In 2006, 2.9 million Medicare beneficiaries received home health services. The home health benefits provides Medicare enrollees to access to services such as: skilled nursing care; physical, occupational, and speech therapy; medical social work, and home health aide services.
Medicare pays home health agencies (HHA) based on 60-day episodes of care. Each HHA receives a flat payment for all services rendered during this time period. There are some adjustments to the 60 day payment however. These adjustments include:
Adjustments for geographic differences in the price of labor using the Medicare Wage Index,
Case Mix Adjustment using Home Health Resource Groups (HHRGs)
Outlier payments made for beneficiaries who incur unusually large costs
If fewer than 5 visits are delivered during a 60-day episode, the HHA is paid per visit by visit type, rather than by the episode payment method.
If a beneficiary switches home health providers during a 60 day episode, than the original HHA only receives only a partial payment of the 60-day prospective payment.
Today, I will briefly review how Medicare constructs the HHRG. A summary of the 5 components that make up the HIPPS code can be found here .
Grouping Step . In this case, each episode is classified by the number visits the home health agencies provides and whether the episode is “early” (one of the first two episodes in home health sequence) or “late” (the third of consecutive 60-day episodes in a series).
Clinical Severity depends on diagnosis codes (e.g., blood disorders, cancer, diabetes). Patients with more severe diagnoses are placed in a higher case mix group.
Functional Severity assess the patient’s ability to perform basic activities of daily living (e.g., ability to use the bathroom, bath oneself, walk, and dress oneself).
Non Routine Supplies identifies whether unconventional supplies were required to treat such health problems as anal fissure, cellutitis, diabetic ulcers, gangreene, malignant neoplans, and 7 other diagnositic categories of disease.
Using these 5 coding places, Medicare assigns beneficiaries into one of the 1836 HIPPS codes which map to 153 HHRGs.
Under Medicare’s home health prospective payment system, a case mix adjusted paymentfor a 60-day episode is made using Home Health Resource Groups (HHRG) also abbreviated to HRG. When used in Medicare claims, HHRGs are represented as HealthInsurance Prospective Payment System (HIPPS) codes. HIPPS codes allow the HHRG code to be carried more efficiently and to include additional information on how theHHRG was derived. HIPPS codes represent specific characteristics (or case mix) on which Medicare payment determinations are made and vary by payment system. HIPPSpayment codes have been established to represent case mix groups derived from research into provider utilization patterns. The payment system applicable to a particular HIPPScode is identified by the use of dedicated revenue codes submitted upon institutional claims to Medicare contractors for payment. The HIPPS code is placed in the HCPCS/Accommodation Rates/HIPPS Rate Codes field of the claim while the associated revenuecode is placed in the Revenue Codes field.