Home Health Prospective Payment System (HH PPS) Overview

Medicare Claims Processing Manual (CMS Pub. 100-04, Ch.10)

HH PPS pays HHAs a predetermined base payment. Payment is based upon 60-day "episodes of care" for each beneficiary, according to the patient’s conditions and needs. The patient’s conditions and needs are assessed by using the Outcome and Assessment Information Set (OASIS). There are no limits to the number of episodes a beneficiary can receive as long as he or she meets eligibility criteria. The 60-day episode:

Corresponds with the OASIS (Outcome and Assessment Information Set) and the Plan of Care (POC)
Equals 60 calendar days
Covers a beneficiary for 60 days regardless of the number of days of care actually furnished
Begins with first Medicare billable visit and ends on and includes 60th day from first Medicare billable visit (unless discharge, death, or intervening event occurs)
May start again on day 61, day 121, etc. (when the beneficiary is recertified for care)

Payment is made based on a split payment approach between the Request for Anticipated Payment (RAP) and the final claim. For a beneficiary's initial 60-day episode, payment will be split 60/40 between the RAP and the final claim. For a beneficiary's subsequent (or recertified) episode, payment will be split 50/50 between the RAP and the final claim.

Certain situations will impact the episode payment:

A Partial Episode Payment (PEP) occurs when the beneficiary elects to transfer to another HHA during a 60-day episode or when the beneficiary is discharged and then readmitted prior to the end of the 60-day episode. Payment is based on a proportion of the 60-day episode (first billable visit through last billable visit).
A Low Utilization Payment Adjustment (LUPA) occurs when there are four or fewer visits provided in a 60-day episode. Instead of an episode payment based on the case mix level of the beneficiary, payment is made based on the standardized average per visit amount. This claim is called a NO-RAP- LUPA claim
A Significant Change in Condition (SCIC) adjustment occurs when the beneficiary's condition changes during a 60-day episode and the agency reports the change on the claim. Payment is figured via a multiple part calculation consisting of a prorated payment for the period prior to the SCIC and a prorated payment for the period after the SCIC.
An outlier payment may be made for episodes whose estimated costs exceed a threshold amount. The Pricer Software within the Fiscal Intermediary Standard System (FISS) will calculate the outlier amount automatically when the claim is submitted.
Episode payment will be reduced if the number of therapy visits indicated on the claim is below the utilization threshold assigned to the HIPPS code submitted.
For episodes beginning on or after January 1, 2008, payment will be increased if the number of therapy visits exceeds the number of visits indicated by the HIPPS code submitted on the home health final claim.

Another important aspect of the HH PPS is consolidated billing. This means that the home health agency that established the plan of care (POC) for the beneficiary must:

Furnish all home health services (either directly or under arrangement with an outside supplier), and
Submit all Medicare covered home health services (including supplies) to the intermediary for reimbursement. This would include even the services and supplies not directly related to the POC.

One payment is made by Medicare to the home health agency for all items and services provided within the scope of the Medicare home health benefit. Durable Medical Equipment (DME) is excluded from HH PPS consolidated billing requirements. For more information on HH PPS consolidated billing, including a listing of services which are subject to it, access the following references:

For more information about HH PPS, please see the Home Health PPS – Overview

Web page on the CMS Web site.

Page last updated: April 14, 2008