Fazzi Associates: New National Average Case Mix Weight

Question: We saw the Minute in the Morning email with a preliminary case mix weight of 1.3517, up from 1.27.  Can you tell me more about it and what that means for my agency?

Answer: The national average case mix weight was posted in the Proposed Home Health Prospective Payment System Update for CY 2014 as 1.3517.  We verified with the Department of Health and Human Services, Centers for Medicare & Medicaid that the number is preliminary based on 2012 final claims data for non-LUPA episodes.  This number will be updated with the remaining claims data for CY 2012 for the 2014 HH PPS Final Rule. Fazzi will be sure to keep you posted when this final figure is announced.

This new number represents a new benchmark.  If you believe that your patients’ medical needs are equal to or greater than the average patient, then your case mix weight should be equal to or higher than the national average case mix weight of 1.3517. What happens if your patients’ needs are equal to or greater than the average patient’s, but you inaccurately underscore your OASIS assessment? You lose and you lose big in two ways.

  • Impact on Quality: If you are underscoring your patients at admission, you are jeopardizing your quality scores. Why? Most Home Health Compare quality scores are a measure of improvement based on OASIS assessments at two different time points. When you underscore at admissions you leave little room to show appropriate improvement. The result is poorer quality scores and poorer Home Health Compare scores even though you may have done an outstanding job.
  • Impact on Revenue: Underscoring doesn’t just impact quality. If you underscore, you get less revenue. It’s as simple as that! Through Fazzi audits we’ve discovered that many agencies who are experiencing financial pressure are doing so simply because of inaccurate underscoring. Underscoring leads to receiving less revenue, revenue that is essential to cover the cost of patient services. Just look at the difference in revenue based on our updated chart with the old and new average case mix weights.
Annual Episodes Standard Episodic Rate Revenue at Old 1.27 Average CMW Revenue at New 1.35 Average CMW Revenue Difference
100 $2,137.73 $271,491.71 $288,593.55 $17,101.84
300 $2,137.73 $814,475.13 $865,780.65 $51,305.52
500 $2,137.73 $1,357,458.55 $1,442,967.75 $85,509.20
1,000 $2,137.73 $2,714,917.10 $2,885,935.50 $171,018.40
2,000 $2,137.73 $5,429,834.20 $5,771,871.00 $342,036.80

Now, imagine that your case mix weight is not 1.35 and that your actual average is 1.20 or 1.10 or worse, below 1.00. The impact on your quality outcomes and financial payments could be devastating.

To determine if your agency is at risk, first find your actual case mix weight (CMW) at RAP. Then, based on your CMW, look at the chart below to make a determination about what to do next.

If Your CMW at Rap is… Strategy You Should Use
1.35 or higher Monitor: Track and trend your case mix weight at RAP and final. Provide annual training updates.
1.27 – 1.35 Train: Track and trend your case mix weight at RAP and final. Initiate internal training programs.
1.15 – 1.27 Focused Response: Get outside help. Have your assessments audited to identify problem areas, and develop a training that addresses these areas. Track your case mix weight at RAP and final.
Less than 1.15 Urgent Response: Get outside help immediately. Have your assessments audited to identify problem areas, and develop a training that addresses these areas. Track your case mix weight at RAP and final.

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