Home Health Report Final

112TH CONGRESS
"
1st Session
COMMITTEE PRINT
S. PRT.
11224
STAFF REPORT ON HOME HEALTH AND THE

MEDICARE THERAPY THRESHOLD
PREPARED
BY THE
STAFF
OF THE
COMMITTEE ON FINANCE
UNITED STATES SENATE
SEPTEMBER 2011
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congress.#13
Printed for the use of the Committee on Finance
STAFF REPORT ON HOME HEALTH AND THE MEDICARE THERAPY THRESHOLD
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112TH CONGRESS
"
1st Session
COMMITTEE PRINT
S. PRT.
11224
STAFF REPORT ON HOME HEALTH AND THE

MEDICARE THERAPY THRESHOLD
PREPARED
BY THE
STAFF
OF THE
UNITED STATES SENATE
SEPTEMBER 2011
Printed for the use of the Committee on Finance
U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON
68404
2011
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congress.#13
For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 5121800; DC area (202) 5121800
Fax: (202) 5122104 Mail: Stop IDCC, Washington, DC 204020001
MAX BAUCUS, Montana, Chairman
JOHN D. ROCKEFELLER IV, West Virginia ORRIN G. HATCH, Utah
KENT CONRAD, North Dakota
CHUCK GRASSLEY, Iowa
JEFF BINGAMAN, New Mexico
OLYMPIA J. SNOWE, Maine
JOHN F. KERRY, Massachusetts
JON KYL, Arizona
RON WYDEN, Oregon
MIKE CRAPO, Idaho
CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas
DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington
JOHN CORNYN, Texas
BILL NELSON, Florida
TOM COBURN, Oklahoma
ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota
THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina
BENJAMIN L. CARDIN, Maryland
RUSSELL SULLIVAN, Staff Director
CHRIS CAMPBELL, Republican Staff Director
(II)
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CONTENTS
Page
Introduction ..............................................................................................................
Background on Therapy Thresholds ......................................................................
The 10-Visit Threshold ............................................................................................
CMS Attempts Reform: Policy Gamed ...................................................................
Amedisys ..................................................................................................................
Gentiva .....................................................................................................................
LHC Group ...............................................................................................................
Almost Family ..........................................................................................................
CMS Must Move Toward Taking Therapy Out of the Payment Model ..............
AppendixSelect Documents Cited in This Report ..............................................
Exhibits Related to Footnote 18 ..........................................................................
Exhibits Related to Footnotes 21 and 22 ...........................................................
Exhibits Related to Footnotes 27, 28, and 30 ....................................................
(III)
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Footnote 71 ..........................................................................
Footnote 72 ..........................................................................
Footnote 73 ..........................................................................
Footnotes 74 and 75 ...........................................................
Footnote 76 ..........................................................................
Footnotes 77 and 97 ...........................................................
Footnote 78 ..........................................................................
Footnote 79 ..........................................................................
Footnote 81 ..........................................................................
Footnote 82 ..........................................................................
Footnote 83 ..........................................................................
Footnotes 84, 85, and 86 ....................................................
Footnote 87 ..........................................................................
Footnote 88 ..........................................................................
Footnote 89 ..........................................................................
Footnote 90 ..........................................................................
Footnote 91 ..........................................................................
Footnote 98 ..........................................................................
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Introduction
The United States Senate Committee on Finance (Committee)
has a duty to conduct oversight of the programs in its jurisdiction,
including Medicare and Medicaid. This duty includes the responsibility to monitor payments made by the Centers for Medicare and
Medicaid Services (CMS) for home health services in order to protect taxpayer dollars from waste, fraud, and abuse.
In May 2010, the Committee initiated an inquiry into home
health therapy practices at Amedisys, LHC Group, Gentiva, and
Almost Family, the four largest publicly traded home health companies, after a Wall Street Journal analysis of therapy utilization
patterns at those four companies suggested they were taking advantage of the Medicare therapy payment system by providing
medically unnecessary patient care.1
The Committee staff reviewed documents provided by Amedisys,
LHC Group, Gentiva, and Almost Family. All companies cooperated
with the Committees investigation.
In its review, the Committee found Amedisys, LHC Group, and
Gentiva encouraged therapists to target the most profitable number of therapy visits, even when patient need alone may not have
justified such patterns:
Therapy visit records for each company showed concentrated
numbers of therapy visits at or just above the point at which
a bonus payment was triggered in the prospective payment
system (PPS).
Internal documents from Amedisys show that, prior to the
2008 CMS therapy payment changes, managers were encouraged to meet the 10-visit therapy threshold.
An A-Team set up by Amedisys corporate management developed therapy programs after the release of the 2008 proposed
PPS changes to target the most profitable Medicare therapy
treatment patterns, including adding therapy visits to clinical
tracks that previously did not involve therapy.
Amedisys pressured therapists and regional managers to adhere to new clinical guidelines developed to maximize Medicare
reimbursements.
Internal e-mails identify top LHC Group managers, including
the companys CEO, who instructed employees to increase the
number of therapy visits provided in order to increase case
mix, a measurement of patient acuity, and revenue.
Internal documents show that Gentiva developed a competitive
ranking system for their management aimed at driving therapy visit patterns toward more profitable thresholds.
1 Barbara Martinez, Home Care Yields Medicare Bounty, Wall Street Journal, April 26,
2010; Barbara Martinez, Senators Question In-Home Caregivers, Wall Street Journal, May 13,
2010.
(1)
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2
Internal documents show that Gentiva management discussed
increasing therapy visits and expanding specialty programs to
increase revenue.
The home health therapy practices identified at Amedisys, LHC
Group, and Gentiva at best represent abuses of the Medicare home
health program. At worst, they may be examples of for-profit companies defrauding the Medicare home health program at the expense of taxpayers.
Background on Therapy Thresholds
The Balanced Budget Act of 1997 (BBA) changed the way Medicare paid for home health services by requiring the implementation
of a home health prospective payment system (PPS). Prior to the
establishment of PPS, Medicare paid on a cost-based reimbursement system, in which Medicare paid separately for items and
services furnished by each home health agency.2
In creating the PPS, the Centers for Medicare and Medicaid
Services (CMS) established a basic unit of payment for home health
services in which home health agencies would receive payment for
a 60-day episode of care. This single payment was intended to
cover the skilled care needs of individuals who were restricted to
their homes for a 60-day period.3 These services included nursing
care; physical, occupational, and speech therapy; medical social
work; home health aide services; and certain routine medical supplies.4
CMS also developed a patient classification system to adjust payments, also known as a case-mix adjustment, in the home health
PPS based on each patients health characteristics and use of services. The patient classification system originally consisted of 80
Home Health Resource Groups (HHRGs). Home health agencies
would determine each patients health characteristics using the
Outcome and Assessment Information Set (OASIS) and each patient would be assigned to an HHRG based on that assessment.
Figure 1 outlines the pre-2008 clinical, functional, and service
metrics from OASIS used to determine each patients HHRG.5
2 Office of Inspector General, Medicare Program; Prospective Payment System for Hospital
Outpatient Services, Background, Federal Register 65:68 (7 April 2000), pp. 18434, 18436.
3 Medicare Program, Prospective Payment System for Home Health Agencies, Federal Register 64:208 (28 October 1999), pp. 58134, 58143.
4 Office of Inspector General, Medicare Program; Prospective Payment System for Hospital
Outpatient Services, Background, Federal Register 65:68 (7 April 2000), pp. 18434, 18442.
5 MedPAC, Health Care Services Payment System, Revised October 2008; MedPAC, Report
to the Congress: Issues in a Modernized Medicare Program, June 2005.
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4
The 10-Visit Threshold
One of the most significant factors outlined in Figure 1 is the inclusion of OASIS score metrics that indicate each patients clinical, functional, and service utilization characteristics. These characteristics are combined to determine each patients HHRG, which
ultimately dictates the reimbursement payment to each home
health agency. The payment system through 2007 included a therapy bonus when a home health agency provided at least 10 therapy visits. This bonus was substantial, and CMS recognized in its
original rulemaking that a 10-visit threshold was susceptible to
manipulation. 6 According to data from CMS, providing 10 visits
as opposed to 9 visits increased reimbursement on average 97.5
percent (over $2,000) in 2007.
When the PPS system was first implemented, the payment increase threshold was set at 10 therapy visits. CMS implemented
the measure in part to discourage stinting, a term used within
the industry to describe agencies rendering the lowest level of service necessary to collect Medicare payment. CMS officials determined 8 hours of combined physical, speech, or occupational ther-
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6 Medicare Program, Prospective Payment System for Home Health Agencies, Final Rule,
Federal Register 65:128 (3 July 2000), pp. 41128, 41148.
5
apy over a 60-day episode would provide a suitable level of care for
patients with significant therapy needs; however, a study by Abt
Associates commissioned by CMS indicated few patients received
that level of care prior to the implementation of PPS. CMS divided
the 8 hours into 10 therapy sessions, lasting 48 minutes each, to
determine the visit number threshold.7
Not surprisingly, the home health episodes that utilized therapy
services, also referred to as therapy episodes, demonstrated a concentrated number of visits at or just above thresholds where payments were much greater. The Medicare Payment Advisory Commission (MedPAC) found that episodes with the number of therapy
visits between 10 and 13 increased by about 90 percent between
2002 and 2007 at an annual rate of 13.8 percent. However, the percentage of episodes just above and below the 10 to 13 therapy visit
range remained relatively unchanged during the same period.8
CMS noted similar results, finding the threshold system might
have distorted service delivery patterns. 9 CMS found that the 10to 13-visit range had the highest concentration of therapy episodes
among cases that utilized home therapy. Of all episodes at or above
the 10-visit threshold, half were concentrated in the 10 to 13
range.10
CMS Attempts Reform: Policy Gamed

In response to the change in home health agencies practices and
evidence of clustering visits just above the 10-visit threshold, CMS
proposed significant changes to the therapy reimbursement system
7 Id.
41148.
8 MedPAC,
Report to Congress, March 2011.

Program, Home Health Prospective Payment System Refinement and Rate Update
for Calendar Year 2008, Proposed Rule, Federal Register 72:086 (4 May 2007), pp. 25356,
25362.
10 Id.
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9 Medicare
6
in 2007, to take effect in 2008.11 However, CMS retained a tiered
therapy threshold system, despite evidence that a threshold system
might be gamed or padded to increase reimbursement to home
health agencies.12
Prior to the promulgation of the final rule, CMS considered alternatives to the therapy threshold system. Specifically, the agency
evaluated whether using pre-admission status, status of activities
of daily living (ADL), specific diagnoses, and additional OASIS
variables could enable CMS to determine a patients need for therapy without a tiered threshold system.13 CMS ultimately determined none of those variables were sufficient and opted to maintain a threshold system in the final rule with therapy thresholds
at 6, 14, and 20 visits. Home health agencies saw a substantially
higher payout for those episodes that reach the thresholds within
each 60-day period. Smaller graduated steps were also implemented between the thresholds, though they were not as significant as the 6, 14, and 20 visit payment increases.
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11 Medicare Program, Home Health Prospective Payment System Refinement and Rate Update for Calendar Year 2008, Final Rule, Federal Register 72:167 (29 August 2007), pp. 49762,
49836.
12 Id. 49764.
13 Id. 49835.
7
CMS also increased the number of payment groups used in determining HHRG from 80 to 153 individual metrics, and provided
higher payments for the third and subsequent home health episodes.14
Home health agencies rapidly altered their treatment patterns to

match the new system, producing what MedPAC called the swiftest one-year change in therapy utilization since PPS was imple-
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14 Id.
8
mented. 15 Therapy visits furnished by home health agencies shifted from the original 10-visit threshold to the new 6, 14, and 20 visits. According to MedPAC, payment for episodes with 6 to 9 visits
increased by 30 percent, and the share of these episodes increased
from 8.6 percent to 11.6 percent. Payment for episodes with 14 or
more therapy visits increased by 26 percent, and the share of these
episodes increased from 12 percent to 14.5 percent. In addition,
the number of episodes at the 10 to 13 therapy visit range dropped
approximately 28 percent.16
15 MedPAC,
Report to Congress, March 2011, p. 183.
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16 Id.
Amedisys
A review of internal documents and communications provided to
the Committee by Amedisys shows that Amedisys management directed employees to adjust the number of home health therapy visits to maximize Medicare payout to the company after the 2008
changes to the Medicare payment system.
In addition, the Committees review substantiates concerns
raised by the Medicare Payment Advisory Commission that the incentives of the therapy thresholds encourage providers to consider
payment incentives, and not necessarily patient characteristics,
when determining what services to provide. 17
Report to Congress, March 2011, p. 183.
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17 MedPAC,
10
Therapy Metrics
As Figure 9 indicates, in 2007, 9.1 percent of Amedisyss therapy
episodes received 10 visits while 2.9 percent of the therapy episodes
received 9 visits. In 2008, after the CMS PPS therapy changes, the
number of therapy episodes that received 10 visits dropped to 4.9
percent. Also from 2007 to 2008, the number of therapy episodes
receiving 6 visits increased from 4.6 percent to 5.3 percent, and the
number of therapy episodes receiving 14 visits increased from 4.7
percent to 5.8 percent.18
Therapy Episode Distribution, AMEDSFC00000001AMEDSFC00000002.
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18 Amedisys
11
Home health episodes with therapy reimbursements accounted
for 71 percent of Amedisyss Medicare revenue in 2009 at
$878,535,009. Amedisyss total Medicare revenue for 2009 was
$1,229,755,214.19 Medicare reimbursements consisted of 88 percent
of Amedisyss revenue in 2009.20
The 10-Visit Therapy Threshold Prior to 2008
The large disparity between the percentage of Amedisys therapy
episodes receiving 9 and 10 visits prior to the 2008 CMS PPS payment changes is not surprising given the employee training materials in circulation at the time. A 2006 PowerPoint presentation encouraged Amedisys managers to generate a report to help the [Directors of Office Operations (DOOs)] focus on therapy utilization.
The presentation instructed Amedisys DOOs to Look for patients
that have 7, 8, 9 visits and try to get the 10 visits to make therapy
threshold. 21
The same presentation also encouraged DOOs to use an Adjusted
Revenue Report to identify patients that have had or will have
revenue adjustments made to the expected payment amount. . . .
This report gives you the best opportunity to convert or prevent
[Low Utilization Payment Adjustments (LUPA) patients] and non
therapy threshold patients. 22
LUPAs are patients with four or fewer home health visits and
are reimbursed under the Low Utilization Payment Adjustment
(LUPA) on a per-visit basis and payment varies depending on the
type of health care professional making the visit. 23 Generally,
home health agencies see LUPA cases as less profitable than midor high-therapy utilization cases.
Another educational document stated that when patients are
close to the 10-visit threshold, therapists should ask, What is the
patients rehab potential. . . . Does that patient have any balance
issues that might create a high risk for falls. . . . Is the patient
appropriate for other therapy services or disciplines? 24
Amedisys Managements Response to the 2008 CMS Payment
Changes
Amedisyss corporate management saw the proposed 2008 CMS
PPS changes as an opportunity to increase its reimbursements
from Medicare by altering internal clinical and marketing practices. A document outlining Amedisys CEO Bill Bornes strategic
plan stated that the proposed changes in the 2008 home health
PPS system provides an opportunity for Amedisys to refine internal practices in order to enhance shareholder value despite the
payment changes. 25
19 Amedisys
Medicare Reimbursement, AMEDSFC00000003.

2010 Annual Report, p. 14, http://www.amedisys.com/pdf/Amedisysl
annualrep10.pdf.
21 Amedsys PowerPoint, Help with Reports, 2006, AMEDSFC00001477AMEDSFC00001543,
*AMEDSFC00001484.
22 Id.
23 Home Health Study Report prepared for CMS by L&M Policy Research, January 11, 2011,
p. 6.
24 Amedisys
PowerPoint, Home Health Care Team Conference Overview, 2006,
AMEDSFC00001544AMEDSFC00001593, *AMEDSFC00001583.
25 Amedisys
Board Meeting Minutes, October 27, 2007, AMEDSFC00000812
AMEDSFC00000845, *AMEDSFC00000820.
20 Amedisys
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According to the minutes of an Amedisys board meeting held at
the Las Ventanas Hotel in Los Cabos, Mexico on July 24, 2007,
Chief Information Officer Alice Ann Schwartz reported, the Company had formed a committee called the A-Team whose specific
purpose was to develop strategic clinical programs and cost-cutting/
efficiency measures to address the proposed case mix refinements. 26
Creating Therapy-Based Programs to Boost Revenue
A list of talking points used during a June 13, 2007 conference
call regarding the proposed PPS changes contained a strategy for
Clinical Development, which included Data Mining of most
profitable/least profitable diagnoses and the financial impact. . . .
Develop an infrastructure to track monthly percentage growth in
desirable cases. . . . Recommendations of new programs with conceptual framework submitted based on analysis/data mining. 27
During this conference call, a document was distributed titled
Data Mining Strategies Handout which ranked medical diagnoses
by average profit per episode. The document laid out a comprehensive strategy to increase therapy visits for certain therapy episodes
that were beneath key thresholds, adding therapy visits into nontherapy episodes, and substituting physical therapy for skilled
nursing visits. The document stated that a therapy based wound
care program in which [physical therapy] replaces [skilled nursing] visits in wound care episodes w/o therapy would bring an
Added Revenue of $1,400,000. 28
Additionally, an August 2007 training document stated, If we
added only 6 Therapy visits to 3% of [congestive heart failure] patients who are F2F3 but received no therapy8809 episodes, net
to company almost half a million. Imagine what the revenue for the
agencies will be! 29
In addition to discussing clinical development strategies based on
the most profitable and least profitable diagnoses, the team also
discussed Developing a strategic sales focus upon preferred patient
mix. 30
Notes from a conference call on August 2, 2007 led by Amedisys
Chief Operating Officer Larry Graham stated that a Key Operational Initiative of Amedisyss Case Mix Refinement Strategy
was Growth of Focused [Disease Management] Programs in 2008
and a New Therapy Clinical Tracks rollout on September 15,
2007.31
A PowerPoint presentation introducing Amedisyss therapy
wound care initiative, which added physical therapy visits to home
health episodes, noted that treating a wound care patient with 14
26 Amedisys
Board Meeting Minutes, October 27, 2007, AMEDSFC00000812
27 Conference
Call agenda, June 13, 2007, AMEDSFC00093064AMEDSFC00093068,
*AMEDSFC00093067.
28 Conference
*AMEDSFC00093065.
29 Therapy and Specialty Program Initiatives, VP/RA/RDBD Education, August 15, 2007,
30 Conference
*AMEDSFC00093068.
31 Conference Call with Larry Graham, August 2, 2007, Case Mix Strategy Handouts,
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and 20 physical therapy visits would more than double the companys Medicare reimbursement for the episode in two examples.
One example explained that the 2008 Medicare reimbursement
without therapy services would be $2,908.13, as opposed to
$6,011.67 with 14 physical therapy visits under the new system.32
According to an Excel spreadsheet used to track tasks of the ATeam committee, Amedisys management decided, as part of its
clinical strategy, to incorporate therapy into [the congestive heart
failure] program and institute Aggressive [Balanced For Life] and
multi-disciplinary therapy program launches in 2008. 33
A 2007 document titled Therapy Initiatives Update was distributed during an August 31, 2007 A-Team conference call. The document indicates that the average HHRG for Balanced for Life reimbursement was $4,100 in 2007. In 2008, the document noted a
projected HHRG reimbursement increase to $4,700 because occupational therapy was added to the Balanced for Life program.34
Altering Patient Care Guidelines to Hit Therapy Thresholds
Amedisys altered its clinical recommendations for the number of
therapy visits, known as clinical tracks, as a result of the CMS
payment changes in 2008. The new clinical tracks correspond to
the new payment thresholds.
Prior to the CMS payment changes, the Better Balance At
Home and Better Strength At Home programs had a recommended 3 to 12 therapy visits.35 An internal Amedisys PowerPoint presentation stated that New case mix weight adjustments
proposed by medicare provided a great opportunity to make some
company wide changes in the rehab clinical tracks and the new
Rehabilitation @ Home program Replaces Better Strength and
Better Balance. 36 However, the new clinical recommendations
changed after CMS implemented its payment changes. Instead of
the number of visits being in the 3 to 12 range, the new visit range
for Rehabilitation @ Home became 8, 16, or 22 visits. All 3 of
these visit tracks were 2 visits above each therapy payment threshold.37
Amedisys Staff was Pressured to Adhere to New Patient Care
Guidelines
While the training material regarding clinical track changes in
2008 stated visit numbers are guidelines and Care plans are
made patient specific and appropriate to the needs of that patient,
e-mails and documents provide evidence that Amedisys executives
pressured employees to reach specific therapy payment thresholds.
An Amedisys PowerPoint authored by Amedisys Vice President
of Disease Management Anne Frechette describes Key Operational
32 Amedisys
PowerPoint presentation, Therapy Wound Care, September 26, 2007,
33 A-Team Case Mix Committee Action Items, December 2007, AMEDSFC00070083
34 Therapy Initiatives Update, August 30, 2007, AMEDSFC00076174AMEDSFC00076177,
*AMEDSFC00076177.
35 Amedisys
Rehab Clinical Track Options, AMEDSFC00001347AMEDSFC00001350,
*AMEDSFC00001347.
36 Amedisys
Rehabilitation
20072008,
AMEDSFC00001846AMEDSFC00001862,
*AMEDSFC00001848.
37 Clinical Track GuidelinesRevised, AMEDSFC00001935.
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Initiatives for 2008 including an initiative to Improve compliance
with scheduling according to clinical tracks by transferring that
responsibility from the agency clinical manager to a [Quality Care
Coordinator].38 The Quality Care Coordinators job is to oversee
clinical decisions and documentation at Amedisys agencies.39
On February 25, 2008, Amedisys Vice President of Quality Management and Analytics Tasha Mears distributed an e-mail with the
subject line, Therapy Management in 2008. The e-mail reminded
Amedisys management of the company wide differences in reimbursement in 2008 versus 2007 based on the total therapy visits
per episode. The e-mail also included a chart showing changes in
revenue per episode, moving from bucket to bucket in 2008.
Lastly, the e-mail included a report ranking individual agencies,
AVPs and VPs by 14+ total therapy visits per episode, and shows
how many episodes are in each therapy bucket. 40
The following day, Amedisys Area Vice President of Operations
in North Alabama Teresa B. Mills wrote in an e-mail urging conformance with the new clinical tracks:
It is imperative that we are compliant with the clinical tracks
for Rehab that were made available to your agency December
2007. After reviewing each of the agencies Episode Statistics
for Feb.1 thru today it is evident that we as a region are not
following the established guidelines for clinical management of
therapy utilization. 65 percent or greater of your episodes that
have ended this month fell under the 2008 PPS rules and discovery is that most of your episodes have fallen into the Grouping Step 1 or Grouping Step 3 with 013 therapy visits. The
Rehab Clinical Traction Options selection sheet is based on the
therapists assessment of the geriatric rehab patient with attention to the clinical and functional scoring established on the
evaluation. There are only 3 of the 14 Therapy Tracks that
have less than 14 visits to be scheduledthey are Rehab at
HomeDO1 for CIF18 visits recommended, Dysphagia at
Home001 for C23 F23 for 8 SLP visits, and Orthopedics I
001 for C12 F1 for 8 PT visits. Most patients in this clinical
and functional status would not be a patient in home health
for any length of time. Most of your patients fall into a C2F2
3 status or greater and would more appropriately be placed on
the other tracks having 1422 visit options and are based on
Clinical 23 and Functional 23 scoring on the OASIS. This is
your guideline and the Clinical Managers are to work with the
therapists to obtain the accurate track selectiondo not use
any of the old therapy tracks.41
A February 27, 2008 e-mail from the Amedisys Vice President of
Florida Operations Dan Cundiff to Amedisys managers in Florida
stated:
38 Amedisys Powerpoint presentation, Key Operation Initiatives2008, VP of Disease Management, Anne Frechette, AMEDSFC00066778AMEDSFC00066899, *AMEDSFC00066798.
39 Remote
Quality
Care
Coordinators,
AMEDSFC00064470AMEDSFC00064499,
*AMEDSFC00064482.
40 E-mail from Amedisys Vice President of Quality Management and Analytics, Tasha Mears,
February
25,
2008
and
attachments,
AMEDSFC00072633AMEDSFC00072642;
AMEDSFC00072702AMEDSFC00072709; AMEDSFC00072769, *AMEDSFC00072634.
41 E-mail
from Amedisys Area Vice President Teresa Mills, February 26, 2008,
AMEDSFC00092129.
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We need to work immediately to adjust our 10 therapy threshold mindset. See the email from Tasha yesterday. At 10, our
episode value drops by over 880.00 1415 is where we need to
be . . . and yes, I understand that our visits per episode will
go up . . . but I would rather be profitable than have a low
visits/episode. At 79 we have upside, but the overall episode
value is less than I would like to see for cases involving therapies. If we continue to drive meeting 10 therapies . . . we will
be cooked. 1113 as well.42
Another e-mail by Mr. Cundiff to Amedisys managers in Florida
on February 29, 2008 stated:
We still drove to a 10 therapy threshold . . . and thus, our values per episode were HAMMERED. We must stop thinking
that 10 therapies maximizes our reimbursement.
The new upper level threshold is now 14 therapy visits. When
clinically appropriate, lets drive to that number. From 10
13 visits, we become significantly less profitable . . . to the
tune of an 800.00+ negative adjustment from 2007 rates. [emphasis in original]
Falling in the 1013 range without a solid set of reasons is real
shame, and the only acceptable reason is that it was absolutely
the best thing for the patient. [sic] I will never . . . NEVER
argue that point, but I would also suggest, that in most cases,
patients benefit from additional therapy beyond 1013 visits.
Lets get with the newer reimbursement schedule . . . improve
our outcomes by more therapy patient contact . . . and win all
around. Lastly, lets not be overly concerned about visits per
episode . . . until we maximize our revenue opportunities . . .
when supported by clinical standards.43
Internal reports about Amedisys branches in Missouri also cited
the need for clinical tracks to be followed. One report stated that
the Rev/Episode is low due to the under utilization of therapy and
recommended that in order to Increase Revenue per episode via
episode management from $1619 to $2500 that the area vice president of operations should Work with DOO to insure [sic] usage of
clinical tracks. 44
Gentiva
Therapy Metrics
As Figure 12 indicates, in 2007, 7.7 percent of Gentivas therapy
episodes received 10 visits while 3.6 percent of the therapy episodes
received 9 visits. In 2008, the number of therapy episodes that received 10 visits dropped to 5.8 percent.45
Also from 2007 to 2008, the number of therapy episodes receiving
6 visits dropped from 6.5 percent to 6.1 percent. However, the per42 E-mail from Amedisys Vice President for Florida Operations Dan Cundiff, January, February 27, 2008, AMEDSFC00092016.
43 E-mail from Amedisys Vice President for Florida Operations Dan Cundiff, episode follow
up, February 29, 2008, AMEDSFC00092017.
44 E-mail from Mike Hamilton to Jill Cannon and William Mayes, March 10, 2008 and attachments. AMEDSFC00093359AMEDSFC00093371, *AMEDSFC00093360.
45 Gentiva Therapy Episode Distribution, GEN 000015.
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16
centage of therapy utilization in the 6-visit through 9-visit range
increased, from 18.9 percent in 2007 to 22.1 percent in 2008. The
number of therapy episodes receiving 14 visits increased from 4.0
percent to 4.8 percent. And the number of therapy episodes receiving 20 visits increased from 1.6 percent to 2.1 percent.46
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46 Id.
17

for 78 percent of Gentivas Medicare revenue in 2009 at
$606,921,660. Gentivas total Medicare revenue for 2009 was
$773,673,026.47 Medicare reimbursements consisted of 82 percent
of Gentivas revenue in 2009.48
Gentiva Management Response to the 2008 CMS Payment Changes
Internal documents and e-mails show that Gentivas management discussed increasing therapy visits and expanding specialty
programs to increase Medicare reimbursements as a result of the
proposed 2008 CMS payment changes.
Vice President and Chief Clinical Executive Susan Sender wrote
in a January 5, 2007 e-mail regarding the CMS payment changes
that there was an internal group . . . crunching utilization and
outcomes data to determine whether revisions to our therapy protocols are clinically defensible. 49
According to a Gentiva Excel spreadsheet analyzing the proposed
2008 CMS payment changes, the company would earn an additional $11 million from Medicare if [t]herapy visits provided increased 2 to 4 visits to reach 6 and 14 visit plateaus. 50
Gentiva Competitive Ranking System
Gentiva developed a competitive ranking system for their management that served to drive therapy visit patterns toward the
more profitable thresholds. Through the ranking system, known internally as the Key Indicator Report (KIR), Gentiva administrators
assigned team names to each region of operation, such as the Mid47 Gentiva
Medicare Reimbursement, GEN 000017.

2010 Annual Report, page 18, http://files.shareholder.com/downloads/GTIV/
1328045690x0x456437/CEA1782E-FB2C-4850-A530-9CF06AA6C55B/GentivalARl2010.pdf.
49 E-mail from Vice President and Chief Clinical Executive Susan Sender, RE: PPS Refinements Proposed Regulations, EGEN 079938.
50 Changes in Profitability due to Proposed Changes in Therapy Reimbursement, GEN 013823.
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48 Gentiva
18
Atlantic Spider Monkeys and the Carolina Killer Bees. 51 Teams
were then ranked based on a list of 21 individual, weighted metrics
primarily designed to maximize profits.52
A February 16, 2009 e-mail noted that the company planned to
eliminate one metric, visits per episode over the last 4 months,
from the ranking system because it runs counter to our initiative
to increase [physical therapy.] 53 The company later indicated that
this metric was not eliminated from the KIR reports.54
The highest-ranking teams received encouraging company-wide
e-mails such as The Killer Bees . . . have a taste for victory,
served best with a side of Spider Monkey . . . and The race is
getting closer for #1 . . . I keep hearing the south will rise
again? 55 First place teams also received a monetary bonus during
an annual company meeting.56 In 2007, KIR bonuses totaled
$161,811.57
In January 2010, Gentiva administrators added two new KIR
metrics that would increase a regions rank based on the percentage of therapy visits that fell in the most profitable therapy visit
range, between 7 and 20 sessions.58
There is also evidence of a direct push toward therapy thresholds
in Gentivas internal educational materials. A presentation titled
PPS Refinements noted About 12% of Gentivas episodes have
LUPA adjustments, less than five visits in the episode. The document stated that it is Interesting how many are at 5, could we
have done one more visit?? 59
An internal analysis presented to CEO Tony Strange in a September 7, 2007 e-mail found that increasing therapy visits by an
average of 2 visits per episode will increase revenue by approximately $350 to $550 per episode. Adding therapy services (6 visits)
to patients with high functional needs will increase revenue by
about $700 per episode. 60
An October 2007 presentation showed that a Gentiva employee
was tasked to Build the case to substantiate increased therapy, including PT, OT, and ST. 61
In a September 29, 2008 e-mail, Area Vice President for Financial Operations Pete Cavanaugh wrote, Id like to know what overall impact well get if we push for an increase in therapy. 62
51 E-mail from Vice President of Finance, Investor Relations Brandon Ballew, KIR Regional
Rankings though October 2009, December 11, 2009, EGEN 024576EGEN 024600, *EGEN
024578.
52 Response to June 17 2011 SFC Set of Supplemental Questions, June 24, 2011, GEN
000003GEN 000004, *GEN 000003.
53 E-mail from Area Vice President Pete Cavanaugh, AVP Rankings, February 16, 2009, E
GEN 042577.
54 E-mail, Regional Ranking April 2010, June 2, 2010, EGEN 024576EGEN 024600, *E
GEN 024577.
55 E-mail, AVP Rankings through April 2009, May 27, 2009, EGEN 024576EGEN
024600; e-mail, Regional Ranking April 2010, June 2, 2010 EGEN 024576.
56 Gentiva Response, June 16, 2011, GEN 000001GEN 000002, *GEN 000002.
57 Response to June 17 2011 SFC Set of Supplemental Questions, June 24, 2011, GEN
000003GEN 000004, *GEN 000004.
58 Id.
59 Gentiva PowerPoint, PPS Refinements, GEN 013811GEN 013820, *GEN 013814.
60 E-mail from Perri Southerland to CEO Tony Strange, PPS Refinements, Therapy Analysis,
September 7, 2007, EGEN 025083.
61 Gentiva PowerPoint, Gentiva Rehab, October 2007, GEN 013799GEN 013810, *GEN
013808.
62 E-mail, PPS Therapy Impact Analysis, September 29, 2008, EGEN 024516EGEN
024517, *EGEN 024517.
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In the same e-mail string, Area Vice President of Finance John
N. Norlander wrote Andrew can work with the PPS Files to see
if we move 1% of <7 visits and see the last 6 months impact by
RegionNet Revenue, Gross Margin and EBITDA. 63
Senior Vice President and Chief Clinical Officer Dr. Charlotte
Weaver wrote in a January 7, 2009 e-mail that operations did a
. . . management assignment which addressed getting more therapy visits in an episode of care. 64
In a May 3, 2010 letter to CEO Tony Strange, one departing
physical therapist expressed disappointment with the direction of
Gentiva. I see the push to treat by metrics not by what the patients need, the employee wrote. Treating by numbers is . . .
making the clinicians feel their professional judgment is being
questioned. Again, not sitting on plateaus is understandable but
pushing to thresholds based on what their diagnosis is, not by what
the patient needs is just wrong. 65
In addition to discussions about increasing the number of therapy visits performed to increase revenue, Gentiva management discussed expanding therapy intensive specialty programs. An Excel
spreadsheet listed Specialty Programs (Orthopedics) increasing
visits as a means to increase revenue in the face of the 2008 CMS
changes.66
CEO Tony Strange wrote in a July 29, 2008 e-mail that,
Amedisys is on our heals [sic] related to growth in Specialties. I
want to see us kick it up a notch related to launches. Especially,
in the programs that drive high % Medicare growth. 67
LHC Group
LHC Group Therapy Metrics
Therapy metrics provided to the Committee by LHC Group point
to a pattern of attempting to achieve the most profitable number
of therapy visits. As Figure 15 indicates, in 2007, 20 percent of
LHC Groups therapy episodes received ten visits while only 2.6
percent of the therapy episodes received nine visits. In 2008, the
number of therapy episodes that received ten visits dramatically
dropped to 6.9 percent. Also, from 2007 to 2008 the number of therapy episodes receiving six visits increased from 2.5 percent to 5.5
percent. The number of therapy episodes receiving 14 visits increased from 4.6 percent to 8 percent. And the number of therapy
visits receiving 20 visits increased from 0.7 percent to 2.1 percent.68
63 Id.
*EGEN 024516.
64 E-mail from Senior Vice President and Chief Clinical Officer Charlotte Weaver, January 7,
2009, EGEN 028021EGEN 028022.
65 E-mail to CEO Tony Strange, Parting Comments, May 3, 2010, EGEN 034749.
66 Gentiva data analysis, GEN 014163GEN 014175.
67 E-mail from CEO Tony Strange, RE: Specialties growth, July 29, 2008, EGEN 037384
EGEN 037384, *EGEN 037384.
68 LHC Group Therapy Episode Distribution, LHCGROUPl00000001.
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20
21

for 50 percent of LHC Groups Medicare revenue in 2009 at
$184,571,930. LHC Groupss total Medicare revenue for 2009 was
$366,673,596.69 Medicare reimbursements consisted of 81.7 percent
of LHC Groups revenue in 2009.70
LHC and the 10-Visit Threshold Prior to 2008
A January 30, 2008 e-mail written by the Vice President of Quality and Performance Improvement, Barbara Goodman indicates
that the primary consideration for determining the number of visits
in LHC Groups therapy programs was financial. She wrote, Most
of our programs (low vision, Pelvic Floor) called for ten visit [sic]
because it was at that threshold that we actually made additional
revenue for therapy. 71
Additionally, there is evidence that therapists were pressured to
hit the 10-visit threshold even when 10 visits may not have been
medically necessary. A June 5, 2007 e-mail from Mississippi Regional Manager Cindy Keeton shows administrators considered
calling on physical therapist Rocky Goodwin to counsel a fellow
therapist who refused to trend toward the 10-visit threshold:
It has been a constant battle with her regarding the 10 visit
threshold. She even bucks when a MD orders a specific frequency and if she feels they do not need it then she refuses.
. . . You can see that I have an unusual situation in getting
this employee educated on home health therapy as related to
hospital. It was suggested that you might have a therapist that
69 LHC
Group Medicare Reimbursement, LHCGROUPl000000003, LHCGROUPl000000004.

Group 2010 Annual Report, p. 13, http://files.shareholder.com/downloads/LHCG/
1328064157x0x466257/715C478B-B77C-4F20-9EC2-346E81F15C23/LHClARlFinal.pdf.
71 E-mail from LHC Groups Barbara Goodman, January 30, 2008, LHCGROUPl00007923
LHCGROUP 00007928, *LHCGROUPl00007923.
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70 LHC
22
would be willing to come here and work with her. I think the
name Rocky was mentioned. 72
A July 8, 2007 e-mail shows that LHC Group physical therapist
Rocky Goodwin wrote, after meeting with another physical therapist on a separate occasion, that he tried to convey several pointers as to how to finish out a therapy episode where only 69 visits
are on the book and he needs something else to do to get to 10 visits. There are several old tricks up my sleeve that I told him about
from a clinical standpoint that he should feel better about using to
get to the 10 visits. 73 Another e-mail, dated October 1, 2007 describes Rocky Goodwin as a PT . . . who assists the start up team
occasionally in an education role in our region. In the e-mail, Area
Manager Liz Regard recommended Goodwin as a resource to help
train staff on the new therapy visit threshold rates based on the
2008 CMS changes.74 The same e-mail went on to request information that would tell us the types of patients that Medicare would
see justification for 6 therapy visits, 14 therapy visits, etc. 75
LHC Group Response to 2008 CMS Payment Changes
In a September 21, 2007 e-mail following the announcement that
CMS was changing its therapy payment structure, LHC Group Division Vice President Liz Starr proposed the Development of new
therapy programs that will now be VERY financially sound but
would not have been in the past PPS reimbursement program. 76
In an April 4, 2008 e-mail to an Arkansas area sales manager
written after CMS altered the therapy payment thresholds, LHC
Group CEO Keith Myers wrote about the need to increase the
number of therapy visits performed by LHC Group in order to increase case mix and revenue:
Its all in the therapy Kevin. Episodes in the 05 therapy buckets have been hit the worst. We have over 70% of episodes in
the 05 bucket since January 1, 2008. We are looking at freestanding agencies in business development that are doing
much better than we are with regard to 2008 case mix and
most of them actually have a pick up under the new rule. The
key is that they have less than 50% of their episodes in the 0
5 therapy buckets. We took a financial hit for any therapy provide [sic] below 10 visits in the past, but under the new system
an episode with 6 therapy visits is better than episode [sic]
with 05 therapy visits. The new 10 visit threshold is actually 6 visits on the low side and 20 visits on the high side. In
other words, once you get to 6 visits, the more therapy visits
provided the better, up to 20 visits. We need to move episodes
out of the 05 buckets and up to the 6 and 79 buckets on the
72 E-mail from LHC Group Area Manager to Rocky Goodwin/LAHCG, June 13, 2007,
LHCGROUPl00046851LHCGROUP 00046852, *LHCGROUPl00046851.
73 LHC Group physical therapist Rocky Goodwin, July 8, 2007, LHC00046855LHCGROUP
00046856, *LHC00046855.
74 E-mail from LHC Group Area Manager to Jessica VanBuskirk, October 1, 2007,
LHCGROUPl00053367.
75 Id.
76 E-mail from LHC Group Division Vice President Liz Starr to Senior Vice President of Operations Don Stelly, September 22, 2007, LHCGROUPl00020460LHCGROUP 00020463,
*LHCGROUPl00020460.
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low end, and look for higher therapy need cases on the high
end.
I think our sales people should be working closely with operations to recruit and employee [sic] more PTs, PTAs, OTs and
COTAs. Sales incentives are driven by admission case mix,
and the only way to get case mix up is to increase therapy utilization. We need to look for opportunities especially within the
OT area, i.e. low vision, etc.77
Similar instructions were issued by LHC Group Division Vice
President of Home Based Operations, Angie Begnaud, who wrote in
a January 18, 2008 e-mail, We want to do more therapy visits.
The point was made by Johnny that we still see our agencies doing
only 1012 visits, when in fact some of these patients we could be
doing 1420 visits if needed. 78
The instructions from LHC Group management to alter therapy
practices in the face of the 2008 PPS changes stood in contrast to
advice offered in an internal company presentation that read, Be
cautious of any deliberate plan to alter therapy practice patterns
in response to a threshold change. Shifts in practice in order to
maximize revenue may draw unwanted attention from Medicare
and are NOT recommended. 79
LHC Employees Pressured to Boost Therapy
Despite LHC Groups claim in its June 4, 2010 letter to the Committee that at LHC, patient decisions are made by the local caregiver and the patients physicianreimbursement is not a factor to
be considered, a number of examples illustrate that therapists and
branch managers at LHC Group were pressured by supervisors to
achieve a higher number of therapy visits.80
An e-mail written by Division Vice President of Home Based Operations Angie Begnaud on April 2, 2008 demonstrates a centralized push from LHC Group management to increase the number of
therapy visits performed. According to the e-mail written by
Begnaud, LHC Group President and Chief Operating Officer Donald Stelly held a conference call to:
stress the urgency of the problem with LUPAs and downgrades, and also the need for our [Directors of Nursing] to communicate with the therapists the problem with projecting visits
and not completing them. The therapist [sic] also need to look
at increasing the number of therapy visits if warranted to
move these patients into the higher therapy buckets. In looking at all 2008 episodes, the company has a 10% LUPA rate
and a 10% therapy downgrade rate for a 20% adjustment rate.
Don has asked for us to have all hands on deck to look at all
open episodes. He also asked that all DONs and BMs report
to the state director weekly on the number of LUPAs and
77 E-mail
from Chairman and CEO Keith Myers, LHC Group, April 4, 2008,
LHCGroupl00048299LHCGROUPl00048300, *LHCGroupl00048299.
78 E-mail
from Division Vice President Angie Begnaud, January 18, 2008,
LHCGROUPl00053618LHCGROUP 00053619, *LHCGROUPl00053618.
79 Therapy Practice in the Refined PPS Environment: Challenges and Opportunities,
LHCGROUP 00047210, LHCGROUP 00047230, *LHCGROUP 00047230.
80 LHC Group Letter to the Finance Committee, Re: Letter of Inquiry dated May 12, 2010,
June 4, 2010.
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downgrades. The last thing that he requested was that by the
end of this week, all DONs and BMs call all of the therapists
that do work for them to re-educate them on the final rule and
to stress the urgency of not having the downgrades, and the
need to really provide the amount of therapy visits necessary
to move those patients into the higher buckets. Presently on
our RAP claims, 47% of our therapy patients are receiving 0
5 therapy visits. This cannot continue to happen and the therapists need to get back with the agency asap after evaluation
to let them know how many therapy visits they will be doing.81
In another example, a top manager of LHC Groups agencies in
Kentucky suggested increasing therapy utilization to get more
profitable. An October 22, 2009 e-mail from LHC Group Kentucky
State Director of Operations Lana Smith to LHC Group employee
Carolyn Cole asked, Considerations to get more profitable: Would
you be able to increase therapy utilization in improve case mix and
Op Margin? [sic] Both of these would improved [sic] financials. 82
An employee in West Tennessee encouraged staff to attend a
teleconference so that we can get the higher paying buckets
FULL. In the e-mail, LHC Group DON/Administrator in West
Tennessee, Kim Bradberry, encouraged staff to attend a MANDATORY teleconference called Therapy in the PPS Final Rule. She
wrote In looking at SVP tools for each [West Tennessee] office yesterday, the greatest % of visits are in the dreaded 05 bucket for
each office. Lets all make a point of attending this, so that we can
get the higher paying buckets FULL . . . we want to be able to say
our 20+ buckets runneth over! :-) 83
Another LHC Group administrator based in Tennessee, Susan
Sylvester, instructed branch managers:
When speaking with your therapists about downcodes, please
discuss front loading of visits. It appears that many of the patients begin to improve and decide to refuse the remainder of
their therapy, go to outpatient, or are rehospitalized. The more
therapy visits weve gotten in before that happens, the better
off we are, as well as the patient. Obviously our goal is to improve the patients overall condition and functionality, however
if we are providing 5 therapy visits or less, we have incurred
all of the expense of the therapy without any of the reimbursement. If the visits are frontloaded, ie 3w4, 2w4, 1w1, we may
be able to get in enough visits early enough to complete (or
nearly complete) our plan of care.84
On the subject of discussions/emails about downcodes, LUPAs
and therapy utilization over the past week or so, Susan Sylvester
said, This is a MAJOR push for Sr. Management at this time, as
well as for all of us, in order to continue to operate successfully. 85
81 E-mail
from Angie Begnaud to Pam Wigglesworth, April 2, 2008, LHCGROUPl00009896.

from Group Kentucky State Director of Operations Lana Smith to Pam Barnett, October, 22, 2009, LCHGROUPl00018983.
83 E-mail
from
LHC
Group
DON/Amin
Kim
Bradberry,
April
18,
2008,
LHCGROUPl00014651LHCGROUPl00014653, *LHCGROUPl00014651.
84 Branch
Manager Pamela Harris e-mail to Susan Sylvester, April 8, 2008,
LHCGROUPl00014716LHCGROUPl00014717, *LHCGROUPl00014716.
85 Id.
82 E-mail
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An LHC Group branch manager who received these instructions
reported a conversation with a company therapist in which the
therapist agreed to frontloading as well as going back after a couple of week [sic] to see if patients are following their exercise program or are functionally declining, in an attempt to raise the number of visits. 86
The post-2007 therapy payment rules had an obvious effect on an
LHC Group agency in West Virginia. The local agency manager
wrote to Becky McCoy, the state director for Ohio/ West Virginia,
[name redacted] now has an understanding of the therapy buckets. He now places his patients [sic] in 6, 10, or 14 visit ranges. 87
A July 8, 2009 e-mail from LHC employee Katy Lebauve to LHC
Group employee Kimberly Gordon stated: You have 20% in the 7
9 therapy bucket range. Please get with the therapists and have
them reeval [sic] those to see if any can or need to be bumped up
please. 88
Additionally, LHC Group managers may have implicitly encouraged higher therapy utilization by discussing the higher revenue of
some therapy thresholds. For example, the LHC Group Division
Vice President Ammy Lee based in Lafayette, LA told an LHC
branch manager in Guntersville, AL after reading the weekly report for December 1, 2009, I see 19 patients in the 1214 therapy
bucket. Were you aware that there is an 18% difference in revenue
between this bucket and the next highest one (1516)? 89
Almost Family
Therapy Metrics
An examination of the therapy metrics suggests that the company was responsive to the incentive changes in the CMS payment
model. As Figure 18 indicates, in 2007, 9.4 percent of Almost Familys therapy episodes received 10 visits while 3.2 percent of the
therapy episodes received 9 visits. In 2008, the number of therapy
episodes that received 10 visits dropped to 5.2 percent. Also from
2007 to 2008, the number of therapy episodes receiving 6 visits increased from 4.5 percent to 6 percent, and the number of therapy
episodes receiving 14 visits increased from 4.6 percent to 6.1 percent.90
86 Id.
87 E-mail from LHC Group Branch Manager Melissa Ayers to State Director Becky McCoy,
October 20, 2008, LHCGROUPl00040048LHCGROUPl00040049, *LHCGROUPl00040048.
88 E-mail from Katy LaBauve to Kimberly Gordon, July 8, 2009, LHCGROUPl00050805.
89 E-mail From LHC Group Division Vice President Home Based Operations to Area Sales
Manager, December 2, 2009, LHCGROUPl00048771LHCGROUPl00048774, *LHCGROUP
l00048771.
90 Almost Family, Therapy Distribution.
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27

for 75 percent of Almost Familys Medicare revenue in 2009 at
$165,489,710. Almost Familys total Medicare revenue for 2009 was
$218,011,583.91 Medicare reimbursements consisted of 77 percent
of Almost Familys revenue in 2009.92
The Committee notes Almost Family had a significant decrease
in the percentage of patients receiving 10 therapy visits per episode
from 2007 to 2008. At the same time, Almost Family increased the
number of patients receiving 6, 14, and 20 therapy visits.93 The
change in the distribution of therapy visits performed by Almost
Family after the implementation of the 2008 PPS rule represents
a behavioral shift similar to that of other home health agencies
within our investigation, some of which implemented aggressive,
top-down programs explicitly instructing employees to target specific therapy visit thresholds. However, none of the documents provided to the Committee by Almost Family show that executives
ever pushed therapists to target thresholds or pursue more profitable clinical regimens.
CMS Must Move Toward Taking Therapy
Out of the Payment Model
Over the last 2 years CMS has taken several steps to address the
overutilization of home therapy episodes.
In a CY 2011 final rule, CMS concluded from data analysis that
the industry may be padding their treatment plans to reach the
higher-paying therapy visit thresholds. Under the rule, CMS modified therapy coverage policies to require stronger documentation,
with the intent to slow the growth of case-mix. Such modifications
include periodic patient function assessments by qualified thera91 Almost
Family Letter, Medicare Reimbursements.

Family Annual Report 2010, page 6, http://almostfamily.ir.edgar-online.com/
EFXldll/EDGARpro.dll?FetchFilingCONVPDF1?SessionID=A7jUF5M1mZimg3h&ID=7757385.
93 Almost Family Response to June 12, 2010 Request to Almost Family, Inc., June 4, 2011.
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92 Almost
28
pists. The rule also requires thorough documentation of therapy
progress with measurable outcomes.94
In the CY 2012 proposed rule released on July 5, 2011, CMS
stated, Our review of HH PPS utilization data shows a shift to an
increased share of episodes with very high numbers of therapy visits. This shift was first observed in 2008 and it continued in 2009.
CMS data also showed that, . . . the share with 14 or more therapy visits continued to increase while the share of episodes with no
therapy visits continued to decrease. The frequencies also indicate
that the share of episodes with 20 or more therapy visits was 6
percent in 2009. This is a 50 percent increase from the share of episodes of 2007, when episodes with at least 20 therapy visits accounted for only 4 percent of episodes. 95
Under the proposed rule, CMS plans to redistribute PPS dollars
from high therapy payment groups to other payment groups including groups with little to no therapy. This change is being proposed
as an attempt to discourage unnecessary utilization of therapy
services.96 The additional steps CMS has taken to crack down on
padding of therapy episodes and the potentially unnecessary utilization of therapy services documented in this report are encouraging. While comprehensive change may take several years to implement, it appears CMSs home health PPS enhancements are
moving in the right direction.
This investigation has highlighted the abrupt and dramatic responses the home health industry has taken to maximize reimbursement under both a 10-threshold model and a 61420 therapy
threshold model. Under the home health PPS, providers have broad
discretion over the number of therapy visits to provide patients and
therefore have control of the single-largest variable in determining
reimbursement and overall margins.
This dynamic was highlighted in an e-mail from LHC Group
CEO Keith Myers to senior executives throughout the firm:
Sales incentives are driven by admissions case mix, and the
only way to get case mix up is to increase therapy utilization.
. . . Take a look at the chart below. This shows you how much
of an impact therapy has on case mix, and case mix is what
determines revenue.97
94 Medicare Program, Home Health Prospective Payment System Rate Update for Calendar
Year 2011; Changes in Certification Requirements for Home Health Agencies and Hospices,
Final Rule, Federal Register 75:221 (17 November 2010), p. 70372.
95 Medicare Program, Home Health Prospective Payment System Rate Update for Calendar
Year 2012, Proposed Rule, Federal Register 76:133 (12 July 2011), p. 40988.
96 Id.
97 E-mail from Chairman and CEO Keith Myers, LHC Group, April 4, 2008, LHCGroup
l00048299LHCGROUPl00048300, *LHCGroupl00048299.
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Another e-mail from CEO Myers stated: I think we can safely

say that higher therapy utilization results in higher absolute margins and higher margins as a percentage of revenue under the current case mix weights. 98 This e-mail was based on an additional
chart circulated at LHC Group that analyzed the payment changes
made by CMS.
MedPAC, in conjunction with the Urban Institute, is developing

an alternative payment model that relies on patient characteristics
rather than therapy utilization to determine reimbursement levels.99 CMS should closely examine any approach that focuses on
patient well-being and health characteristics, rather than the numerical utilization measures. Further, CMS should continue efforts
to assess the efficiency and effectiveness of various post-acute care
settings and the services they provide. This includes the Continuity
Assessment Record and Evaluation (CARE) tool, a standardized patient assessment system intended to measure health outcomes of
post-acute Medicare patients.100
The Committee also looks forward to receiving reports on future
demonstration projects implemented by the 2010 Affordable Care
Act, notably an alternative payment model pilot program for postacute Medicare patients, which includes bundled payments; and
the establishment of the Center for Medicare and Medicaid Innovation (CMI) which is charged with testing innovative payment and
service delivery models to reduce program expenditures and en-
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98 E-mail from LHC Group CEO Keith Myers, May 29, 2009, LHCGROUP 00012744
LHCGROUP 00012746.
99 MedPAC, Report to Congress, March 2011.
100 CMS, Agency Information Collection Activities: Submission for OMB Review; Comment
Request, Federal Register 72:217 (9 November 2007), p. 63612.
30
hance quality of care.101 102 We anticipate these programs will further shed light on the deficiencies within the PPS system and highlight new, innovative reimbursement methods that may encourage
high-quality, patient-centered care, and discourage abuse of the
Medicare program.
101 Patient Protection and Affordable Care Act, Pub L. no. 111148, 3023, 124 Stat 401
(2010).
102 Patient Protection and Affordable Care Act, 3021, 124 Stat 389.
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APPENDIX
SELECT DOCUMENTS CITED IN THIS REPORT
(31)
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Home Health Report Final

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112TH CONGRESS

STAFF REPORT ON HOME HEALTH AND THE

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Printed for the use of the Committee on Finance

STAFF REPORT ON HOME HEALTH AND THE MEDICARE THERAPY THRESHOLD

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STAFF REPORT ON HOME HEALTH AND THE

Printed for the use of the Committee on Finance

U.S. GOVERNMENT PRINTING OFFICE

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For sale by the Superintendent of Documents, U.S. Government Printing Office

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CMS Attempts Reform: Policy Gamed

Report to Congress, March 2011.

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Home health agencies rapidly altered their treatment patterns to

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Report to Congress, March 2011, p. 183.

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Report to Congress, March 2011, p. 183.

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Therapy Episode Distribution, AMEDSFC00000001AMEDSFC00000002.

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Medicare Reimbursement, AMEDSFC00000003.

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Home health episodes with therapy reimbursements accounted

Medicare Reimbursement, GEN 000017.

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