Home Health PPS
Billing Tips

Beginning October 1, 2000, home health services - for hospital based and freestanding home health agencies - will be subject to a new prospective payment system (PPS). The new PPS is case-mix and wage adjusted and relies on unlimited 60-day episodes of care. Payment is based on the 60-day episode for all homebound beneficiaries under a physician's plan of care.

To ensure the proper receipt of payments for home health services, hospitals must understand the new billing rules for the 60-day episode of care. The new HH methodology splits the payment for each episode. Episodes serve as the basis for tracking the claim and, ultimately, the basis for payment.

An episode requires the creation of two bills:

  • The first bill, called a Request for Anticipated Payment (RAP), is developed at the beginning of the episode and is not subject to all requirements for Medicare claims such as the payment floor.
  • The second (and final bill) is submitted at the end of the 60-day episode of care.

Note: An exception is made for episodes in which four or fewer visits are delivered during the entire episode. These episodes are referred to as "low utilization payment adjustments (LUPAs)." These episodes may have only a claim or may have a RAP and a claim billed.

The following checklist items will assist you in understanding and meet the billing requirements imposed by Home Health PPS.

Since Home Health PPS is effective 10/1/2000, all services provided to patients on or after this date must follow the new billing requirements. Interim payments will be made for services through 9/30/2000.

Train staff on the development of the OASIS assessment, including the determination of projected therapy hours. This should also include the treatment goals to be derived from home health care.

Obtain and train staff on the use of the grouper software that provides the HIPPS code to be included on UB-92 bill. Generally, grouper software is incorporated in the software package supporting OASIS assessment, including HAVEN, the free OASIS software package that HCFA makes available to the public.

Obtain and verify beneficiary eligibility including secondary insurance and the source for transfer into a home health plan of care.

Bill for each 60-day episode. The process generally starts with the submission of the RAP which can be submitted using a UB-92 bill for each 60-day episode as soon as the first billable service has been delivered.

Proceed with timely preparation and submission of the initial bill or RAP. This is an important step because it also opens the episode of care within the Common Working File (CWF), allowing the provider to "claim" the beneficiary for the 60-day period.

Check to see that some of the following items in the RAP are handled correctly:

  • Use 322 - Type of Bill (form locator 4) for RAP submission only. Do not use Type of Bill codes 325 or 335. RAPs can be cancelled (TOB 328), but not submitted as adjustments.
  • Indicate the start of care date (first billable service date) in several fields: Admission (form locator 17); Statement Covers (please note - "From and Through" dates are the same); and Service Date - this is the date indicated on the line item containing revenue code 0023.

Note: If the episode is subsequent to a prior initial episode, the admission date will remain the same as the first episode for all episodes in a period of continuous care. The statement covers dates will change to represent the first day of the episode, rather than the first billable service (i.e., for a second episode, Day 61 after the first 60-day episode has been completed); however, the line ite 0023 date will remain the first billable service in that episode.

  • Use "0023" Revenue Code (form locator 42) to indicate that HIPPS code output by the Grouper follows. Indicate HIPPS rate code and post in the HCPCS/Rate Column (form locator 44). Note: The Total Charge (form locator 47) must be zero dollars whenever the revenue code 0023 line item appears). Report Revenue Code 0001 -Total Charges on line 23 with zero dollars in the charge column. only one 0023 revenue code line is reported on the RAP. This is the only detail line item required for Medicare billing of the RAP.
  • Obtain and report HIPPS codes for the episode which usually must be reported on the claim at the end of the episode. These are developed from the OASIS assessment along with the projected therapy hours.
  • Report any of the approved NUBC codes for Source of Admission (form locator 20). Note: New codes were added: B - Transfer from another HHA; and, C - Discharge and Readmission to the same HHA. This field is required for both RAPs and claims. The same code should be used for RAP and the claim of the same episode.
  • Report the Unique Physician Identification Number (UPIN) along with the name of the physician in the Attending Physician block (form locator 82).
  • Indicate MSA location code using Value Code 61.

Obtain copies of all Program Memorandum related to HHPPS, including those outlining additional details of billing instructions:

Transmittal AB-00-65 dated June 2000 for general information

Transmittal A-00-41 dated July 2000 for the transition from the interim payment to the new prospective payment system

Transmittal A-00-59 dated August 2000 for phase-in payments and contingency plans at the beginning of home health PPS

R296HHA dated August 2000 for comprehensive billing instructions for the HIM11 (Medicare Home Health Manual)

parallel instructions for MIM (Medicare Intermediary Manual) to follow in September 2000

other detailed instruction updates (as issued)

All materials can be found on CMS's web site at

Claims may be submitted either at discharge or the end of the episode. Use Type of Bill code 329 Final Claim for a Home Health PPS Episode. While claims may be submitted in accordance with current timeliness requirements, failure to submit a claim within 60 days of the latter of either the end of the episode or payment of the RAP will result in recoupment of the payment for the RAP.

  • Provide line item detail on all services provided - includes revenue code, HCPCS, line item Dates of service, associated Service Units, and service line Total Charges. Specific requirements may vary depending on revenue code, type of episode, etc.
  • Include MSA location code in Value Code section using code 61 to denote MSA number. If the MSA has changed over the course of the episode, report the MSA at the end of the episode on the claim.
  • Make sure you have readily available documentation containing verbal physician orders prior to submission of the RAP and signed physician orders prior to submission of the claim.
  • Report the HIPPS line item from the RAP (alphanumeric code) in form locator 44 on the UB-92 and any other HIPPS that may have resulted from re-assessment of the patient during the episode if required by Medicare billing/payment policy.
  • Report the same Source of Admission code on the RAP and the claim for the same episode.
  • Report Patient Status code. Make sure you utilize the new codes as indicated in the above section on initial claim when the beneficiary is transferred from your HH agency to another during the 60-day episode; or when the beneficiary is discharged with their goals were met, but returns to the HHA during the same 60-day episode.
  • New Billing Requirements include entering of a special treatment authorization number (eighteen characters) made up of the Start of Care Date; Assessment date; and assessment reason code.

Familiarize staff with the rules that could change the handling of claim during a 60-day episode, including:

  • Beneficiary elects to transfer to another home health facility
  • A significant change in condition (SCIC) occurs resulting in a new case-mix assignment
  • Earlier discharge due to the reaching of the treatment goals outlined in the original plan of care
  • The minimum number of HH visits is 4 or less resulting in a "Low-utilization payment adjustment" (LUPA)

Train staff on the handling of services that are subject to consolidated billing (Note: Home Health consolidated billing will be implemented on October 1, 2000), including the handling of:

  • Medical supplies 1
  • Medical services provided by interns/residents of a teaching hospital
  • Certain services requiring specialized equipment from hospitals, SNFs, rehabilitation centers



1 The inclusion of medical supplies in the PPS rate for chronically-ill patients is one of a number of outstanding policy concerns about payment for home health care that the AHA has. We will seek to have these concerns addressed in legislative and regulatory forums, as appropriate.




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