CMS Finalizes 1.9% Boost for Medicare Home Health Reimbursement

CMS has finalized a 1.9 percent, or $390 million, increase in Medicare home health reimbursement in 2021.

The boost in reimbursement is significantly less than the 2.6 percent increase proposed by CMS in June. The proposed rate increase would have added $540 million in Medicare home health reimbursement.

According to a final rule published today on the Federal Register, however, the federal agency will boost reimbursements under the Home Health Prospective Payment System (HH PPS) by 2.0 percent minus 0.1 percent for reductions in the rural add-on percentages mandated by law.

The final rule will also update the home health wage index, which is used to calculate the national, standardized 30-day period payment rate used in the HHS PPS. The update includes the adoption of revised statistical area delineations from the Office of Management and Budget and the implementation of a 5 percent cap on future wage index decreases.

The new HH PPS policies will go into effect on January 1, 2020, and will last through the calendar year.

Additionally, the final rule is seeking to strengthen Medicare and efficiencies in home health by promoting the use of telecommunications technology.

CMS finalized permanent changes to home health regulations that will allow the use of telecommunications technologies when providing care to beneficiaries under the Medicare home health benefit as long as the services delivered through the technologies are included in the care plan.

That means home health agencies can provide remote patient monitoring or other services via a telecommunications system or audio-only technology if the services are tied to the patient’s specific needs as identified in her comprehensive assessment, the agency explained.

In addition, home health agencies will not have to provide a description of how telecommunications technology help to achieve care plan goals as long as clinical documentation in the medical record can justify how the services can facilitate treatment outcomes.

The final rule will also expand the definition of telecommunications technology, in addition to remote patient monitoring, that home health agencies can report as allowable administrative costs on their Medicare cost reports.

CMS intends for the expanded coverage of telecommunications technology to increase efficiencies in furnishing home healthcare. However, the agency warned agencies that the use of the technology cannot replace an in-person home visit that is part of the care plan even if efficiency gains result in changes to the frequencies and types of in-person visits.

The technology also cannot be considered a visit for the purposes of patient eligibly or payment, CMS stated in the final rule.

Other policy updates in the 2021 HHS PPS final rule include updated home infusion therapy services payment rates, which will be based on CY 2021 Physician Fee Schedule amounts, and the retention of the low utilization payment adjustments under the relatively new Patient-Driven Groupings Model (PDGM).

The latter policy has been a point of contention for home health agencies, especially after a Dobson DaVanzo & Associates, LLC study from earlier this year found that the PDGM reduced Medicare home health reimbursement by about 22 percent in 2020.

The reduction resulted in a $1.3 billion reimbursement shortfall largely because of payment cuts implemented by CMS to offset anticipated low utilization payment adjustments that did not end up happening, the research firm stated.

CMS anticipated home health agencies to alter coding and documentation workflows to maximize Medicare reimbursement under the new payment model by, for example, providing extra visits to qualify for the low-utilization payment adjustment.

In reality, the low-utilization payment adjustment rates were much higher than anticipated in the first half of 2020, according to the Dobson DaVanzo & Associates study.

CMS stated in the final rule that it does not have enough data from 2020 to make changes to the low-utilization payment adjustment rates next year.

To view the complete final rule, click here.