November 17, 2020

2021 Home Health Agency Medicare Rate Updates

By Scott Manson, Managing Director, Advisory Services

2021 Home Health Agency Medicare Rate Updates Healthcare

In the November 4, 2020, Federal Register, the Centers for Medicare and Medicaid Services (CMS) released the calendar year 2021 Home Health Prospective Payment System Rate Update Final Rule. After the 2020 transition year, 2021 will become the first full year during which all Medicare episodes will be reimbursed under the Patient Driven Groupings Model. The 2021 national standard episode and per payment visit amounts are increased by 2.0%. CMS estimates this will result in increased payments of approximately $390 million in 2021.

The final rule makes no change to case-mix rates or low utilization payment thresholds from 2020. The wage indices used to adjust the rates based on geographical differences in wages receive a major update for 2021. Similar to other payment systems, no county’s wage index will decrease by more than 5% from its 2020 wage index. Certain counties will change from urban to rural, or rural to urban, and others will change their core-based statistical area (CBSA) number or name. In 2021, the rural add-on for counties designated as high utilization density will be zero, low population density will be 2.0%, and all other rural designations will be 1.0%.

Interestingly, the county-specific density designations carry over from 2020 into 2021 and 2022. The designations do not receive updates based on the 2021 wage index CBSA changes. The result is that some counties will be designated as urban areas and will continue to receive rural add-ons.

Beginning in January 2021, payments will no longer be made with requests for anticipated payments (RAPs) for any agencies regardless of certification dates. No-pay RAPs with less information are required to be filed timely within five calendar days of the start of care. A late submission penalty equal to 1/30 of the episode rate will be assessed for each day the no-pay RAP is late. For example, if it is submitted on the sixth day after the start of care, it will be considered six days late. The penalty will be 6/30 of the episode payment which is equivalent to a 20% reduction in reimbursement. The combination of no payment with RAPs and the possible late payment penalty is something agencies should monitor closely with their cash flow.

The final payment rule also provides information on the home health quality reporting requirements, home infusion therapy services and supplier enrollment requirements, and home health value-based purchasing model data submission requirements. The final rule confirmed changes that agencies should be aware of, while continuing to monitor cash flow. Marcum’s Healthcare Industry webpage has home health rate calculation tools and other resources available to the home health industry.

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