CY2021 Home Health Proposed Rule Review


The CY2021 Home Health Proposed Rule was released by CMS on June 30, 2020, with a comment period ending on August 31, 2020. The rule includes routine updates to the home health payment rates as well as a proposal to make permanent the regulatory changes related to telecommunications technologies in providing care under the Medicare home health benefit beyond the expiration of the coronavirus public health emergency.

Guest blogger John Reisinger, CPA, Principal of Innovative Financial Solutions for Home Health offers an in-depth summary of the proposed rule as well as information on how you can (and should) participate in the rule-making process by submitting your comments to CMS.

The Rule Making Process

The rule making process is what occurs to get a Proposed Rule finalized. For Medicare, CMS is the agency that proposes a rule, like the Proposed HH PPS Rule for CY2021. CMS puts the rule out via the Federal Register so that it can be reviewed by all stakeholders and interested parties who have an opportunity to comment on said rule. Unfortunately, participation by the stakeholders and interested parties of home health has been very scant over the years. For example, when rebasing was proposed back in 2014 (the biggest proposed change since the inception of PPS at that time), there were only 100 comments submitted at a time when there were well over 12,000 HHAs, plus all the associations, vendors, consultants, attorneys, etc… that primarily call home health their primary work focus. Commenting on significant proposed changes is one of the most beneficial advocacy activities you can do for this industry. Do your associations, vendors, EMRs, consultants, attorneys, leadership team, etc… submit comments to the proposed rules?  If yes, they truly do advocate for this industry. Be sure to thank them!  If no, you might ask them why not, especially if they hold themselves out as industry advocates.

The way to potentially be able to make meaningful impacts on a proposed rule (prior to it going final) is twofold:

  1. The submission of high-quality comments (not cut-and-paste as has been recommended by too many), and
  2. Increasing the volume of comments submitted; but again, not via cut-and-paste (cut-and-paste comments just detract from the value of the original comment).

These proposed changes impact your livelihood, so it’s worthwhile to get involved and submit comments. You can pick and choose what topic or topics you want to comment on (and you can even do so anonymously). Every year there are a few topics worthy of comment, and in some years (like with last year’s change over to PDGM), there’s a multitude of topics to comment on. Currently, I see three topics worthy of comment this year: 1) Telehealth/Remote Patient Monitoring (which I think almost all should comment on), 2) the Outlier Provision (again, I think almost all should comment on) and 3) the changes proposed to the Home Health Wage Indices (see the following).

  • 34 Urban counties are proposed to be changed to Rural status
  • 47 Rural counties would change to Urban
  • 31 Urban counties would change name or CBSA #, and
  • 19 Counties would change to a different CBSA

All these changes will trigger a change in the wage-index for all services in these areas, and many of these changes will be negative (meaning reduced reimbursement rates). In fact, some of these reductions would be so significant that CMS is proposing to implement a 5% cap on the amount an area’s wage index could be reduced in CY2021 (but, it could be even worse in CY2022 – because no such cap for CY2022).

Another potential area to comment on would be “The Use of Technology under the Medicare Home Health Benefit.”  This is all about telehealth/remote patient monitoring. Whereas CMS is proposing to consider these costs as allowable administrative costs going forward (historically considered non-allowable costs), CMS is still not enabling the home health industry to treat telehealth/remote patient monitoring visits as allowable chargeable visits (meaning that they would count against the LUPA Threshold). A comment that I believe everyone in the industry could get behind and should submit could be something like:

I/we are requesting that CMS put the home health industry on par with other segments of Medicare (e.g., hospitals, doctors, outpatient PT entities, etc…), and allow the home health industry to:

  • Attribute the costs of providing telehealth/remote patient monitoring to the disciplines involved (a lesser desire), and
  • Be able to treat the telehealth/remote patient monitoring visits as allowable chargeable visits as part of the Medicare Home Health Benefit (the BIG wish)

The rule making process is available to us whenever CMS proposes any type of regulatory and/or reimbursement changes that are considered materially significant to our industry. The CY2021 Home Health Proposed Rule was published at the Public Inspection Desk of the Federal Register on Thursday, June 25, 2020 (and published in the Federal Register on Tuesday, June 30, 2020). For this Proposed Rule, stakeholders and interested parties (and if you are reading this, you are one) have until 5:00pm on Monday August 31, 2020 to submit your comments for those comments to be considered by CMS in the development of the final HH PPS Rule for CY2021.

The easiest way to submit comments is via the electronic portal identified in the Federal Register. This is the link to where you can submit your comments (and you can write them here directly and/or write them up in a Word document and drag and drop that as well)Docket Folder Summary. Just click on the Comment Now button on the webpage:

As previously noted, you can type your comments there, or if you scroll down the page a little bit you can see the tools to allow you to drag-and-drop a saved Word or .PDF document.

Let’s try and get a few 1,000 comments submitted this year. There are certainly topics worthy of consideration.


Initial Review of CY2021 Home Health Proposed Rule

Following are my thoughts and comments based on my initial review of the Home Health PPS Proposed Rule for CY2021. Caveat: the following is based on my review of § III. of the Proposed Rule (Home Health Prospective Payment). This is where the vast majority of changes are identified. However, there are two other sections with some changes:

§ IV, which discusses A) HH QRP (but no changes proposed) and B) Proposed Change to the Conditions of Participation (CoPs) OASIS (not initially reviewed or commented on as I am a CPA, and financially and operationally oriented and this would seem to be primarily clinical in nature), and

§ V. Home Infusion Therapy (also primarily clinical in nature).

Overall, I think it’s a pretty passive proposal, considering the hits that we as an industry have been taking for the last 15+ years. There is no “Nominal Change in the Case-Mix Weight Adjustment” proposed here in year two of PDGM. This is kind of surprising since the average case-mix weight identified so far for CY2020 appears to be much higher than what CMS had originally envisioned. This is big, because this has been the cause of very significant cuts in the past, and it is something we will need to be on the lookout for going forward.


LUPA Thresholds, Add-Ons, and Case-Mix Weights

CMS is proposing no changes in CY2021 for the LUPA thresholds, the 432 case-mix weights or the LUPA add-on factors.  CMS identified that it did not feel that it had an adequate amount of data to consider changes to any of these areas for year two of PDGM (CY2021).


Proposed Changes to the Home Health Wage Index

There are some significant home health wage index changes proposed:

  • 34 Urban counties are proposed to be changed to Rural status (see Table 3 for details)
  • 47 Rural counties would change to Urban (see Table 4)
  • 31 Urban counties would change name or CBSA # (see Table 5), and
  • 19 Counties would change to a different CBSA (see Table 6)

All these changes will trigger a change in the wage-index for all services provided in these areas, and many of those changes will be negative (meaning reduced reimbursement rates). In fact, some of these reductions would be so significant that CMS is proposing to implement a 5% cap on the amount an area’s wage index could be reduced in CY2021 (but, it could be even worse in CY2022). Some areas will undoubtedly benefit from these changes (meaning an increase in the wage index), but others will be hit fairly hard in CY2021 (reductions up to 5%), and could also face significant reductions in CY2022 as the wage indices are reduced to that new rate (and these reductions could exceed 5% in CY2022). These changes will be county specific.

The proposed (net) market basket update for CY2021 is a 2.7% increase. Agencies not submitting the required quality data will see their market basket opdate reduced by 2%; down to +0.7%. Therefore, based on the calculations for the CY2021 National, Standardized 30-day Payment Rate and the LUPA rates, these amounts will increase by approximately 2% for CY2021.

Agency owners/operators need to understand that the 2.7% increase that CMS identifies for CY2021 is for all of home health spending and not for any specific home health agency. So if you expect that you will see a 2.7% increase (or whatever the % change is that CMS identifies), you are rolling the dice with your future Medicare revenues because that’s not guaranteed for any agency. It’s just the average for the entire industry. The only way to identify what the impact would likely be for your agency would be to analyze that yourself (or outsource it to someone that knows how to do it). I have seen agencies saddled with double-digit reductions to their reimbursement rates when the industry overall was receiving an increase in home health spending.


The Rural Add-on

The rural add-on is going to continue in accordance with what was identified in last year’s (CY2020) final rule. See the following:


Changes to the RAP Process

Another set of changes that are proposed to occur in CY2021 as was proposed in the CY2020 home health final rule has to do with the Request for Anticipated Payment (RAP):

  • The RAP payment will be eliminated starting for all 30-day payment periods that begin on/after Jan 1, 2021; and what the agencies will now be submitting will be called a “No-Pay RAP”.
  • Beginning on Jan 1, 2022, a Notice of Admission (NOA) will replace the No-Pay RAP.

Penalty for Late Submission of RAP

  • A financial penalty will become applicable to all 30-day payment periods that start on/after Jan 1, 2021:
    • The penalty would be applicable each time a No-Pay RAP (or NOA) is submitted later than the 5th day of services (i.e., the SoC date + 4).  A No-Pay RAP (or NOA) submitted on days one through five of the 30-day payment period would NOT incur a penalty.
    • The penalty would be based on a factor of 30 (the number of days in the payment period), which would be the denominator in the calculation.
    • The numerator of the calculation would be the number of days into the episode the No-Pay RAP (or NOA) is submitted.
    • Following are a couple of examples of the financial penalty calculation:
      • For a RAP submitted on day six, a 20% penalty (6/30) would apply (meaning your PPS payment rate would be reduced by 20%), and
      • For a RAP submitted on/after day 30, a 100% penalty (30/30) would apply (meaning your PPS payment rate would be reduced by 100%: i.e., no payment!)
  • But, as noted in the CY2020 Home Health Final Rule, the documentation requirements for the No-Pay Rap (and NOA) will be lessened since there’s no reimbursement associated with the RAP (or NOA). See the following as excerpted from the CY2020 Home Health Final Rule:


The Outlier Provision

Another area not proposed to see any significant changes for CY2021 is the outlier provision. However, it’s this provision that I see as problematic to the home health industry in general. Simply put, if the outlier provision was eliminated, every agency would realize an increase of 2.5% in their reimbursement rate for every 30-day payment period, but would not receive an outlier payment on any 30-day payment period. Most people worry about losing the outlier payment, not realizing they would likely realize more in home health reimbursement over the year by obtaining an increase of 2.5% on all 30-day payment periods!

This is because the national, standardized 30-day payment rate is reduced by 5% to fund the outlier provision. However, there is a cap of 2.5% for outlier spending, creating a 2.5% discrepancy. This 2.5% discrepancy is monies allocated to home health every year that just vanishes,  providing no benefit to home health. This 2.5% discrepancy amounts to approx. $450 million per year (give or take), and this discrepancy has existed since CY2011 (CY2021 will be the 11th year)! Therefore, this is an area (of the outlier provision) that I think everyone should review (I could help for a nominal charge) to see how they have historically been impacted by this situation, and if you lost net reimbursement because of it (which, I believe that 95%+ of all HHAs have been negatively impacted by this provision), I would recommend that you use your right to participate in the rule-making process and submit a comment requesting that the outlier provision be eliminated from HH PPS and the 5% withheld to fund the outlier provision be restored to the national, standardized 30-day payment rate.


Telehealth/Remote Patient Monitoring

The last area I’ve reviewed was all about telehealth/remote patient monitoring. There certainly are some changes proposed, but most were occurring even without the coronavirus pandemic.  Telehealth/remote patient monitoring has been an allowable activity in home health for ages. There’s a common misconception across the industry that our ability to use telehealth is new, and that is plain wrong! The organization I was with 20 years ago was utilizing telehealth to some degree of success.  What is changing (and was going to change even if the pandemic never occurred) is that CMS is now proposing to allow the costs associated with telehealth/remote patient monitoring to be considered as an allowable administrative costs on the cost report (would be included on line 5 of the current cost report). Twenty years ago it was a non-allowable cost, just like marketing was then and still is today.

Being able to treat telehealth/remote patient monitoring costs as allowable costs is a positive step. It’s still a far cry from what many other segments of Medicare are entitled to.  Many other segments of Medicare (e.g., hospitals, doctors, outpatient PT facilities, etc…) are able to utilize telehealth/remote patient monitoring and treat it as an allowable and reimbursable patient encounter; unfortunately, we in home health are not treated the same. Additionally, the use of telehealth/remote patient monitoring must be included on the Plan of Care (POC). See the following as extracted from the Proposed Rule:

“the POC MUST include any provision of remote patient monitoring or other services furnished via a telecommunications system AND describe how the use of such technology is tied to the patient-specific needs as identified in the comprehensive assessment and will help to achieve the goals outlined on the POC.”

This seems reasonable, to an extent. But, how much documentation is considered reasonable compared to how much is considered inadequate?  Subjectivity could come into play here and I think we all remember/know how subjectivity impacted Face-to-Face!

But, in-spite of the restrictions on the overall allowability of telehealth/remote patient monitoring, I do feel that this is a positive first step for the home health industry. The next step would be to wind-up industry participation in the rule-making process on this issue and get thousands  of industry stakeholders and interested parties to submit a comment on telehealth/remote patient monitoring, requesting that CMS put the home health industry on par with other segments of Medicare (i.e., hospitals, doctors, outpatient PT entities, etc.), and allow the home health industry to:

  • Attribute the costs of providing telehealth/remote patient monitoring to the disciplines involved, and
  • Be able to treat the telehealth/remote patient monitoring visits as allowable chargeable visits as part of the Medicare home health benefit.

So all-in-all, a very pleasant CY2021 Home Health Proposed Rule as compared to year’s past. However, it does plant some seeds of concern for next year.


Want to Learn More? Join Our Upcoming Webinar!

On August 20th, John will join us for a free webinar to discuss the CY2021 Home Health proposed rule, including the various proposed updates and the projected impact on home health, all the way down to the agency level. He’ll discuss:

  • Significant issues and changes in the proposed rule
  • Preparation tips for the proposed changes
  • How the rule-making process works
  • Opportunities to positively impact our own industry, specifically in regards to telehealth/remote patient monitoring

Click here to register!


About John Reisinger, CPA

For more than 20 years, John Reisinger, CPA, Principal of Innovative Financial Solutions, has been an industry leader in education about the CMS rule-making process. His diverse background includes Medicare auditor, home health financial executive, and he currently serves as a highly in-demand home health and hospice consultant. John is a strong advocate for the home care industry, regularly participating in public speaking engagements across the country. Additionally, John is the industry leader working to bring back the sound financial and operational fundamentals long missing from our industry.

2020-08-07T12:00:10+00:00
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