Home Health & Hospice Week

Rule commenters chastise Medicare officials for discriminatory wage index procedures.

Medicare is taking millions out of HHAs’ pockets with unfair wage index policies, and its newest rule does little to rectify the problem. So say multiple commenters on the 2023 home health payment proposed rule.

Reminder: In the home health rule released June 17, the Centers for Medicare & Medicaid Services pitched the idea of capping negative wage index changes from one year to another at 5 percent for home health agencies. The 5 percent cap is “a permanent approach to smooth year-to-year changes in providers’ wage indexes,” CMS said in the rule published in the June 23 Federal Register. It “increases the predictability of home health payments for providers and mitigates instability and significant negative impacts to providers resulting from changes to the wage index,” CMS claimed (see HCW by AAPC, Vol. XXXI, No. 33).

Plus, “this 5-percent cap on negative wage index changes would be implemented in a budget neutral manner through the use of wage index budget neutrality factors,” CMS added in the rule.

Multiple home health agencies and their representatives were glad to see CMS address the issue of wild swings in wage index values. “It is good to see CMS finally codify this request [for protection against drastic changes] into a permanent regulation,” praises CPA John Reisinger with Innovative Financial Solutions for Home Health in Tampa, Florida, in his comment letter.

University of Pittsburgh Medical Center Home Health Care “supports the CMS proposal to permanently adopt a 5 percent cap on wage index decreases,” says UPMC HHC president Paula Thomas in her comment letter.

Do this: Other commenters want to see bigger protections. “We urge CMS to finalize the permanent cap on home health wage index decreases to 2 percent,” says Katy Barnett of LeadingAge, which merged with the Visiting Nurse Associations of America last year. “Even a 2 percent wage decrease impacts operations,” Barnett stressed in the trade group’s comment letter.

The 2 percent cap is needed, “especially considering the increased inflationary and labor costs HHAs are experiencing in 2022,” says Patrick Conole with the Home Care Association of New York State in his comment letter.

FYI: Hospice commenters requesting a similar reduction in the protection threshold struck out in the hospice final rule issued in July, which kept the figure at 5 percent (see HCW by AAPC, Vol. XXXI, No. 27).

Multiple HHAs and their advocates also asked for CMS to strike the “budget neutral” part of its proposal. “Applying the cap in a non-budget neutral way will ensure that when significant economic downturns occur, all home health agencies will be protected from significant reductions,” Barnett explained to CMS.

Do this: “We request the agency utilize its existing authority to [apply the cap] in a non-budget-neutral manner given the … challenges being placed on providers” right now, UPMC HHC’s Thomas urges.

Big 2022 Wage Index Drop Needs Correction

But CMS is shirking its duty to address bigger wage index problems, multiple commenters charged in their letters.

“CMS proposes no action to address the unfair discriminatory action it took in 2022 in extending the original wage index transitional 5 percent negative change cap for hospitals, but not other health care providers,” blasts the National Association for Home Care & Hospice in its comment letter.

Background: When a big Office of Management and Budget (OMB) Core-Based Statistical Area (CBSA) reorganization caused some areas’ wage indices to drop drastically in 2021, CMS put in place the temporary 5 percent negative change cap. But then in 2022, CMS applied that cap again only to hospitals, so that “home health agencies in certain geographic areas experienced 10 to 20 percent wage index reductions in 2022,” emphasizes Jennifer Elder with the Texas Association for Home Care & Hospice in her comment letter.

“As a result, hospitals have a distinct advantage over home health agencies in relation to staff recruitment and retention competing with home health agencies for many of the same staff,” Elder stresses. “Affected home health agencies have suffered millions of dollars of reduced Medicare payment as a result of the expiration of the wage index reduction cap,” she tells CMS.

“With hospitals subject to a wage index with a 5 percent negative adjustment cap since 2021 and HHAs subject to an index that is significant[ly] different as a result [of ] having no cap in effect in 2022, HHAs will permanently have a markedly different wage index than hospitals while competing with hospitals for the same type of staff,” NAHC criticizes. “The unfairness and predictable impact of that inconsistent action is readily apparent,” the trade group concludes in its letter.

Do this: “CMS should apply the 5 percent wage index reduction cap in 2023 as if it had been applied in 2022 without regard to budget neutrality as it relates to the limited geographic areas affected,” NAHC urges.

Stay tuned to the 2023 final rule, expected in late October or early November, to see whether CMS implements any commenters’ recommendations.

Note: The 84-page proposed rule is at www.govinfo.gov/ content/pkg/FR-2022-06-23/pdf/2022-13376.pdf.