Home Health & Hospice Week

Where does your area fall in the wage index reshuffle?

The 5 percent cap on wage index decreases in 2021 — but no such cap on increases — is good news for scores of counties across the U.S.

Background: Under an Office of Management and Budget wage index area restructuring announced in April 2018, 34 counties (and county equivalents) that are currently urban will become rural beginning in calendar year 2021, and 47 counties will go the opposite way, rural to urban, the Centers for Medicare & Medicaid Services details in the 2021 home health payment proposed rule published in the June 30 Federal Register. Nineteen counties will move from one Core-Based Statistical Area to another, and 31 will change their CBSA name or code. (For more on the rule’s wage index provisions, see Eli’s HCW, Vol. XXIX, No. 26-27.)

Winners: The county that will see the biggest increase, at a whopping 32.68 percent, is Madison County, Virginia, according to wage index analysis by Dave Macke with VonLehman & Co. in Fort Wright, Kentucky. It moves from a rural county status to the Washington-Arlington- Alexandria, DC-VA Core-Based Statistical Area designation (CBSA 47894), Macke points out.

Other counties with sharp increases 20 percent or higher are Granville County, NC; King and Queen County, VA; and Anson County, NC (see chart, p. 229).

Losers: Decreases are much more moderate, thanks to the 5 percent cap on them. Fifty-five counties will see a 5 percent drop in wage index, and more than 200 counties will see a drop in the 3 and 4 percent range.

The bad news is that counties capped at the 5 percent decrease will take the full reduction next year, when CMS fully adopts the new OMB designations, the proposed rule says.

Reminder: The wage index, whether higher or lower, applies to the 76 percent of the payment rate that is the labor portion adjusted by wage index, explains Mark Sharp with BKD in Springfield, Missouri. For agencies seeing the full 5 percent drop in wage index, that will translate to a 4 percent drop in their rates before other factors such as the inflation update and rural add-on.

CMS doesn’t include the rural add-on in its wage index table this year, Macke points out. So you’ll have to calculate whether you are still receiving an add-on and how much it will add yourself.

Recap: In 2021, HHAs in “high utilization” rural counties will receive no add-on; HHAs in “low population density” rural counties will see a 2 percent add-on, and HHAs in all other rural counties will see a 1 percent add-on.

Overall, 1,810 counties or county equivalents will see an increase in 2021, and 1,447 will see a decrease, Macke notes. “There are more increases than decreases,” he tells Eli.

Note: Specific wage indices are in an Excel document at www.cms.gov/center/provider-Type/home-Health-Agency-HHA-Center under the “Spotlights” section. A file of the rural add-on county designations is in the “Downloads” section at www.cms.gov/medicaremedicare-fee-service-paymenthomehealthppshome-health-prospective-payment-system-regulations/cms-1730-p. It hasn't been updated with the new OMB categories.