Home Health & Hospice Week

Mid Atlantic agencies win, New England agencies lose under new OMB system.

Are you ready to see your rates cut 4 percent next year? That’s what could happen if you’re one of the losers in the wage index revamp scheduled for January.

Recap: The Office of Management and Budget issued an April 2018 Bulletin, No. 18–03, which established revisions to the delineation of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, the Centers for Medicare & Medicaid Services notes in its 2021 proposed payment rule for home health published in the June 30 Federal Register. Now CMS is implementing the changes.

Result: Under the OMB restructuring, 34 counties (and county equivalents) that are currently urban would become rural beginning in CY 2021, and 47 counties would go the opposite way, rural to urban, CMS details in the rule. Nineteen counties would move from one CBSA to another, and 31 would change their CBSA name or code.

In the past, CMS has phased in wage index changes over multiple years. But this time, the agency wants to limit drastic swings by capping any decreases in wage index at 5 percent, the rule says. This “transition policy” should “help mitigate any significant negative impacts that home health agencies may experience,” CMS contends.

Bonus: There is no proposed cap on wage index increases, points out the National Association for Home Care & Hospice in its rule analysis.

HHAs would have to transition to the full change in 2022, however. “A one year 5 percent cap provides home health agencies sufficient time to plan appropriately for CY 2022 and future years,” CMS believes.

The wage index changes give finance expert Mark Sharp heartburn, he says. “Some locations will take a pretty good hit,” warns Sharp with BKD in Springfield, Missouri.

If you are in one of the areas with a 5 percent reduction, that will mean about a 4 percent cut to your rates overall, Sharp points out, since 76 percent of the payment rate is the labor portion adjusted by the wage index. A 4 percent drop “is pretty significant for an agency in this climate,” Sharp tells Eli.

That drop will be mitigated by the proposed 2.6 percent increase overall, but may be exacerbated by factors such as LUPA rates, case mix, loss of the rural add-on, and more.

Overall, HHAs in the New England region will see the biggest hit from wage index changes, CMS indicates in the proposed rule. Agencies in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont will see a 1.1 percent decrease due to wage index changes, a 0.1 percent decrease due to the 5 percent cap, and another 0.1 percent decrease due to rural add-ons phasing out. That equals only an average 1.4 percent rate increase for them, CMS says in its impact estimate.

On the flip side, CMS predicts HHAs in the Mid Atlantic region of Pennsylvania, New Jersey, and New York will see a 3.4 percent average rate increase due in part to a 0.5 percent increase in wage index values under the changes, according to the proposed rule.

Note: Specific counties changing designations are in Tables 3-6 of the rule at www.govinfo.gov/content/pkg/FR-2020-06-30/pdf/2020-13792.pdf. A link to an Excel document with specific values for each wage index area is at www.cms.gov/center/provider-Type/home-Health-Agency-HHA-Center under the “Spotlights” section.