Home Health Agencies Receive 2% Update

Regulation | November 04, 2020 | by

On October 29, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2021 home health final rule detailing changes to Medicare payment and policy effective on January 1, 2020. It is published in the Federal Register on November 4, 2020.

Payment Update

The rule establishes a 2.0% payment update for CY 2021 based on the statutory formula. While we recommended that CMS take into account the unprecedented cost of supplies due to the pandemic and increase the payment in response, it was noted that they “do not yet have the claims and cost report data to conduct the analysis needed for a possible add-on payment to account for any increased costs for PPE” but “can examine overall costs once we have complete claims and cost report data for CY 2020”.

Aggregate spending is projected to increase by 1.9% due to the planned reductions to the rural add-on payments as required by the Bipartisan Budget Act of 2018. For 2021, the rural add-in percentages are:

  • High utilization – 0.0%
  • Low population density – 2.0%
  • All other – 1%

For those areas that met the definitions for the three categories for the rural add-on payments, that categorization was set at a point-in-time and is not impacted by the changes to the core-based statistical areas (CBSAs) updated by the Office of Management and Budget (OMB).

Wage Index

The most notable change to the wage index comes as a result of an update to the CBSA categorizations based on OMB’s September 14, 2018 bulletin. This update results in new CBSAs, urban counties that have become rural, rural counties that have become urban, and existing CBSAs that have been split apart. CMS has implemented this change across the various Medicare payment updates throughout this year. This change can cause some areas to have a more significant change than would have otherwise occurred. For areas that see an increase, the full increase will be in effect in CY 2021. For areas that see a large decrease, a 5% cap is applied to the decrease for CY 2021 and then the remainder of that decrease would be factored into the CY 2022 rate update for that area.

Telehealth and Telecommunications Technology

This rule also finalizes regulatory language at section 409.43(a) originating from the COVID-18 interim final rule from March, to state that the plan of care must include any provision of remote patient monitoring or other services furnished via a telecommunications system and that these services cannot substitute for a home visit ordered as part of the plan of care and cannot be considered a home visit for the purposes of patient eligibility or payment. CMS continues to reference statutory impediments to reimbursing home health agencies for telehealth visits. However, LeadingAge, ElevatingHOME, and the Visiting Nurse Associations of America (VNAA) continue to advocate for the passage of the Home Health Emergency Access to Telehealth (HEAT) Act (S.4854/H.R.8677) to provide payments for home health services furnished via visual or audio telecommunication systems during an emergency period.

Timely Submission of RAPs

CMS announced a change to the policies around requests for anticipated payments (RAPs) in the CY 2019 final rule. This included the gradual phase-out of advanced payment for home health periods of care that is effective in 2021. Additionally, RAP submission will be required in 2021, in a slimmed-down form, in advance of the implementation of the new Notice of Admission form for 2022. Though CMS noted that they did not change any policy in the CY 2021 rule, they further clarified the policy related to the payment penalty if the RAP is not submitted in a timely manner, within 5 days of the start of care. They illustrate that with the following example:


  • 1/1/2021 = Day 0 (start of the first 30-day period of care)
  • 1/6/2021 = Day 5 (A “no-pay” RAP submitted on or before this date would be considered “timely-filed”.)
  • 1/7/2021 and after = Day 6 and beyond (A “no-pay” RAP submitted on and after this date will trigger the penalty.)

The payment penalty if a RAP is not timely-filed is calculated from the first day of that 30-day period (in the example, the penalty calculation would begin with the start of care date of January 1, 2021, counting as the first day of the penalty) until the date of the submission of the RAP.  The 30-day payment amount is reduced by 1/30th for each day based on the ‘‘from date’’ on the claim until the date of filing of the RAP.  For example, if an HHA submits their RAP one day late (with submission 6 days after the start of care), the result would be a 20% reduction to the 30-day payment amount.  Additionally, no LUPA payments are made that fall within the late period.