Proposed Medicare Home Health Payment Rule: Impact on Rural Providers
August 5, 2014 03:24 PM
The proposed rule regarding home health prospective payment for 2015 issued by CMS on July 2, 2014 will have a unique impact on some rural providers. The cause of the impact centers on the rate adjustment that is made to reflect differences in wages among geographic areas and the application of a 3% rural add-on to the payments when the patient resides in an area designated as rural.
If finalized, CMS will apply a wage index adjustment that uses a 50/50 blend of 2014 and 2015 geographic area designations, otherwise known a Core Based Statistical Areas (CBSA). The reason for the blend is to provide a smoother transition to the new CBSAs that were approved in 2013 by the Office of Management and Budget (OMB) that are based on 2010 census data. In the 2006 Medicare payment rates, CMS also used a 50/50 transitional blend when OMB devised the CBSAs to replace the previous Metropolitan Statistical Areas (MSAs).
The switch to the new CBSAs means that 105 counties currently designated as rural would change to urban status. In addition, 37 urban counties would change to rural status. That means that HHAs serving the formerly rural counties will lose the 3% rural add-on with episodes that end January 1, 2015 and later. CMS confirmed that it intends to apply the rural add-on based on the 2015 CBSA designation even though it will use a 50/50 blend of 2014 and 2015 wage indexes.
The affected counties are set out in TABLE 13 and TABLE 14 in the Notice of Proposed Rulemaking can be found here.
While not wholly related to this change, CMS estimates that rural home health agencies will experience a greater reduction in 2015 payments (-0.5%) than urban agencies (0.2%) in comparison to 2014. That is a strong indication that the rural add-on loss in 105 counties is not offset by a comparable gain in the 37 newly rural counties.
The loss of the rural add-on will occur in various counties located throughout the country. Counties in 37 states will lose the rural add-on while counties in 18 states will gain it. CMS does not directly control the areas designated as rural and urban. However, it does control when it adopts any new OMB approved geographic designations, the use of a blended transition approach to wage index application, and the determination of whether to apply the rural add-on to both years of a transitional period.
NAHC intends to submit formal comments in the rulemaking process advocating for the application of the rural add-on in any county that is designated in the 2014 and 2015 CBSA standards.