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Medicare Home Health 2021 Final Rule Issued

Jena Weitzer

November 02, 2020

The Centers for Medicare & Medicaid Services issued their final rule for CY 2021, which varies little from the proposed CY 2021 rule. After applying more recent data in the Market Basket Index, the CMS reduced the annual update of payment rates from 2.7% to 2.0%. The proposed rule set the update at 2.7%, using a 3.1 percent inflation update and a .4% productivity adjustment.

Similar to the proposed rule, the final rule shows a small increase in rate update, no difference in the PDGM structure (as it’s here to stay), the planned phasing out of rural add-on, a considerable change in wage index area designations, and a continuance of outlier payment standards.

As all Home Health agencies have been dealing with multiple changes over the last year, 2021 brings a year of limited changes and steadying.

It’s also important to note that the final rule updates the Home Health wage index. It limits any decreases in the geographic area’s wage index value to no more than 5% in 2021. This will apply based on the patient’s residence and has changed drastically to reflect in census updates. There will be no cap on the wage index increases.

Click here to review the complete Medicare Home Health 2021 Final Rule. Download the final rule from the Federal Register here.

Change in Payment Rates for 2021

The final rule adds an estimated $390 million increase for Home Health agencies in 2021. The base 30-day payment rate will now be $1,901.12 up from $1,864.03 in 2020. Home health agencies that did not submit the required quality data will have their rate reduced by 2%.

The LUPA per visit rates are set at:


Key Items to Note:

  • LUPA rates will reduce by 2% for those Home Health Agencies that do not submit required quality data;
  • The LUPA add-on for LUPA only patient continues and LUPA thresholds stay consistent with 2020;
  • The Outlier Fixed Dollar Loss Ration will remain the same at 0.56;
  • The continuation of the rural add-on phase-out;
  • High Utilization areas will receive a 0% add-on;
  • Low Population Density areas will receive a 2% add-on; and
  • All other areas will receive a 1% add-on.

The CMS is still moving forward with their RAP and NOA policy that includes a penalty for RAPs submitted 5 days after the start of episode date. The penalty is a loss in payment from the start of episode until the date of filing. There will be limited exception requests that can be filed due to extreme circumstances.

It is vital for Home Health agencies to create a plan of action internally on how to handle the upcoming changes with RAP claim submission. Mueller Prost has reached out to multiple software vendors to learn the changes they are making within the systems and on their reporting functions. Understanding these changes and partnering with a team that understands the process is crucial to ensure your RAP claims are being submitted within 5 days from the start of the episode date. Mueller Prost has maintained this process for years with the Hospice Notice of Elections and created a full-proof tracking system to ensure all claims are submitted with the necessary guidelines.

The finalization of a more permanent basis of telehealth services with a home health plan of care is the last change to the final rule. This would come without reimbursement change.

The CMS has decided to keep in place the behavioral adjustment that was previously built into PDGM.

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