On June 25, 2020, the Centers for Medicare & Medicaid Services (“CMS”) announced its proposed Home Health Prospective Payment System Rule, for calendar year 2021 (the “Rule”), which aims to increase home health agency Medicare payment rates.  This Rule also includes a provision to make permanent the regulatory changes related to telecommunication technologies in providing care under the Medicare home health benefit beyond the expiration of the COVID-19 public health emergency (“PHE”), which is set to time out at the end of July 2020.

According to the National Association for Home Care & Hospice (“NAHC”) President William A. Dombi, there were limited changes introduced in the Rule, and this serves as a welcomed form of relief for home health agencies working through the transition to the fairly new Patient-Driven Groupings Model (“PDGM”), discussed in our previous blog post, all while grappling with the impact of the PHE on the industry.  Notably, however, of the major reimbursement changes proposed by the Rule, including updates to home health agency Medicare payments and home infusion therapy payments, the Rule did not include any favorable reimbursement adjustments for telehealth services—services that recently skyrocketed in the industry due to the PHE.  As explained in further detail below, while CMS intends to make permanent the use of technology allowed during the PHE, telehealth cannot act as a substitute for in-person visits or qualify for reimbursement.

The Rule was published in the Federal Register on June 30,2020 and comments are due to CMS by 5:00 pm on August 31, 2020.

The key takeaways of the Rule are as follows:

1. Home Health Provider’s Use of Telehealth Services Are Here To Stay.

In an effort to promote efficiencies, CMS proposes to make permanent, beginning January 1, 2021, the changes to the home health regulations regarding the use of telehealth services initiated in light of the PHE, yet providers would still be required to provide the virtual care without a carved out reimbursement method.  In particular, the Rule makes permanent the looser restrictions on home health providers’ use of telehealth, such as remote patient monitoring.  It is important to note that, the technology must be outlined in the care plan, tied to a specific treatment goal and related to the skilled services being provided.  CMS explained that the costs of telehealth services would then be allowed as “administrative costs on the home health cost agency report” beyond the PHE.  For the roughly 11,200 home health agencies registered with Medicare, many, if not all, are likely disappointed to learn that telehealth services cannot be used as a substitute for a planned in-person home visit, nor can be considered a home visit for the purposes of patient eligibility or reimbursement.

These proposed changes are one of the first telehealth flexibilities provided during the PHE that CMS is proposing to make a permanent part of the Medicare program, and are vital to ensuring patient access to the latest technology.  Therefore, despite the issue of lack of reimbursement for telehealth services, providers are still hopeful that the Rule, once finalized, will serve as an incentive to boost more support for remote care beyond the public health crisis that may eventually lead to more telehealth flexibilities in the home health industry.

2. Home Health Prospective Payment System (HH PPS) Update.

The Rule would also update the home health prospective payment system (“HH PPS”) payment rates and wage index for calendar year 2021.  In doing so, CMS’ proposed HH PPS policies stated in the Rule would result in a 2.6% increase (roughly $540 million) in Medicare payments to home health agencies, compared to last year’s increase of only 1.3%.  According to CMS, this increase considers the effects of the proposed 2.7% percent home health payment update percentage ($560 million increase) and a 0.1% decrease in payments due to reductions made in the rural add-on percentages mandated by the Bipartisan Act of 2018 for 2021 ($20 million decrease).  Moreover, this Rule proposes to update the home health wage index by limiting any decreases in a geographic area’s wage index value to no more than 5% in 2021.

3. Home Infusion Therapy Service Update.

In addition to making certain telehealth changes permanent and increasing the Medicare home health reimbursement rate, the Rule updates the 2021 home infusion therapy services payment rates using the CY 2021 Physician Fee Schedule amounts and amends regulations to exclude home infusion therapy services from home health services.  Specifically, the Rule finalizes changes to the home health infusion therapy benefit established by the 21st Century Cures Act (“Cures Act”),  which allows Medicare beneficiaries to receive drugs intravenously or subcutaneously at home, to be implemented by January 1, 2021.  CMS further notes that, the home infusion therapy services benefit is intended to be a separate payment that covers professional services; training and education that are not covered under the Durable Medical Equipment (“DME”) benefit; and monitoring and remote monitoring services for providing home infusion drugs, and thus, is excluded from coverage under the home health benefit.  Lastly, CMS did not make any policy changes to those announced in last year’s final rule.

Other proposed changes include the elimination of a provision that requires new home health agencies to transmit test data to the Quality Improvement & Evaluation System or CMS OASIS contractor as part of the initial process for becoming a Medicare-participating home health agency, and a scheduled phasing out of the rural add-on.  The Rule does not outline any changes to the structure of the PDGM.