[Updated] CMS Finalizes 1.9% Home Health Rate Increase for 2021, Keeps PDGM’s Behavioral Adjustment

The U.S. Centers for Medicare & Medicaid Services (CMS) issued its final 2021 home health payment rule Thursday.

In doing so, it changed very little from what it first proposed in June.

The final rule adds an estimated $390 million home health payment boost for agencies in 2021, or an aggregate increase of 1.9%. That estimate is less than the $540 million boost and 2.6% increase originally outlined in CMS’s proposed rule.


The increase reflects the effects of the 2% home health payment update percentage and a 0.1% decrease in payments due to reductions in the rural add-on percentages mandated by the Bipartisan Budget Act of 2018 for 2021, the agency noted.

The rule also updates the home health wage index, limiting any decreases in a geographic area’s wage index value to no more than 5% next year.

On one hand, the rule brings a semblance of stability to the home health industry by not making any major changes to the Patient-Driven Groupings Model (PDGM). At the same time, by keeping to the status quo, CMS also keeps in place the widely controversial behavioral adjustment built into PDGM. 


Home health advocates had been pushing for CMS to reconsider PDGM’s behavioral adjustment for months, especially after a Dobson DaVanzo & Associates (DDA) analysis found the overhaul lowered home health spending by a projected 21.6% in 2020.

William A. Dombi, president of the National Association for Home Care & Hospice (NAHC), expressed disappointment on that point in an email to the organization’s members.

“We are disappointed that CMS put off consideration of dropping the behavioral adjustment to payment rates based on its view that it needs a full year of data before it can act,” Dombi wrote. “We believe sufficient information is available to recognize that the behavioral changes assumed have not occurred. We will continue to work to get a mid-year rate change to reflect the absence of the rate behavior that CMS assumed.”

A handful of lawmakers — including Sen. Susan Collins (R-Maine) — recently wrote to CMS asking the agency to drop the 4.36% behavioral adjustment baked into PDGM. NAHC had also previously suggested that CMS consider a mid-year review of PDGM once a full year of 2020 data becomes available.

Broadly, PDGM’s behavioral adjustment is based on three CMS assumptions.

Going into this year, CMS believed home health agencies would do everything possible to lower Low Utilization Payment Adjustment (LUPA) rates while “upcoding” for the highest-paying primary diagnoses. CMS also assumed home health providers would adjust their documentation and coding practices to receive a corresponding payment for patients’ functional limitations and comorbidities.

During the COVID-19 pandemic, LUPA rates have actually increased for many providers, however. Additionally, the DDA analysis found that most home health agencies aren’t upcoding as part of their day-to-day operations.

“This behavioral assumption would require agencies to substantially disregard international agreed coding schemas, so it is unsurprising shifts did not occur to the extent predicted in the behavioral assumption,” the analysis stated.

Apart from solidifying PDGM as is, the new rule makes certain COVID-19-related telehealth adjustments permanent, though it does not change anything in regards to direct reimbursement for virtual visits, an action that would require Congressional action.

Collins and other members of Congress recently backed a home health telehealth bill to do just that.

While it doesn’t always catch headlines, the wage index changes will have a significant impact on home health agencies that serve certain geographic areas, Dombi noted in his message to NAHC members.

He additionally pointed out that the final rule makes minor adjustments to the Home Health Value-Based Purchasing Model to align with COVID-19 exceptions.

The rule likewise implements Medicare enrollment policies for qualified home infusion therapy suppliers and updates the 2021 home infusion therapy services payment rates using the CY 2021 Physician Fee Schedule amounts. It excludes home infusion therapy services from home health services, as required by law.

You can read the full text of the final rule here.

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