Late RAPs Could Trigger Immediate 20% Payment Reduction in 2021

The U.S. Centers for Medicare & Medicaid Services (CMS) released its final home health payment rule for CY 2021 on Thursday, with essentially no changes to the Patient-Driven Groupings Model (PDGM) or its controversial behavioral adjustment. 

In addition to doubling down on PDGM, boosting the home health base payment rate by 1.9% and making minor adjustments to the Home Health Value-Based Purchasing Model, CMS also clarified its new policy on Requests for Anticipated Payment (RAPs) for next year and beyond.

Home health agencies likely won’t be happy with the fine print.

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In its 2020 rulemaking, CMS announced it was moving forward with a plan to fully eliminate RAPs — or home health-prepayments that provide a chunk of an episode’s anticipated payment at the beginning of care — by 2021. In place of RAPs, the agency explained it will instead require agencies to submit a one-time Notice of Admission (NOA) starting in 2022.

Although NOAs kick in for 2022, 2021 would be a transition year, with agencies still required to submit a watered-down RAP for billing purposes.

“With the removal of the upfront-RAP payment for CY 2021, we relaxed the required information for submitting the RAP for CY 2021 and stated that the information required for submitting an NOA for CYs 2022 and subsequent years would mirror that of the RAP in CY 2021,” CMS wrote in Thursday’s final rule. “Starting in CY 2022, [agencies] will submit a one-time NOA that establishes the home health period of care and covers all contiguous 30-day periods of care until the individual is discharged from Medicare home health services.”

While the elimination of pre-payments is already incredibly impactful, especially for smaller, cash-strapped home health agencies, CMS’s new policies also come with a built-in penalty for late submissions.

The RAP in 2021 and the one-time NOA starting in 2022 must both be submitted within five calendar days from the start of care. If agencies fail to do so, they’re subject to a one-thirtieth reduction to the wage and case-mix adjusted 30-day period payment amount for each day from the start of care date until the date agencies submit their RAP or NOA.

In other words, home health agencies will be hit with a 3% fine for each day they’re late filing their paperwork.

The fine print

A 3% fine for each late day to file a RAP or NOA doesn’t seem too bad at first glance. But that 3% fine turns into a 20% penalty very quickly.

After issuing its proposed rule in June, CMS received multiple comments from industry stakeholders asking when the non-timely payment reduction actually begins.

“A commenter requested clarification on the methodology used to calculate the non-timely submission payment reduction,” CMS stated in its 2021 final rule. “This commenter asked whether the reduction begins on Day 1 or Day 6.”

For purposes of determining if a “no-pay” RAP is timely-filed, the no-pay RAP must be submitted within five calendar days after the start of each 30-day period of care. For example, if the start of care for the first 30-day period is Jan. 1, then the no-pay RAP would be considered timely-filed if it is submitted on or before Jan. 6, the agency clarified.

What’s that mean? Well, in the event that the no-pay RAP is not timely-filed, CMS will calculate the one-thirtieth penalty from the first day of that 30-day period. So in the previous example, the penalty calculation would begin on Jan. 1 — and not on Jan. 7, the first day after an agency misses its deadline.

Translation: If an agency submits its no-pay RAP one day late, the result would be a 20% reduction to its 30-day payment amount.

Industry financial experts previously told Home Health Care News that the elimination of pre-payments alone could devastate mom-and-pop home health agencies.

“That will take these small agencies out,” McBee Associates President Mike Dordick told HHCN in July 2019.

A possible 20% penalty on top of that just adds insult to injury.

Cheating on your taxes

The RAPs penalty is an important detail from CMS’s final payment rule for next year, but the main takeaway is still the agency’s decision to stick to PDGM’s behavioral adjustment — effectively a 4.36% cut if left unmitigated. 

Industry stakeholders were hoping CMS would reconsider the adjustment after emerging data suggested it’s inherently flawed but exacerbated due to the COVID-19 pandemic. The adjustment has proven difficult for many agencies, particularly when paired with astronomical personal protective equipment (PPE) costs and other factors.

“Our members have been working hard throughout this health care crisis to serve older adults in need of  home health care, while at the same time shouldering significant pandemic-related expenses for PPE, staffing and other needs,” Katie Smith Sloan, president and CEO of LeadingAge, told HHCN in an email. “They’ve cared for older adults both in person and via telehealth, despite shortcomings in Medicare reimbursement policies that keep providers from being paid for delivering telehealth services.”

Those facts, coupled with CMS’s decision to not address faulty behavior assumption adjustments in its rule for CY 2021, put home health agencies in “an untenable position,” she added.

In addition to her role at the Washington, D.C.-based aging services industry association LeadingAge, Smith Sloan also serves as acting president and CEO of ElevatingHOME and the Visiting Nurse Associations of America.

In part, PDGM’s behavioral adjustment was based on CMS assuming home health agencies would do everything possible to lower Low Utilization Payment Adjustment (LUPA) rates while always “upcoding” to the highest-paying primary diagnoses.

Intrepid USA CEO John Kunysz told HHCN that line of thinking was wrong from the start.

“Maintaining the behavioral adjustment is akin to the government saying, ‘We believe you are going to cheat on your taxes, so we are disallowing a percentage of your deductions,’” Kunysz said in an email. “We operate in a highly regulated environment. The incentives to provide appropriate care far outweigh any temptation to try and game the system.”

Dallas-based Intrepid USA is a home health, hospice and home care provider with operations in more than a dozen states. In 2019, the company cared for more than 22,000 patients under its home health service line.

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