CMS Releases 2021 Home Health Proposed Rule

Early release of rule indicates limited changes from CMS

Situation Report | June 29, 2020

As we reported in an alert on Friday afternoon, the U.S. Centers for Medicare and Medicaid Services (CMS) released its proposed 2021 payment rule for home health.

HCA appreciates CMS issuing the proposed rule in June, which comes at least a week early compared to previous years. The proposal is also light in reading —138 pages — compared to previous years, which indicates that there are modest changes proposed by CMS. It appears CMS recognized that any significant changes during the infancy of the Patient Driven Groupings Model (PDGM) would be premature given the limited data available from 2020, combined with the turmoil created by the COVID-19 pandemic.

Below is a cursory review of each of the areas addressed in CMS’s proposed rule.

Payment Rates & Changes to the Wage Index

The 2021 proposed Medicare home health rates represent a modest market-basket update, a significant change in wage index area designations, no change in the structure of the PDGM payment model, a scheduled phasing-out of the rural add-on, and a continuation of outlier payment standards.

Some of the highlights include:

  • A market-basket increase of 2.7 percent based on an annual inflation update of 3.1 percent reduced by a 0.4 percent productivity adjustment.
  • The base 30-day payment rate is increased from $1864.03 to $1911.87 after application of the market-basket update and a wage index budget neutrality factor of 0.9987. Home health agencies that did not submit required quality data would have that rate reduced by 2 percent.
  • Proposed Low Utilization Payment Adjustment (LUPA) rates set at: Skilled Nursing ($153.54); Physical Therapy ($167.83); Speech Language Pathology ($182.42); Occupational Therapy ($168.98); Medical Social Work ($246.10); and Home Health Aide ($69.53).
  • Adoption of the revised Office of Management and Budget (OMB) statistical area delineations which include a proposal to apply a 5 percent cap on wage index decreases in 2021. There is no cap on wage index increases.
  • The Outlier Fixed Dollar Loss ratio would remain at 0.63 percent, which suggests that CMS does not expect any increases or decreases in the national volume of outlier episodes.
  • A continuation of the rural add-on phase-out, where most rural counties in New York will see a 1 percent increase to their rates in 2021.
  • PDGM case mix weights and LUPA thresholds remaining at the 2020 levels.

The combination of all these changes is projected to increase Medicare home health services spending nationally by $540 million in 2021.


CMS proposes to finalize the plan-of-care requirements related to telehealth that were issued in the COVID-19 interim final rule published on March 30.

The home health Plan of Care (POC) must include any provision of remote patient monitoring or other services furnished via a telecommunications system, and describe how the use of such technology is tied to the patient-specific needs as identified in the comprehensive assessment and how it will help to achieve the goals outlined on the plan of care.

The amended POC requirements in CMS’s March 30 final rule also stated that these services cannot substitute for a home visit ordered as part of the plan of care and cannot be considered a home visit for the purposes of patient eligibility or payment. CMS is also proposing to allow home health agencies to continue to report the costs of telehealth/telemedicine as allowable administrative costs on line 5 of the home health agency cost report.

Quality Reporting Program

In its 2020 rule, CMS finalized twenty measures for the 2022 Quality Reporting Program (QRP). No new changes to the home health QRP were proposed in the 2021 proposed rule.

However, CMS proposes changes to the OASIS testing requirements for new home health agencies. Section 484.45(c)(2) of the conditions of participation (CoPs) will now require that new home health agencies must successfully transmit test data to the Quality Improvement & Evaluation System (QIES) or CMS OASIS contractor as part of the initial process for becoming a Medicare-participating home health agency.

Home Infusion Therapy

CMS’s proposed rule reiterates the home infusion therapy supplier policies for coverage and payment finalized in the 2019 and 2020 HHPPS final rules. This proposed rule includes regulation text changes from Section 5012 of the 21st Century Cures Act to exclude home infusion therapy from the definition of home health services, effective on January 1, 2021.

However, the rule proposes to implement Medicare enrollment policies for qualified home infusion therapy suppliers and proposes updates to the 2021 home infusion therapy services payment rates using the 2021 Physician Fee Schedule amounts.

Next Steps

HCA will continue to review the proposed rule and provide the membership with a more detailed analysis.

Comments on the proposed rule are due by August 28. HCA will submit comments and also encourages members to do so as well. CMS customarily finalizes the rule in early November.