CMS Working to Implement Home Health Rural Add-on

April 1, 2010

As a result of the enactment of the “Patient Protection and Affordable Care Act” (PPACA), a 3 percent add-on payment became effective today for Medicare home health services delivered in rural areas. The add-on applies to episodes ending on or after April 1, 2010, through Dec. 31, 2016.

Similar to temporary rural add-on provisions in the past, claims that report a rural state code (i.e., a code beginning with “999”) as the Core-Based Statistical Area ( CBSA) code for the beneficiary’s residence will receive the additional 3 percent payment. The CBSA code is reported associated with value code 61 on home health claims.

The Centers for Medicare & Medicaid Services (CMS) says it is working to implement the new rural add-on provision expeditiously, as mandated in Section 3131(c) of PPACA. Be on the alert for more information about this provision and its impact on past and future claims. Further, watch for more information pertaining to implementation of the landmark health reform legislation’s many other provisions.

It is a significant victory that a home health rural add-on has been reinstated in any form, and took years to accomplish. A 5 percent rural add-on nearly made it into last year’s economic stimulus package, the “American Recovery and Reinvestment Act of 2009,” but ultimately was not included in the final legislation. The National Association for Home Care & Hospice (NAHC) vowed to continue to fight to get an add-on reinstated, including by looking to other legislation to which it might be attached (NAHC Report, 2/12/09) and working with a growing host of supporters in Congress to introduce a standalone bill to get it done.

Longtime home care and hospice advocates like Sen. Debbie Stabenow (D-MI) were part of the effort. As gasoline prices spiked in the summer of 2008 — squeezing home care agencies across the nation hard, and particularly those in rural areas with greater distances to cover to reach their patients — Stabenow read into the Congressional Record a report from NAHC highlighting the staggering number of miles traveled annually by the nation’s home health professionals and the resultant crunch that soaring transportation costs were causing (NAHC Report, 7/15/08).

“As a short-term solution, I urge my colleagues to join with me in calling for the Medicare rural home-health add-on, which expired in 2006, to be reinstated,” Stabenow said. “The rural add-on bonus will have a huge impact on the ability of home health providers to serve seniors — particularly in remote, rural locations.”

However, efforts to include a home health rural add-on in legislation at that time to stave off cuts to Medicare physician reimbursement, an expensive problem that has yet to find any long-term solution (NAHC Report, 3/29/10), were unsuccessful. And, then as always, NAHC vowed to fight on. In 2007, a home health rural add-on was included in legislation to reauthorize and expand the State Children’s Health Insurance Program, or SCHIP, but the bill was vetoed by then-President George W. Bush (NAHC Report, 10/19/07). In that instance, although the rural add-on didn’t survive the legislative process, the home health market basket update did in a smaller SCHIP reauthorization bill that was to become law (NAHC Report, 12/19/07).

Thus, as Sen. Stabenow pointed out in her speech, the last time there was a Medicare home health rural add-on payment was in 2006. The “Deficit Reduction Act of 2005” had instituted a 5 percent add-on for rural home health episodes “beginning on or after Jan. 1, 2006, and before Jan. 1, 2007,” which itself created some confusion because the standard for applying these add-ons historically has been by episodes’ ending dates (NAHC Report, 2/24/06). You’ll note this latest add-on’s return to that standard. And NAHC had pressed for that 2006 add-on since the one prior to it expired April 1, 2005 (NAHC Report, 4/1/05) — illustrating the long and seemingly constant battles to ensure fair and adequate reimbursement for home care and hospice providers participating in government health care programs.

NAHC will continue to monitor the application of the new rural add-on and will report back on the process as the change is made. Stay tuned to NAHC Report for updates.