The Centers for Medicare & Medicaid Services (CMS) has proposed a 2.5 percent increase in Medicare payment rates to home health agencies for calendar year 2006. The CMS proposal would raise the national episode rate from $2,264.28 to $2,320.89, before local wage index adjustments.
CMS estimates that the proposed rate increase, published in the Federal Register on July 14, will generate an additional $330 million in payments to home health agencies next year.
In making the new wage index calculation, CMS used the new Core Based Statistical Area (CBSA) market area definitions to account for cost variations in different areas of the country. The familiar Metropolitan Statistical Areas (MSAs), used in previous years to distinguish higher-wage urban areas from lower-wage rural areas, are now one of three types of CBSAs.
First announced by the Office of Management and Budget in June 2003, CBSAs account for new population centers outside the old metro area cores (as measured by the 2000 census) as well as new commuting patterns. This new approach recognizes 49 new MSAs and revises many of the previously existing MSAs.
Projected reimbursement rate increases
With the proposed rate increase, the adoption of the new CBSA designations, and other proposed changes to the wage index, overall Medicare reimbursements are expected to increase as follows.
- 2.3% - all urban agencies
- 2.4% - hospital-based urban agencies
- 2.2% - freestanding urban agencies
- 3.5% - all rural agencies
- 3.3% - hospital-based rural agencies
- 3.7% - freestanding rural agencies
New per-visit amounts for LUPAs and Outliers
CMS also proposed new national per-visit amounts for LUPAs and Outlier calculations. The new amounts, including the 2.5 percent increase but excluding the wage index adjustment, are as follows:
- Home health aide: $45.88
- Medical social services: $162.41
- Occupational therapy: $111.53
- Physical therapy: $110.78
- Skilled nursing: $101.32
- Speech-Language pathology: $120.38
For more information, see the Home Health section of the CMS Web site or contact Jim Wesson, the lead health care partner in Wipfli’s Milwaukee office, at 414.431.9350 or jwesson@wipfli.com.