How rural copayments have changed where home health services are delivered

Use of home health services declined in both urban and rural areas from January 2016 to March 2022 in the “high use” categories, in part due to additional payments in rural areas.

In 2018, the Centers for Medicare & Medicaid Services (CMS) implemented a rural copayment or percentage increase at the request of Congress. This is in addition to the standardized home health payment.

Lawmakers created the rural supplement to give higher rates to rural counties with low population density.

According to a new report from the Office of the Inspector General (OIG), the rural supplement shifted payments to those areas with low population density. However, there were some problems reporting this usage data due to possible record keeping errors.

“We found that the methodology shifted the allocation of supplemental payments from the ‘high utilization’ category to the ‘low population density’ and ‘all other’ categories,” the OIG summary said. “We originally planned to use the Federal Information Processing Standards (FIPS) data to analyze usage, but were unable to do so because the FIPS data were incomplete.”

High utilization counties are those in the top quartile of counties based on the number of Medicare home health care episodes served per 100 people. About 25 percent of rural counties fall into this category, according to the OIG.

Low population density counties are counties with a population density of six people or less per square mile. About 17% of rural counties fall into this category, and the remaining 58% are “all other.”

Source: OIG

The OIG report found that from 2016 to 2021, the number of home health beneficiaries served decreased by more than 13% in urban counties, more than 20% in the “high utilization” category of rural areas, and more than 10% in the “all others” rural category.

Source: OIG

During the same time period, the number of beneficiaries served in the rural “low population density” category increased by less than 1%.

Source: OIG

The rural top-up will stop at the end of 2022.

In the 2023 home health final rule, CMS requested comments on future approaches to health equity in the expanded home health value-based purchasing (HHVBP) model to correct for disparities in outcomes caused by several factors, including life in a rural area.

OIG Findings, Recommendations

While conducting the audit, the OIG found that home health providers either did not always apply FIPS codes to claims or the codes used were invalid.

The OIG also found that Medicare administrative contractors (MACs) did not always return claims with missing or invalid FIPS codes to providers. Because of this, the bugs were never fixed.

However, this trend seems to be improving.

Source: OIG

Despite the improvements, the federal watchdog group believes that CMS should take steps to improve reporting of FIPS codes for home health claims and update its pricing logic to check for missing and invalid FIPS codes for all home health claims.

In response, CMS agreed that the FIPS requirements apply to all claims, but disagreed with the OIG’s recommendation that the home health rater check for a FIPS code on all claims.

“Imposing such a redaction on all claims, not just those affected by the rural copayment, could delay immediate payment for eligible home health services and would not affect the payment amount,” CMS wrote in answer.

The second recommendation from the OIG, which was concurred with by CMS, was to work with the MAC to ensure that these claims are returned to providers for correction.

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