This regulation governs how CMS calculates case-mix and wage area adjusted prospective payment rates for Home Health Agencies (HHAs) under Medicare. It specifies downward adjustments to national standardized payment rates for coding/classification changes that do not reflect real case-mix shifts, and adjusts for geographic wage differences using a wage index based on the beneficiary's site of service. Beginning in 2023, a 5-percent cap on negative wage index changes is applied in a budget-neutral manner. This is a Medicare payment methodology rule for home health services, not a behavioral health, IDD, ABA, or foster care licensing regulation.
View official source§ 484.220 Calculation of the case-mix and wage area adjusted prospective payment rates. CMS adjusts the national, standardized prospective payment rates as referenced in § 484.215 to account for the following: (a) HHA case-mix using a case-mix index to explain the relative resource utilization of different patients. To address changes to the case-mix that are a result of changes in the coding or classification of different units of service that do not reflect real changes in case-mix, the national, standardized prospective payment rate will be adjusted downward as follows: (1) For CY 2008, the adjustment is 2.75 percent. (2) For CY 2009 and CY 2010, the adjustment is 2.75 percent in each year. (3) For CY 2011, the adjustment is 3.79 percent. (4) For CY 2012, the adjustment is 3.79 percent. (5) For CY 2013, the adjustment is 1.32 percent. (6) For CY 2016, CY 2017, and CY 2018, the adjustment is 0.97 percent in each year. (b) Geographic differences in wage levels using an appropriate wage index based on the site of service of the beneficiary. (c) Beginning on January 1, 2023, CMS applies a cap on decreases to the home health wage index such that the wage index applied to a geographic area is not less than 95 percent of the wage index applied to that geographic area in the prior calendar year. The 5-percent cap on negative wage index changes is implemented in a budget neutral manner through the use of wage index budget neutrality factors. [72 FR 49879, Aug. 29, 2007, as amended at 80 FR 68717, Nov. 5, 2015; 83 FR 56629, Nov. 13, 2018; 87 FR 66886, Nov. 4, 2022]