In addition to the Hospice Proposed Rule having many updates related to the Wage Index and CBSA classifications, the Home Health Proposed Rule also outlined several updates. Though both contained updates, there are occasional differences in the wage index results between home health and hospice.
The Home Health Proposed Rule indicates that 53 counties will shift from urban to rural status. Among these, 29 counties are expected to experience a wage index decrease of more than 5 percent. Additionally, 54 counties will transition from rural to urban, with 10 of them facing a wage index reduction exceeding the 5 percent cap.
88 additional counties will undergo changes in CBSA classification. Some of these counties will shift from one wage index to another, while others may simply be renamed or reclassified. Out of these 88 counties, 10 will experience a wage index reduction greater than the 5 percent cap.
Out of the 195 counties facing CBSA realignment, 106 will see an increase in their wage index, while 89 will experience a decrease. Across all 3,266 county CBSA codes, 1,350 are expected to have a negative wage index impact for the upcoming year.
For those counties experiencing a wage index reduction of more than 5%, it’s important to note that a 5% cap on wage index changes was introduced last year. This cap was made permanent, so any future reductions in the wage index will be limited to a maximum of 5% each year, based on the previous year’s index.
If your wage index is set to decrease by more than 5%, you’ll receive a temporary CBSA code to use for billing until your wage index aligns with the expected rate. For example, if your wage index was supposed to drop by 10%, the reduction will be capped at 5% for 2025. Then, in 2026, another 5% reduction will be applied, based on the adjusted 2025 wage index. It may take up to three years for your CBSA wage index to fully align with the intended rate for your area.
Previously, the 5% cap only applied in the first year, meaning if your wage index was supposed to drop by 12%, you had to absorb the remaining 7% reduction in the following year. Now, with the 5% maximum cap per year, the implementation of significant wage index decreases is staggered, providing a more gradual adjustment.
You’ll need to review the wage index tables in the proposed rule and the final update. The transition codes, which start with “50,” will be your CBSA code for 2025. Depending on the size of the reduction for 2026, you might need to use this code that year as well.
It’s crucial that your billing team is aware if your county is among those affected by the reduction and requires the “50” CBSA code on claims. In addition to notifying your billing department, you must also ensure that your EMR system has updated the CBSA code for 2025.
Even if you’re not affected by the 5% reduction cap or a temporary transition code, you still need to make sure your system has the correct CBSA code. With 195 changes in total and 88 involving adjustments to CBSA codes without a shift from urban to rural or vice versa, it’s important to update your system accordingly.
Connecticut has recently shifted from using “planning regions” to “county classifications.” Each of these 10 counties will experience a reduction in their wage index for 2025.
Healthcare Provider Solutions is here to help you navigate all aspects of the Home Health Proposed Rule. Should you need support with understanding the wage index changes or require assistance with billing and collections, please feel free to reach out to us.
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