CMS finalizes $140M increase to home health payments

Centers for Medicare & Medicaid Services (CMS) released a rule Wednesday that increases the 2024 home health payments by 0.8%, or $140 million.

“The $140 million increase in estimated payments for CY 2024 reflects the effects of the CY 2024 home health payment update percentage of 3% ($525 million increase), an estimated 2.6% decrease that reflects the effects of the permanent behavioral assumption adjustment ($455 million) and an estimated 0.4% increase that reflects the effects of an updated FDL ($70 million increase),” the unpublished rule said.

CMS expects increasing the rate will bring home health payments in line with statutory payment authority.

In July, the Biden administration proposed cutting reimbursements to home health providers by 2.2% next year, or an estimated $375 million less than 2023 payment levels. It also proposed cutting home health rates by 5.1% or $460 million. Instead, CMS is finalizing a -2.89% adjustment, just half of the proposed home health cut earlier in the year, acknowledging that 5.1% could’ve been “too burdensome” a cut for many providers.

The proposed rule will be published in the Federal Register Nov. 13, effective Jan. 1, 2024.

Several home health advocacy groups criticized the final rule's implications on systems around the country.

"The Partnership for Quality Home Healthcare is extremely disappointed that the Centers for Medicare & Medicaid Services (CMS) finalized a -2.89% cut to home health in its CY2024 Home Health Prospective Payment System (HH PPS) Final Rule," said the Partnership in a statement to Fierce Healthcare. "On top of last year’s nearly -4% cut, CMS’s decision to only partially mitigate their proposed cut to home health will cause further harm to patient access and create financial instability that will make it harder to provide care in the home."

"Both patients and providers have described how difficult it already is to access and deliver home health services because of years of continuous Medicare cuts, a significant staffing shortage, and rising inflation," said CEO Joanne Cunningham. "I do not understand what the disconnect is. With labor and inflation costs continuing to rise dramatically and home health providers dealing with a national healthcare workforce crisis, any cut to home health will cause further harm. To put these numbers into context, the rule finalizes a base rate year-over-year increase of less than $1 per day to care for Medicare’s sickest patients. And while CMS is slightly delaying implementation of the permanent cut for next year, those dollars will be cut from home health in future years.”

The Partnership stated that it shared both quantitative and anecdotal data with CMS showing that patients are struggling with access, and that these changes would result in more access problems. Cunningham called on lawmakers to block cuts to home health.

“We continue to strenuously disagree with CMS’ rate setting actions, including the budget neutrality methodology that CMS employed to arrive at the rate adjustments,” NAHC President William A. Dombi told Home Health Care News. “We recognize that CMS has reduced the proposed 2024 rate cut. However, overall spending on Medicare home health is down, 500,000 fewer patients are receiving care annually since 2018, patient referrals are being rejected more than 50% of the time because providers cannot afford to provide the care needed within the payment rates, and providers have closed their doors or restricted service territory to reduce care costs.”

Shortly after CMS released its 5.1% proposal in July, the NAHC petitioned the U.S. District Court for the District of Columbia to strike down and vacate the home health prospective payment system final rule, and to withhold apply the 2024 proposal, saying Congress would prohibit the pay cuts for causing "substantial financial harm" to home health agencies under the Bipartisan Budget Act of 2018.

Other changes include increasing the CY 2024 home health market basket percentage by 3.3% before adjusting the rate by 0.3% to 3.0%, a finalized labor related share of 74.9% and non-labor-related share of 25.1% and codify a $270.09 payment toward home health purchases for disposable negative pressure wound therapy (dNPWT) devices.

“The actions CMS is taking in this final rule will help improve patient care and also protect the Medicare program’s sustainability for future generations,” CMS said in a release.

Wednesday’s rule drop included modifications to the Home Health (HH) Quality Reporting Program (QRP) as well, removing the Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment beginning in CY 2025. It also removed two Outcome and Assessment Information Set (OASIS) items no longer necessary for collection. Additionally, home health agencies must meet a 90% threshold of all required OASIS items. Changes under the HH QRP is estimated to reduce cost by more than $5M by reducing unnecessary data collection.

The Home Healthy Value-Based Purchasing (HHVBP) Model will codify the measure removal factors finalized in the CY 2022 final rule, replace the claims-based Acute Care Hospitalization During the First 60 Days of Home Health Use measures with the Potentially Preventable Hospitalization measure, effective Jan. 1, 2025, according to the release.

“The overall economic impact of the expanded HHVBP Model for CYs 2024 through 2027 is an estimated $3.376 billion in total savings to FFS Medicare from a reduction in unnecessary hospitalizations and SNF usage as a result of greater quality improvements in the HH industry,” the rule said.

Permanent coverage and payment of items related to IVIG (Medicare Intravenous Immune Globulin) for patients at home with a primary immune deficiency disease was finalized, now that the Medicare Demonstration program will cease payment using the average sales price (ASP) methodology at the end of the year. This should account for an increase in $8.7 million in total costs to traditional Medicare plans.

Under the new rules, Medicare Part B will have an expanded definition for identifying lymphedema treatment that is covered. CMS also finalized plans that codify documentation requirements for Durable Medical Equipment, Prosthetics, Orthotics, & Supplies (DMEPOS) refills.

“For the conforming change to sections in CAA of 2023 provision, the overall economic impact for CY 2023 and CY 2024 is an estimated $100 million in total cost to FFS Medicare,” the rule said. “For the lymphedema provision, the overall economic impact for CYs 2023 to 2028 is an estimated $150 million in total cost to FFS Medicare.”