Home care industry group sues to block 2023, 2024 Medicare payment cuts it claims are unlawful

Days after the Biden administration proposed hundreds of millions in 2024 pay cuts for home health providers, an industry association is suing the government over similar adjustments at the heart of 2023’s final rule.

Filed Wednesday in the U.S. District Court for the District of Columbia, The National Association for Home Care and Hospice (NAHC)’s complaint petitions the court to strike down and vacate the Home Health Prospective Payment System (Home Health PPS) final rule for 2023, and to withhold applying the 2024 proposal released last Friday.

NAHC alleged that the pay cuts included in both rules contradict directions Congress gave the Centers for Medicare and Medicaid Services (CMS) in the Bipartisan Budget Act of 2018, “arbitrarily and capriciously” set payment rate adjustments that “will result in substantial financial harm to numerous home health agencies across the country” and, ultimately, stymie access to home care.

“We have done everything possible to get Medicare to understand the disastrous consequences of its actions,” NAHC President William Dombi said in a release. “We have presented hard facts, deep legal analyses, and extensive data to Medicare that demonstrate the errors in its policies to no avail.  As a last resort, we have filed this lawsuit to protect Medicare beneficiaries and the home health agencies that care for them.”

The 2018 law aimed to distance payment incentives away from the volume of therapy sessions delivered and, to account for resulting changes in care patterns, required CMS to create and periodically confirm payment assumptions about behavioral changes in home health, which it began to do in 2020.

In the CY2023 Home Health PPS, that permanent behavior adjustment of -3.925% (-$635 million) largely offset other payment increases and left aggregate Medicare payments to home health agencies at an estimated 0.7% ($125 million) year-over-year increase, per CMS.

In the CY2024 Home Health PPS proposal released last week, CMS floated a -5.1% ($870 million) permanent behavior assumption adjustment that would outpace other upward adjustments for an estimated aggregate change of -2.2% (-$375 million) compared to CY2023. That proposal has been largely panned by industry groups that said it would lead to reduced beneficiary access to home healthcare services.

NAHC was among those critics and took their dissent to a new level with Wednesday’s filing. In it, the group noted that Congress instructed CMS to make its adjustments in a way that would be “budget-neutral, ensuring that the adoption of the new payment system would result in neither a net increase nor a net decrease in total Medicare payments.”

CMS’ approach “unlawfully rebases home health payment rates to reduce overall expenditures,” the group wrote.

Additionally, the CY2023 final rule still “ties the payment adjustment to the amount of therapy actually provided” against Congress’ intent, NAHC alleged, and despite CMS’ messaging “does not measure either assumed or actual behavior changes at all, and it certainly does not calculate the difference of their impact on aggregate expenditures.”

Unless they are corrected, CMS’ approach to home health payment adjustments “will leave numerous Medicare beneficiaries with limited or no access to vital home health services, directly contrary to Congress’s intent,” the group wrote. “Instead of reforming Medicare reimbursement rates to be more patient-centric and less therapy-centric, as Congress directed, the Secretary’s final rule will disrupt the market, penalize home health agencies that relied on Congress’s statutory reforms, and prevent beneficiaries from accessing the essential home health services they need.”

NAHC’s complaint highlighted specific member organizations—Home Health Services of Mary Lanning Healthcare, in Nebraska, and Androscoggin Home Healthcare + Hospice, in Maine—that had their Medicare revenues reduced by hundreds of thousands and millions, respectively, under the payment model at issue. An accompanying release also points to a 500,000-person reduction in the number of Medicare patients who have used home health services since 2020.

“Home health agencies again must withstand billions of dollars in payment cuts as cost of care continues to rise and still be expected to deliver the care to which our patients are entitled to as a Medicare benefit.”  Ken Albert, Chairman of NAHC, and CEO of Androscoggin Home HealthCare + Hospice, said in a release. “Since these cuts took effect in January, providers have reduced service areas, turned away thousands of patients, and halted the use of innovative technologies in order to stay afloat and serve some patients.”