Home Health Agencies Receive $125 Million Pay Boost

Although budget cuts are still coming,  home health agencies will receive a 0.7% pay increase, equaling $125 million, rather than the proposed $810 million budget cut, under the finalized rule for the Home Health Prospective Payment System Rate Update.

According to the Centers for Medicare and Medicaid Services (CMS), this increase reflects the 4% home health payment update percentage ($725 million increase) and the 0.2% increase ($35 million increase) that reflects an update to the fixed-dollar loss ratio used in determining outlier payments.

However, CMS committed to a 3.9% budget cut to home health agencies (HHA) for 2023, determining the agency paid more under the new Patient-Driven Groupings Model (PDGM) than it would have under the previous system. CMS says the overall impact of the cut will only be 3.5%  because it applies to the 30-day payment rate and not the Low Utilization Payment Adjustment (LUPA) per visit payment rates.

The 3.9% cut is part of the agency’s plan to phase in a 7.9% cut to the 30-day pay rate in order to stay budget neutral, higher than the 7.7% cut proposed in June. The 7.9% cut will continue to be implemented in the following years. 

Many are outspoken about the impacts these cuts will have on HHAs and accessibility for those who need their services. 

Joanne Cunningham, CEO of The Partnership for Quality Home Healthcare, told Inside Health Policy,

Joanne Cunningham

This 7.85% cut is worse than initially proposed and when enacted in 2024, will result in an immediate decline in access to home health. This will have negative effects on the availability of care for the most chronically ill of the Medicare population and result in access to care problems. While this short-term phase-in blunts the immediate impact, the long-term consequences of this rule, unless mitigated, will devastate access to care in the home.

Introduced in 2020, the home health PDGM bundles home health payments in 30-day intervals rather than 60-day intervals and eliminates the number of therapy hours as a determination in reimbursement. According to CMS, “The PDGM better aligns payments with patient care needs, especially for clinically complex beneficiaries that require more skilled nursing care rather than therapy.”

CMS also finalized changes in other areas, including:

• A permanent, budget neutral 5% cap on negative wage index changes
• Annual recalibration of case-mix weights and Low Utilization Payment Adjustment thresholds
• An 8.7% payment rate for home infusion therapy
• Ended temporary suspension of OASIS data collection on non-Medicare/non -Medicaid HHA patients with the phase-in process starting January 2025
• Determined the baseline year as 2022 for the Expanded Home Health Value-Based Purchasing (HHVBP) Model

Read more at Modern Healthcare and RevCycle Intelligence.