CMS Proposed Rule: FY 2023 Home Health Payments Decrease by 4.2% or $810M YOY

The rule includes proposals and routine updates to the Medicare Home Health Prospective Payment System (HHPPS) and the home infusion therapy services’ payment rates for CY 2023.

This rule proposes a permanent, budget-neutral approach to smooth year-to-year changes in the pre-floor/pre-reclassified hospital wage index as critics argue the proposal ignores the current state of the industry: raised labor costs, inflation and costs related to COVID-19.  Specifically the proposal includes a permanent 5% cap on negative wage index changes (regardless of the underlying reason for the decrease) for home health agencies. HHPS was implemented in October 2000 and features bundled payments for all covered home health services provided in a 60-day episode.

William A. Dombi, the president of the National Association for Home Care & Hospice (NAHC),

With significantly rising costs for staff, transportation, and more, home health agencies across the country cannot withstand the impact of the proposed rate cut. Reliable analyses proves that PDGM underpaid home health agencies. We will be taking all steps to protect the home health benefit as this proposed rule advances and have fully prepared for Congressional action and more.

According to RevCycle Intelligence, CMS seeks to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for changes resulting from the implementation of the Patient-Driven Groupings Model (PDGM).  According to the American Physical Therapy Association PDGM is s a shift away from volume-driven home health payment to a model that focuses on the unique characteristics, needs, and goals of each patient. In conjunction with the implementation of the PDGM there was a change in the unit of home health payment from a 60-day episode to a 30-day period. Learn more about PDGM from this slide deck from CMS.

CMS proposes to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for any increases or decreases in aggregate expenditures, as a result of the difference between assumed behavior changes and actual behavior changes, under PDGM and the 30-day unit of payment.

The American Hospital Association said it was very concerned about the unprecedented scale of the proposed PDGM behavioral offset. In addition, the rule would require collection of all patient assessment data for the HH Quality Reporting Program; collect feedback on strategies to better measure disparities in health care outcomes; and change the terminology and timeline for baseline years used to calculate performance in the Value-based Purchasing program. CMS will accept comments on the proposed rule through Aug. 16.

CMS is soliciting comments on how best to implement a temporary payment adjustment for CYs 2020 and 2021 and the agency is also soliciting comments on the collection of telehealth data on home health claims so it can analyze the characteristics of the beneficiaries utilizing services furnished remotely. Check out the CMS Fact Sheet for additional details.

CMS is also updating the home infusion therapy services payment rates for CY 2023 as required by law. Section 1834(u)(3) of the Act specifies that annual updates to be equal to the percent increase in the Consumer Price Index for all urban consumers (CPI–U) for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment for CY 2023. The CPI-U for June 2022 was not yet available at the time of the proposed rule.

Get the full proposed rule on the Federal Register