Late Friday, the U.S. Centers for Medicare and Medicaid Services (CMS) made available its proposed Calendar Year (CY) 2023 payment rule for Medicare home health. CMS states that it will be published in the Federal Register on June 23.
While the proposed rule is relatively modest in length at 175 pages, it does include numerous proposed changes along with some serious concerns for the home health industry as it includes a significant proposed rate reductions related to the change to the Patient Driven Grouping Model (PDGM) methodology in CY 2020.
All told, taking into account the various adjustments to the base episodic rate, CMS estimates an overall -4.2 percent decrease in national Medicare home health payments (or -$810 million) in 2023.
The most significant change is a proposed reduction of 7.69 percent in Medicare home health payments for CY 2023, in order to ensure that expenditures under the PDGM meet the statutory requirements for budget neutrality in the implementation of the new payment model. In last year’s (CY 2022) rulemaking CMS discussed potential methodologies for making such adjustments.
In the rule, CMS proposes to use the same methodology included in last year’s rule and did not adopt the recommendations or materially address the significant technical and policy concerns outlined in home health stakeholders’ comments. As a result, CMS proposes a -7.69% permanent adjustment to the to the home health payment rates in CY 2023 to ensure budget neutrality in aggregate payments moving forward. Though CMS has authority to recapture excess payments from CY 2020 and CY 2021 through temporary adjustments to the payment rates, CMS did not propose to do so in CY 2023. Instead, CMS is soliciting comments on the best approach for applying a temporary payment adjustment(s) to account for an estimated $2.0 billion in excess spending in CYs 2020 and 2021. If recaptured in one year, such an adjustment could be substantial (i.e., higher than 10 percent). Finally, the proposed rule does not provide for a phase-in of the rate reductions over time.
Other significant highlights in the proposed rule include:
- A market-basket increase of 2.96 percent based on an annual inflation update of 3.3 percent, reduced by a 0.4 percent productivity adjustment.
- An decrease in the 30-day payment rate from $2021.64 to $1,904.76 after application of the PDGM budget neutrality adjustment, market-basket update, a wage-index budget neutrality factor of 0.9975 and case-mix recalibration neutrality factor of 9.895. Agencies that do not submit required quality data will have that rate reduced by 2 percent.
- Low Utilization Payment Adjustment (LUPA) rates set at the following amounts: Skilled Nursing: $161.32; Physical Therapy: $176.32; Speech Language Pathology (SLP): $191.66; Occupational Therapy (OT): $177.54; Medical Social Work: $258.57; and Home Health Aide: $73.04.
- An updated CY 2023 Wage Index including a proposed permanent 5% cap on negative wage index changes, available here.
- A recalibration of the 432 PDGM case-mix-weights (CMWs), including a modification of the LUPA thresholds.
- Modified elements of the upcoming Home Health Value Based Purchasing (HHVBP) program.
- Modified Quality Reporting Program measures.
- Deferring the Home Infusion Therapy benefit rate update to the Physician Fee Schedule issuance.
- A request for information regarding a data collection on the use of telecommunications.
- A Request for Information (RFI) on health equity which proposes updates to advancing a health information exchange.
Next Steps
HCA is very concerned with the CMS proposed rule. The stability of home health care is at risk because of CMS proposing the application of a flawed methodology for assessing whether the PDGM payment model led to budget neutral spending in 2020 and later years.
With significantly rising costs for staff, transportation, and more, home health agencies cannot withstand the impact of the proposed rate cut. Reliable analyses proves that PDGM underpaid home health agencies.
HCA will exercise strong advocacy and to protect the Medicare home health benefit including immediate engagement with New York’s Congressional delegation as well as working with our colleagues at the National Association for Home Care and Hospice (NAHC).
HCA will continue to review the final rule and provide the membership with a more detailed analysis later in the week.