The Situation Report | July 10, 2023
The U.S. Centers for Medicare and Medicaid Services (CMS) has made available its proposed Calendar Year (CY) 2024 payment rule for Medicare home health here.
The Proposed Rule presents serious concerns for the home health community as CMS proposes further, significant rate reductions to account for the change in the payment model in 2020. Medicare law requires CMS to make permanent and temporary adjustments intended to ensure that the transition to the PDGM payment model is budget neutral in comparison to expected Medicare spending on the 2019 payment model. CMS originally proposed a 7.85% permanent rate adjustment based on the conclusion that HHAs were overpaid in 2020 and 2021 due to provider behavior changes in coding and services provided.
In 2023, CMS applied a 3.925% permanent rate reduction. At the time, CMS explained that the lower adjustment would be applied because “we recognize the potential hardship of implementing the full -7.85 percent permanent adjustment in a single year.”
CMS did not take any action on the $2.1 billion in anticipated temporary adjustments to address alleged overpayments in 2020 and 2021. An evaluation of the amount of any temporary adjustments related to 2022 payments was not provided due to the time lag in in data availability.
The CY 2024 Proposed Rule proposes a rate reduction at 5.653%. This represents the remainder of the original 7.85% rate reduction that CMS calculated as warranted under its methodology for 2020 and 2021 along with an additional 1.636% for 2022, totaling 9.36% overall from the beginning of PDGM. An early analysis indicates that the additional 2022 element to the proposed permanent adjustment is due to further visit decreases in a 30-day episode, particularly with therapy services.
All told, taking into account the various adjustments to the base episodic rate, CMS estimates the CY 2024 proposed rule will decrease Medicare home health expenditures by $375 Million nationally ($460 million inflation update – $870 million rate adjustment + $35 million outlier FDL change).
Other significant highlights in the proposed rule include:
- A market-basket increase of 2.70 percent based on an annual inflation update of 3.0 percent, reduced by a 0.3 percent productivity adjustment.
- A decrease in the 30-day payment rate from $2,010.69 to $1,974.38 after application of the PDGM budget neutrality adjustment, market-basket update, a wage-index budget neutrality factor and case-mix recalibration neutrality factor adjustments. 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: $167.93; Physical Therapy: $183.55; Speech Language Pathology (SLP): $199.52; Occupational Therapy (OT): $184.81; Medical Social Work: $269.16; and Home Health Aide: $76.03.
- An updated CY 2024 Wage Index including the permanent 5% cap on negative wage index changes, will be available when we issue our comprehensive memo.
- A recalibration of the 432 PDGM case-mix-weights (CMWs), including a modification of the LUPA thresholds.
- CMS is proposing to remove five measures from the current Home Health Value Based Purchasing (HHVBP) applicable measure set and add three measures starting in CY 2025. Due to the net change in the number of measures proposed, CMS is proposing to adjust the weights for the measures in the OASIS-based and claims-based measure categories starting in CY 2025. Lastly, CMS is proposing to update the Model baseline year to CY 2023 for all measures starting in CY 2025.
- CMS is proposing to adopt two new Home Health Quality Reporting Program (HHQRP) measures and remove one existing measure. Along with the removal of two OASIS items. Additionally, CMS is proposing to begin public reporting of additional measures in the HHQRP.
- In response to program integrity concerns related to hospice and other providers, CMS is proposing several changes to existing Medicare provider enrollment regulations.
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 next week.