Home Health Agencies Would Lose $810M under CMS Proposed Rule

Proposal will 'protect the Medicare program's sustainability for future generations,' CMS says.

Medicare payments to home health agencies are estimated to decrease by 4.2%—or $810 million—as compared to 2022, based on policies under a proposed rule by the Centers for Medicare and Medicaid Services (CMS).

This decrease reflects the effects of the proposed 2.9% home health payment update percentage—a $560 million increase—an estimated 6.9% decrease that reflects the effects of the proposed prospective, permanent behavioral assumption adjustment of -7.69%, a $1.33 billion decrease, and an estimated 0.2% decrease that reflects the effects of a proposed update to the fixed-dollar loss ratio used in determining outlier payments, a $40 million decrease.  

CMS this week issued the calendar year 2023 Home Health Prospective Payment System (PPS) Rate Update proposed rule, which would update Medicare payment policies and rates for home health agencies. This rule includes proposals and routine updates to the Medicare Home Health PPS and the home infusion therapy services’ payment rates for the 2023 calendar year, in accordance with existing regulatory and statutory requirements.

This rule also proposes a permanent, budget-neutral approach to smooth year-to-year changes in the pre-floor/pre-reclassified hospital wage index in order to achieve the policy goal of increased predictability in home health payments.

Specifically, this rule proposes a permanent 5% cap on negative wage index changes, regardless of the underlying reason for the decrease, for home health agencies.

The rule also proposes recalibration of case-mix weights. Each of the 432 payment groups under the Patient-Driven Groupings Model (PDGM) has an associated case-mix weight and Low Utilization Payment Adjustment (LUPA) threshold, and CMS’ policy is to annually recalibrate the case-mix weights and LUPA thresholds using the most complete utilization data available at the time of rulemaking.

In this proposed rule, CMS is proposing to recalibrate the case-mix weights, including the functional levels and comorbidity adjustment subgroups, and LUPA thresholds using data from 2021 to more accurately pay for the types of patients that home health agencies are serving.

Actions in this proposed rule “would help improve patient care and also protect the Medicare program’s sustainability for future generations by serving as a responsible steward of public funds,” according to CMS.