The U.S. Centers for Medicare and Medicaid Services (CMS) on Wednesday released proposed home health payment rules for fiscal year 2025 that the center suggested could lead to further significant cuts to providers.
To rebalance the Patient-Directed Grouping Model (PDGM) and make it budget neutral, at least according to its internal methodology, CMS is proposing to permanently prospectively adjust home health payment rates in FY2025 to -4.067%.
CMS applied reductions of 3.925% and 2.890% for fiscal years 2023 and 2024, respectively.
“This adjustment takes into account the difference between assumed and actual behavior changes relative to estimated total expenditures due to the implementation of the FY 2020 PDGM and the change to a 30-day payment unit,” CMS wrote in a fact sheet about the proposed rule.
CMS’ proposed rule includes a 2.5% update to home health payments for FY 2025, offset by an estimated 3.6% decrease related to the PDGM rebalancing and an estimated 0.6% decrease reflecting the proposed fixed dollar loss.
Overall, CMS projects that Medicare payments to home health agencies in fiscal year 2025 will decrease by a total of 1.7 percent, or about $280 million, compared with 2024 levels.
Continued reduction
In past years, CMS has typically proposed larger cuts and then finalized smaller cuts, but even if the cuts were lowered between the proposed and final rules, providers would still lose out on the finalized cuts.
For example, a 1.7% cut may not seem like much, but a permanent reduction of more than 4% would be extremely significant.
Additionally, CMS mentioned the clawbacks it plans to recover from the industry for amounts deemed to be past overpayments, which currently stand at approximately $4.55 billion.
“The Administration has repeatedly voiced its support for home care and recognizes that home care is a higher quality, lower cost option than institutional care settings, where Medicare beneficiaries want to receive care – in their own homes,” Stacey Smith, vice president of public policy at AccentCare, said in a statement shared with Home Health Care News. “The home care community has repeatedly proposed solutions to CMS that would reduce spending while maintaining payment levels for agencies that provide high quality care and comply with the rules. Yet CMS continues to do the math that leads to worsening health outcomes, lower patient satisfaction and leaving at-risk seniors stranded in high-cost institutional care settings.”
Mr Smith also described the cuts as “draconian” and called for parliamentary action.
Over the past few years, access to home health care has declined and referral denial rates have skyrocketed, in part due to budget cuts. Since CMS began reviewing the PDGM framework, providers have continued to fight against further budget cuts and potential clawbacks.
“CMS has proposed cuts for the third consecutive year, making it significantly harder for home health care providers to meet the care demands of an increasingly complex and aging patient population,” Joan Cunningham, CEO of the Partnership for Home Health Quality Improvement, said in a statement. “The status quo of ongoing cuts is unsustainable. Medicare’s continued application of permanent cuts to home health care will further weaken a community already facing historic labor costs and workforce shortages. We are concerned that CMS’ proposed actions for 2025 will have unintended consequences for older Americans who want to receive care in the home.”
In advance of the proposed rule, PQHH released a data summary showing the future impacts of home health care cuts.
In addition to the reductions, CMS is proposing to reweight PDGM case-mix, update the Low Utilization Payment Adjustment (LUPA) system to include an occupational therapy LUPA add-on factor, and further refine the home health wage index.
“Each of the 432 payment groups under the PDGM has associated case-mix weights and LUPA thresholds,” CMS explains. “CMS policy is to recalibrate case-mix weights and LUPA thresholds annually using the most complete utilization data available at the time of rulemaking. In this proposed rule, CMS proposes to recalibrate case-mix weights and LUPA thresholds, including functional level and comorbidity adjustment subgroups, using calendar year 2023 data to more accurately pay for the types of patients HHAs serve.”
LeadingAge, an association of nonprofit providers, also noted that payment cuts and other regulatory decisions have increased staffing pressures in home health care.
“As the only organization representing multiple sites across elder care providers, we are taking a holistic view of the proposed rule. Payment cuts, including the proposed 1.7% cut to home care providers, jeopardize seniors’ ability to receive the care and services they need,” LeadingAge CEO Katie Smith Sloan said in a statement. “To put CMS’s action today in context, nurses are at the heart of home care, and our mission-driven nonprofit members struggle every day to recruit and retain scarce nurses in a highly competitive labor market. Combined with the Biden Administration’s nursing home staffing rule requiring 24/7 nurse presence, the already tough competition for nurses will become even more intense. Payment cuts will pose significant challenges for our members. Without staff, there will be no care, and ultimately seniors and their families will suffer.”
