Home Health Prospective Payment System: More catch-up cuts in 2024 annual rule

CMS’ proposed Calendar Year 2024 Medicare Home Health Prospective Payment System rule includes updates to:

• the Patient-Driven Groupings Model, Low Utilization Payment Adjustment thresholds, functional levels and comorbidity adjustment subgroups;
• estimated aggregate payments based on the 30-day payment rate to account for assumed versus actual behavior changes;
• the HH Value-Based Purchasing and Quality Reporting programs;
• home intravenous immune globulin items and services, and disposable negative pressure wound therapy device payment rates;
• medical equipment and supplies, including competitive bidding, as outlined by the Consolidated Appropriations Act of 2023; and
• provider and supplier enrollment requirements and oversight.

The HH PPS rule also proposes to add a new Special Focus Program for low-performing hospices.

CMS estimates that the rule will cut aggregate HH agency payments by $375 million nationally. This includes a -1.81% adjustment in the HH annual standard payment rate. These cuts are of critical concern to agencies already facing higher operating costs, a shrinking workforce and the need to manage the downstream patient impact of these factors.

How the proposed HH PPS cuts impact home health providers

1. Continued PDGM and behavior change adjustments drive deeper payment cuts

In the CY 2024 rule, CMS proposed more changes to the Patient-Driven Grouping Model and 30-day standard payment unit implemented in CY 2020. These changes reflect behavior assumptions related to the switch from a 60-day payment rate and to Clinical Group Coding, Comorbidity Coding and Low Utilization Payment Adjustment threshold updates.

CMS believes these changes better align payments and patient care needs, especially for beneficiaries with clinically complex conditions. However, the CAA of 2023 requires that CMS study their impact. As a result, CMS implemented a -3.925% adjustment to the base payment rate adjustment for CY 2022 and proposes a further -5.653% adjustment for CY 2024. It’s important to note that the behavior adjustment is statutory, and there could be more adjustments through CY 2026.

CMS believes this modification may reduce future permanent adjustments and intends to delay additional temporary adjustments to other payment years. These temporary adjustments are to reconcile overpayments that arose from the payment differences between assumed and actual behaviors tied to the 30-day rate unit for CYs 2020 to 2022. The estimated overpayment is $3.439 billion.

2. Fewer patients may receive home healthcare

CMS expressed concern about patient access in the proposed rule based on fewer HH aide service claims and anecdotal evidence. CMS issued a Request for Information on its Fact Sheet to ensure that:

• beneficiaries have access to all entitled HH services;
• agencies address barriers and obstacles to hiring HH aides; and
• HH aide wages equal those in other care settings.

Since the HH payment model changed in 2020, 500,000 fewer Medicare patients have accessed home health services. This is according to the National Association for Home Care and Hospice, which filed suit in July to stop CMS’ payment cuts and asserted that these cuts have indeed “precipitated services limitations or access to care.”

3. More VBP and quality reporting changes could strengthen programs

CMS proposes changes to metrics, data sets and reporting requirements for the Home Health Value-Based Purchasing Model and the Home Health Quality Reporting Program. These changes would help streamline and align CMS quality measures. Program performance impacts HH agency Medicare payments by up to ± 5% for HHVBP and can lead to a ≤2% marketbasket reduction for HHQRP.

CMS expanded HHVBP in 2021 due to strong results. CMS’ analysis showed an annual average improvement of 4.6% in HH agency quality scores and $141 million in savings, all without beneficiary service cuts. In future years, the agency intends to add health equity components to both programs and seeks input on multiple HHQRP measures. This includes cognitive function, behavioral and mental health, patient experience and satisfaction, chronic conditions and pain management.

Get help on the rule update: contact DataGen today!

DataGen hospital and health system clients already received their in-depth analysis of the proposed HH PPS changes.

If your facility needs key PPS data insights backed by an analytics-first approach, contact DataGen for a free consultation.