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In a recent development, the CMS published its proposed payment cut for the Home Health Prospective Payment system in the fiscal year of 2024. It would result in a 5.1% decrease in home health payments, amounting to an estimated $870 million. While the draft has yet to be officially published in the Federal Register, the released details have garnered significant criticism from the home health industry. 

On top of the mandated rule to reduce home health agency payments by 5.1%, there will be an additional 2.2% reduction. However, there will also be a 2.7% increase, equivalent to approximately $460 million, to offset these reductions. This increase is expected to be part of normal increases to help businesses operate in the coming future.

A part of the problem with the Patient-Driven Groupings Model (PDGM) and the 30-day unit of payment mandated in the Bipartisan Budget Act of 2018 was that the CMS incurred extra costs due to ineffective tracking of behavioral changes. This resulted in the exploitation of government funding; Medicare overpaid home health agencies for assumed costs rather than actual costs. That is why there is a need for a permanent, prospective adjustment

The proposal aims to permanently change the home health payment rate and offset the high expenditures incurred over the past few years on assumed behavioral costs. It will, by contrast, account for the cost differences between assumed and actual behavior changes. In addition, it will introduce a new review process and stipulations based on actual behavioral changes to track costs more effectively and increase expenditures as needed while preventing any increase in runaway assumed costs.

A physiotherapist is on a home health visit with a senior man.
Home health payments will be cut in 2024.

In addition to the payment cuts, the CMS’ proposed draft includes changes to the Home Health Value-Based Purchasing (HHVBP) Model. The agency suggests removing five quality measures and adding three new ones:

  • Discharge function scores
  • Discharges to the community
  • Potentially preventable hospitalizations during home health care coverage 

The proposed rule also addresses wound care and separates disposable device payments from nursing and therapy services. These anticipated changes will be implemented in 2024. 

Reactions to the Rule

The proposed rule has faced backlash from industry experts who have openly voiced their opposition.  

United State Capitol building where industry experts are voicing their concerns and asking for Congressional support.  
Industry experts are calling for Congressional support.

William A. Dombi, the National Association for Home Care & Hospice (NAHC) president, has criticized the CMS’ methodology while highlighting the detrimental effects of budget neutrality. 

“Overall spending on Medicare home health is down, fewer patients are receiving care, and patient referrals are being rejected because providers cannot afford to provide the care needed within the payment rates,” Dombi said. “Providers have closed their doors or restricted service territory to reduce care costs. We would not see these actions occurring if the rate were truly budget neutral.”

LeadingAge’s CEO, Katie Smith Sloan, has also criticized the proposal, stating that it contradicts the Biden administration’s goal of ensuring home-based care for seniors. “A 2.2% cut will hurt,” she said. “Reduced payment will limit members’ ability to recruit, hire, and retain staff in a very tight labor market—and without staff, there is no care.”

Meanwhile, Joanne Cunningham, the CEO of the Partnership for Quality Home Healthcare (PQHH), has pointed out that CMS’ payment rate updates do not keep up with the rising operating costs of home health agencies. 

“The CMS’ market basket projections are not keeping up with the real-world costs to home healthcare providers, and home health agencies cannot absorb compounding cuts in this environment,” Cunningham said. “This latest round of proposed cuts will exacerbate an already fragile economic environment in the home health sector.”

Calls for Congressional Support 

The fate of the proposed payment cuts and other rule changes will likely shape the future of home health services in the United States. As the proposed rule moves forward for consideration, home health providers and industry advocates are urging Congress to intervene and prevent further harm to the sector. 

Experience Care will continue to keep readers updated as the story unfolds.