On June 30, the Centers for Medicare and Medicaid Services (CMS) released the Calendar Year (CY) 2024 proposed Home Health Prospective Payment Rule. In addition to the payment rate update, the proposed rule covers home health value-based quality reporting program requirements, home health value-based purchasing expanded model requirements, home intravenous immune globulin items and services, and hospice informal dispute resolution and special focus program requirements. 

Overall, the rule proposes a 2.2% aggregate payment decrease for home health when adjusting upward market basket and downward for the prospective payment system (PPS) adjustment with no additional clawback proposed from “overpayments” from 2020-2021. While the cut is lower than last year’s,  it will nonetheless hurt home health providers, who struggle with labor shortages and inflation fueled price hikes.

“Our mission-driven, nonprofit members are navigating continued, substantial challenges: workforce shortages and inflation-fueled price hikes that increase operating costs. While in this proposed rule CMS did not include any recoupments from 2020 and 2021 payments, the agency did calculate a market basket rate update using cost report data from 2021—and in doing so failed to capture the impact of the past 24 months’ increases in labor, transportation and other business-related costs. Providers’ operating environment is tough. A 2.2% cut will hurt,” said LeadingAge President and CEO Katie Smith Sloan in a statement. “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. This proposed rule contradicts the Biden Administration’s oft-stated commitment to ensuring access to home and community-based care and threatens to harm those who most need home health: older adults and families.”

Comments are due on August 29 to ensure enough time for the final rule and implementation in January. During the comment period, LeadingAge will ensure that the voices of home health providers and clients are heard. Topline provisions of interest to aging services providers include: 

Home Health

• CMS is proposing to adjust the market basket up by 3.0% with a -.3% productivity adjustment, resulting in a proposed 2.7% market basket adjustment for home health. These data were calculated using 2021 cost report data. We understand this is insufficient given the costs of labor, transportation, and other inflationary costs. LeadingAge will advocate for a higher market basket update.
• CMS is implementing the remainder of last year’s permanent prospective payment adjustment – a 3.765% base cut. Based on this year’s analysis, they also added -1.88% on top of that resulting in a total adjustment of approximately -5.1% when including base rate reductions for 30 day episodes and Low Utilization Payment Adjustments (LUPAs).
• Last year, CMS noted that they had calculated a temporary retrospective payment adjustment of $2 billion for 2020 and 2021. They asked for suggestions regarding recoupment. CMS notes that imposing a temporary adjustment on top of the permanent adjustment would result in significant adjustment in a single year. Therefore, no recoupments or temporary adjustments are included in this rule stemming from CMS “overpayment” from CYs 2020 and 2021.

Hospice

• As was anticipated CMS is proposing to implement the special focus program (SFP) in hospice. CMS notes the use of a technical expert panel (TEP) in development of the SFP.  We will conduct a more in-depth analysis of this portion to assess CMS alignment in their proposal with TEP recommendations and our 34 program integrity recommendations submitted to CMS earlier this year.
• Our comments will include substantial analysis of included quality measures and appropriate weighting within the SFP scoring algorithm.
• On the positive side, CMS has included an informal dispute resolution (IDR) process similar to the home health IDR process for condition-level findings.