June 22, 2022

Home Health CY 2023 Prospective Payment Rule Summary

BY Katy Barnett

This summary is not exhaustive; we encourage members to read the whole rule. The page numbers referenced in this summary refer to the public inspection copy of the rule linked here. A copy of the fact sheet which accompanied the rule is available here.

Temporary Retrospective and Permanent Prospective Adjustment

For the first time since the implementation of Patient Driven Groupings Model (PDGM), CMS conducted a required analysis of the new payment model to determine its budget neutrality in comparison to the expected Medicare spending on the previous payment model from CY2019. CMS determined aggregate Medicare expenditures for CY2020 and CY2021 exceeded their assumed behavioral changes requiring a retrospective and permanent prospective payment adjustment. To reconcile the differences between CY2020 and CY2021 assumed behavior vs. actual behavior, CMS would need to apply a -7.69% permanent adjustment to the CY2023 base payment rate in addition to a temporary adjustment of $2 billion to reconcile retrospective overpayments from the first two years of PDGM.

CMS proposes to only apply the permanent adjustment of -7.69% to the CY2023 national, standardized 30-day period payment and would not impact payments for 30-day periods which are Low Utilization Payment Adjustments (LUPAs). CMS solicits comments on how to collect the temporary payment adjustment of $2 billion for CY2020 and CY2021. CMS is also open to additional empirical evidence to support COVID-19 PHE effects on provider behavior which may change the payment adjustments.

In addition to the permanent adjustment, CMS proposes a 2.9 percent market basket increase for the home health payment update for CY 2023.

CMS estimates that Medicare payments to home health agencies in CY2023 would decrease in the aggregate by -4.2%, or -$810 million compared to CY 2022, based on the proposed policies. This decrease reflects the effects of the proposed 2.9% home health market basket update ($560 million increase), an estimated 6.9% decrease that reflects the effects of the proposed prospective, permanent behavioral assumption adjustment of -7.69% ($1.33 billion decrease), and an estimated 0.2% decrease that reflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($40 million decrease) which is discussed in more detail below.


CY 2022



30-Day Period
















CY 2023




CY 2023



30-Day Period








For HHAs that do not submit the required quality data for CY 2023, the home health payment update would be 0.9 percent (2.9 percent minus 2 percentage points).


HH Discipline

CY 2022 Per- Visit Payment Amount

Wage Index Budget Neutrality Factor

CY 2023 HH Payment Update

CY 2023 Per-Visit Payment Amount

Home Health Aide





Medical Social Services





Occupational Therapy





Physical Therapy





Skilled Nursing





Speech-Language Pathology




$191.66 (102)

Reassignment of PDGM Diagnosis Codes (PGS. 46-59)

CMS proposes make the following changes to clinical groupings and comorbidity subgroups:

  • Reassign 320 diagnosis codes to different clinical groups when listed as a principal diagnosis
  • Reassign 37 diagnostics codes to a different comorbidity subgroup when listed as a secondary diagnosis
  • Removal of 159 ICD-10-CM diagnosis codes from being accepted as the principal diagnosis to “no clinical group” since each has another ICD-10-CM code which more clearly specified the diagnosis
  • Reassign B78.9 (strongyloidiasis, unspecified) to clinical group K (Infectious Disease, Neoplasms, and Blood-Forming Diseases)
  • Reassign N83.201 (unspecified ovarian cyst, right side) to clinical group J (Gastrointestinal Tract and Genitourinary System)
  • Reassign 144 gout-related ICD-10-CM diagnosis codes to clinical group E (Musculoskeletal Rehabilitation)
  • Reassign 12 ICD-10-CM diagnosis codes related to crushing injury of the face, skull, and head (listed on page 53) to clinical group B (Neurological Rehabilitation)
  • Reassign 3 ICD-10-CM diagnosis codes related to lymphedema (listed on page 53) to clinical group C (Wounds)
  • Reassign ICD-10-CM diagnosis code F60.5 (obsessive-compulsive personality disorder) to comorbidity subgroup behavioral 5 (Phobias, Other Anxiety and Obsessive-Compulsive Disorders) when listed as a secondary diagnosis
  • Assign ICD-10-CM diagnosis code Q82.0 (hereditary lymphedema) to circulatory 10 (Varicose Veins and Lymphedema) when listed as a secondary diagnosis
  • Reassign 11 ICD-10-CM diagnosis codes related to malignant neoplasms of the upper respiratory tract (listed on page 55) to neoplasm 1 (Malignant neoplasms of lip, oral cavity, and pharynx, including head and neck cancers) when listed as secondary diagnoses
  • Reassign diagnosis codes C74.00 (malignant neoplasm of cortex of unspecified adrenal gland) and C74.90 (malignant neoplasm of unspecified part of unspecified adrenal gland) from “NA” to neoplasm 15 (malignant neoplasm of adrenal gland, endocrine glands and related structures) when listed as secondary diagnoses
  • Reassign diagnosis code J18.2 (hypostatic pneumonia, unspecified organism) to respiratory 2 (whooping cough and pneumonia) when listed as a secondary diagnosis
  • Reassign diagnosis codes J98.2 (interstitial emphysema) and J98.3 (compensatory emphysema) to respiratory 4 (bronchitis, emphysema, and interstitial lung disease) when listed as a secondary diagnosis
  • Reassign diagnosis code U09.9 (post COVID-19 condition, unspecified) to respiratory 10 (2019 novel Coronavirus) when listed as a secondary diagnosis

CMS also proposes to establish a new comorbidity subgroup for certain neurological conditions related to non-diabetic neuropathy. CMS identified 18 ICD–10–CM diagnosis codes for potential reassignment to a proposed new comorbidity subgroup, neurological 12. Of the 18 codes, 11 diagnosis codes were not currently assigned a comorbidity group and seven diagnosis codes were assigned to neurological 11 comorbidity subgroup. These can be reviewed in Table 1.C of the CY 2023 Proposed Reassignment of ICD– 10–CM Diagnosis Codes supplemental file here.

Proposed Permanent Cap on Home Health Wage Index Decreases (PGS. 93-96)

The proposed CY2023 Home Health Prospective Payment Rate would include a permanent 5-percent cap on wage index decreases. This change was initially made in CY2021 final rule to mitigate the impact of Hospital Wage Index calculations issued by the Office of Management and Budget. By making this change permanent, CMS believes this will provide greater transparency and be administratively less complex as well as giving providers time to adjust to new yearly labor market delineations and wage index values.

In previous years, CMS received comments raising concerns about significant changes to labor markets areas and the impact this could have on Medicare payments. In the past, CMS implemented limited term, phased transition policies when significant changes to the labor market areas occurred in an attempt to mitigate short term instability and fluctuations. CMS recognizes that external factors, outside of the provider’s control, like the COVID-19 Public Health Emergency (PHE), can impact labor market area changes making predictability of Medicare payments difficult to budget and plan for in operations.

CMS provided an estimate of the impact to payments for providers in CY2023 based on this policy change on page 161 of the rule and stated they would examine the proposed policy’s effects on an ongoing basis.

For CY 2023, CMS proposes to base the home health wage index on the FY2023 hospital pre-floor, pre-reclassified wage index for hospitals.

Proposed CY2023 PDGM LUPA Thresholds and PDGM Case-Mix Weights (PGS. 59-61)

CMS is proposing to update the Low Utilization Payment Adjustment (LUPA) thresholds for CY 2023 using data from CY 2021. CMS did not find much variation in the updated LUPA thresholds.

  • 280 case-mix groups had no change in their LUPA threshold
  • 120 case-mix groups had their LUPA threshold go down by one visit
  • 18 case-mix groups had their LUPA threshold go up by a visit
  • 12 case-mix groups had their LUPA threshold go down by two visits
  • 2 case-mix groups had their LUPA threshold go down by three visits

The proposed LUPA thresholds for the CY2023 PDGM payment groups with the corresponding Health Insurance Prospective Payment System (HIPPS) codes and the case-mix weights are listed in Table B26 here.

To ensure the changes to the PDGM case-mix weights are implemented in a budget neutral manner, CMS applied a case-mix weights budget neutrality factor to the CY2022 national, standardized 30-day period payment rate. The proposed case-mix weights budget neutrality factor for CY2023 is 0.9895, calculated using CY2021 claims data.

Functional Impairment Level Changes (PGS. 61-64)

For CY2023, CMS proposes to use CY2021 claims data to update the functional points and functional impairment levels by clinical group. They are proposing to use this same methodology previously outlined in CY2018 HH PPS proposed rule to update the functional impairment levels for CY 2023. The updated OASIS functional points table and the table of functional impairment levels by clinical group for CY2023 are listed in Tables B21 and B22 (PGS 62-64).

Comorbidity Adjustment Subgroup Changes (PGS. 64-72)

For CY 2023, CMS proposes to use the same methodology used to establish the comorbidity subgroups to update the comorbidity subgroups using CY2021 home health data. The comorbidity subgroups for CY2023 reflect the proposed coding changes detailed above and include:

  • 23 low comorbidity adjustment subgroups as identified in Table B23 (PGS. 65-66)
  • 94 high comorbidity adjustment interaction subgroups as identified in Table B24 (PGS. 66-72)

A full review of these adjustments, including the updated diagnosis codes in each subgroup, is available here.

Fixed-Dollar Loss (FDL) Ratio Changes for Outlier Payments (PGS. 104-107)

Historically, CMS used a value of 0.80 for the loss-sharing ratio to preserve incentives for agencies to provide care efficiently for outlier cases. CMS also has a statutory requirement that total outlier payments cannot exceed 2.5 percent of total payments estimated under the HH PPS. Using CY2021 claims data, CMS is proposing an FDL ratio of 0.44 for CY 2023, a .2% decrease from CY2022.

Collection of Data on Use of Telecommunications Technology under Medicare Home Health Benefit (PGS. 107-112)

Currently, telecommunications technology cannot be used as a substitute for in-person home health services, as ordered on the plan of care, and services provided using telecommunications technology (rather than in-person) are not considered a home health visit. The collection of data on the use of telecommunications technology is limited to overall cost data on a broad category of telecommunications services as apart of an agency’s administrate costs on line 5 of the HHA Medicare cost reprots. In CY2019, CMS began factoring these costs into per visit costs.

Beneficiary level data on the uses of telecommunications technology during a 30-day period of care is not currently collected on the home health claim. Collecting this data on claims could allow CMS to analyze the characteristics of beneficiaries utilizing services furnished remotely and give a broader understanding of the social determinants that affect who benefits most from these services, including barriers to these services for certain subsets of beneficiary. In March 2022, MedPAC also recommended tracking the use of telehealth in home health care on claims to improve payment accuracy.

CMS recognizes the COVID-19 PHE has made significant changes in home health practices of telecommunications technology. CMS is therefore soliciting comments on the collection of such data on home health claims. CMS would aim to begin collecting voluntary data by January 1, 2023, and to require this information be reported on claims by July of 2023.

CMS is soliciting comments on the use of three new G-codes identifying when home health services are furnished using:

  • synchronous telemedicine rendered via a real-time two-way audio and video telecommunications system;
  • synchronous telemedicine rendered via telephone or other real-time interactive audio-only telecommunications system; and
  • the collection of physiologic data digitally stored and/or transmitted by the patient to the home health agency, that is, remote patient monitoring (CMS would capture the utilization of remote patient monitoring through the inclusion of the start date of the remote patient monitoring and the number of units indicated on the claim).

CMS is requesting comments on whether there are other common uses of telecommunications technology under the home health benefit that would warrant additional G-codes. CMS stated they believe that, due to the hands-on nature of home health aide services, the use of telecommunications technology would generally not be appropriate for such services. CMS is also soliciting comments regarding the appropriateness of such technology for particular services.

Additional instruction on how G-codes are to be used will be forthcoming, but each code will need to report services in line-item detail and each service must be reported as a separate line under the appropriate revenue code. While CMS does not plan on limiting the use of these G-codes to any particular discipline, they would not anticipate use of such technology would be reported under certain revenue codes such as the wound care.

Beginning July 1, 2023, CMS will solicit comments on future refinement of these G-codes. Specifically, whether the codes should differentiate the type of clinician performing the service via telecommunications technology (e.g. a therapist vs. therapist assistant) and whether new G-codes should differentiate the type of service being performed through the use of telecommunications technology (e.g. physical therapy for maintenance vs. other restorative physical therapy).

CMS clarified that this comment solicitation does not mean that telehealth services are considered “visits” for purposes of eligibility or payment. Additionally, data collected in this effort will not be used or factored into case-mix weights, count towards outlier payments, or the LUPA threshold per payment period.

Changes to Home Health Quality Reporting Program (PGS. 113-123)

All Payer OASIS

CMS proposes to end the suspension of the collection of OASIS data on non-Medicare and non-Medicaid patients and require home health ageinces to report all-payer OASIS data for the purpose of the Home Health Quality Reporting Program (HHQRP) beginning in CY2025. CMS’ goal is to have OASIS measures reported for all patients for all payer sources and improve the HHQRP ability to assess quality and foster better quality of care regardless of pay source. CMS is also interested in comparing standardized outcome measures across post-acute care settings in line with the Improving Medicare Post-Acute Care Transformation (IMPACT) Act.

This would mean for the CY2025 HHQRP, the expanded reporting would be required for all patients discharged between January 1, 2024, and June 30, 2024. For the CY2026 HHQRP, agencies would be required to report assessment-based quality measure data and standardized patient assessment data on all patients, regardless of payer, for the applicable 12-month performance period (patients discharged between July 1, 2024, and June 30, 2025).

CMS also proposed the following technical changes to HHQRP regulations:

  • Amending § 484.245(b)(1)(iii) to state, “For the purposes of this HHCAHPS survey data submission, the following additional requirements apply:”
  • Moving quality data required under section 1895(b)(3)(B)(v)(II) from § 484.245(b)(1)(iii) to § 484.245(b)(1)(i) and the change would state, “Data on measures specified under sections 1895(b)(3)(B)(v)(II), 1899B(c)(1), and 1899B(d)(1) of the Act.”
  • Amending 42 CFR 484.245 to add eight HHQRP measure removal factors finalized in CY2019 HH PPS final rule.

CMS included statutorily required cost estimates for expanding the collection of OASIS for all home health patients regardless of payer on pages 149-155.

Request for Information on Health Equity (PGS. 123-130)

Based on the feedback received from the CY2022 HH PP final rule request for information on health equity, CMS is asking for public comment on specific work home health agencies conducted around health equity using the following questions:

  • What efforts does your HHA employ to recruit staff, volunteers, and board members from diverse populations to represent and serve underserved populations? How does your HHA attempt to bridge any cultural gaps between your personnel and beneficiaries/clients? How does your HHA measure whether this has an impact on health equity?
  • How does your HHA currently identify barriers to access to care in your community or
  • service area?
  • What are the barriers to collecting data related to disparities, SDOH, and equity? What steps does your HHA take to address these barriers?
  • How does your HHA collect self-reported demographic information such as information on race and ethnicity, disability, sexual orientation, gender identity, veteran status, socioeconomic status, and language preference?
  • How is your HHA using collected information such as housing, food security, access to interpreter services, caregiving status, and marital status to inform its health equity initiatives?

Additionally, CMS is considering a structural composite measure based on organizational activities to address access to and quality of home health care for underserved populations. CMS is interested in developing health equity measures based on information collected by home health agencies that is not currently available on claims, assessments, or other publicly available data.

Home health agencies could receive a point for each domain where data are submitted to a CMS portal, regardless of the action (such as training in culturally and linguistically appropriate services, health equity, and implicit bias). The data could reflect the home health agency’s completed actions for each corresponding domain (for a total of three points, one per proposed domain) in a reporting year. A home health agency could also submit documentation, examples, or narratives to qualify for the measure numerator. CMS is also seeking comment on how to score a domain for a home health agency that submitted data reflecting no actions or partial actions in a given domain.

CMS is interested in public comments on publicly reporting a composite structural health equity quality measure, displaying descriptive information on Care Compare from the data home health agencies proved to support health equity measures, and the impact of the domains and quality measure concepts on organizational culture change. CMS is seeking comment on each of the domains being considered below, including specific suggestions on items that should be added, removed, or revised.

Domain 1: HHAs’ commitment to reducing disparities is strengthened when equity is a key organizational priority. Candidate domain 1 could be satisfied if an HHA submits data on actions it is taking with respect to health equity and community engagement in their strategic plan. HHAs could report data in the reporting year about their actions in each of the following areas, and submission of data for all elements could be required to qualify for the measure numerator.

  • HHAs attest to whether their strategic plan includes approaches to address health equity in the reporting year.
  • HHAs report community engagement and key stakeholder activities in the reporting year.
  • HHAs report on any attempts to measure input they solicit from patients and caregivers about care disparities they may experience as well as recommendations or suggestions for improvement.

Domain 2: Training HHA board members, HHA leaders, and other HHA staff in culturally and linguistically appropriate services (CLAS), health equity, and implicit bias is an important step the HHA can take to provide quality care to diverse populations. Candidate domain 2 could focus on HHAs’ diversity, equity, inclusion training for board members and staff by capturing the following reported actions in the reporting year. Submission of relevant data for all elements could be required to qualify for the measure numerator.

  • HHAs attest as to whether their employed staff were trained in culturally sensitive care mindful of SDOH in the reporting year. HHAs could report data relevant to this training, such as documentation of specific training programs or training requirements.
  • HHAs attest as to whether they provided resources to staff about health equity, SDOH, and equity initiatives in the reporting year and report data such as the materials provided or other documentation of the learning opportunities.

Domain 3: HHA leaders and staff can improve their capacity to address health disparities by demonstrating routine and thorough attention to equity and setting an organizational culture of equity. This candidate domain could capture activities related to organizational inclusion initiatives and capacity to promote health equity. Examples of equity-focused factors include proficiency in languages other than English, experience working with diverse populations in the service area, and experience working with individuals with disabilities. Submission of relevant data for all elements could be required to qualify for the measure numerator.

  • HHAs attest as to whether they considered equity-focused factors in the hiring of HHA senior leadership, including chief executives and board of trustees, in the applicable reporting year.
  • HHAs attest as to whether equity-focused factors were included in the hiring of direct patient care staff (for example, therapists, nurses, social workers, physicians, or aides) in the applicable reporting year.
  • HHAs attest as to whether equity focused factors were included in the hiring of indirect care or support staff (for example, administrative, clerical, or human resources) in the applicable reporting year.

Update on Advancing Health Information Exchange (PGS. 130-132)

The proposed rule provides an update on a number of Department of Health and Human Services (HHS) efforts to adopt interoperable health information technology for post-acute care settings. In January, the Office of National Coordinator for Health Information Technology (ONC) released the Trusted Exchange Framework and Common Agreement Version 1 which will advance principles for health information exchange and allow for connections at different levels and is inclusive of many types of entities including post-acute care. For more information visit: www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement-tefca

Changes to Expanded Home Health Value Based Purchasing Model (PGS. 133-146)

CMS is proposing two key updates to the Home Health Value Based Purchasing (HHVBP) Model prior to the first year of data collection in CY2023 and is seeking feedback on how to incorporate health equity in future years of the model.

CMS proposes to replace the term baseline year with the terms HHA baseline year and Model baseline year. New definitions:

  1. HHA baseline year as the calendar year used to determine the improvement threshold for each measure for each individual competing HHA.
  2. Model baseline year as the calendar year used to determine the benchmark and achievement threshold for each measure for all competing HHAs.

CMS also proposes to change the baseline HHVBP year from CY2019 to CY2022 for the performance year starting in CY2023. This decision reflects the continuing effects of the COVID-19 public health emergency (PHE). CMS conducted a measure-by-measure comparison of performance for CY2019 to CY2021 for the expanded HHVBP Model’s measure set relative to the historical trends of those measures. The two claims-based measures in the set (Acute Care Hospitalization During the First 60 Days of Home Health Use measure and the Emergency Department Use without Hospitalization During the First 60 Days of Home Health measure) deviated significantly from previous trends with a drop of 9 percent and 15 percent in CY 2020, respectively, relative to CY2019 (Table D2 PGS. 139-140). Analysis also found measure averages remained lower in CY 2021 as compared to historic trends that occurred prior to the pandemic. In the five years prior to 2020, both measures demonstrated stable trends, varying +/- 5 percent from year to year, which highlights the significance of the change. These two measures alone make up 35 percent of the total performance score used to determine payment adjustments under the Model.

Based on these trends, CMS proposes to use CY2022 as the baseline year since it was the first year where the vast majority of beneficiaries were vaccinated and there were viable treatments available. Additionally, healthcare providers had nearly two years of experience managing COVID -19 patients.

However, because not all the CY2022 baseline data is available yet, CMS would not anticipate providing agencies with the final achievement thresholds and benchmarks until the July 2023 interim performance report (IPR). This is consistent with the rollout of the original HHVBP Model in which benchmarks and achievement thresholds using 2015 data were made available to agencies during the summer of the first performance year (CY2016).

As CMS continues to develop policies for the expanded HHVBP Model, they are requesting public comments on policy changes that to consider on the topic of health equity. Specifically, CMS is requesting comments on whether they should consider incorporating adjustments into the expanded HHVBP Model to reflect the varied patient populations that agencies serve around the country and tie health equity outcomes to the payment adjustments they make based on agency performance under the Model. CMS provided several examples of how this could be implemented:

  • Adjustments could be made at the measure level in forms such as stratification (for example, based on dual status or other metrics),
  • New measures could be adopted around social determinants of health (SDOH).
  • Adjustments could be incorporated at the scoring level in forms such as modified benchmarks, points adjustments, or modified payment adjustment percentages (for example, peer comparison groups based on whether the home health agency includes a high proportion of dual eligible beneficiaries or other metrics).

Home Infusion Therapy Payment Rates CY2023 (PGS. 147-148)

CMS proposes they will no longer include a section in the HH PPS rule on home infusion therapy if no changes are being propose to the payment methodology. Instead, the rates will be updated each year in a Change Request and posted on the CMS website.