Key insights
- CMS finalized another permanent behavioral offset of negative 2.6% for 2024 on top of this year’s 3.95% cut to address the transition to the patient driven groupings model (PDGM).
- CMS estimates a 3% increase, but when combined with the behavioral offset and other payment changes in the rule, the update will be a 0.8% increase — approximately $140 million — compared to calendar year 2023.
- CMS finalized updates to the hospice provider enrollment process to reduce fraud, waste, and abuse.
Need help unpacking the final rules?
Larger environmental context
Demographics, value-based payments, aging in place, technology, and more are all driving the demand for care at home, which is also propelling market activity.
One of the most recent and largest acquisitions is Optum’s purchase of Amedysis in an all-cash offer of $101 per share. The deal continues to elicit scrutiny from federal regulators. On the other hand, home health (and home care), like all of health care, face countervailing forces, such as staffing shortages, lower wages, need for sufficient technology, and an increasing need to care for higher levels of acuity. Near term, we continue to see a dynamic home health market with various opportunities.
The Centers for Medicare & Medicaid Services (CMS) issued its final rule updating the Home Health Agencies (HHA) payment rates and policies for the calendar year (CY) 2024 Home Health prospective payment system (PPS). CMS estimates a 3% increase, but when combined with the behavioral offset and other payment changes in the rule, the update will be a 0.8% increase — approximately $140 million — compared to CY 2023.
Also included in the final rule are changes to the Home Health Quality Reporting Program (HHQRP) and the HH Value-Based Purchasing Program (HHVBP) for 2024 and future years.
Read on for more information or download the proposed rule from the Federal Register.
Market basket and payment updates
CMS finalized a 3% increase in the home health payment rates for CY 2024.
In addition, this includes a 2.89% decrease to the national, standardized 30-day payment rate, and reflects half of the full permanent behavioral adjustment of negative 5.779%. The adjustment is to account for the differences between the actual and assumed behavior changes resulting from the implementation of the Patient-Driven Groupings Model (PDGM) implemented by CMS.
CMS also estimated a 0.4% increase resulting from the updates to the fixed-dollar loss ratio (FDL) used in determining outlier payments. When combined with all other changes in the rule, the result is an 0.8% increase in estimated payments compared to CY 2023.
Home Health Quality Reporting Program
The HH QRP finalizes codifying the requirement for all HHAs to meet or exceed a data submission threshold of 90% of all required Outcome and Assessment Information Set (OASIS) data. This data must be submitted through the CMS-designated data submission system. CMS is also removing two OASIS items no longer necessary for collection, the M0100 – Episode Timing and M2220 – Therapy Needs.
CMS is adopting two new measures, removing one existing measure, and requiring public reporting of four measures. The added measures include COVID-19 Vaccine: Percent of Patients/Residents Who are Up-to-Date measure beginning with CY 2025; and Functional Discharge Score measure beginning with the CY 2025 reporting year.
Health equity an ongoing focus across Medicare
The Department of Health & Human Services is advancing health equity throughout its programs, such as providing updates on health equity initiatives in this HH final rule. We have seen health equity policies included in other Medicare payment rules such as new payment codes in teh physician fee schedule, as well as being embedded into all new CMS Innovation Models, like the REACH ACO, the Making Care Primary, and the new Guiding an Improved Dementia Experience model. We believe understanding your patient’s social drivers of health will be a growing focus in the coming years.
CMS is removing two measures: Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function measure beginning in CY 2025.
The four measures CMS added for public reporting include: Discharge Function; Transfer of Health Information to the Provider – Post-Acute Care measure; Transfer of Health Information to the Patient – Post-Acute Care measure; and COVID-19 Vaccine, Percent of Patients/Residents Who are Up-to-Date measure.
Home Health Value-Based Purchasing model
When CMS implemented the HHVBP model in 2016, the goals of the original model were to:
- Provide higher incentives for better quality care with greater efficiency
- Study new potential quality and efficiency measures for appropriateness in the home health setting
- Enhance the current public reporting process
Subsequently, CMS expanded the program and all HHAs certified to participate in the Medicare program prior to January 1, 2022, will be required to participate and will be eligible to receive an annual Total Performance Score based on their CY 2023 performance.
As part of the expanded HHVBP model, CMS finalized the following changes:
- Codify in the Code of Federal Regulations the measure removal factors finalized in CY 2022 HH PPS final rule
- Replace the two Total Normalized Composite measures (for Self-Care and Mobility) with the Discharge Function Score measure effective January 1, 2025
- Replace the OASIS-based Discharge to Community measure with the claims-based Discharge to Community-Post Acute Care measure for home health agencies effective January 1, 2025
- Replace the claims-based Acute Care Hospitalization During the First 60 Days of Home Health Use and the Emergency Department Use without Hospitalization During the First 60 Days of Home Health measures with the claims-based the Potentially Preventable Hospitalization measure effective January 1, 2025
- Change the weights of individual measures due to the change in the total number of measures
- Beginning with performance year CY 2025, the model baseline year will be CY 2023 for all applicable measures in the finalized measure set, including those measures included in the current measure set except for the 2-year DTC-PAC measure, which would be CY 2022 and CY 2023
CMS indicated their commitment to developing approaches to meaningfully incorporate the advancement of health equity into the expanded HHVBP model. CMS wants to provide HHAs the time to learn the requirements of the expanded model, gather at least two years of data, and study the effects of the expanded model on health equity outcomes before incorporating any potential changes to the expanded model regarding health equity.
Hospice enrollment provisions
To prevent and address hospice fraud, waste, and abuse, CMS finalized several provider enrollment regulatory changes. CMS believes these provisions related to hospice ownership and management will help protect against fraud schemes and improve transparency.
The finalized provider enrollment regulatory changes include:
- Subjecting hospices to the highest level of provider enrollment application screening, including fingerprinting all 5% or greater owners of hospices
- Expanding the HHS change in majority ownership provisions in 42 CFR Section 424.550(b) to include hospice changes in majority ownership
- Clarifying that the definition of “managing employee” in 42 CFR Section 424.502 includes the administrator and medical director of a hospice
Hospice special focus program
The Consolidated Appropriations Act, 2021 (CAA) required the Secretary of Health & Human Services to create a special focus program (SFP) for poor-performing hospices. The purpose of the SFP is, through regulatory oversight, to address issues that place hospice beneficiaries at risk of receiving unsafe and poor-quality care.
CMS will identify a subset of 10% of hospice programs based on the highest aggregate scores determined by an algorithm created by CMS for the SFP based on multiple data sources. CMS released the algorithm and data sources in the proposed rule and responded to comments on those in the final rule. Data in the SFP will include survey reports with condition-level deficiencies and complaints with substantiated allegations, and CMS Medicare data sources from the Hospice Quality Reporting Program (Medicare claims and Consumer Assessment of Healthcare Providers and Systems (CAHPS®).
The SFP has been finalized as proposed and will help hold hospices accountable for providing unsafe and poor-quality care to patients. Those in the SFP will have enforcement and survey requirements. Hospices unable to resolve deficiencies identified through the SFP or meet the SFP completion criteria will be placed on a termination track. CMS intends to publicly post hospices in the SFP programs as well as the list of hospitals with the worst 10% algorithm scores. The SFP is effective 2024.
Hospice transactions: 36-month rule
CMS extends its existing 36-month rule related to a change in majority ownership (CIMO) to hospices. Specifically, if a hospice undergoes a change in majority ownership by sale within 36 months after the effective date of the initial enrollment in Medicare or within 36 months after the most recent CIMO, the provider agreement and Medicare billing privileges do not convey to the HHA’s new owner. The prospective provider/owner must instead: (1) enroll in Medicare as a new (initial) HHA; and (2) obtain a state survey or an accreditation from an approved accreditation organization. There are four exemptions to this requirement.
How we can help
Connect with CLA for further clarification on this final rule and how it impacts home health agencies. Our health care team is on the front lines of regulatory, policy, and payment changes for providers across the continuum and can provide guidance to meet your specific needs.