Last June 17, 2022, the Centers for Medicare & Medicaid Services (CMS) released the 2023 home health proposed payment rule—and it has not been received well. It validates the concerns that providers have had since the hospice and skilled nursing facility proposed payment rule was released, as well as worries related to the rebalancing of the Patient-Driven Groupings Model (PDGM).
At first glance, it looks disappointing to providers. Let us take a closer look at the cause for disappointment and the goal of CMS for this rule.
Decrease in Payment
The proposed rule comes with a 4.2% estimated decrease in payment rates, which is $810 million less compared to 2022 rates. According to the CMS, “This decrease reflects the effects of the proposed 2.9% home health payment update percentage ($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 used in determining outlier payments ($40 million decrease).”
CMS is proposing to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for any increase or decrease in expenses.
To recall, the law requires CMS to make assumptions about behavior changes that might be due to the implementation of the 30-day unit of payment and the Patient-Driven Groups Model (PDGM). In the 2019 home health final rule, CMS finalized three behavioral assumptions for clinical group coding, comorbidity coding, and the Low Utilization Payment Adjustment threshold.
In addition, CMS is also required to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated combined expenses, from 2020 up to 2026. CMS is also expected to make temporary and permanent increases or decreases to the 30-day payment amount as needed.
This 2023 proposed rule suggests calculating what the Medicare program would have spent if the PDGM was not implemented in 2020 and 2021, and then comparing that to actual home health expenditures during those years. With this method, CMS is proposing a -7.69% permanent adjustment to the 30-day payment rate in 2023 to ensure that aggregate expenditures under the new payment system model would be equivalent to what they would have been under the old payment system.
Disappointment from the Industry
The CMS 2023 proposed payment rule looks upsetting to providers, as it does not seem to consider the current challenges in their operations. This includes the rising labor costs, a high inflation rate, and other COVID-19-related increased expenses, such as a significant rise in staffing costs, transportation, and more. This will only put more pressure on providers that can compromise their ability to provide quality health care. Because of this, industry leaders fear that it would threaten the stability of home health care.
Other Key Takeaways
In addition to a decrease in payment and the proposal to apply a permanent prospective payment adjustment to the home health 30-day period payment rate, here are other particulars to take note of.
- CMS is currently soliciting comments on:
- The best way to implement a temporary payment adjustment for CYs 2020 and 2021
- The collection of telehealth data on home health claims to allow CMS to analyze the characteristics of the beneficiaries utilizing services furnished remotely
- Health-equity measure development and its potential future application in the Expanded Home Health Value-Based Purchasing Model (HHVBP)
- CMS finalized policy changes regarding the use of services provided via telecommunications systems in the 2021 final rule.
- CMS is also updating the home infusion therapy services payment rates for 2023.
- The proposed rule also addresses the All-Payer Policy and Baseline Years in the expanded HHVBP.
Through this proposed rule, CMS aims to ultimately help improve patient care and protect Medicare’s sustainability for future generations by serving as a responsible custodian of public funds. What agencies can do is navigate the shifting landscape of home health by recognizing actions to take.
Meanwhile, these cuts in home health payments underscore the need for home health businesses to optimize reimbursements and take advantage of opportunities to improve profitability in consideration of the implementation of the new OASIS-E and the expanded HHVBP.