CMS Final Rule Reins in 2024 Rate Reduction, But Brings Big Cuts Beyond

WASHINGTON—The Centers for Medicare & Medicaid Services (CMS) issued its 2024 Home Health Prospective Payment System Rate Update final rule on Nov. 1, landing on more moderate cuts than initially proposed but still enacting rate reductions beginning in 2025 that would present “serious concerns for the home health community,” according to the National Association for Homecare and Hospice.

The final rule calls for a -2.890% permanent adjustment in payment rates to home health agencies in calendar year 2024, half of the full permanent adjustment of -5.779%. The proposed rule called for a slightly lower overall permanent adjustment of -5.653%. CMS said that because the new rule only calls for half of the full permanent adjustment to go into effect in 2024, Medicare payment to home health agencies will increase by .8%, rather than the original 2.2% decrease initially proposed.

“This halving of the permanent adjustment is in response to commenter concerns about the magnitude of a single-year significant payment reduction,” CMS wrote in its announcement of the rule. “CMS will have to account for the remaining permanent adjustment not applied in CY 2024, and other potential adjustments needed to the base payment rate, to account for behavior change based on analysis at the time of future rulemaking.”

But NAHC said the cuts would still come to 6.533% over 2023 and 2024—with more to come in future years.

“We continue to strenuously disagree with CMS’s rate-setting actions, including the budget neutrality methodology that CMS employed to arrive at the rate adjustments,” said NAHC President Bill Dombi. “We recognize that CMS has reduced the proposed 2024 rate cut. However, overall spending on Medicare home health is down, 500,000 fewer patients are receiving care annually since 2018, patient referrals are being rejected more than 50% of the time because providers cannot afford to provide the care needed within the payment rates, and providers have closed their doors or restricted service territory to reduce care costs. If the payment rate was truly excessive, we would not see these actions occurring.”

“The fatally flawed payment methodology that CMS continues to insist on applying is having a direct and permanent effect on access to care,” Dombi continued. “When you add in the impact of shortchanging home health agencies on an accurate cost inflation update of 5.2% over the last two years, the loss of care access is natural and foreseeable.”

NAHC is currently suing CMS, saying the basis for its payment assumptions is flawed, and also pushing Congress to pass the bill S 2137, which would block the final rule.

“We now implore Congress to correct what CMS has done and prevent the impending harm to the millions of highly vulnerable home health patients that depend and will depend in the future on this essential Medicare benefit,” Dombi said. “We urge the Congress to support this bill and enact it into law before the end of the year. The 2024 rate cuts must not take effect” Dombi added.

The new rule also finalizes CMS’s proposals to:

• Rebase and revise the home health market basket
• Revise the labor-related share
• Recalibrate case-mix weights under the Patient-Driven Groupings Model (PDGM)
• Update low utilization payment adjustment thresholds, functional impairment levels and comorbidity adjustment subgroups for 2024
• Codify statutory requirements for disposable negative pressure wound therapy
• Establish payment rules for lymphedema compression treatment and home intravenous immune globulin

The rule also updates requirements for how often and when providers of durable medical equipment prosthetics, orthotics and supplies (DMEPOS) must contact beneficiaries before dispensing resupply items.

“CMS is finalizing its proposal to codify with some changes to its long-standing refill policy,” the agency wrote. “We will require documentation indicating that the beneficiary confirmed the need for the refill within the 30-day period prior to the end of the current supply. Additionally, we will codify our requirement that delivery of DMEPOS items (that is, date of service) be no sooner than 10 calendar days before the expected end of the current supply.”

The rule also includes several provisions regarding hospice enrollment, with the goal of “more closely scrutinizing prospective hospice owners and ensuring that newly enrolled hospices provide appropriate care to people nearing the end of life,” including:

• Fingerprinting all 5% or greater owners of hospices
• Expanding the HHA change in majority ownership provisions to include hospices
• Clarifying who a “managing employee” of a hospice is
• Reducing the period of Medicare non-billing for which a provider can be deactivated from 12 months to six

It also creates a new dispute resolution process for hospice programs and a program enhancing oversight of poor-performing hospices based on similar enforcement programs used for nursing homes.

NAHC joined three other major national hospice organizations—the National Hospice and Palliative Care Organization, LeadingAge and the National Partnership for Healthcare and Hospice Innovation—to oppose the final design of that program, saying it uses a flawed methodology and “will threaten the ability of millions of older adults and other hospice beneficiaries to access quality hospice care.”

“The implementation of the poorly designed algorithm, which has been widely criticized by congressional leaders, technical expert panel participants, and hospice community and association leaders, will hinder a widely shared goal of improving sector quality. As a community, we are profoundly disappointed with this decision,” the groups wrote in a joint statement, saying that over two years they’ve argued that point to CMS and others and “CMS has opted to ignore our feedback.”