CMS Releases Final Rule on 2025 Home Health Prospective Payment Systems

BALTIMORE—The Centers for Medicare and Medicaid Services (CMS) issued a final rule on its calendar year (CY) 2025 home health prospective payment system, which updates Medicare payment policies and rates for home health agencies. This rule will also provide updates to the intravenous immune globulin (IVIG) items and services’ payment rates for durable medical equipment suppliers. 

With this final rule, CMS finalized a permanent prospective adjustment of -1.975% (half of the calculated permanent adjustment of -3.95%) to the CY 2025 home health payment rate, which seeks to clarify the impact of implementing patient-driven grouping models. CMS said this adjustment aims to account for differences between assumed and actual behavior changes on estimated aggregate expenditures. Additionally, CMS applied a 3.925% reduction for CY 2023 and a 2.890% reduction for CY 2024, which were half of the estimated required permanent adjustments.

As part of this final rule, CMS is deciding upon a crosswalk for mapping responses on the current outcome and assessment information set (OASIS), OASIS-E—in response to the prior OASIS set, OASIS-D—with the intention of analyzing the difference between assumed and actual behavior changes on estimated aggregate expenditures, recalibrated patient-driven grouping model case-mix weights and updated low-utilization payment adjustment (LUPA) thresholds, functional impairment levels and comorbidity adjustment subgroups. Additionally, CMS intends to finalize and adopt the most recent office of management and budget core-based statistical area delineations for home health wage indexes; an occupational therapy low-utilization payment adjustment add-on factor and updated physical therapy, speech-language pathology and skilled nursing low-utilization payment adjustment add-on factors; and an updated CY 2025 fixed-dollar loss ratio for outlier payments. 

This final rule settles the rate update for the CY 2025 IVIG items and services’ payment under the IVIG benefit. Additionally, CMS is finalizing updates to the home health agency conditions of participation, which aim to reduce avoidable care delays by helping ensure that referring entities and prospective patients can select the most appropriate home health agency based on their care needs.

CMS said its actions in this final rule intend to help improve patient care and protect the Medicare program’s sustainability for future generations.

Steven Landers, CEO of the National Alliance for Care at Home, released a statement in response to the final rule.

“Somehow, CMS sees reduced access to home health services, the closures of hundreds of home health agencies, tens of millions fewer home health visits and a reduction in overall Medicare spending on home health services as ‘budget neutral,’” Landers said. “While decreasing the proposed permanent rate cut and withholding the massive temporary adjustment may slow the decline of the home health benefit a bit, we need CMS to reverse course on its dismantling of this essential services through its payment model. A net increase in Medicare spending projected for 2025 does not address the several years of unwarranted rate cuts and the shortfall in recognizing the significant inflationary pressures and cost increases that have been incurred. In no way can CMS defend its actions as ‘budget neutral.’ Home health access is a life and death-issue for vulnerable homebound beneficiaries. The 2025 final version of Medicare home health payment rates continues the ongoing and predictable rate reductions impacting patient access to home health since the beginning of the new payment model in 2020. The decline is due to a fatally flawed budget neutrality methodology that CMS employed to arrive at the rate adjustments, and the risk to homebound patients is compounded by the expansion of Medicare Advantage and associated financial and administrative barriers to care.

“We need help from Congress to end this assault on the Medicare home health benefit,” Landers continued. “Home health has long demonstrated its value as a cost-effective alternative to hospitalization and institutional care and (is) an essential service to over 3 million highly vulnerable Medicare beneficiaries. The hallmark of home health in Congress is the bipartisan and bicameral support that is has had for decades. Legislation is pending that would end these cuts. Longstanding advocates for home health care, Senators Debbie Stabenow (D-MI) and Susan Collins (R-ME), and Congressman Adrian Smith (R-NE) and Congresswoman Terri Sewell have introduced S 2137 and HR 5159 to eliminate the rate cuts. We urge the Congress to enact legislation that will stabilize home health services before the end of the year.”

This final rule aims to settle upon routine, statutorily required updates to the home health payment rates for CY 2025. The CY 2025 updated rates include the final CY 2025 home health payment update of 2.7% ($445 million increase), which is offset by an estimated 1.8% decrease that reflects the permanent behavior adjustment ($295 million decrease) and an estimated 0.4% decrease that reflects the updated fixed-dollar loss ratio ($65 million decrease). CMS estimates that Medicare payments to HHAs in CY 2025 would increase in the aggregate by 0.5%, or $85 million, compared to CY 2024, based on the finalized policies.

The policy updates for home health agencies impact:

• Patient-driven grouping models (PDGM) and behavior assumptions.
• A crosswalk for mapping OASIS-D data elements to the equivalent OASIS-E data elements.
• The final occupational therapy LUPA add-on factor and LUPA add-on factor updates.
• Recalibration of PDGM case-mix weights.
• Wage index updates.

Additionally, CMS made other final changes in the rule impacting:

• Home health conditions of participation updates.
• Home health quality reporting program updates.
• Expanded home health value-based purchasing model.
• Long-term care facility acute respiratory illness data reporting.
• Medicare provider enrollment.

See a full list of the final rule’s updates and related information here.