NAHC Sues CMS to Preserve Home Health Service Benefit

Washington, D.C.—The National Association for Home Care and Hospice (NAHC) filed a lawsuit against the Centers for Medicare and Medicaid Services (CMS) and the United States Department of Health and Human Services (HHS) challenging the validity of a change in Medicare home health payment that reduced rates by 3.925% in 2023 with significant additional cuts expected over the next several years. CMS has proposed an additional 5.653% permanent rate cut to begin in 2024 based on the same challenged payment methodology.

The lawsuit argues that Medicare is required to institute the payment model changes in a budget neutral manner rather than to inflict rate cuts that have precipitated services limitations or access to care. Until recently, nearly 3.5 million Medicare beneficiaries received home health services annually. Since the new payment model began in 2020, more than 500,000 fewer Medicare patients have accessed home health services.

“We have done everything possible to get Medicare to understand the disastrous consequences of its actions,” said William A. Dombi, president of NAHC. “We have presented hard facts, deep legal analyses and extensive data to Medicare that demonstrate the errors in its policies to no avail. As a last resort, we have filed this lawsuit to protect Medicare beneficiaries and the home health agencies that care for them.”

“Home Health agencies again must withstand billions of dollars in payment cuts as cost of care continues to rise and still be expected to deliver the care to which our patients are entitled to as a Medicare benefit.” said Ken Albert, chairman of NAHC and CEO of Androscoggin Home HealthCare + Hospice. “Since these cuts took effect in January, providers have reduced service areas, turned away thousands of patients and halted the use of innovative technologies in order to stay afloat and serve some patients.”

The lawsuit was filed in the U.S. District Court for the District of Columbia. It alleges that CMS and HHS promulgated an illogical and invalid methodology in determining whether expenditures stemming from payment rates established in 2020 were “budget neutral” in comparison to the estimated expenditures that would otherwise have occurred under the previous payment model. Budget neutrality is required under a 2018 law that mandates certain payment system reforms.

Data from the Congressional Budget Office (CBO) highlights the extent of Medicare’s error. Following the 2018 enactment of the payment reform legislation, CBO projected 2023 Medicare expenditures at $23 Billion. In May 2023, CBO revised its 2023 projections downward to only $16 Billion.

The lawsuit seeks declaratory and injunctive relief including a reversal of the rate adjustments in the 2023 rule and requirement that Medicare implement the budget neutrality mandate consistent with the law.