Home Health PPS

CY 2023 Home Health PPS Final Rule

AT A GLANCE

The Centers for Medicare & Medicaid Services (CMS) Oct. 31 issued the calendar year (CY) 2023 final rule for the home health (HH) prospective payment systems (PPS). View highlights from this rule below.

Key Highlights

The final rule:

  •  Increases HH payments by a net 0.7%, or $125 million, in CY 2023 relative to CY 2022, which includes all the updates and cuts described below.
  • Implements a 4.1% market basket update, offset by a 0.1 percentage point productivity cut.
  • Finalizes a cut to all payments of 7 percentage points in order to achieve budget-neutrality for the Patient-driven Groupings Model (PDGM) case-mix system on a prospective basis. However, this cut will be phased in over two years, with a 3.5 percentage point cut implemented in CY 2023.
  • Increases payments by 0.2 percentage points for outlier payments.
  • Requires submission of patient assessment data on all patients, regardless of payer, with a phased approach beginning Jan. 1, 2025.
  • Changes the terminology and timeline for baseline years used to calculate HH agency performance in the VBP program.

AHA TAKE

We are pleased that our advocacy resulted in CMS providing HH agencies with an increase in payments next year, rather than a cut as proposed, allowing them to better provide care for their patients and communities. However, we remain concerned that this update still falls short given the extraordinary inflationary environment and continued labor and supply cost pressures HH agencies face, especially given their reliance on nurses and other personnel who are willing to take on the challenges of providing home-based care. In addition, we continue to believe that the unprecedented behavioral offset the agency will implement — 7 percentage points of all payments — is inappropriate, particularly given the stress the current inflationary and workforce burdens are imposing on the overall health care delivery system, including HH agencies.

Highlights from the rule follow.

HH PPS PAYMENT CHANGES

CY 2023 Payment Update

The rule finalizes a net increase to HH PPS payments of 0.7%, or $125 million, in CY 2023 relative to CY 2022, which includes the following:

  • 4.1% market basket update;
  • 0.1 percentage point productivity cut;
  • 3.5 percentage point PDGM budget neutrality cut (described in more detail below);
  • 0.2 percentage point increase for outlier payments.

In contrast, the agency had proposed a net decrease in HH PPS payments of 4.2%, or $810 million, in CY 2023 relative to CY 2022.

Budget Neutral Implementation of PDGM. The implementation of a new case-mix classification system for the HH PPS on Jan. 1, 2020, PDGM, included a substantial behavioral offset of negative 4.36 percentage points, which CMS stated was necessary to help achieve budget neutrality relative to the prior system. In this rule, the agency finalizes a further budget neutrality cut related to PDGM. Specifically, it finalizes a permanent cut of 7.85 percentage points to the 30-day payment rate. However, it will phase this rate in over two years, applying a cut of 3.925 percentage points in CY 2023. We note that because this cut only applies to the 30-day payment rate and not to the low-utilization payment adjustment (LUPA) per-visit payment rates, its actual impact to total HH PPS payments is negative 7.0 percentage points, and negative 3.5 percentage points in CY 2023.

Permanent Cap on Wage Index Decreases. To achieve the CMS policy goal of increasing predictability in HH payments, as well as aligning with policies implemented in the other 2023 payment rules, this rule finalizes a permanent, budget neutral approach to smooth year-to-year changes in the HH wage index. Specifically, this rule finalizes a permanent 5% cap on negative wage index changes (regardless of the underlying reason for the decrease) for HH agencies. The AHA has supported this approach, while calling for the policy to be implemented in a non-budget neutral manner.

QUALITY REPORTING PROGRAM AND VALUE-BASED PURCHASING PROGRAM

Submission of All-Payer OASIS Data. CMS finalized its proposal to require HH agencies to submit all-payer OASIS data, but with a delay. CMS notes that since the 2006 report recommending that the HH agencies only collect and report assessment data on Medicare patients due to privacy and logistical concerns, improvements in the data collection feasibility as well as the alignment of data collection requirements across post-acute care settings leads CMS to propose a change in policy. Originally, CMS proposed to require HH agencies to submit OASIS data for purposes of the Quality Reporting Program for all patients, regardless of payer, beginning Jan. 1, 2024 (the CY 2025 Program Year). However, in response to concerns raised in comments, including by AHA, CMS will instead implement the requirement in a phased approach: HH agencies will be required to submit data beginning Jan. 1, 2025 (for the CY 2027 program year), and failure to submit the data during the first two quarters of 2025 will not result in a penalty.

HH Value-based Purchasing (VBP) Program. CMS will change the terminology and timeline for baseline years used to calculate HH agency performance in the VBP program. CMS will define the “Model baseline year” as the time period used to calculate the benchmark and achievement thresholds for all HH agencies in the program, and “HH agency baseline year” as the time period used to calculate improvement in each measure for the individual HH agencies. CMS also will change the baseline years for the CY 2023 program year to CY 2022 in order to use the most recently available data.

FURTHER QUESTIONS

Please contact Joanna Hiatt Kim, AHA’s vice president of policy, at jkim@aha.org, with any questions related to payment, and Caitlin Gillooley, AHA’s director of policy, at cgillooley@aha.org, regarding any quality-related questions.

View the detailed Special Bulletin below.


Key Resources

 

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