On June 26, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2025 Home Health Prospective Payment System proposed rule for home health agencies (HHAs). CMS released a fact sheet accompanying the proposed rule. This proposed rule includes the annual payment update, proposed policies for the home health conditions of participation, the quality reporting program, and the value-based purchasing model as well as updates to the provider and supplier enrollment requirements.

The proposed rule also includes several requests for information.

Comments are due by August 26, 2024.

CMS PREDICTS $280 MILLION DECREASE IN HOME HEALTH PAYMENTS IN CY 2025

The Home Health Prospective Payment System (PPS) provides a standardized case-mix and area-wage adjusted payment to home health agencies for 30-day periods. This bundled payment includes six home health service types, including skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services, as well as non-routine supplies.

For CY 2025, CMS is proposing a 1.7 percent decrease in home health payments, or $280 million, relative to CY 2024. This reflects a proposed 3.6 percent, or $595 million, decrease associated with a proposed behavioral assumption adjustment, an estimated 0.6 percent, or $110 million, decrease associated with a proposed fixed-dollar loss ratio (FDL), and a proposed 2.5 percent, or $415 million, home health PPS annual payment update increase.

Table 1. Home Health PPS Payment Impacts for CY 2025

CY 2025 Annual Update	CY 2025 FDL Decrease	Behavioral Assumption Adjustment	CY 2025 Economic Impact
2.5% (+$415 million)	0.6% (-$100 million)	-3.6% (-$595 million)	-1.7% (-$280 million)

In CY 2020, CMS implemented the Patient-Driven Groupings Model (PDGM) for home health agency payment, as required by statute.[1] The goal of the PDGM is to better align payments with patient care needs, especially for beneficiaries that require more skilled nursing care rather than therapy. When implementing the law, CMS had to make assumptions about behavior changes that could occur due to the implementation of the 30-day unit of payment and the PDGM.[2] CMS annually determines the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures and adjusts payment accordingly.

In the CY 2023 Home Health PPS final rule,[3] CMS determined that Medicare paid more to home health agencies in CYs 2020 and 2021 under PDGM than the old payment system. In response, CMS indicated a negative 7.85 percent adjustment would need to be made to the 30-day payment rate. However, to mitigate the impact of such a large adjustment, CMS finalized a phased-in permanent adjustment, reducing it by half to negative 3.925 percent.

For CY 2024, CMS applied an additional negative 5.78 percent home health PPS payment adjustment to offset observed differences between assumed and actual behavior changes in CY 2023 and in consideration of that phased-in adjustment for CY 2023. For CY 2025, CMS proposes an additional permanent adjustment of negative 4.067 percent to be made to the 30-day base payment rate. CMS does not propose any temporary adjustments in CY 2025, but states the agency has the discretion to make any permanent or temporary adjustments through analysis of estimated aggregate expenditures through CY 2026.

The proposed national standardized 30-day period payment rate for CY 2025 is $2,008.12.

CMS RECALIBRATES CASE-MIX WEIGHTS USING CY 2023 CLAIMS DATA

Under the PDGM, there are 432 payment groups with each having an associated case-mix weight and Low Utilization Payment Adjustment (LUPA) threshold. CMS annually recalibrates the case-mix weights and LUPA thresholds using the most recent and complete utilization data available to ensure they reflect current home health resource use and changes in utilization patterns.

For CY 2025, CMS proposes to recalibrate the PDGM case-mix weights, functional levels, and comorbidity adjustment subgroups using CY 2023 claims data. CMS proposes several updates to LUPA thresholds for CY 2024.[4]

CMS PROPOSES A 2.5 PERCENT INCREASE TO PAYMENTS FOR HOME IVIG

The payment rate for home IVIG and services is subject to annual updates based on the home health payment rate update percentage. Division FF, section 4134 of the Consolidated Appropriations Act, 2023 (CAA, 2023) expanded Medicare coverage to include intravenous immune globulin (IVIG) administration in the homes of patients with primary immune deficiency disease (PIDD), effective January 1, 2024.[5]

For CY 2025, CMS proposes that the payment rate for home IVIG items and services would be $430.99 per visit, which reflects the CY 2024 IVIG items and services payment rate of $420.48 updated by the 2.5 percent proposed home health payment increase. CMS projects that this proposal would result in a total cost increase of $9,435,233 to Medicare fee-for-service program.

CHANGES COMING TO HOME HEALTH CONDITIONS OF PARTICIPATION

Sections 1861(o) and 1891 of the Act grant the Secretary of the HHS authority to define the conditions of participation (CoPs) that HHAs must meet to qualify for Medicare participation. These standards apply both to HHAs as entities and to the services provided to individual patients. Currently, HHAs must provide skilled nursing services and at least one other therapeutic service on a visiting basis in patients’ residences, tailored to meet their specific needs. However, the variability in services among HHAs presents challenges for patients and caregivers in finding an HHA that meets their exact care requirements.

To address these challenges and enhance patient care outcomes, CMS proposes to require HHAs to develop and maintain an “acceptance to service policy” for prospective patients referred for home health care. This policy would involve an annual review and assessment of factors such as current case load, case mix, staffing levels, and staff competencies, enabling HHAs to make informed decisions about accepting new patients.

Additionally, CMS proposes that HHAs publicly disclose accurate information about the services they offer, including any limitations related to specialty services, service duration, or frequency. This transparency aims to assist referring entities, caregivers, and patients in selecting an HHA that aligns with their specific care needs and geographic location.

CMS seeks public comment on these proposals, including alternative strategies to reduce delays in home health care initiation, barriers faced by patients with complex needs in accessing appropriate HHAs, and ways to enhance transparency in HHA acceptance policies. Additionally, CMS invites input on improving the overall referral process for referring entities, patients, and HHAs.

CMS PROPOSES CHANGES TO PROVIDER AND SUPPLIER ENROLLMENT POLICIES

Section 1866(j)(3)(A) of the Social Security Act directs the HHS Secretary to establish procedures for ensuring enhanced oversight of new providers and suppliers. CMS typically oversees newly enrolled home health agencies (HHAs) under a provisional period of enhanced oversight (PPEO) to monitor for fraud, waste, and abuse.

CMS proposes to include providers and suppliers that are reactivating their Medicare enrollment and billing privileges under the “new provider and supplier” category. This will allow CMS to impose a PPEO for 30 days to one year for reactivating providers and suppliers.

CMS PROPOSES FOUR NEW SDOH MEASURES UNDER THE HOME HEALTH QUALITY REPORTING PROGRAM, MODIFICATIONS TO ONE EXISTING MEASURE

Under the Home Health Quality Reporting Program (HH QRP), HHAs must submit certain required data for the measurement of health care quality. HHAs that fail to submit this data have their annual payment update reduced by 2 percentage points.

CMS proposes to add four new social determinants of health (SDOH) assessment items to the Outcome and Assessment Information Set (OASIS), the instrument used to collect and report assessment data for the HH QRP, and to modify one existing item.

These new measures and proposed modification are intended to better standardize the collection of SDOH data across programs, with all the changes being based on measures currently collected in the Accountable Health Communities (AHC) Health related social needs (HRSN) Screening Tool. CMS proposed identical changes to the IRF Quality Reporting Program (QRP) and the SNF Quality Reporting Program (SNF QRP) in their respective rules. These changes would go into effect beginning with the CY 2027 HH QRP.

In addition, the agency proposes updates to OASIS all-payer data collection, and requests information on future HH QRP quality measure concepts.

New SDOH Measures to be Collected Using the OASIS

Living Situation

CMS believes that HHAs could use housing information on a patient’s living situation to better inform discharge planning and ensure that referrals to address this SDOH are not lost when care is transitioned.

The proposed measure would ask patients “What is your living situation today?” CMS proposes the following response options: (1)I have a steady place to live; (2) I have a place to live today, but I am worried about losing it in the future; (3) I do not have a steady place to live; (4) Patient declines to respond; and (5) Patient unable to respond.

Food

Food insecurity is associated with several negative health outcomes, including cardiovascular disease. CMS aims to increase coordination between HHAs and providers to address food insecurity during transitions of care. This information could also be used to refer patients to government programs such as the Supplemental Nutrition Assistance Program (SNAP).

Accordingly, CMS proposes two food related measures that would be asked to patients:

1. “Within the past 12 months, you worried that your food would run out before you got money to buy more.”
2. “Within the past 12 months, the food you bought just didn’t last and you didn’t have money to get more.”

Patients would choose one of the following proposed options to respond: (1) Often true; (2) Sometimes true; (3) Never True; (4) Patient declines to respond; and (5) Patient unable to respond.

Utilities

The inability to cover the cost of utilities places patients at risk of living without adequate heat or air conditioning. These living conditions can lead to negative health outcomes such as increased risk of respiratory conditions.  Accordingly, CMS believes HHAs should have access to information regarding a patient’s utility insecurity so that they can help connect patients to programs that address this SDOH, such as the Low-Income Home Energy Assistance Program (LIHEAP), which helps pay for heating and cooling.

This measure would ask patients, “In the past 12 months, has the electric, gas, oil, or water company threatened to shut off services in your home?”

Patients would choose one of the following proposed options to respond: (1) Yes; (2) No; (3) Already shut off; (4) Patient declines to respond; and (5) Patient unable to respond.

Proposed Modification to the Transportation Measure

CMS proposes to modify the existing transportation item to better align this item with the AHC HRSN Screening Tool. The proposed modifications would make the lookback period for the measure clearer and simplify the response options available to patients.

This measure would be modified from reading, “Has lack of transportation kept you from medical appointments, meetings, work, or from getting things needed for daily living?” to “In the past 12 months, has a lack of reliable transportation kept you from medical appointments, meetings, work or from getting things needed for daily living?”

Patients would choose one of the following proposed options to respond: to: (0) Yes; (1) No; (7) Patient declines to respond; and (8) Patient unable to respond.

Updates to OASIS All-Payer Data Collection

CMS finalized requirements for HHAs to submit all-payer OASIS data beginning with the CY 2027 HH QRP in the CY 2023 HH PPS final rule. This rule also finalized the end of the temporary suspension of OASIS data collection for patients who were not enrolled in Medicare or Medicaid. To add clarity to these changes, CMS proposes to establish that data collection will begin with the start of care (SOC) time point, as opposed to the OASIS discharge time point. To provide data for the CY 2027 program year, HHAs must collect data for non-Medicare/non-Medicaid patients beginning July 1, 2025.

CMS Seeks Feedback on Future HH QRP Quality Measure Concepts

CMS seeks feedback on four concepts that could be incorporated into the HH QRP to better align the program with CMS’s Universal Foundation of quality measures: a composite vaccination measure similar to the Adult Immunization Status measure in the Universal Foundation, a depression related measure similar to the Clinical Screening for Depression and Follow-up measure in the Universal Foundation, the concept of pain management, and a measure of substance use disorder similar to the Initiation and Engagement of Substance Use Disorder Treatment measure in the Universal Foundation. CMS will not be responding to comments but will incorporate them into future measure development.

CMS REQUESTS INFORMATION ON MEASURE CONCEPTS FOR EXPANDED HOME HEALTH VALUE-BASED PURCHASING MODEL

In the CY 2022 HHA Final Rule,[6] CMS finalized its expansion of the Home Health Value-Based Purchasing (VBP) Model; requiring HHAs in all 50 states, the District of Columbia, and U.S. territories to participate, with a pre-implementation year beginning in 2022. CY 2023 is the first performance year, which will impact payment during CY 2025 with a maximum payment adjustment, upward or downward, of 5 percent.

CMS views the expanded VBP Model as an opportunity to improve quality of care and adopt measures that address critical gaps in care. Accordingly, the agency seeks general comments on future model concepts, as well as feedback on the following specific performance measures that could be included in the expanded VBP Model:

• A measure that addresses HHAs ability to meet caregiver needs,
• A claims-based measure of falls with injury,
• A measure of Medicare spending per beneficiary, and
• Measures that would complement the existing cross-setting Discharge (DC) Function measure by better capturing daily living elements like bathing and dressing.

The proposed rule also includes an update on potential approaches to integrate a health equity adjustment into the VBP Model. While CMS does not propose any health equity changes to the model in this rule, the agency reiterates its intention to establish a health equity adjustment that rewards HHAs for providing high quality care to underserved populations. This adjustment will not be finalized until at least two years of performance data are gathered under the program so that the agency can better understand the program’s impact on health equity outcomes.

CMS SEEKS COMMENTS ON TWO REQUESTS FOR INFORMATION

CMS seek public comment the following two topics:

1. Feasibility of rehabilitative therapists conducting the comprehensive assessment for cases that have both therapy and nursing services ordered as part of the plan of care.
2. HHA scope of services and how these services interact with HHA operations.[7]

RFI to Allow Rehabilitation Therapist to Conduct the Comprehensive Assessment

The CoPs in § 484.55(a)(1) mandate that a registered nurse must perform an initial assessment visit within 48 hours of referral or the patient’s return home, or no later than 5 days after the start of care date ordered by the physician or practitioner.

Rehabilitation professionals (occupational therapists (OT), physical therapists (PT), or speech-language pathologists (SLP)) may conduct the initial and comprehensive assessments when therapy services are the sole services ordered.

CMS waived the requirements in § 484.55(a)(2) and (b)(3) at the beginning of the COVID-19 public health emergency, allowing rehabilitation professionals to conduct the initial and comprehensive assessment when both nursing and therapy services are ordered. CMS seeks comment regarding revising the policy to expand coverage permanently.

ACUTE RESPIRATORY ILLNESS DATA REPORTING TO REPLACE COVID-19 REPORTING STANDARDS

Lastly, CMS proposes to replace current COVID-19 reporting standards for Long-Term Care Facilities that sunset in December 2024 with a new standard with will address a broader range of respiratory illnesses. The proposed data elements include facility census on resident vaccination status for COVID-19, influenza, and respiratory syncytial virus (RSV); confirmed resident cases of COVID-19, influenza, and RSV (overall and by vaccination status); and hospitalized residents with confirmed cases of COVID-19, influenza, and RSV (overall and by vaccination status). The measures would be required for reporting beginning January 1, 2025. CMS is seeking feedback on ways to minimize the reporting burden on HHAs.

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This Applied Policy® Summary was prepared by Simay Okyay McNutt with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at sokyay@appliedpolicy.com or at 202-558-5272.

[1] 42 U.S.C. 1395fff(b)(2)

[2] CMS finalized three behavioral assumptions in the CY 2019 Home Health PPS final rule with comment period, including clinical group coding, comorbidity coding, and the Low Utilization Payment Adjustment threshold.

[3] 87 FR 66796

[4] See Table 25 on page 67 of the unpublished proposed rule.

[5] The amendment added coverage under section 1861(s)(2)(Z) of the Act and established a separate bundled payment system for IVIG administration items and services, distinct from the IVIG product payment.

[6] 86 FR 62240.

[7] See page 183 of the unpublished proposed rule for specific questions.