CMS Proposes Inadequate Home Health Payment Update

What’s happening: The Centers for Medicare & Medicaid Services issued a proposed calendar year (CY) 2025 home health prospective payment system.  

What else to know: CMS estimates payments to home health agencies, as a result of the changes in the proposed rule, will decrease by $280 million (1.7%). Other key provisions of the proposed rule include: 

  • Market Basket Update (MBU): CMS proposes a net MBU of 2.5%. However, this is further reduced by a budget neutrality adjustment to account for alleged behavioral changes since the implementation of the Patient Driven Groupings Model (PDGM) in 2020. 
  • PDGM Recalibration: The proposed rule recalibrates PDGM case rates, updates the fixed dollar loss threshold for outliers, the low utilization payment adjustment thresholds (LUPA), and the functional impairment levels.  
  • Occupational Therapy (OT) LUPA Add On: CMS proposes to establish an OT therapy specific LUPA factor (1.7266) and discontinue the temporary use of the physical therapy LUPA add-on as a proxy.  
  • Home Health Quality Reporting Program: CMS proposes to collecting four new items — one living situation item, two food items, and one utilities item — as standardized patient assessment data elements in the social determinants of health (SDOH) category, and to modify the current transportation item collected as a standardized patient assessment data element in the SDOH category, beginning with the CY 2027 HH QRP via the Outcome and Assessment Information Set.  
  • Home Health Conditions of Participation: CMS proposes changes to the HHA CoPs to reduce avoidable care delays by helping ensure that referring entities and prospective patients can select the most appropriate HHA based on their care needs.  

CMS’s detailed fact sheet is available here. CHA will make a detailed summary available shortly. Comments are due Aug. 26.