Home health agency payments in 2023 decrease by 4.2%, or $810 million, under proposed rule

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The Centers for Medicare and Medicaid Services estimates that Medicare payments to home health agencies in 2023 would decrease in the aggregate by 4.2%, or $810 million, compared to 2022, in its 2023 Home Health Prospective Payment System Rate Update proposed rule.

This decrease reflects the effects of the proposed 2.9% home health payment update percentage, a $560 million increase, an estimated 6.9% decrease that reflects the effects of the proposed prospective, permanent behavioral assumption adjustment of -7.69%, which is a $1.33 billion decrease, and an estimated 0.2% decrease that reflects the effects of a proposed update to the fixed-dollar loss ratio used in determining outlier payments, a $40 million decrease.

The rule proposes a permanent, budget-neutral approach to smooth year-to-year changes in the hospital wage index by proposing a permanent 5% cap on negative wage index changes, regardless of the underlying reason for the decrease.

In addition, CMS is proposing to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for any increases or decreases in aggregate expenditures, as a result of the difference between assumed behavior changes and actual behavior changes, due to the implementation of the Patient-Driven Groupings Model and 30-day unit of payment. 

CMS is soliciting comments on how best to implement a temporary payment adjustment for 2020 and 2021. 

CMS is also soliciting comments on the collection of telehealth data on home health claims to allow CMS to analyze the characteristics of the beneficiaries using services furnished remotely. 

CMS finalized policy changes regarding the use of services furnished via telecommunications systems in the 2021 final rule. However, the collection of data on the use of telecommunications technology under the home health benefit is limited to a broad category of telecommunications technology costs.

This proposed rule solicits comments on the collection of data on the use of telecommunications technology. Collecting this data would allow CMS to analyze the characteristics of the beneficiaries using services furnished remotely, and could give a broader understanding of the social determinants that affect who benefits most from these services, including what barriers may potentially exist for certain subsets of beneficiaries.

CMS is seeking stakeholder feedback on its work around health-equity measure development and the potential future application of health equity in the Expanded Home Health Value-Based Purchasing Model's scoring and payment methodologies.

CMS is also updating the home infusion-therapy services payment rates for 2023. The law specifies that annual updates be equal to the percent increase in the Consumer Price Index for all urban consumers for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment for 2023. The consumer price index for June 2022 was not yet available at the time of this proposed rule.
The proposed rule also addresses the All-Payer Policy and Baseline Years in the Expanded Home Health Value-Based Purchasing Model.
 
WHY THIS MATTERS

The actions CMS is taking in the proposed rule would help improve patient care and also protect the Medicare program's sustainability for future generations by serving as a responsible steward of public funds, the agency said.

Each of the 432 payment groups under the Patient-Driven Groups Model has an associated case-mix weight and Low Utilization Payment Adjustment threshold. CMS updates this annually. 

For 2023, CMS is proposing to recalibrate the case-mix weights, including the functional levels and comorbidity adjustment subgroups and low utilization thresholds, using 2021 data to more accurately pay for the types of patients home health agencies are serving.

The law requires CMS to make assumptions about behavior changes that could occur because of the implementation of the 30-day unit of payment and the Patient Driven Groups Model. In the 2019 home health final rule, CMS finalized three behavioral assumptions for clinical group coding, comorbidity coding, and the Low Utilization Payment Adjustment threshold. 

The law also requires CMS to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026, and to make temporary and permanent increases or decreases, as needed, to the 30-day payment amount.

This 2023 proposed rule proposes to calculate what the Medicare program would have spent had the Patient Driven Groups Model not been implemented in 2020 and 2021, compared to actual home health expenditures during those years.

Using this method, CMS is proposing a -7.69% permanent adjustment to the 30-day payment rate in 2023 to ensure that aggregate expenditures under the new payment system model would be equal to what they would have been under the old payment system. 

CMS is soliciting comments on how best to implement a temporary payment adjustment, estimated to be $2 billion for excess estimates in 2020 and 2021.

THE LARGER TREND

On January 1, 2020, CMS implemented the home health Patient Driven Groups Model and a 30-day unit of payment, as required by the Bipartisan Budget Act of 2018. The model, which Congress required, better aligns payments with patient care needs, especially for clinically complex beneficiaries that require more skilled nursing care rather than therapy.

Additionally, in the 2019 final rule, CMS stated that it would interpret actual behavior change to encompass both behavior changes that were previously outlined, as assumed by CMS when determining the budget-neutral 30-day payment amount for 2020, and other behavior changes not identified.

In the 2022 home health proposed rule, CMS solicited comments on a repricing methodology to determine the impact of behavior changes on estimated aggregate expenditures.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org