CMS splits 7.85% permanent cut in home health payments over two years.
 
Home health agencies will get a temporary reprieve from expected Medicare payment cuts, as CMS splits what it had first pitched as a one-time permanent payment cut in 2023 into two pieces that will play out over the next two years.
 
That means a modest increase in home health payments in 2023 of 0.7%, or $125 million in total.
 
The industry can celebrate that it isn't seeing the worst-case scenario of steep payment cuts, but CMS is splitting what will eventually be a 7.85% permanent cut in payments between the two years — and continues to assert that billions in additional spending over the first three years of PDGM will be clawed back in the future. 
 
CMS announced its payment rate in the 2023 Home Health Prospective Payment System Rate and Home Infusion Therapy Services Requirements Final Rule, release late Oct. 31 and expected to be published in the Federal Register on Nov. 4, 2022. 
 
The overall change in payments for 2023 is based on three factors, according to CMS:  
  • A proposed 4.0% home health payment increase due to inflation, up from 2.9% that had been proposed in June. 
  • An estimated 3.5% decrease in payment (which includes the finalized more than 3.9% cut in 30-day periods, minus low-utilization payment adjustments that don’t face the same cuts).  
  • A 0.2% increase that reflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments. 
Industry leaders continue to seek congressional relief to avoid the proposed payment cuts. Bills have been introduced that would freeze payment rates until 2026 in hopes that more time will provide real data on the impacts of PDGM before CMS slashes home health spending.  
 
HHQRP reporting expanded 
 
For the Home Health Quality Reporting Program (HHQRP), CMS finalized a plan to expand OASIS data submission to include non-Medicare/non-Medicaid patients. Agencies will have to submit all-payor OASIS data for purposes of the HHQRP beginning with a phase-in period for the first six months of 2025 before penalties are applied. 
 
HHVBP baseline year moves 
 
CMS also is finalizing the controversial step to move the baseline year in determining Home Health Value-Based Purchasing scores from 2019 to 2022. 
 
The 2023 calendar year will be the first “performance year” for the national rollout of the HHVBP model, with agencies competing for an up to 5% increase or decrease in payments based on key claims, OASIS and patient survey measures. 
 
CMS has said it is making the change on the baseline year to measure competing agencies’ performance on benchmarks and achievement thresholds that “are more current.” 
 
Industry comments to the proposed rule had noted the challenges agencies will face in getting real-time data to compare their progress — CMS reports on 2022 performance aren’t expected until the summer of 2023.
 
Comorbidity adjustments and functional impairment levels
 
As finalized in the rule, the number of diagnosis pairings that will lead to a high comorbidity adjustment will jump to 91 possible interactions from the current 87.
 
The low comorbidity subgroups list is growing as well, jumping to 22 subgroups from the current 20.
 
Similar to last year’s final update, CMS is also adjusting functional points and functional impairment levels by clinical group for 2023 with the majority of the changes resulting in a slight decrease in the number of points.
 
Other points in the final rule
  • LUPA rates going up. The individual visit rates for Low-Utilization Payment Adjustments (LUPAs) will see an increase in 2023. These payments benefit from the 4.0% inflationary factor without the negative adjustments seen in 30-day episode payments.
  • Claims-based telehealth reporting. CMS will begin requiring the use of three codes on claims to reflect telehealth use, beginning in July 2023. Voluntary use of the codes would begin in January 2023. There is still no payment tied to home health care telehealth visits. Agencies will use the new G codes to identify telehealth visits, either audio only or audio and video, as well as a code for remote patient monitoring.
  • More moves toward health equity scores. In the final rule, CMS acknowledged feedback on health equity concerns. A health equity technical expert panel (HE TEP) is expected to meet in November to provide input and direction on the development of a health equity measure to be used in home health and hospice settings.
Look for more coverage in the next issue of Home Health Line.