Fact Sheets
Calendar Year (CY) 2025 Home Health Prospective Payment System Proposed Rule Fact Sheet (CMS-1803-P)
On June 26, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS) proposed rule, which would update Medicare payment policies and rates for Home Health Agencies (HHAs). These changes can support timely admission to home health services, which has demonstrated improvements for patient outcomes and reducing risk of hospital readmissions.
As required by the Bipartisan Budget Act of 2018, which amended section 1895(b) of the Social Security Act, this rule proposes a permanent prospective adjustment to the CY 2025 home health payment rate of -4.067%, to account for the impact of implementing the Patient-Driven Groupings Model (PDGM). This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY 2020 implementation of the PDGM and the change to a 30-day unit of payment. For CY 2023 and CY 2024, CMS previously applied a 3.925% reduction and a 2.890% reduction, respectively, which were half of the estimated required permanent adjustment.
In addition, CMS is proposing to: recalibrate the PDGM case-mix weights; update the fixed dollar loss (FDL) for outlier payments; update the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups for CY 2025; establish a home health occupational therapy (OT) LUPA add-on factor; and update other LUPA add-on factors. This rule also proposes to adopt the core-based statistical area (CBSA) delineations for the home health wage index using the 2020 Decennial Census. Additionally, this rule includes a proposed rate update for the CY 2025 intravenous immune globulin (IVIG) items and services’ payment under the IVIG benefit. It discusses how the CY 2025 payment rate update for the negative pressure wound therapy disposable device (dNPWT) will be applied.
The actions CMS is taking in this proposed rule would help improve patient care and protect the Medicare program’s sustainability for future generations.
CY 2025 Proposed Payment and Policy Updates for Home Health Agencies
This rule proposes routine, statutorily required updates to the home health payment rates for CY 2025. The CY 2025 updated rates include the proposed CY 2025 home health payment update of 2.5% ($415 million increase), which is offset by an estimated 3.6% decrease and required by statute, that reflects the proposed permanent behavior adjustment ($595 million decrease) and an estimated 0.6% decrease that reflects a proposed FDL ($100 million decrease). CMS estimates that Medicare payments to HHAs in CY 2025 would decrease in the aggregate by 1.7%, or $280 million, compared to CY 2024, based on the proposed policies.
PDGM and Behavior Assumptions
On January 1, 2020, CMS implemented the home health PDGM and a 30-day unit of payment, as required by section 1895(b) of the Social Security Act, as amended by the Bipartisan Budget Act of 2018. The PDGM better aligns payments with patient care needs, especially for clinically complex individuals. The law required CMS to make assumptions about behavior changes that could occur because of the 30-day unit of payment and the PDGM. CMS finalized three behavior assumptions in the CY 2019 HH PPS final rule: clinical group coding, comorbidity coding, and LUPA 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 to offset such increases or decreases. Additionally, in the CY 2019 HH PPS final rule (83 FR 56455), CMS stated that we 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 CY 2020, and other behavior changes not identified at the time the 30-day payment amount for CY 2020 was determined.
In the CY 2023 HH PPS final rule (87 FR 66790), CMS finalized a methodology for analyzing the impact of the differences between assumed and actual behavior changes on estimated aggregate expenditures and calculated levels of actual and estimated aggregate expenditures. Based on analyses of CYs 2020 and 2021 claims data, CMS determined a permanent adjustment was needed and finalized implementing half (-3.925%) of the permanent adjustment estimated at the time (-7.85%).
In the CY 2024 HH PPS final rule (88 FR 77676), using CY 2022 claims and the finalized methodology, CMS determined that an additional permanent adjustment needed to be applied and finalized, implementing half (-2.890%) of the permanent adjustment estimated at the time (-5.779%). This estimated permanent adjustment necessary for CY 2024 included the remaining -3.925% (to account for CYs 2020 and 2021) that was not applied to the CY 2023 payment rate.
For the CY 2025 HH PPS proposed rule, using CY 2023 claims and the methodology finalized in the CY 2023 HH PPS final rule, CMS determined that Medicare still paid more under the new system than it would have under the old system. Therefore, we are proposing an additional permanent adjustment of -4.067% to be made to the 30-day base payment rate. This proposal would continue to satisfy the statutory requirements at section 1895(b)(3)(D) of the Act to offset any increases or decreases on the impact of differences, between assumed behavior and actual behavior changes, on estimated aggregate expenditures, reduce the need for any future large permanent adjustments, and help slow the accrual of the temporary payment adjustment amount. The proposed permanent adjustment is also anticipated to lessen any potential temporary adjustment(s) in future years. While we are not proposing to implement a temporary adjustment in CY 2025, the proposed rule does provide the calculated temporary adjustment based on analysis of CY 2023 claims. The law provides CMS the discretion to make any future permanent or temporary adjustments in a time and manner determined appropriate through analysis of estimated aggregate expenditures through CY 2026.
Crosswalk for Mapping OASIS-D Data Elements to The Equivalent OASIS-E Data Elements
The Outcome and Assessment Information Set (OASIS)-D was the home health assessment instrument used under the prior 153-group system and the first three years (CYs 2020-2022) of the current PDGM; however, the Office of Management and Budget (OMB) approved an updated version of the OASIS instrument, OASIS-E, on November 30, 2022, effective January 1, 2023 (OMB-control number 0938-1279). To accurately determine payments under the 153-group system, we use the October 2019 3M Home Health Grouper (v8219) to assign a Health Insurance Prospective Payment System (HIPPS) code to each simulated 60-day episode of care. This older version of the Home Health Grouper requires responses from OASIS-D. Therefore, to continue with the repricing methodology, CMS will need to impute responses for the three items from OASIS-D that have changed in the OASIS-E. Additionally, 13 items on the OASIS-E are no longer required to be asked at a follow-up visit. For these items, we can use the most recent SOC/ROC to determine a response, which would not require imputation. We are proposing a methodology to address this issue by mapping the OASIS-E items in this proposed rule.
Proposed OT LUPA Add-on Factor and LUPA Add-on Factor Updates
With sufficient recent claims data available and to establish equitable compensation for all home health services, CMS is now proposing to establish a definitive occupational therapy (OT) specific LUPA add-on factor and discontinue the temporary use of the physical therapy (PT) LUPA add-on factor as a proxy. We propose using the same methodology to establish the skilled nursing (SN), PT, and speech-language pathology (SLP) LUPA add-on factors, as described in the CY 2014 HH PPS final rule. The proposed OT LUPA add-on factor (1.7266) will be updated based on more complete CY 2023 claims data in the final rule.
Additionally, we propose updating LUPA add-on factors to more accurately reflect current healthcare practices and costs, by proposing to use recent claims through CY 2023 to update the SN, PT, and SLP LUPA add-on factors.
Recalibration of PDGM Case-Mix Weights
Each of the 432 payment groups under the PDGM has an associated case-mix weight and LUPA threshold. CMS’ policy is to annually recalibrate the case-mix weights and LUPA thresholds using the most complete utilization data available at the time of rulemaking. In this proposed rule, CMS is proposing to recalibrate the case-mix weights — including the functional levels and comorbidity adjustment subgroups — and LUPA thresholds using CY 2023 data, to more accurately pay for the types of patients HHAs are serving.
Wage Index Update
This rule proposes to update the home health wage index and adopt the new labor market delineations from the July 21, 2023, OMB Bulletin No. 23-01 based on data collected from the 2020 Decennial Census. The July 21, 2023, OMB Bulletin No. 23-01 contains several significant changes. It is standard practice to adopt the latest OMB update when available, as using the most recent OMB statistical area delineations results in a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. For example, there are new CBSAs, urban counties that have become rural, rural counties that have become urban, and existing CBSAs that have been split. We note that existing home health PPS regulations limit one-year wage index decreases to 5%, which will help mitigate the impact of CBSA changes on payment.
Home Health (HH) Quality Reporting Program (QRP) Updates
CMS is proposing to collect four new items as standardized patient assessment data elements in the social determinants of health (SDOH) category, and to modify one item collected as a standardized patient assessment data element in the SDOH category, beginning with the CY 2027 HH QRP via the OASIS. The four assessment items proposed for collection are: one living situation item, two food items, and one utilities item. In addition, CMS is proposing to modify the current transportation item beginning with the CY 2027 HH QRP via the OASIS instrument.
CMS is also proposing an update to remove the suspension to change all-payer data collection to begin with the start of care OASIS data collection timepoint instead of the discharge timepoint.
Lastly, we are seeking input on future HH QRP measure concepts.
Expanded Home Health Value-Based Purchasing (HHVBP) Model
Request for Information (RFI) on Future Performance Measure Concepts for the Expanded HHVBP Model
CMS is including in the proposed rule an RFI that would build on input from the Expanded Home Health Value-Based Purchasing (HHVBP) Model’s Implementation and Monitoring technical expert panel (TEP), which met in November 2023. Discussions included potential future measure concepts that could fill measurement gaps in the expanded HHVBP Model. These include function measures complementing the existing cross-setting Discharge (DC) Function measure. These measures would include care activities like bathing and dressing, which are important for home health patients and caregivers but are not included in the DC Function measures. Based on TEP feedback, CMS may also consider adding the existing Medicare Spending per Beneficiary measure in future rulemaking. Other potential areas for measure development activities discussed with the TEP include family caregiver status and claims-based falls with major injuries.
Health Equity Update
CMS is including an update on health equity to let stakeholders know that we are committed to developing approaches to meaningfully incorporate the advancement of health equity into the expanded HHVBP Model. As we move this important work forward, we will continue to take input from home health stakeholders and monitor the application of proposed health equity policies across CMS initiatives, such as proposed payment adjustments in the Hospital and SNF Value-Based Purchasing Programs.
Home Health Conditions of Payment (CoPs) Updates
CMS is proposing 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 proposes adding a new standard that would require HHAs to develop, implement, and maintain through an annual review, a patient acceptance to service policy that is applied consistently to each prospective patient referred for home health care. We are proposing that the policy must address, at a minimum, the following criteria related to the HHA’s capacity to provide patient care: the anticipated needs of the referred prospective patient, the HHA’s caseload and case mix, the HHA’s staffing levels, and the skills and competencies of the HHA staff. This proposed rule would not prevent HHAs from maintaining their existing acceptance to service policies; rather, it is intended to complement them. Additionally, CMS is proposing that HHAs make available to the public accurate information regarding the services offered by the HHA and any service limitations related to types of specialty services, service duration, or service frequency. HHAs would be required to review this information annually.
Request for Information on Rehabilitative Therapists and HHAs Scope of Services
Lastly, we are seeking public comments on two RFIs. First, we are seeking information regarding the 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. Second, we are seeking information regarding the HHA scope of services and how these services interact with HHA operations. We are soliciting comment on the communications that occur between patients’ physicians and allowed practitioners in establishing and reviewing the plan of care. We are also seeking information on how the physician and allowed practitioners ensure patients receive the right mix, duration, and frequency of services to meet measurable outcomes and goals identified by the HHA and the patient.
Long-Term Care (LTC) Facility Acute Respiratory Illness Data Reporting
CMS proposes replacing the current COVID-19 reporting standards for LTC facilities that sunset in December 2024 with a new standard that will address a broader range of acute respiratory illnesses. This new standard would require that, beginning on January 1, 2025, facilities electronically report information about COVID-19, influenza, and respiratory syncytial virus (RSV) to the Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN). CMS proposes that the data elements for which reporting would be required include facility census; resident vaccination status for COVID-19, influenza, and 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). CMS continues to believe that sustained data collection and reporting of respiratory illnesses outside of emergencies will help LTC facilities gain important insights related to their evolving infection control needs.
CMS also recognizes that, while necessary, these data may not be sufficient during an actual emergency event. Accordingly, we are also proposing that in the event of a declared — or significantly likely — national public health emergency (PHE) for an acute respiratory illness, there may be additional categories or reporting required, such as: reporting data up to a daily frequency and additional or modified data elements relevant to the PHE — including but not limited to relevant confirmed infections, supply inventory shortages, and additional demographic factors.
CMS is seeking comment on ways the reporting burden can be minimized while still providing adequate data; whether we should expand the proposed requirements for what is collected and how often, both during and outside a declared — or significantly likely — PHE; the value of these data in protecting the health and safety of residents in LTC facilities both during and outside of a PHE; system readiness and capacity to collect and report these data; and whether race, ethnicity, or other demographic information, such as socioeconomic factors or disability status, should be included in the requirements for ongoing reporting beginning on January 1, 2025.
Medicare Provider Enrollment
CMS is proposing to add providers and suppliers that are reactivating their Medicare billing privileges to the categories of new providers and suppliers subject to additional oversight. CMS may impose a provisional period of enhanced oversight (PPEO) for 30 days to one year for new providers and suppliers. The goal of a PPEO is to reduce and prevent fraud, waste, and abuse. During a PPEO, CMS may, among other things, conduct prepayment medical review and cap payments. Currently, CMS can apply a PPEO to new providers or suppliers, which are defined as providers or suppliers that are: (1) newly enrolling; (2) undergoing a change of ownership under 42 CFR § 489.18; and/or (3) undergoing a 100% change of ownership via a change of information. This proposal would add reactivating providers and suppliers as another category of new providers and suppliers subject to a PPEO.
For additional information about the Home Health Prospective Payment System, visit: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps and https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.
For additional information about the Home Health Patient-Driven Groupings Model, visit https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM.
For additional information about the expanded Home Health Value-Based Purchasing Model, visit: https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model.
The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/current.
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