Dive Brief:
- The CMS is proposing to cut Medicare reimbursements to home health agencies by 2.2% next year, or $375 million less than providers received in 2023, according to draft regulation released Friday.
- The agency said the proposed rule includes a 2.7% payment bump that’s offset by a 5.1% cut related to the Patient-Driven Groupings Model, which aimed to better sort patients into different payment categories by clinical need, and other factors.
- The reimbursement changes also reflect an estimated 0.2% increase due to an updated fixed-dollar loss ratio, according to regulators.
Dive Insight:
Home health is an increasingly popular space for some of the industry’s largest players like UnitedHealth Group and CVS, which have both recently pursued home health acquisitions. Payers hope bringing care into the home will lower costs and keep patients away from more expensive care by catching concerns before they escalate.
Industry groups blasted the proposed rule, arguing payment cuts will harm quality and reduce access to care. A large part of the cuts is due to the effects of the permanent behavior assumption adjustment, meant to reflect differences between assumed and actual behavior changes on spending because of the PDGM.
A 2018 spending law required regulators to change the payment rate from a 60-day to 30-day period and better align payments with patient care requirements, resulting in the PDGM.
Using claims data from 2022 and methodology finalized in the 2023 final rule, the CMS said Medicare ended up paying more under the new system.
"CMS previously finalized, for CY 2023, a permanent adjustment that was half of the estimated required permanent adjustment," the CMS wrote in the rule.
The Partnership for Quality Home Healthcare estimates overall cuts will total more than $18 billion over the next decade.
“CMS’s market basket projections are not keeping up with the real-world costs to home healthcare providers, and home health agencies cannot absorb compounding cuts in this environment,” Joanne Cunningham, CEO of the group, said in a statement. “This latest round of proposed cuts will further exacerbate an already fragile economic environment in the home health sector.”
The American Hospital Association said it had been concerned about the scale of the PDGM behavioral offsets, and the hospital lobby is “disappointed CMS continues to seek their implementation.”
The CMS plans to publish the proposed rule next week. It will accept comments through August 29.
