[Updated] CMS Finalizes 0.8% Home Health Payment Increase For 2024, Additional PDGM Cuts

The U.S. Centers for Medicare & Medicaid Services (CMS) released its CY 2024 home health final payment rule Wednesday.

It comes with an estimated aggregate increase to 2024 home health payments of 0.8%, or $140 million, compared to 2023 aggregate payments. But that doesn’t tell the entire story, with sharp rate cuts also finalized.

“The $140 million increase in estimated payments for CY 2024 reflects the effects of the CY 2024 home health payment update percentage of 3.0% ($525 million increase), an estimated 2.6% decrease that reflects the effects of the permanent behavioral assumption adjustment ($455 million) and an estimated 0.4% increase that reflects the effects of an updated FDL ($70 million increase),” the final rule reads. 


CMS is finalizing a permanent prospective adjustment of -2.890% to the CY 2024 home health payment rate, short of a -5.1% adjustment proposed in June.

A -3.925% permanent rate adjustment was already implemented in 2023.

The agency had proposed a 2.2% aggregate decrease in 2024 in June. The full fact sheet on the final rule can be viewed here.


The nuts and bolts

While a 0.8% increase in aggregate payments – compared to the 2.2% decrease proposed – is positive news in the near term, CMS is not backing off its desire for permanent, negative adjustments. The agency continues to maintain that it overpaid home health agencies during the first three years of the Patient-Driven Groupings Model (PDGM), too.

The permanent prospective adjustment of -2.890%, while smaller than the 5.1% proposed, is something that providers and advocates hoped CMS would do away with completely.

CMS is suggesting that home health agencies have been overpaid by about $3.5 billion from 2020-2022, which means clawbacks are still on the table. Specifically, CMS believes it overpaid by $873 million in 2020, $1.2 billion in 2021 and $1.4 billion in 2022. 

“A permanent prospective adjustment of -1.767% to the CY 2024 30-day payment rate (assuming the -7.85 percent adjustment was already taken) would be required to offset for such increases in estimated aggregate expenditures in future years,” CMS wrote in its rule. 

The National Association for Home Care & Hospice (NAHC) and other industry organizations disagree with CMS, on that note and others. 

“We continue to strenuously disagree with CMS’ rate setting actions, including the budget neutrality methodology that CMS employed to arrive at the rate adjustments,” NAHC President William A. Dombi said in a statement shared with Home Health Care News. “We recognize that CMS has reduced the proposed 2024 rate cut. However, overall spending on Medicare home health is down, 500,000 fewer patients are receiving care annually since 2018, patient referrals are being rejected more than 50% of the time because providers cannot afford to provide the care needed within the payment rates, and providers have closed their doors or restricted service territory to reduce care costs.”

The latter part of Dombi’s statement is, in NAHC’s analysis, proof that the continued cuts to home health payment are affecting patient access. 

“When you add in the impact of shortchanging home health agencies on an accurate cost inflation update of 5.2% over the last two years, the loss of care access is natural and foreseeable,” Dombi continued.

CMS, on the other hand, sees the access situation differently, and maintains that home health agencies “in general continue to experience high profit margins.”

It does not appear, however, that CMS is taking into account Medicare Advantage reimbursement for home health services in their analyses. MA plans tend to offer far lower rates for home health services, and MA beneficiaries now make up over 50% of the Medicare population.

“We appreciate industry advocates’ dedication to ensuring continued access to home health services,” CMS wrote in its rule. “We recognize there is always a level of concern that accompanies a payment rate decrease and we remind readers that, by law, … we are required to ensure that estimated aggregate expenditures under the HH PPS are equal to our determination of estimated aggregate expenditures that otherwise would have been made under the HH PPS in the absence of the change to a 30-day unit of payment and changes in case-mix adjustment factors.”

As part of the proposed rule, CMS elicited comments on home health access. It said that the feedback it received will help guide its formulation processes in future regulatory updates.

The agency also delved further into the details of the behavioral changes it had observed.

“In the CY 2023 HH PPS final rule (87 FR 66796), we concluded that the three assumed behavior changes had in fact occurred,” CMS wrote. “Additionally, this monitoring showed that other behavioral changes, such as changes in the provision of therapy and functional impairment levels, also resulted from implementing the PDGM. We also restated … that we interpret actual behavior changes to encompass both behavior changes that were previously outlined and assumed by CMS, as well as other behavior changes that were not identified at the time the budget-neutral 30-day payment rate for CY 2020 was established.”

The Partnership for Quality Home Healthcare (PQHH) said it was “extremely disappointed” with Wednesday’s outcome.

“To put these numbers into context, the rule finalizes a base rate year-over-year increase of less than $1 per day to care for Medicare’s sickest patients,” PQHH CEO Joanne Cunningham said in a statement. “And while CMS is slightly delaying implementation of the permanent cut for next year, those dollars will be cut from home health in future years.”

Advocacy delivers

Home health stakeholders have advocated extremely hard against payment cuts since that original proposal in June. Though they didn’t get everything they wanted, the positive payment adjustment will likely allow many providers to keep their heads above water over the next year. 

The advocacy led to increased lawmaker support. The Preserving Access to Home Health Act was introduced in both the Senate and House, in June and August, respectively. Just last week, eight senators urged President Joe Biden to help protect home health benefit in a letter.

The Senate Finance Committee’s Subcommittee on Health Care also held a hearing in September regarding aging in place. In that hearing, lawmakers in attendance sympathized with home health providers’ plight over the last couple of years and seemed to be against future cuts to home health payment

Katie Smith Sloan, president and CEO of nonprofit senior care association LeadingAge, noted the finalized rule will further limit providers’ ability to recruit and retain a sufficient workforce.

“While we recognize that CMS did not cut as much as they proposed, future payment reductions and clawbacks are a certainty under the agency’s interpretations of its current statutory obligations,” the LeadingAge leader said in a statement. “Providers are already navigating well-documented challenges to recruit, hire and retain staff in a very tight labor market. Faced with additional cuts in this environment, our mission-driven providers will be forced to limit their caseloads even further in order to ensure quality care.”

“And the current struggles of older adults and their families to access care will worsen,” she continued.

There were significant grassroot advocacy efforts from providers across the country. NAHC also sued CMS and the U.S. Department of Health & Human Services (HHS) over the cuts.

“We now implore Congress to correct what CMS has done and prevent the impending harm to the millions of highly vulnerable home health patients that depend and will depend in the future on this essential Medicare benefit,” Dombi said. “Fortunately, longstanding advocates for home health care, Senator Debbie Stabenow (D-Mich.) and Senator Susan Collins (R-Maine) have introduced S. 2137 to eliminate the rate cuts. We urge the Congress to support this bill and enact it into law before the end of the year. The 2024 rate cuts must not take effect.”

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