Operating Conditions Worsen As CMS Continues To Gaslight Home Health Providers

Scroll down to watch: HHCN’s 2024 Final Home Health Payment Rule webinar

The final payment rule for 2024 reaffirmed that, no matter the amount of on-the-ground testimonials or data the home health industry lays out, the U.S. Centers for Medicare & Medicaid Services (CMS) is going to continue gaslighting providers.

CMS has a hard job, and protecting the Medicare trust fund is a complex task. But with each proposed and final payment rule over the last few years, the agency has continued to deal blows of uncertainty and distress to a group of health care providers that can actually positively impact total cost of care in the U.S.

For context, CMS finalized an aggregate 0.8% bump to home health payments in 2024 earlier this month, which was better than the 2.2% aggregate cut it proposed in June. Still, the agency went ahead with a 2.6% permanent behavioral assumption adjustment cut. It also asserted that it had overpaid home health providers by about $3.5 billion from 2020-2022, and that it would have to claw back that money over time – which would mean more cuts.


CMS followed the same pattern last year. It proposed a 4.2% cut to 2023 payments in June 2022, then finalized a 0.7% bump in October, with permanent cuts included.

“Immediately, you feel a little sigh of relief as an operator just because we were expecting the full proposed cut,” Healing Hands Healthcare CEO Summer Napier said on a webinar hosted by Home Health Care News last week. “But then the further you read, you’re like, ‘This is trash. I’m not going to accept this for 2025 and beyond. It’s not happening.’”

Healing Hands CEO Summier Napier at the HHCN FUTURE event in 2023.
Healing Hands CEO Summier Napier at the HHCN FUTURE event in 2023. | HHCN photo

The payment cuts evoke wide-ranging concerns for home health providers. Among them: an already acute staffing crisis; an all-time high referral rejection rate in the sector; a high Low-Utilization Payment Adjustment (LUPA) rate; an exacerbating Medicare Advantage (MA) conundrum; and rising cost of care.


There are other concerns as well, but of the above, those were all basically dismissed by CMS, even when accompanied by trustworthy data.

“Almost nothing changed,” VitalCaring President Luke James also said on the webinar. “There was adequate political pressure placed upon CMS. I believe the Senate Finance Committee hearing did a great job of highlighting the reality of what we’re facing here as an industry. The advocacy efforts did pay off in terms of reducing the overall cut that was ultimately levied on the industry in the final rule. But, unfortunately, getting into all the nuts and bolts, very little changed for us.”

What’s getting worse

A high home health referral rejection rate is a problem on its own. It means patients are having a harder time accessing home health services in a timely manner than ever before.

But really, that rate – up to 76% as of December 2022, compared to 54% in 2019, according to WellSky – is a symptom of larger problem. With slimmer margins, providers cannot afford to appropriately staff their businesses, meaning they can take on fewer patients. Providers did not receive the add-on payments that other health sectors did to deal with staffing woes during the pandemic.

Particularly for smaller home health agencies, there’s also less room on the margins to make investments in more efficient operations, which would also help them take on more patients.

Whether viewed as problem or symptom of a problem, though, the result is the same: a reduction in access to home health care – a vital and promised service under Medicare.

CMS dismissed those concerns in the final rule, suggesting that “referrals rejected by HHAs does not equate to the proportion of qualifying beneficiaries who are denied care.” The agency also expressed distrust in some of the data sets it was provided.

The advocacy efforts did pay off in terms of reducing the overall cut that was ultimately levied on the industry in the final rule. But, unfortunately, getting into all the nuts and bolts, very little changed for us.”

VitalCaring President Luke James

It also suggested that providers could be cherry-picking patients in their data: “We are concerned by suggestions that the ‘referral rejections’ and perceived access to care issue that industry advocates have cited to us are in fact being caused by strategic behavior,” CMS wrote.

But, as James pointed out, some of the data provided to CMS was actually its own data.

“CMS cited that the only 63% of Medicare beneficiaries who have an order when they’re leaving a hospital for home health services actually received services in the seven days following discharge,” James said. “That is CMS’ own data that was cited.”

Prior to the webinar, James had a phone call with an MA plan executive, a call which made him believe that even MA leaders were starting to recognize the negative impact referral rejection rates were having on patient outcomes.

“There’s a clear delineation in spend, readmissions and ER utilization for patients that have orders for home health coming out of a hospital,” James said. “Between those that actually receive care and those that don’t.”

Elsewhere, LUPA rates remain a problem for home health agencies across the country. A spike in LUPAs was expected at the beginning of the COVID-19 pandemic, but in the summer of 2021, they remained a problem.

Now, it appears that LUPA struggles are just a reality of the Patient-Driven Groupings Model (PDGM) era.

“There’s fewer Medicare beneficiaries that received care in 2022 – the most recent claims data year that CMS referenced – than in any of the previous four years,” James said. “LUPA rates are up 16% in PDGM compared to the pre-PDGM timeframe.”

CMS’ rationale, almost across the board, is evidence of either an unwillingness or an inability to come to grips with the reality on the ground, James said.

“CMS said that they believed that the COVID public health emergency would have impacted utilization uniformly across all of the case mix groups,” he continued. “Therefore, any reduction in resource use would have been uniform across all payment groups. But, at the same time, CMS cites lower visits being provided to patients – both therapy and nursing post-PDGM – as behavior change that they then dock providers for. It’s highly contradictory.”

Finding a middle ground

Napier believes that the home health industry needs to continue advocating to win over members of Congress, encouraging action on the way.

Lawsuits and congressional action may be worth seeking, but they also have a slim chance of success, at least in the near-term future.

Thus, she still thinks that home health providers still need to try to meet CMS where it’s at.

“We have to understand what CMS is trying to do,” Napier said. “They’re not full of just bad, hateful people who want all geriatric people to not get care. They’re trying their hardest to implement policy that will sustain and save the trust fund. … We have to meet them at those pain points and meet them where they’re at so that we can have a better conversation and try to find some mutual ground.”

One area where home health providers can definitely do better is cost reporting.

Cost reporting has fallen on the totem pole of importance for providers over the years. But accurate cost reporting can play a hand in painting the reality of modern day home health delivery for CMS.

“I think that several years of bad data in our cost reports have helped get us to where we’re at today with fighting these cuts,” Napier said. “[Providers] need to understand that Medicare cost reports are one of the biggest and best advocacy tools.”

Ultimately, no one knows whether CMS will bend the knee on core issues. For now, home health providers will have to continue an uphill battle of advocacy and data collection to make their voices hear.

“Mark Twain has a quote: ‘Data is like garbage, you better know what you’re going to do with it before you collect it,’” James said. “And it just feels like CMS knows what they’re going to do with a lot of the data they’re collecting before they go into rulemaking.”

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