Hidden Changes: What Home Health Providers May Have Missed In The Final Rule 

On Nov. 1, the Centers for Medicare & Medicaid Services (CMS) issued the final home health payment rule for 2025, updating Medicare policies and rates for home health agencies.

But while the payment-related information grabbed headlines, there are plenty of other changes to home health care within the rule that providers should be paying attention to.

CMS estimated that Medicare payments to agencies in 2025 would increase by 0.5%, or $85 million, compared to 2024. In addition to the slight payment increase, the rule introduced other changes for HHAs that may impact their business practices.

“This is not where we want to be,” William A. Dombi, president emeritus of the National Alliance for Care at Home, said during a recent webinar. “We are on a slippery slope toward potential disaster. We projected this would happen when we examined CMS’ methodology for budget neutrality. All CMS has done is mitigate the situation, rather than create a foundation for restoring the home health benefit to its intended state.”

Elara Caring CEO Scott Powers echoed this sentiment and urged CMS to reevaluate its payment model.

“While CMS’ 2025 payment adjustments attempt to address some challenges faced by home health providers, the current approach remains inadequate,” Powers told Home Health Care News. “The budget neutrality methodology continues to undermine the fundamental purpose of home health care, limiting access for the seniors who rely on these services the most. We urge CMS to prioritize a payment model that genuinely reflects the value of home health care.”

With a presence in 18 states, Elara Caring provides an array of home-based care services across more than 200 locations, serving more than 60,000 patients.

“CMS’ decision to implement a -1.975% permanent projected adjustment to home health payments is deeply concerning,” Compassus CEO Mike Asselta told HHCN. “This is particularly troubling as the demand for these services continues to rise. Concurrently, new conditions of participation increase the administrative burdens on home health agencies without adequately addressing critical issues like access to care.”

Based in Brentwood, Tennessee, Compassus also offers a wide range of home-based care services including home health care, home infusion, palliative care, hospice care and home-based high-acuity care, with more than 270 locations across 30 states.

Bud Langham, the executive vice president of clinical excellence and strategy for Enhabit Inc. (NYSE: EHAB) , expressed significant concern about the 2025 home health final rule.

“The most pressing issue is yet another cut to home health reimbursement,” he said. “This marks the third consecutive implementation of negative permanent adjustments, along with planned temporary adjustments that are still pending. Congress needs to take action; over 60 million Medicare-eligible Americans are counting on it.”

In addition to the disappointing annual payment update, CMS has finalized several other changes that will affect home health providers starting in 2025 and beyond.

The Outcome and Assessment Information Set (OASIS)

The Outcome and Assessment Information Set (OASIS-D) was the home health assessment used under the previous 153-group system and in the first three years of the current Patient-Driven Groupings Model (PDGM). However, the Office of Management and Budget (OMB) approved an updated OASIS instrument, OASIS-E, on Nov. 20, 2022, effective Jan. 1, 2023.

To accurately determine payments under the 153-group system, CMS uses the October 2019 3M home health grouper to assign a health insurance prospective payment system code to each simulated 60-day episode of care. This older version of the home health grouper requires responses from OASIS-D that have changed in OASIS-E.

Additionally, 13 items on OASIS-E no longer need to be asked at the follow-up visit. For these items, CMS may use the most recent start of care (SOC) or resumption of care (ROC) assessment to determine a response that does not require imputation. In this final rule, CMS is finalizing a crosswalk to address this issue by mapping OASIS-E items back to OASIS-D.

“OASIS-E is the tenth version of OASIS,” Langham said. “SOC already has 16 sections with 116 items to review and answer upon each admission. That leads to far too much ‘eyes down’ time when we need more opportunity for ‘eyes up’ with patients and families.”

OASIS collection on all payers begins voluntarily on Jan. 1, 2025. Mandatory collection begins July 1.

“Instead of imposing these challenges, CMS could take meaningful steps to enhance home health care,” Asselta said. “For example, timely initiation of care measures could be refined to improve their relevance, accuracy and alignment with evolving clinical practices and regulatory standards. Similarly, evaluating and streamlining OASIS questions would reduce unnecessary documentation, giving clinicians more time to focus on direct patient care and improve outcomes. The home health sector has significant potential for innovation and improvement, but cutting essential funding while adding administrative hurdles undermines its ability to deliver high-quality, patient-centered care.”

LTM Group CEO David Kerns said he understands that these changes intend to improve care delivery and patient outcomes; however, the implementation may place additional financial and operational pressures on home health agencies, which could be detrimental.

“With ongoing reimbursement cuts, we anticipate an accelerated closure rate,” he said.

The LTM Group comprises several home health, personal care, hospice and rehab companies with more than 500 employees across Indiana, Ohio and Michigan.

Home Health Quality Reporting Program (HHQRP) updates

CMS has additionally finalized four new OASIS assessment items and modified one existing item in the social determinants of health (SDoH) category, which will take effect with the 2027 Home Health Quality Reporting Program (HHQRP). Providers are required to begin collecting this data on Jan. 1, 2027.

The new assessment items include one focused on the living environment, two addressing food insecurity and one related to utilities. Additionally, CMS is modifying the current transportation item within the OASIS framework, starting with the 2027 HHQRP.

“We support the initiative to collect data on these critical issues and appreciate CMS simplifying the questions. However, we have concerns about the expanding size and scope of the OASIS data set and the resulting burden it places on clinicians and patients,” Langham said. “In the final rule, CMS estimates that collectively, the time required to address these new items will be 0.9 minutes, or 54 seconds. We respectfully suggest that CMS observe some of our case-managing clinicians to better understand how long it takes to explain and collect responses to the SDoH questions, as well as the time and resources required for training.”

Furthermore, CMS is changing all-payer data collection to begin at the start of care OASIS data collection timepoint instead of the discharge timepoint.

Low utilization payment adjustment (LUPA) threshold changes

To ensure fair compensation for all home health services, CMS has proposed establishing a distinct low-utilization payment adjustment (LUPA) add-on factor specifically for occupational therapy (OT). This will replace the temporary use of the physical therapy (PT) LUPA add-on factor, which was being used as a substitute.

CMS is moving forward with finalizing the new OT LUPA add-on factor using the same methodology that was applied to determine the LUPA add-on factors for skilled nursing (SN), physical therapy (PT), and speech-language pathology (SLP), as outlined in the 2014 Home Health Prospective Payment System (HHPPS) final rule.

The OT LUPA add-on factor will apply when occupational therapy is the first skilled visit in a LUPA episode, whether it occurs as a stand-alone episode or as the initial episode in a series of adjacent episodes.

Additionally, CMS is finalizing updates to the SN, PT and SLP LUPA add-on factors to better reflect current health care practices and costs, using recent claims data from 2023.

“CMS updated the LUPA thresholds based on 2023 utilization data,” Langham noted. “In total, 44 out of the 432 LUPA thresholds have changed. Of these, 33 HIPPS codes experienced a decrease in their LUPA threshold, while 11 saw an increase. Prior to the Patient-Driven Groupings Model, there was only one LUPA threshold – four visits per 60-day episode – with approximately 7% of all episodes being classified as LUPAs in 2018. Under PDGM, there are now 432 distinct LUPA thresholds, set at the tenth percentile of visit utilization, allowing each 30-day period to potentially qualify as a LUPA. This has resulted in a more complex system.”