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Stability of Home Health Care Is at Risk: CMS Proposes 4.2% Decrease to Provider Payments in 2023

On June 17, 2022, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2023 Home Health Prospective Payment System (HH PPS) Rate Update proposed rule, which would update Medicare payment policies and rates for home health agencies (HHAs). This rule includes proposals and routine updates to the Medicare Home Health PPS and the home infusion therapy services’ payment rates for CY 2023, in accordance with existing statutory and regulatory requirements. In addition, CMS is proposing to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for any increases or decreases in aggregate expenditures, as a result of the difference between assumed behavior changes and actual behavior changes, due to the implementation of the Patient-Driven Groupings Model (PDGM) and 30-day unit of payment. CMS is soliciting comments on how best to implement a temporary payment adjustment for CYs 2020 and 2021. CMS is also soliciting comments on the collection of telehealth data on home health claims to allow CMS to analyze the characteristics of the beneficiaries utilizing services furnished remotely. The actions CMS is taking in this proposed rule would help improve patient care and also protect the Medicare program’s sustainability for future generations by serving as a responsible steward of public funds.

CY 2023 Proposed Payment Updates and Policy Changes Updates for Home Health Agencies and Home Infusion Therapy Suppliers

Proposals and Updates to the HH PPS for CY 2023

This rule proposes routine, statutorily required updates to the home health payment rates for CY 2023. CMS estimates that Medicare payments to HHAs in CY 2023 would decrease in the aggregate by -4.2%, or -$810 million compared to CY 2022, based on the proposed policies. This decrease reflects the effects of the proposed 2.9% home health payment update percentage ($560 million increase), an estimated 6.9% decrease that reflects the effects of the proposed perspective, permanent behavioral assumption adjustment of -7.69% ($1.33 billion decrease), and an estimated 0.2% decrease that reflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($40 million decrease).

Proposed Permanent Cap on Wage Index Decreases

To achieve the policy goal of increased predictability in home health payments, while aligning with proposals in the FY 2023 Inpatient Prospective Payment System proposed rule and other proposed rules, this rule proposes a permanent, budget-neutral approach to smooth year-to-year changes in the pre-floor/pre-reclassified hospital wage index. Specifically, this rule proposes a permanent 5% cap on negative wage index changes (regardless of the underlying reason for the decrease) for home health agencies.

Recalibration of Patient-Driven Groupings Model (PDGM) Case-Mix Weights

Each of the 432 payment groups under the PDGM has an associated case-mix weight and Low Utilization Payment Adjustment (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 2021 data to more accurately pay for the types of patients HHAs are serving.

PDGM and Behavioral Assumptions

On January 1, 2020, CMS implemented the home health PDGM and a 30-day unit of payment, as required by the Bipartisan Budget Act of 2018. The PDGM, which Congress required, better aligns payments with patient care needs, especially for clinically complex beneficiaries that require more skilled nursing care rather than therapy. The law required CMS to make assumptions about behavior changes that could occur because of the implementation of the 30-day unit of payment and the PDGM. In the CY 2019 HH PPS final rule with comment period, CMS finalized three behavioral assumptions (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), we 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 is determined. In the CY 2022 home health proposed rule, CMS solicited comments on a repricing methodology to determine the impact of behavior changes on estimated aggregate expenditures. This CY 2023 proposed rule proposes the repricing method, which calculates what the Medicare program would have spent had the PDGM not been implemented in CYs 2020 and 2021, assuming that HHAs would have provided home health services in the same way they do under the PDGM, compared to what actual home health expenditures were under the PDGM in CY 2020 and CY 2021.

Using this method, we are proposing a -7.69% permanent adjustment to the 30-day payment rate in CY 2023 to ensure that aggregate expenditures under the new payment system (PDGM) would be equal to what they would have been under the old payment system. While the law also requires CMS to implement one or more temporary adjustments to retrospectively offset for such increases or decreases in estimated aggregate expenditures, CMS also has the discretion to implement these adjustments in a time and manner deemed appropriate, therefore, CMS is not proposing a temporary payment adjustment in CY 2023. However, we are soliciting comments on how best to implement a temporary payment adjustment, estimated to be $2.0 billion for excess estimates in CYs 2020 and 2021.

Comment Solicitation on the Collection of Data on the Use of Telecommunications Technology under the Medicare Home Health Benefit

CMS finalized policy changes regarding the use of services furnished via telecommunications systems in the CY 2021 HH PPS final rule. However, the collection of data on the use of telecommunications technology under the home health benefit is limited to a broad category of telecommunications technology costs under administrative costs on the HHA cost reports (reported at the agency level). This proposed rule solicits comments on the collection of data on the use of such services furnished using telecommunications technology on the home health claims (at the individual beneficiary level). Collecting data on the use of telecommunications technology on home health claims would allow CMS to analyze the characteristics of the beneficiaries utilizing services furnished remotely, and could give us a broader understanding of the social determinants that affect who benefits most from these services, including what barriers may potentially exist for certain subsets of beneficiaries.

Updates to the Home Infusion Therapy Benefit for CY 2023

CMS is updating the home infusion therapy services payment rates for CY 2023 as required by law. Section 1834(u)(3) of the Act specifies that annual updates to be equal to the percent increase in the Consumer Price Index for all urban consumers (CPI–U) for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment for CY 2023. The CPI-U for June 2022 was not yet available at the time of this proposed rule.

Proposal of All-Payer Policy for the Home Health Quality Reporting Program

CMS is proposing to end the suspension of non-Medicare / non-Medicaid data for HHA patients. HHAs would be required to submit all-payer OASIS data for purposes of the HH Quality Reporting Program (QRP), beginning with the CY 2025 program year.

Baseline Years in the Expanded Home Health Value-Based Purchasing (HHVBP) Model

For the Expanded HHVBP Model, CMS is proposing to:

  • add definitions for HHA baseline year and Model baseline year, and remove the previous definition of baseline year;

  • change the HHA baseline year from CY 2019 to CY 2022 for existing HHAs with a Medicare certification date prior to January 1, 2019, and from 2021 to 2022 for HHAs with a Medicare certification date prior to January 1, 2022 starting in the CY 2023 performance year; and,

  • change the Model baseline year from CY 2019 to CY 2022 starting in CY 2023.

Health Equity Request for Information (RFI)

CMS is seeking stakeholder feedback on our work around health equity measure development for the Home Health QRP and the potential future application of health equity in the Expanded HHVBP Model’s scoring and payment methodologies.

For additional information about the Home Health Patient-Driven Groupings Model, visit Payment/HomeHealthPPS/HH-PDGM.html.

For additional information about the Home Infusion Therapy Services benefit, visit Therapy/Overview.html.

The proposed rule can be downloaded from the Federal Register at:


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