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CMS 2023 Home Health Final Rule: What Agencies Need To Know

The 2023 Home Health Final Payment Rule, which the Centers for Medicare and Medicaid Services (CMS) released in October, increases Medicare payments for home health agencies by 0.7%, or $125 million, compared to 2022. While this seems like a treat, William A. Dombi, president of the National Association for Home Care and Hospice, said the increase portrays a rosier picture than reality.

“The reality is that Medicare’s final rule does not adequately account for all the cost inflation experienced in home health in 2022 and expected to continue into 2023,” Dombi said in a presentation during the 2022 Relias Impact Nation conference.

The final rule includes a 4.1% net inflation rate update. However, Dombi would like to see payments catch up to the cost increases in the market. “When you’re looking at cost increases in home health, the primary triggers of that are workforce costs, and we have seen labor shortages leading to higher compensation and higher recruitment and retention costs,” he said.

Dombi added that transportation and gasoline costs, which impact the cost of home health services, are not reflected in the rule’s inflation update, and the increase in the cost of living is closer to 8%.

“Being a home health worker is very difficult and comes with myriad challenges,” said Vince Baiera, BSN, Partner for Post-Acute Care at Relias. “When the work doesn’t come with the financial rewards that so many other entry-level roles offer, it makes retention very difficult. Many organizations, such as McDonald’s and Costco, have raised the minimum wage. When you can get paid to flip burgers as much as you can to provide great care, it’s easy to see why retention is becoming more difficult in entry-level jobs.”

How will the 2023 final rule affect your business? Below are some of the changes home health providers should be aware of.

Patient-Driven Groupings Model (PDGM)

CMS has finalized a -3.925% permanent adjustment to the 30-day payment rate to ensure that aggregate expenditures under the PDGM are equal to what they would have been under the old payment system.

A permanent cap on the wage index decreases

The rule finalizes a permanent 5% cap on negative wage index changes for home health agencies, regardless of the underlying reason for the decrease, to improve predictability in home health payments.

Recalibration of PDGM case-mix weights

Each of the 432 payment groups under has an associated case-mix weight and low utilization payment adjustment (LUPA) threshold. CMS has finalized the recalibration of the case-mix weights, including the functional levels and co-morbidity adjustment subgroups and the LUPA thresholds, using the calendar year 2021 data to pay more accurately for the types of patients that home health agencies serve.

Collecting data on telecommunications technology

Beginning January 1, CMS began asking home health agencies to voluntarily collect data on their use of telecommunications technology. The information will help CMS analyze the characteristics of beneficiaries who use remote services and understand the social determinants that affect them, as well as the barriers that exist for the different subsets of patients who use telehealth. Data collection will become mandatory on July 1.

Updates to the home infusion therapy benefit

The Consumer Price Index for all urban consumers for June 2022 is 9.1%, and the productivity adjustment is a reduction of 0.4%. Therefore, the final home infusion therapy payment rate update for 2023 is an increase of 8.7%.

Finalization of the all-payer policy for the home health Quality Reporting Program

CMS has ended the suspension of collecting Outcome and Assessment Information Set (OASIS) data on non-Medicare/non-Medicaid home health agency patients. Starting in 2027, home health agencies will be required to submit OASIS data for all patients. During a phase-in period from January 1, 2025, to June 30, 2025, agencies that fail to submit the data will not be penalized.

Baseline years in the expanded Home Health Value-Based Purchasing (HHVBP) model

A few changes appear in the expanded HHVBP:

  • Adding definitions for home health agencies’ baseline year and model baseline year
  • Changing the home health agency baseline calendar year from 2019 to 2022 for existing home health agencies with a Medicare certification date before January 1, 2019, and from 2021 to 2022 for home health agencies with a Medicare certification date before January 1, 2022
  • Changing the model baseline calendar year from 2019 to 2022 starting in 2023

Keeping up with all these changes is important to your agency’s bottom line — so is compliance with CMS regulations to maximize your reimbursements under the new rule.


The State of Home Health Care and Hospice 2023 With Bill Dombi

In this session from the Relias 2022 Impact Nation Conference, William Dombi, President of the National Association for Home Health Care and Hospice, analyzes the 2023 Medicare Payment Rule and explains how it could affect your home health or hospice organization.

Watch the Webinar →

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