Calendar Year (CY) 2024 Home Health Prospective Payment System Final Rule (CMS-1780-F)
On November 1, 2023, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2024 Home Health Prospective Payment System (HH PPS) Rate Update final rule, which updates Medicare payment policies and rates for Home Health Agencies (HHAs). This rule includes routine updates to the Medicare Home Health PPS payment rates for CY 2024 in accordance with existing statutory and regulatory requirements. As described further below, CMS estimates that Medicare payments to HHAs in CY 2024 will increase in the aggregate by 0.8 percent, or $140 million, compared to CY 2023.
CMS is finalizing a permanent prospective payment adjustment to the CY 2024 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 as required by the Bipartisan Budget Act of 2018. The finalized -2.890 percent permanent adjustment is half the full permanent adjustment of -5.779 percent (-5.653 percent in the proposed rule). As a result of CMS finalizing roughly half of the full permanent adjustment projected, Medicare payments to HHAs in CY 2024 will increase in the aggregate by 0.8 percent, rather than a 2.2 percent decrease as initially proposed.
In addition, CMS is also finalizing its proposals to rebase and revise the home health market basket; revise the labor-related share; recalibrate the PDGM case-mix weights; update the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups for CY 2024; codify statutory requirements for disposable negative pressure wound therapy (dNPWT); and establish regulations to implement payment for items and services under two new benefits: lymphedema compression treatment items and home intravenous immune globulin (IVIG). The actions CMS is taking in this final rule will help improve patient care and also protect the Medicare program’s sustainability for future generations. In addition, the final rule includes several enrollment provisions that apply to hospices as well as other provider types. We believe these provisions will help protect hospice beneficiaries by more closely scrutinizing prospective hospice owners and ensuring that newly enrolled hospices provide appropriate care to people nearing the end of life. The final rule also includes a new informal dispute resolution (IDR) process for hospice programs and a special focus program (SFP) to provide enhanced oversight of the poorest-performing hospices, building on similar oversight and enforcement programs focused on nursing homes.
CY 2024 Payment Updates and Policy Changes Updates for HHAs
This rule finalizes routine, statutorily required updates to the home health payment rates for CY 2024. CMS estimates that Medicare payments to HHAs in CY 2024 will increase in the aggregate by 0.8 percent or $140 million compared to CY 2023, based on the finalized policies. This increase reflects the effects of the 3.0 percent home health payment update percentage ($525 million increase), an estimated 2.6 percent decrease that reflects the net effects of the finalized prospective permanent behavior assumption adjustment across all payments (half of the full adjustment), as the adjustment applies only to the national, standardized 30-day period payments and does not impact LUPAs ($455 million decrease), and an estimated 0.4 percent increase that reflects the effects of an update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($70 million increase).
PDGM and Behavior Assumptions
On January 1, 2020, CMS implemented the home health PDGM and a 30-day unit of payment, as required by section 1895(b) of the Social Security Act, as amended by the Bipartisan Budget Act of 2018. The PDGM better aligns payments with patient care needs, especially for clinically complex beneficiaries. 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. CMS finalized three behavior assumptions in the CY 2019 HH PPS final rule with comment period (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 with comment period (83 FR 56455), CMS stated that we interpreted actual behavior changes 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 was determined. In the CY 2023 HH PPS final rule (87 FR 66795), CMS finalized a methodology for analyzing the differences between assumed versus actual behavior changes on estimated aggregate expenditures and calculated levels of actual and estimated aggregate expenditures, using CY 2020 and 2021 claims. Based on analysis of this claims data, CMS determined a permanent adjustment was needed. In CY 2023, CMS finalized implementing half (-3.925 percent) of the permanent adjustment estimated at the time (-7.85 percent).
For the CY 2024 HH PPS final rule, using updated CY 2022 claims and the methodology finalized in the CY 2023 HH PPS final rule, CMS determined that Medicare paid more under the new system (PDGM) than it would have under the old system. CMS is finalizing a permanent adjustment percentage of –2.890 percent (half of the estimated permanent adjustment of –5.779 percent) in CY 2024 to address the differences in the aggregate expenditures. This halving of the permanent adjustment is in response to commenter concerns about the magnitude of a single-year significant payment reduction. CMS will have to account for the remaining permanent adjustment not applied in CY 2024, and other potential adjustments needed to the base payment rate, to account for behavior change based on analysis at the time of future rulemaking. While the law requires CMS to also apply temporary payment adjustments to offset any over or under payments, the law also provides CMS the discretion to make any future permanent or temporary adjustments in a time and manner determined appropriate through analysis of estimated aggregate expenditures through CY 2026. While the proposed rule calculated the total temporary adjustment in the CY 2024 proposed rule (approximately $3.5 billion), CMS did not propose a temporary adjustment for CY 2024.
Rebasing and Revising the Home Health Market Basket
Since the HH PPS was implemented, the market basket used to update HH PPS payments has been rebased and revised to reflect more recent data on home health cost structures. CMS last rebased and revised the home health market basket in the CY 2019 HH PPS final rule with a comment period, where a 2016-based home health market basket was adopted. For CY 2024, CMS will adopt a 2021-based home health market basket, which includes proposed changes to the market basket cost weights and price proxies.
Updating the Labor-Related Share
As a result of the rebasing and revising of the home health market basket, the CY 2024 labor-related share (LRS) is 74.9 percent, which is based on the 2021-based home health market basket compensation cost weight (the current labor-related share is 76.1 percent). Additionally, we are implementing the revised labor-related share in a budget-neutral manner.
Disposable Negative Pressure Wound Therapy
In accordance with Division FF, section 4136 of the Consolidated Appropriations Act (CAA), 2023, CMS is finalizing its proposal to codify statutory requirements for negative pressure wound therapy (NPWT) using a disposable device for patients under a home health plan of care. The CAA, 2023 requires that beginning January 1, 2024, there is a separate payment for the device only. Payment for the services to apply the device is to be included in the 30-day payment under the home health prospective payment system. There are also changes that allow HHAs to now report the disposable device on the type of home health claim most familiar to HHAs.
Recalibration of PDGM Case-Mix Weights
Each of the 432 payment groups under the PDGM has an associated case-mix weight and 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. CMS is finalizing its proposal to recalibrate the case-mix weights (including the functional levels and comorbidity adjustment subgroups) and LUPA thresholds using CY 2022 data to more accurately pay for the types of patients HHAs serve.
Request for Information on Access to Home Health Aide Services
In the CY 2024 HH PPS proposed rule, CMS solicited comments from the public, including home health providers, as well as patients and advocates, regarding information related to promoting the appropriate access to and provision of home health aide services for all beneficiaries receiving care under the home health benefit. This final rule includes a discussion on the comments received regarding access to home health aide services. The feedback provided by respondents will help guide our policy formulation processes, and we are hopeful this information can assist in refining policy development, addressing barriers, and fostering coordination under the home health benefit for future regulatory updates.
Home Health (HH) Quality Reporting Program (QRP)
CMS is finalizing the following measures:
- COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine) measure to the HH QRP beginning with the CY 2025 HH QRP.
- Functional Discharge Score (DC Function) measure to the HH QRP beginning with the CY 2025 HH QRP.
The COVID-19 Vaccine measure continues CMS’s commitment to promoting the uptake of the COVID-19 vaccine and ensures alignment with current CDC guidance.
CMS is finalizing the removal of the following measures:
- With the addition of the Discharge Function measure, we finalized to remove the Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) measure from the HH QRP beginning with the CY 2025 HH QRP.
- Additionally, CMS finalized removal of two OASIS items that are no longer necessary for collection, the M0110 – Episode Timing and M2220- Therapy Needs items.
CMS is finalizing the public reporting of four measures:
- Discharge Function;
- Transfer of Health (TOH) Information to the Provider—Post-Acute Care (PAC) Measure (TOH-Provider);
- Transfer of Health (TOH) Information to the Patient—Post-Acute Care (PAC) Measure (TOH-Patient); and
- COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date.
We are also finalizing our proposed technical changes to § 484.245(b) that codify our requirement that HHAs must meet or exceed a data submission threshold set at 90 percent of all required OASIS and submit the data through the CMS-designated data submission systems. We discuss responses to our request for information on future HH QRP measure concepts and provide updates on HH QRP health equity initiatives.
Expanded Home Health Value-Based Purchasing (HHVBP) Model
Applicable Measure Set used in the expanded Home Health Value-Based Purchasing (HHVBP) Model
For the expanded HHVBP Model, CMS is finalizing its proposals to:
- Codify in the Code of Federal Regulations the measure removal factors finalized in the CY 2022 HH PPS final rule;
- Replace the two Total Normalized Composite Measures (for Self-Care and Mobility) with the Discharge Function Score measure effective January 1, 2025;
- Replace the OASIS-based Discharge to Community (DTC) measure with the claims-based Discharge to Community-Post Acute Care (PAC) Measure for Home Health Agencies, effective January 1, 2025;
- Replace the claims-based Acute Care Hospitalization During the First 60 Days of Home Health Use and the Emergency Department Use without Hospitalization During the First
60 Days of Home Health measures with the claims-based Potentially Preventable Hospitalization measure effective January 1, 2025;
- Change the weights of individual measures due to the change in the total number of measures; and
- Beginning with performance year CY 2025, update the Model baseline year to CY 2023 for all applicable measures in the finalized measure set, including those measures included in the current measure set with the exception of the 2-year DTC-PAC measure, which would be CY 2022 and CY 2023.
CMS is finalizing an additional opportunity to request a reconsideration of the annual Total Performance Score (TPS) and payment adjustment.
Public Reporting Reminder
CMS is including a reminder for HHAs and other stakeholders that public reporting of HHVBP performance data and payment adjustments will begin in December 2024.
Health Equity Update
CMS is including an update on health equity to let stakeholders know that we are committed to developing approaches to meaningfully incorporate the advancement of health equity into the expanded HHVBP Model. As we move this important work forward, we will continue to take input from home health stakeholders and monitor the application of proposed health equity policies across CMS initiatives, such as proposed payment adjustments in the Hospital and SNF Value-Based Purchasing Programs.
Home Intravenous Immune Globulin (IVIG) Items and Services
As required under Division FF, section 4134 of the CAA, 2023, CMS is finalizing regulations, as proposed, to implement permanent coverage and payment of items and services related to administration of IVIG in a patient’s home for a patient with a diagnosed primary immune deficiency disease (PIDD). Currently, Medicare pays for the IVIG product using the average sales price (ASP) methodology, and the items and services needed for in-home administration of IVIG for the treatment of PIDD are paid under a Medicare Demonstration program. This Demonstration program will end on December 31, 2023, and the CAA, 2023, establishes permanent coverage and payment of the items and services needed for in-home administration beginning on January 1, 2024.
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Policy Issues
Lymphedema Compression Treatment Items
Section 4133 of the CAA, 2023 establishes a Medicare Part B benefit for standard and custom-fitted gradient compression garments and other compression treatment items for the treatment of lymphedema that are prescribed by an authorized practitioner. Compression garments for treatment of lymphedema have not been previously covered by Medicare because, prior to the enactment of the CAA, 2023, there was no statutory benefit category for such items. This rule addresses the scope of the new benefit by defining what constitutes a standard- or custom-fitted gradient compression garment and identifying other compression items used for the treatment of lymphedema that fall under the new benefit category, beginning January 1, 2024. The rule sets forth Medicare payment for gradient compression garments for both daytime and nighttime use as well as ready-to-wear, non-elastic, gradient compression wraps with adjustable straps and compression bandaging systems applied in a clinical setting as part of phase one decongestive therapy as well as during phase two maintenance therapy. In response to concerns by commenters, this rule establishes that Medicare will pay for an increase in daytime garments over the amount previously proposed. As such, Medicare will pay for three daytime garments every six months and two nighttime garments every two years for each affected extremity or part of the body. This rule establishes the initial Healthcare Common Procedure Coding System (HCPCS) codes and the payment methodology for these items and outlines how future coding, benefit category, and payment determinations for these items will be made. The payment basis that we are finalizing for lymphedema compression treatment items approximates the payment methodology by the Department of Veterans Affairs, which is the average Medicaid State agency payment amounts plus 20 percent. In the event that Medicaid State agency payment rates are not available, payment rates will be based on the average of payment amounts established by TRICARE and internet retail prices. If neither Medicaid nor TRICARE payment amounts are available, Medicare payment rates will be based on the average internet retail prices for a lymphedema compression treatment item.
Medicare Definition of Brace
This rule also codifies the longstanding Medicare definition of brace to provide clarification on the scope of the Medicare Part B benefit for leg, arm, back, and neck braces and, as a result, classifies certain exoskeleton-type devices as braces for Medicare payment purposes.
Safeguarding Taxpayer Dollars
DMEPOS Refill Policy
In response to concerns related to auto-shipments and delivery of DMEPOS supplies that may no longer be needed or not needed at the same level of frequency/volume, CMS instituted policies to require suppliers to contact the beneficiary prior to dispensing DMEPOS refills. CMS is finalizing its proposal to codify with some changes to its long-standing refill policy. We will require documentation indicating that the beneficiary confirmed the need for the refill within the 30-day period prior to the end of the current supply. Additionally, we will codify our requirement that delivery of DMEPOS items (that is, date of service) be no sooner than 10 calendar days before the expected end of the current supply.
Hospice Enrollment Provisions
CMS is also finalizing several provider enrollment regulatory changes to prevent and address hospice fraud, waste, and abuse in the future. CMS believes these provider enrollment provisions related to hospice ownership and management will strengthen protections against hospice fraud schemes and improve transparency. The hospice enrollment-related regulatory changes in this final rule include:
- Subjecting hospices to the highest level of provider enrollment application screening, which includes fingerprinting all 5 percent or greater owners of hospices;
- Expanding the HHA change in majority ownership provisions in 42 CFR § 424.550(b) to include hospice changes in majority ownership; and
- Clarifying that the definition of “Managing Employee” in 42 CFR § 424.502 includes the administrator and medical director of a hospice.
Other Provider Enrollment Provisions
To further protect the Trust Funds and Medicare beneficiaries, we are also finalizing additional provider enrollment provisions, which include, but are not limited to, the following:
- Reducing the period of Medicare non-billing for which a provider or supplier can be deactivated under § 424.540(a)(1) from 12 months to 6 months.
- Strengthening the program integrity safeguards associated with a provisional period of enhanced oversight under section 1866(j)(3) of the Social Security Act.
Hospice Special Focus Program (SFP) and Informal Dispute Resolution (IDR)
Hospice Special Focus Program: CMS is finalizing the details of the hospice special focus program (SFP) provisions for CY 2024.
The CAA, 2021, required the Secretary of Health & Human Services to create an SFP for poor-performing hospices that, through increased regulatory oversight, would address issues that place hospice beneficiaries at risk of receiving unsafe and poor-quality care. Previous public comments urged CMS first to convene a Technical Expert Panel (TEP) to gather input and feedback to inform the development of the SFP. A TEP was convened in CY 2022 to gain input from key stakeholders on various aspects of the SFP to identify the most appropriate indicators of poor-performing hospices and other components of the program. CMS is finalizing the methodology and an algorithm with criteria for identifying hospices that should be in the SFP based on the TEP recommendations and other stakeholder feedback. Details from the TEP meetings, including their recommendations, are available in the TEP summary recommendation report on the CMS website. The SFP would establish an equitable approach utilizing hospice survey findings and other quality indicators related to performance and ensure that hospices are held accountable for providing unsafe and poor-quality care to patients. Hospice programs that are unable to resolve the deficiencies that brought them into the SFP and cannot meet the SFP completion criteria would be placed on a termination track.
CMS is finalizing the following methodology and algorithm for the hospice SFP based on the TEP recommendations and other stakeholder feedback; however, the agency remains interested in feedback and may consider refinements to this algorithm in the future:
- Data sources: To identify hospices providing poor quality or unsafe care, CMS will use the most recent Medicare hospice data from the following data sources based on TEP recommendations: 1) hospice surveys (recertification and complaint), and; 2) Hospice Care Index Overall Score, based on Medicare claims data, and 3) four CAHPS® Hospice Survey measures, that are most aligned with caregiver experience.
- SFP Scoring: Hospices will be ranked from highest to lowest aggregated score, and the subset of the ten percent of hospices with the highest scores, which represent the lowest-performing hospices, will be considered for participation in the SFP.
- Selection Criteria & Public Reporting: The SFP will identify the ten percent of hospices with the highest aggregated scores and the SFP selections from that subset, which will be determined annually. At a minimum, the general information, program guidance, the target ten percent, SFP selections, and current and past SFP status will bepublicly available on the CMS SFP webpage by the end of the first quarter of each calendar year.
- Survey Frequency: As indicated in the CAA, 2021, while enrolled in the SFP, a hospice will be surveyed “not less than once every six months” over 18 months.
- Completion or Termination Criteria: Hospices must meet three conditions to complete the SFP:
- No condition-level deficiencies (CLDs) for two of the standard surveys, which are conducted every six months during the SFP.
- No pending complaint investigations triaged at immediate jeopardy or condition, or
- Have returned to substantial compliance with all requirements, during the 18-month timeframe to complete the SFP successfully.
A hospice program that was unable to achieve substantial compliance for surveys conducted during the SFP would be considered for termination from the Medicare program.
- Hospice Informal Dispute Resolution: The IDR for hospice programs would allow hospice providers an informal opportunity to refute one or more condition-level deficiencies cited in the Statement of Deficiencies survey report, which would align with the established IDR for Home Health Agencies.
For additional information about the Home Health Prospective Payment System visit: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps and https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.
For additional information about the Home Health Patient-Driven Groupings Model, visit https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HHPDGM.
For additional information about the expanded Home Health Value-Based Purchasing Model, visit: https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model.
For additional information about the Hospice Special Focus Program, visit: https://www.cms.gov/medicare/health-safety-standards/certification-compliance/hospice-special-focus-program
The final rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-24455/medicare-program-calendar-year-2024-home-health-prospective-payment-system-rate-update-quality