Calendar Year (CY) 2024 Home Health Prospective Payment System Proposed Rule (CMS-1780-P)
On June 30, 2023, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2024 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 proposes a permanent, prospective adjustment to the CY 2024 home health payment rate to account for the impact of the implementation of the Patient-Driven Groupings Model (PDGM). This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the implementation of the PDGM and 30-day unit of payment as required by the Bipartisan Budget Act of 2018, which amended section 1895(b) of the Social Security Act (the Act). CMS previously finalized, for CY 2023, a permanent adjustment that was half of the estimated required permanent adjustment.
In addition, CMS is also proposing 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 proposed rule would help improve patient care and also protect the Medicare program’s sustainability for future generations. In addition, the proposed rule includes several hospice-related enrollment provisions. We believe these provisions would help protect hospice beneficiaries by more closely scrutinizing hospice owners and ensuring that they do not pose program integrity risks.
CY 2024 Proposed Payment Updates and Policy Changes Updates for Home Health Agencies
This rule proposes routine, statutorily required updates to the home health payment rates for CY 2024. The proposed home health payment update percentage is a proposed 2.7 percent increase (approximately $460 million). Accounting for an estimated 5.1 percent decrease, as required by statute, that reflects the effects of the proposed prospective, permanent behavior assumption adjustment ($870 million decrease), and an estimated 0.2 percent increase that reflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($35 million increase,), CMS estimates that Medicare payments to HHAs in CY 2024 would decrease in the aggregate by 2.2 percent, or $375 million compared to CY 2023, based on the proposed policies.
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. In the CY 2019 HH PPS final rule with comment period, CMS finalized three behavior 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), CMS 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 was determined. In the CY 2023 HH PPS final rule, using CY 2020 and 2021 claims, 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. Based on analyses of CYs 2020 and 2021 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 proposed 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 than it would have under the old system. CMS is proposing an additional permanent adjustment percentage of -5.653 percent in CY 2024 to address the differences in the aggregate expenditures. The proposed permanent adjustment of -5.653 percent includes the remaining -3.925 percent (to account for CYs 2020 and 2021) not applied to the CY 2023 payment rate and accounts for actual behavior changes in CY 2022. The law 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. As such, we are not proposing to implement a temporary adjustment in 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 comment period, where a 2016-based home health market basket was adopted. For CY 2024, CMS is proposing to adopt a 2021-based home health market basket, which includes proposed changes to the market basket cost weights and price proxies. Additionally, we are proposing that the market basket update for the final rule be based on the most recent data available at the time of rulemaking.
Updating the Labor-Related Share
As a result of the proposed rebasing and revising of the home health market basket, the proposed CY 2024 labor-related share (LRS) is 74.9 percent, which is based on the proposed 2021-based home health market basket compensation cost weight (the current labor-related share is 76.1 percent). Additionally, we are proposing to implement the revised labor-related share in a budget-neutral manner.
Proposal for Disposable Negative Pressure Wound Therapy
In accordance with Division FF, section 4136 of the Consolidated Appropriations Act (CAA), 2023, CMS is proposing 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 under the home health prospective payment system. There are also changes to now report the disposable device on the type of home health claim most familiar to Home Health Agencies.
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. 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 2022 data to more accurately pay for the types of patients HHAs are serving.
Request for Information on Access to Home Health Aide Services
CMS is soliciting comments from the public, including home health providers, as well as patients and advocates, regarding information related to ensuring the appropriate access to and provision of home health aide services for all beneficiaries receiving care under the home health benefit. This proposed rule also includes additional questions regarding any notable barriers and obstacles to recruiting and retaining home health aides, as well as ways to ensure that home health aides are consistently paid wages that are equivalent to other care settings and commensurate with the impact they have on patient care.
Home Health (HH) Quality Reporting Program (QRP)
CMS is proposing the adoption of 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.
- CMS also proposes to adopt the 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 proposing the removal of the following measures:
- With the addition of the Discharge Function measure, we propose 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 is proposing removal of two OASIS items no longer necessary for collection, the M0110 – Episode Timing and M2220- Therapy Needs items.
CMS is proposing 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); and
- COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date.
We are also proposing technical changes to § 484.245(b) to 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 are also seeking input on future HH QRP measure concepts and providing 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 proposing 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 the 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, we propose to update the Model baseline year to CY 2023 for all applicable measures in the proposed 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 proposing to add an additional opportunity to request a reconsideration of the annual Total Performance Score (TPS) and payment adjustment.
Public Reporting Update
CMS is including an update to remind 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. At this time, however, we would like to give HHAs time to learn the requirements of the expanded Model, gather at least two years of performance data, and study effects of the expanded Model on health equity outcomes before incorporating any potential changes to the expanded Model regarding health equity.
Home Intravenous Immune Globulin (IVIG) Items and Services
As required under Division FF, section 4134 of the CAA, 2023, CMS is proposing regulations to implement 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 generally not been covered by Medicare because, prior to the enactment of the CAA, 2023, there was no statutory benefit category for such items. This rule would address 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 would fall under the new benefit category, beginning January 1, 2024. The rule proposes that Medicare would cover 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. This rule would establish the initial Healthcare Common Procedure Coding System (HCPCS) codes and the payment methodology for these items and propose how future coding, benefit category, and payment determinations for these items would be made. The proposed payment basis for lymphedema compression treatment items is the average Medicaid State agency payment amounts plus 20 percent. In the event that Medicaid State agency payment rates are not available, this rule proposes to base payment rates on the average of TRICARE and internet retail prices. If neither Medicaid nor TRICARE payment amounts are available, this rule proposes to base Medicare payment rates on the average internet retail prices for a lymphedema compression treatment item.
Medicare Definition of Brace
This proposed rule would also codify 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, would classify 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 proposing to codify its long-standing refill policy, with some changes. We are proposing to 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 are proposing to 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. CMS is also seeking comments for consideration in future rulemaking on ways to balance beneficiary burden with the potential risks/burdens of not verifying the beneficiary’s actual need for recurring supplies for certain individuals with permanent health conditions.
Hospice Enrollment Provisions
CMS is also proposing several provider enrollment regulatory changes to prevent and address hospice fraud, waste, and abuse in the future. CMS believes that these provider enrollment provisions related to hospice ownership and management will strengthen protections against hospice fraud schemes and improve transparency. The proposed hospice enrollment-related regulatory changes in this proposed 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
Finally, to further protect the Trust Funds and Medicare beneficiaries, we are proposing 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 proposing the details of 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 proposing the methodology and an algorithm with criteria for identifying hospices that should be in the proposed 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 proposal would establish an equitable threshold 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 proposed SFP completion criteria, would be placed on a termination track.
CMS is proposing the following methodology and algorithm criteria for the hospice SFP based on the TEP recommendations and other stakeholder feedback:
- Data sources: To identify hospices providing poor quality or unsafe care, we are proposing to 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: We propose to rank each hospice from highest to lowest aggregated score, and the subset of the ten percent of hospices with the highest scores will be considered for participation in the SFP.
- Selection Criteria & Public Reporting: We propose identifying 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, we propose that general information, program guidance, the target ten percent, SFP selections, and current and past SFP status be publicly 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 should be surveyed “not less than once every six months” over 18 months.
- Completion or Termination Criteria: Hospices must have no CLDs for two of the standard surveys, which are conducted everysix months during the SFP, and no pending complaint investigations triaged at immediate jeopardy or condition-level, or have returned to substantial compliance with all requirements, during the 18-month timeframe to complete the proposed SFP successfully. A hospice program that failed to achieve two surveys during the 18-month SFP period with no CLDs, and no pending complaint investigations triaged at immediate jeopardy or condition-level, or that has not returned to substantial compliance with all requirements would be considered for termination from the Medicare program.
Hospice Informal Dispute Resolution: The IDR for hospice programs would allow hospice providers an 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/HH-PDGM.
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.
The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-14044/medicare-program-calendar-year-2024-home-health-prospective-payment-system-rate-update-home-health
 The estimated 5.1 percent decrease related to the proposed behavioral assumption adjustment includes all payments, while the proposed -5.653 percent BA adjustment only applies to the national, standardized 30-Day period payments and does not impact payments for 30-day periods which are LUPAs.