Final Rule ‘Blunts Immediate Impact,’ But CMS-Home Health Industry Core Disagreement Remains

Nearly five months after the unveiling of the proposed payment rule caused a stir among home health stakeholders and advocates, the U.S. Centers for Medicare & Medicaid Services (CMS) released its final payment rule on Monday.

Back in June, CMS proposed a 4.2% aggregate decrease for 2023, a cut the industry at large felt would be devastating.

Though CMS will still usher in other cuts and permanent adjustments related to the rebalancing of the Patient-Driven Groupings Model (PDGM), the final rule comes with an increase in the aggregate by 0.7%, or $125 million, compared to 2022.

While many in the industry acknowledge that CMS has made efforts to address the concerns of providers, most are still stressing that the methodologies CMS is following will eventually crush operators and reduce access to care .

“CMS has rightly recognized the challenging operating environment providers are currently navigating and reduced payment cuts from the 7.69% proposed in June to the 4% announced today,” LeadingAge President and CEO Katie Smith Sloan said in a statement. “That, along with the 4% market basket update that addresses rising costs of providing services, indicate CMS is cognizant of current realities. We appreciate that — but at the same time, we remain concerned.”

CMS decided to take a phased-in approach to the PDGM behavioral adjustment and impose about a 3.5% adjustment for a 30-day period. This is an overall $635 million decrease in reimbursement for agencies. 

“Agencies need to understand that this is only half of what will be imposed after this year,” J’non Griffin, senior vice principal of coding and the OASIS department at SimiTree, told Home Health Care News in an email. “The remaining permanent adjustment, along with any other potential adjustments needed to the base payment rate to account for behavior change based on data analysis, which are all required by law, will be proposed in future rulemaking.”

In the wake of the proposed payment rule’s release, many took aim at the behavioral adjustment methodology CMS used. With the final rule out, it is still viewed as problematic.

“We still have serious concerns regarding the agency’s continued reliance on a flawed budget-neutrality methodology that produced the proposed rule and today’s result,” Amedisys Inc. (Nasdaq: AMED) said  in a statement.

Still, the company felt that slight progress had been made, especially when compared to the proposed rule.

“While not the ideal outcome, today’s release of the CY 2023 Home Health Final Rule is a welcomed improvement over what was proposed by CMS this summer in regard to the overall payment update for next year,” the organization said in its statement. “The unprecedented inflation we are experiencing across the country led to a 4.0% market basket update, the highest update we have seen for home health agencies. CMS’ decision to reduce the behavioral adjustment cuts calculated by half for CY 2023 is also helpful.”

Amedisys noted that mass volume of comments and continued advocacy efforts from providers, clinicians and industry trade associations likely played a role in the more positive improvements seen in the final rule.

The Partnership for Quality Home Healthcare (PQHH) likewise voiced its concerns. 

“This 7.85% cut is worse than initially proposed and when fully implemented in 2024, will result in an immediate decline in access to home health,” PQHH CEO Joanne Cunningham said in a statement. “This will have negative effects on the availability of care for the most chronically ill of the Medicare population and result in access to care problems. While this short-term phase-in blunts the immediate impact, the long-term consequences of this rule, unless mitigated, will devastate access to care in the home.”

Ultimately, providers will need to make major changes in order to survive in a challenging environment that includes other headwinds such as labor challenges, inflation and COVID-19. 

“Agencies are faced with tightening their belt, while still striving to maintain outcomes under HHVBP,” Griffin said. “It feels like, yet again, home health agencies are being asked to do more with less. Agencies will have to think of creative ways to stretch their dollar — possibly to outsource some services that traditionally have been housed internally, and utilize those staff members in other areas of the business.”

Griffin believes that providers should find ways to become “leaner” in their approach to business.

“Think of creative ways to look at RCM and ROI in house staff versus outsourcing, and the benefits of experts handling your OASIS,” she said. “While there is a cut now, we have to look ahead to HHVBP reimbursement and how that may be affected. Agencies should financially model what the rule means to them, and see the impact for themselves and how it affects their population.”