Home health providers set for 2.2% Medicare pay cut


The Centers for Medicare and Medicaid Services has proposed cutting reimbursements to home health providers by 2.2% in fiscal 2024 in a draft regulation published Friday.

The proposed rate change is the product of a 3% market basket update, a minus 5.1% adjustment related to the Patient-Driven Groupings Model and other factors.

CMS introduced the Patient-Driven Groupings Model in 2020 as a means to reduce unnecessary care by instead pegging reimbursements to patient characteristics. The agency built an assumption that providers would respond by upcoding claims and incorporated a downward reimbursement adjustment to compensate, although by law the payment model must be budget neutral compared with the old system.

The agency badly miscalculated both how providers would adapt to the revised reimbursement system and how it determined budget neutrality, which threatens the viability of home health providers, an industry trade group said.

“Overall spending on Medicare home health is down, fewer patients are receiving care, patient referrals are being rejected because providers cannot afford to provide the care needed within the payment rates, and providers have closed their doors or restricted service territory to reduce care costs. If the rate was truly budget neutral, we would not see these actions occurring,” National Association for Home Care and Hospice President William Dombi said in a statement. “The fatally flawed budget neutrality methodology that CMS continues to insist on applying will have a direct and permanent effect on access to care.”

Partnership for Quality Home Healthcare CEO Joanne Cunningham said she fears the cuts would cost the industry close to $18 billion over the next decade. “The home health provider community is gravely concerned that CMS’s proposed actions for 2024 will only continue to degrade beneficiary access to home healthcare services,” she said in a statement.

CMS also proposes modifications to the home health value-based purchasing program by replacing five current metrics with a claims-based discharge measure, an outcome and improvement discharge function score and a within-stay measure for potentially preventable hospitalizations. These changes would take effect in 2025 and CMS projects they would save $3.38 billion through 2027.

The agency will accept comments on the home health prospective payment system proposed rule through Aug. 29.


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