On November 1, 2023, the Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2024 final payment rule for home health agencies (HHAs). The final rule includes the annual payment update and changes to the home health quality reporting program and value-based purchasing model. The final rule also includes provisions on durable medical equipment, prosthetics and orthotics supplies as well as provider and supplier enrollment requirements. The CMS fact sheet on the final rule is available here.

Provisions of this final rule are effective on January 1, 2024.

CMS FINALIZES $140 MILLION INCREASE IN HOME HEALTH PAYMENTS IN CY 2024

The Home Health Prospective Payment System (PPS) provides a standardized case-mix and area-wage adjusted payment to home health agencies over for 30-day periods. This bundled payment includes six home health service types, including skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services, as well as non-routine supplies.

For CY 2024, CMS finalizes a 0.8 percent increase in home health payments, relative to CY 2023. Overall, Medicare payments will increase by $140 million. This reflects a 2.6 percent decrease associated with a permanent behavioral assumption adjustment,[1] an estimated 0.4 percent increase associated with an updated fixed-dollar loss ratio (FDL), and a 3.0 percent home health PPS annual payment update. CMS initially proposed a 2.2 percent decrease in home health payment in 2024.

Table 1. Home Health PPS Payment Impacts for CY 2024

CY 2024 Annual Update	CY 2024 FDL Increase	Behavioral Assumption Adjustment (half)	CY 2024 Economic Impact
3.0% (+$525 million)	0.4% (+$70 million)	-2.6% (-$455 million)	0.8% ($140 million)

In CY 2020, CMS implemented the Patient-Driven Groupings Model (PDGM) for home health agency payment, as required by statute.[2] The goal of the PDGM is to better align payments with patient care needs, especially for beneficiaries that require more skilled nursing care rather than therapy. When implementing the law, CMS had to make assumptions about behavior changes that could occur due to the implementation of the 30-day unit of payment and the PDGM.[3] CMS annually determines the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures and adjusts payment accordingly.

In the CY 2023 Home Health PPS final rule,[4] CMS determined that Medicare paid more to home health agencies in CYs 2020 and 2021 under PDGM than the old payment system. In response, CMS indicated a negative 7.85 percent adjustment would need to be made to the 30-day payment rate. However, to mitigate the impact of such a large adjustment, CMS finalized a phased-in permanent adjustment, reducing it by half to negative 3.925 percent. Following stakeholder feedback that such a large permanent adjustment in a single year would be too burdensome on HHAs, CMS is finalizing the same approach as last year and only applying half of the permanent adjustment (−2.890 percent, half of the −5.779 percent) to the CY 2024 30-day payment rate.

CMS stated that without the full permanent adjustment in effect, the total temporary dollar amount will likely continue to increase until the permanent adjustment is fully implemented. The National Association of Home Care and Hospice (NAHC) is currently suing CMS, challenging the reduction in home health payments based on the Agency’s payment methodology.[5]

CMS RECALIBRATES CASE-MIX WEIGHTS USING CY 2022 CLAIMS DATA

Under the PDGM, there are 432 payment groups with each having an associated case-mix weight and Low Utilization Payment Adjustment (LUPA) threshold. CMS annually recalibrates the case-mix weights and LUPA thresholds using the most recent and complete utilization data available to ensure they reflect current home health resource use and changes in utilization patterns.

For CY 2024, CMS finalizes the proposal to update LUPA thresholds and recalibrate the PDGM case-mix weights using CY 2022 claims data.[6]

CMS FINALIZES DURABLE MEDICAL EQUIPMENT PROPOSALS IN THE HOME HEALTH RULE

Refill Policy: Beneficiary Contact Requirement Extended from 14 Days to 30 Days

CMS finalizes its proposal that suppliers contact beneficiaries one time within 30-days prior to the end of the current supply to confirm of their need for refill. CMS clarifies that beneficiaries will not have to provide specific remaining quantities on hand but simply confirm their need for refill supplies.

Under the Part B Durable Medical Equipment Prosthetics and Orthotics Supplies (DMEPOS) benefit, suppliers ship and deliver DMEPOS items and supplies to Medicare beneficiaries on a 30- or 90-day basis. Disposable supplies for certain DME items are generally furnished on a recurring basis to beneficiaries with chronic conditions. An existing CMS policy for DMEPOS supplies that are frequently shipped is that suppliers must contact the beneficiary prior to dispensing DMEPOS refills to ensure that they still need the items. Although this refill policy is well known among the supplier community and maintained in Local Coverage Determinations, CMS has not previously codified the requirement in regulation. In this final rule, CMS codifies the requirement that suppliers must document beneficiary confirmation of their need for the refill within the 30-day period prior to the end of the current supply.

CMS notes that the contact documentation does not need to specify quantity of items remaining and that it should be a simple confirmation that the beneficiary is using the item and requires refill. Suppliers must have documentation of the beneficiary’s name, date of contact, the item requested, and beneficiary confirmation of the need for supplies prior to dispensing and shipping the product. Although some DMEPOS supplies are currently shipped on a 90-day basis, CMS does not address shipping and billing for items less frequently than on a 30-day basis.

In the proposed rule, CMS sought comments on if there are certain diagnosis/device combinations that a beneficiary should not need to confirm the need for a refill with the same frequency because those persons would not expect to have fluctuations in the type or quantity of supplies due to a permanent disability or health condition. CMS stated that commenters shared their belief that certain conditions, such as type I and type II diabetics, beneficiaries with obstructive sleep apnea, and those in need of permanent urinary or ostomy supplies, are the types of beneficiaries which may benefit from an exception to the beneficiary contact requirement for refills. CMS states that comments will be considered in future rulemaking.

Additionally, CMS provides clarification that suppliers are permitted to use any mode of communication (phone call, text message, email, etc.) to contact beneficiaries so long as beneficiary affirmation is received and documented.

Lastly, CMS also finalizes its proposal to codify the requirement that the delivery of DMEPOS items (i.e., date of service) is no sooner than 10 calendar days before the expected end of the current supply.

Pandemic Payment Methodology for Items in Competitive Bidding Program to Continue Through End of 2023

During the COVID-19 public health emergency (PHE), Congress revised the fee schedule amounts of certain DME[7] furnished in non-competitive bidding areas (non-CBAs) and directed CMS to increase the payment rates.[8] CMS was to go back to its regular payment methodology after the end of the PHE. Under the Consolidated Appropriations Act (CAA) of 2023, CMS continued to pay for DMEPOS items and services furnished in rural and non-contiguous non-CBAs based on a 50/50 blend of adjusted and unadjusted fee schedule. The CAA directed CMS to continue this methodology through January 2024. Thus, to conform with the statute, CMS finalizes the following:

• Continue 50/50 blended rate in rural, contiguous areas
• Extension of the 50/50 blended rate in rural, non-contiguous areas and non-rural areas through December 31,2023.
• Extension of the 75/25 blended rate (75 percent of the adjusted payment amount and 25 percent of the unadjusted payment amount) in areas other than rural or non-contiguous areas through December 31, 2023. The 75/25 methodology increases payments so that they are 33 percent higher than the payments at the fully adjusted fee schedule amounts.

CMS Establishes Scope of the New Part B Benefit Category for Lymphedema Compression Treatment Items

CMS finalizes its proposal to establish a new Part B benefit for lymphedema compression treatment items effective January 1, 2024, as required by the CAA 2023.[9] Currently, Medicare Part B does not cover lymphedema compression treatment items other than certain compression pumps and accessories. CMS outlines the scope of the new benefit category in this final rule. CMS also finalizes the new HCPCS codes established for items and supplies in new category.[10]

Payment for lymphedema compression treatment items will be based on the average of state Medicaid fee schedule amounts plus 20 percent, or, when Medicaid fees are not available, the average of average internet retail prices and payment amounts established by TRICARE. On January 1 of each year, these rates will be increased by the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U). Lymphedema compression treatment items will also be eligible to be included under the competitive bidding programs.

CMS FINALIZES CHANGES TO PROGRAM INTEGRITY AND PROVIDER AND SUPPLIER ENROLLMENT POLICIES

Medicare Provider and Supplier Enrollment Changes

Provisional period of enhanced oversight. Section 1866(j)(3)(A) of the Social Security Act directs the Secretary of the Department of Health and Human Services to establish procedures for ensuring enhanced oversight of new providers and suppliers. For new home health agencies, this provisional period of enhanced oversight (PPEO) has resulted in the suppression of requests for anticipated payment. In this rule, CMS finalizes the proposal to define any new provider or supplier for the purpose of PPEO as:[11]

• A newly enrolling Medicare provider or supplier (including providers that must enroll as a new provider pursuant to a change in majority ownership),
• A certified provider or certified supplier undergoing a change of ownership, consistent with the principles of 42 CFR 489.18 (including providers that qualify under certain change in majority ownership exceptions), and
• A provider or supplier (including a home health agency or hospice) undergoing a 100 percent change of ownership via a change of information request.

CMS finalizes changes to the effective date of the PPEO commencement to the date the new provider or supplier submits its first claim.

Medicare billing privilege deactivation. Currently, CMS can deactivate a Medicare provider or supplier’s billing privileges for various reasons, such as in instances where the provider or supplier has not submitted a Medicare claim for 12 consecutive months. CMS will shorten the deactivation period to 6 months.

Managing employees. In Medicare enrollment applications, providers and suppliers must report their managing employees. Under 42 CFR § 424.502, a managing employee is currently defined as a “general manager, business manager, administrator, director, or other individual that exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider or supplier (either under contract or through some other arrangement), whether or not the individual is a W-2 employee of the provider or supplier.”^[12] In consideration that a hospice or skilled nursing facility (SNF) administrator and medical director exercises managing control over these operations, CMS finalizes its proposal to include these administrators and medical directors as part of the definition of a managing employee. CMS clarifies that this change is not intended to establish a minimum threshold for managing employee reporting.

Resumption of criminal background checks. CMS finalizes that DMEPOS suppliers, home health agencies, opioid treatment programs, Medicare Diabetes Prevention Program Suppliers, and SNFs for which CMS waived fingerprint-based criminal background checks (FBCBCs) when they enrolled in Medicare during the COVID-19 PHE, will be subject to the high-risk screening category.

Hospice Program Integrity Changes

Building on prior efforts to address concerns regarding hospice ownership and program integrity, CMS finalizes several changes to mitigate hospice fraud, waste, and abuse under the Medicare program. Under existing regulation,[13] hospices are subject to the moderate-risk screening category for Medicare enrollment purposes. In response to concerns about care quality considerations, improper billing, and ownership turnover, CMS will subject newly enrolled hospices and hospices reporting new owners to the high-risk screening category. This means that 5 percent or greater owners of these providers and suppliers would be subject to FBCBCs.

CMS also finalizes its proposal to limit the circumstances under which a hospice’s Medicare provider and agreement and billing privileges would transfer to a new owner in response to a change in ownership. Under this change, if there is a change in majority ownership of a hospice by sale within 36 months of the hospice’s initial enrollment with Medicare, the new provider or owner must enroll in Medicare as a new hospice and be subjected to a state survey or receive accreditation from an approved accreditation program (subject to certain exceptions). CMS believes that this increased level of oversight will better address fraudulent schemes and patient abuse and quality concerns.

CMS FINALIZES TWO NEW MEASURES UNDER THE HOME HEALTH QUALITY REPORTING PROGRAM

Under the Home Health Quality Reporting Program (HH QRP), home health agencies must submit certain required data for the measurement of health care quality. HHAs that fail to submit this data have their annual payment update reduced by 2 percentage points.

CMS finalizes its proposal to remove the Application of Functional Assessment/Care Plan process measure and replace it with the Discharge Function Score (DC Function) measure beginning with the CY 2025 HH QRP.  The Discharge Function Score (DC Function) measure is an assessment-based outcome measure that evaluates functional status by calculating the percentage of HH patients who meet or exceed an expected discharge focus score.

Additionally, to increase COVID-19 vaccination in HHA patients and reduce the spread of COVID-19, CMS is finalizing its proposal to add the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date beginning with the CY 2025 HH QRP measure to the CY 2025 HH QRP.

Under current law,[14] HHAs must conduct a quality-of-care survey to assess medical, nursing, and rehabilitative care as part of a patient’s assessment. HHAs complete this assessment through the Outcome and Assessment Information Set (OASIS) data set for the purposes of the HH QRP. CMS is finalizing the removal of M0110 – Episode Timing and M2220 – Therapy Needs from OASIS, effective January 1, 2025.

Additionally, CMS will begin publicly reporting the following four measures of the HH QRP:

• the DC Function measure;
• the Transfer of Health (TOH) Information to the Provider—Post-Acute Care (PAC) measure (TOH-Provider);
• the Transfer of Health (TOH) Information to the Patient—Post-Acute Care (PAC) measure (TOH-Patient);
• and the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure.

The timeline for the public reporting of these measures varies and is dependent on technical feasibility. Most are expected to begin with the January 2025 Care Compare refresh or as soon as technically feasible in a subsequent refresh.

CMS does not propose any new health equity quality measures for HH QRP.

Aligned with CMS’s National Quality Strategy, CMS issued a Request for Information on principles for selecting and prioritizing HH QRP quality measures and concepts in the proposed HH PPS rule. The Agency identified measurement gaps within the HH QRP in the cognitive function, behavioral and mental health, and chronic conditions and pain management domains. CMS states that the stakeholder feedback will be considered for future rulemaking.[15]

CMS FINALIZES CHANGES TO MEASURES UNDER THE HOME HEALTH VALUE-BASED PURCHASING MODEL

In the CY 2022 HHA Final Rule,[16] CMS finalized its expansion of the Home Health Value-Based Purchasing (VBP) Model; requiring HHAs in all 50 states, the District of Columbia, and U.S. territories to participate, with a pre-implementation year beginning in 2022. CY 2023 is the first performance year, which will impact payment during CY 2025 with a maximum payment adjustment, upward or downward, of 5 percent.

In the CY 2022 HH PPS final rule, CMS adopted eight measure removal factors that are considered when determining measure removal. CMS finalizes its proposal to codify these factors:

• Factor 1. Measure performance among HHAs is so high and unvarying that meaningful distinctions in improvements in performance can no longer be made.
• Factor 2. Performance or improvement on a measure does not result in better patient outcomes.
• Factor 3. A measure does not align with current clinical guidelines or practice.
• Factor 4. A more broadly applicable measure (across settings, populations, or conditions) for the particular topic is available.
• Factor 5. A measure that is more proximal in time to desired patient outcomes for the particular topic is available.
• Factor 6. A measure that is more strongly associated with desired patient outcomes for the particular topic is available.
• Factor 7. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm.
• Factor 8. The costs associated with a measure outweigh the benefit of its continued use in the program.

To better align measures used in the HH VBP Model with the HH QRP, CMS finalizes removal of five measures from the HH VBP and replaces them with three new measures. The following five measures will be removed:

• OASIS-based Discharged to Community (DTC);
• OASIS-based Total Normalized Composite Change in Self-Care (TNC Self-Care);
• OASIS-based Total Normalized Composite Change in Mobility (TNC Mobility);
• claims-based Acute Care Hospitalization During the First 60 Days of Home Health Use (ACH); and
• claims-based Emergency Department Use without Hospitalization During the First 60 Days of Home Health (ED Use).

And the following three measures will be added:

• the claims-based Discharge to Community-Post Acute Care (DTC-PAC) measure for Home Health Agencies;
• the OASIS-based Discharge Function Score (DC Function) measure; and
• the claims-based Home Health Within-Stay Potentially Preventable Hospitalization (PPH) measure.

Additionally, CMS finalizes revisions to its appeals process under the HH VBP Model. Under this process, HHAs may submit recalculation requests for certain performance and payment reports. An HHA may request Administrator review of a reconsideration decision within seven days of CMS notification, and that the CMS reconsideration official will issue a final and binding written decision seven calendar days after the decision.

CMS estimates the overall economic impact of the HH VBP to be $3.376 billion in fee-for-service Medicare savings for CYs 2024 through 2027, resulting from a reduction in unnecessary hospitalizations and skilled nursing facility usage as a result of quality improvements in the home health.

CMS FINALIZES HOSPICE SPECIAL FOCUS PROGRAM FOR POOR PERFORMANCE

Under provisions of the CAA 2021, CMS finalizes the Hospice Special Focus Program (SFP) for poor-performing hospice programs that place hospice beneficiaries at risk for poor quality of care. These provisions give authority for imposing enforcement remedies for noncompliant hospice programs and require the development and implementation of remedies as well as procedures for appealing determinations regarding these remedies. These enforcement remedies can be imposed instead of, or in addition to, termination of the hospice programs’ participation in the Medicare program. Remedies include civil money penalties (CMP), directed in-service training, directed plan of correction, suspension of all or part of payments, and appointment of temporary management to oversee operations.

CMS finalizes the following methodology and algorithm for the SFP:

• Data sources to identify hospice poor performance: CMS will use the most recent Medicare hospice data from 1) hospice surveys, 2) Hospice Care Index Overall Score, based on Medicare claims data, and 3) four Consumer Assessment of Healthcare Providers and Systems (CAHPS®) survey measures.
• SFP selection: Hospices will be ranked from highest to lowest aggregated performance score, and the subset of the ten percent of hospices with the highest scores will be considered for participation in the SFP. The number of hospices selected to participate in the SFP will be determined in the first quarter of each CY.
• Criteria for SFP completion and termination: To complete the SFP, a hospice must have no Condition-Level Deficiencies (CLDs) cited for any two 6-month SFP surveys, and no pending complaint investigations at an immediate jeopardy or condition level or have returned to substantial compliance with all requirements. A hospice in an SFP that fails any two SFP surveys by having any CLDs on the surveys in an 18-month period or pending complaint investigations will be considered for termination from the Medicare program.
• Public reporting of the SFP: CMS will publicly report information about the SFP and hospices selected for SFP participation annually.

CMS COLLECTS COMMENTS ON ACCESS HOME HEALTH AIDE SERVICES CHALLENGES FOR FUTURE RULEMAKING

CMS solicited comments on questions to help understand beneficiaries’ challenges accessing home health aide services in the proposed rule.  Medicare beneficiaries requiring skilled services have reported difficulty accessing home health aides’ assistance under the Medicare home health benefit. Commenters highlighted a magnitude of challenges including that Medicare’s current payment model discourages HHAs from employing aides and providing necessary aide services. CMS states that comments will be considered in future rulemaking.[17]

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This Applied Policy® Summary was prepared by Simay Okyay McNutt with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at sokyay@appliedpolicy.com or at 202-558-5272.

[1] CMS finalized a -5.779 percent behavioral adjustment but will only apply half (-2.8 percent) of this full permanent adjustment, therefore, increasing originally proposed payment update percentage. This only applies to national, standardized 30-day period payments and does not affect payments implicating Low Utilization Payment Adjustments.

[2] 42 U.S.C. 1395fff(b)(2)

[3] CMS finalized three behavioral assumptions in the CY 2019 Home Health PPS final rule with comment period, including clinical group coding, comorbidity coding, and the Low Utilization Payment Adjustment threshold.

[4] 87 FR 66796

[5] https://nahc.org/wp-content/uploads/2023/07/NAHC-Sues-HHS-Over-HH-Cuts.pdf

[6] See Table B12 on pages 83 – 94 of the unpublished rule for case-mix weights and LUPA thresholds.

[7] See full list of product categories included in the DMEPOS CBP here.

[8] Section 3712 of the of the CARES Act 2020

[9] Section 4133 of the CAA, 2023.

[10] A list of these codes and their descriptions can be found in Table FF-A 2 on page 389 of the unpublished rule.

[11] See page 305 of the unpublished rule.

[12] See 42 CFR § 424.502

[13] See 42 CFR § 424.518

[14] Section 1891(d) of the Social Security Act.

[15] See page 226 of the unpublished rule for summary of the comments.

[16] 86 FR 62240.

[17] See pages 24-29 of the unpublished final rule for specific comments.