On the evening of October 31, 2022, the Centers for Medicare & Medicaid Services (CMS) released the CY 2023 final payment rule for home health agencies (HHAs). This rule includes the annual payment update for Home Health Agencies (HHAs) as well as policies for the Home Health Quality Reporting Program (HH QRP) and Home Health Value-Based Purchasing (HHVBP) Model. These regulations are effective on January 1, 2023.

PAYMENTS TO HOME HEALTH AGENCIES EXPECTED TO INCREASE SLIGHTLY IN CY 2023

CMS estimates that home health payments for CY 2023 will increase by 0.7 percent. This increase accounts for a 4.0 percent payment update percentage, an estimated 3.5 percent decrease that reflects the effects of the prospective permanent behavioral assumption adjustment of -3.925 percent that is being phased-in, and a 0.2 percent decrease reflecting the effects of the proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payment. Overall, CMS estimates that payments to HHAs will increase by an estimated $125 million, compared to CY 2022 levels. The finalized rates reflect an increase in payment from the proposed rates, which would have decreased home health payments for CY 2023 by 4.2 percent or $810 million.

CMS TO PHASE-IN PERMANENT ADJUSTMENT FOR BEHAVIORAL CHANGES MITIGATING PAYMENT UPDATE IMPACT TO HHAS

The Patient-Driven Groupings Model (PDGM) began being used for home health agency payment in CY 2020 as required by statute.[1] This model puts patients into payment categories using clinical characteristics and other patient information, instead of previously used therapy thresholds, to adjust home health payment. 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.[2] 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 proposed rule, CMS proposed a repricing methodology to determine the impact of behavior changes on estimated aggregate expenditures, which calculates what the Medicare program would have spent had the PDGM not been implemented in CY 2020 and CY 2021.[3] Based on that method, CMS determined that Medicare paid more under the new system than it would have under the old payment system, and would need to make a -7.85 percent adjustment to the 30-day payment rate in CY 2023. In the final rule, in order to mitigate such a large decrease in payments to home health agencies in a single year, CMS is finalizing a phase-in of the permanent adjustment, reducing it by half to -3.925 percent in CY 2023. CMS indicates that the remaining permanent adjustment is required by law and will be proposed in future rulemaking.

CMS found that to reconcile overpayments due to the difference in estimated aggregate expenditures for CY 2020 and CY 2021, resulting from the differences between assumed and actual behavior changes, CMS would also need to apply a temporary adjustment of approximately negative $2.0 billion in addition to the proposed permanent adjustment. However, CMS is not implementing a temporary payment adjustment in CY 2023.

CMS FINALIZES ALL PAYER POLICY FOR THE HOME HEALTH QUALITY REPORTING PROGRAM

Under the Home Health Quality Reporting Program (HH QRP), home health agencies are required to submit data for the measurement of health care quality, including a quality-of-care survey to assess a patient’s medical, nursing, and rehabilitative care as well as social and discharge planning needs, known as the Outcome of Assessment Information Set (OASIS).[4] Privacy concerns surrounding the collection of all-payer data and the release of personal health information, as well as the issue of administrative burden, resulted in the temporary suspension of OASIS data collection from non-Medicare and non-Medicaid patients.

In this final rule, CMS finalizes its proposal to end the temporary suspension of the collection of OASIS data from non-Medicare and non-Medicaid patients and require HHAs to submit all-payer OASIS data for purposes of the HH QRP. The agency asserts that an all-payer policy for OASIS data collection under the HH QRP better aligns with the data collection requirements under the Long-Term Care Hospital (LTCH) and Hospice QRPs. Additionally, the agency contends that the privacy concerns surrounding the data collection have been mitigated.

The new OASIS data reporting period will begin with the CY 2027 program year, requiring two quarters of data for that program year. CMS will implement a 6-month phase-in period from January 1, 2025 through June 30, 2025 during which providers will not be penalized for failure to submit data.

Additionally, the agency finalizes its proposal to change regulatory text to consolidate the statutory references to data submission, codifies HH QRP measure removal factors, and summarizes comments received in response to the Request for Information relevant to health equity in the HH QRP.

CMS FINALIZES CHANGE TO BASELINE YEAR IN EXPANDED HOME HEALTH VALUE-BASED PURCHASING MODEL

In the final rule, CMS finalizes proposed policy updates, defines new terms and provides modifications of existing definitions, and confirms regulation text changes for the Home Health Value-Based Purchasing expanded model (HHVBP).

Definitions

In the CY 2023 Home Health Proposed Rule, CMS proposed to replace the term “baseline year” with the terms “HHA Baseline Year” and “Model Baseline Year.” CMS also proposed to change the calendar years associated with each baseline year. In the final rule, CMS finalizes the following new and revised definitions:

• HHA Baseline Year: the calendar year used to determine the improvement threshold for each measure for each individual competing HHA.
• Model Baseline Year: the calendar year used to determine the benchmark and achievement threshold for each measure for all competing HHAs.
• CMS revised the terms achievement threshold and benchmark to indicate that they are calculated using the HHA baseline year.

Update to HHA Baseline Year Finalized

For existing HHAs with a Medicare certification date prior to January 1, 2019: CMS finalizes change of the HHA baseline year from CY 2019 to CY 2022.

• For HHAs with a Medicare certification date prior to January 1, 2022, starting in the CY 2023 performance year:CMS finalizes change of the HHA baseline year from 2021 to 2022.

Update to Model Baseline Year Finalized

CMS also finalizes its proposal to change the Model baseline year from CY 2019 to CY 2022. This provision enables CMS to measure competing HHAs’ performance using benchmark and achievement thresholds respective to the most recent data sets. Additionally, this decision mitigates the issue of data affected by the most acute phase of the COVID-19 Public Health Emergency (PHE). The agency intends to provide HHAs with the final achievement thresholds and benchmarks in the July 2023 Interim Performance Report (IPR) in the summer of CY 2023.

CMS RECALIBRATES CASE-MIX WEIGHTS USING CY 2021 DATA

Each of the 432 payment groups under the PDGM has 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, complete utilization data available to ensure they reflect current home health resource use and changes in utilization patterns. CMS finalizes the proposal to recalibrate the case-mix weights and LUPA thresholds for CY 2023 using CY 2021 data to more accurately reflect HHA patients.

CMS FINALIZES A PERMANENT CAP ON WAGE INDEX DECREASES

Beginning CY 2023 and thereafter, CMS finalizes a 5 percent cap on any wage index decrease from the prior year, regardless of the reason for the decrease, to increase predictability in home health payments and align with other payment rules including the FY 2023 Inpatient Prospective Payment System final rule.

CMS TO BEGIN VOLUNTARY COLLECTION OF HOME HEALTH TELECOMMUNICATIONS CLAIMS DATA

To improve payment accuracy and inform CMS on the social determinants of beneficiaries utilizing telehealth services in the home health care setting, CMS solicited comments on telehealth home health claims data in the proposed rule. Specifically, CMS was interested in comments on the use of three new G-codes that label the service as two-way audio and video, two-way audio only, or remote patient monitoring (digital collection and storing of physiologic data).

CMS plans to begin collecting data on the use of services furnished via telecommunications technology under the home health benefit on a voluntary basis beginning January 1, 2023, and on a mandatory basis beginning July 1, 2023. CMS will issue further instructions for reporting this information in January 2023.

HEALTH EQUITY REQUEST FOR INFORMATION

In the CY 2023 Home Health proposed rule, CMS solicited comments on health equity measure development for the Home Health QRP. CMS additionally sought feedback on ways to apply health equity in the Expanded HHVBP Model’s scoring and payment methodologies. CMS was considering adopting a structural composite measure for the HH QRP that would measure organizational activities to address access to and quality of home healthcare. HHAs could receive one point for each of the three domains where they submit data to a CMS portal. CMS reviewed comments and plans to consider all comments and suggestions in future policy development.

CMS UPDATES HOME INFUSION THERAPY SERVICES PAYMENT RATES

The home infusion therapy services payment system requires a single payment to be made to a qualified home infusion therapy (HIT) supplier for items and services furnished. Annual HIT payment updates are made by increasing the single payment amount by the percentage increase in the Consumer Price Index for all urban consumers (CPI-U) for the 12-month period ending in June of the previous year. This is reduced by the productivity adjustment and adjusted for multifactor productivity (MFP).

The final home infusion therapy payment rate update for CY 2023 is 8.7 percent. Once finalized, CMS will publish the standardization factor, final geographic adjustment factors (GAFs), national home infusion therapy payment rates, and locality-adjusted home infusion therapy payment rates on its Home Infusion Therapy Services webpage.

 

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

 

[1] The Bipartisan Budget Act of 2018 required the implementation of the home health PDGM and a 30-day unit of payment.

[2] 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 LUPA threshold.

[3] CMS solicited comments on such a repricing methodology in the CY 2022 home health proposed rule.

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