Just recently on Monday, October 31, 2022, the U.S. Centers for Medicare & Medicaid Services (CMS) released its FY 2023 home health final payment rule. While it presents particular financial challenges that providers may face in the near future, it has brought better news than what was expected.
To recall, CMS projected a 4.2% aggregate decrease in payment in the 2023 proposed payment rule, which would have been one of the steepest home health Medicare cuts in years. This was met with negative feedback from providers and home health advocacy organizations across the U.S.
As indicated in the final rule, home health agencies will receive a 0.7% increase or $125 million in home health payments for 2023 compared to 2022 aggregate payments.
Furthermore, as written in its fact sheet, CMS is phasing in the permanent adjustment by finalizing a -3.925% permanent adjustment to the 30-day payment rate in CY 2023. This is half of the full permanent adjustment of -7.85% (-7.69% in the proposed rule) to mitigate a large dip in home health payments in a single year. This is also to ensure that aggregate expenditures under the new Patient-Driven Groupings Model (PDGM) would be equal to what they would have been under the old payment system.
CMS also notes in the final rule that the permanent adjustment to the 30-day payment rate does not impact the Low Utilization Payment Adjustments (LUPAs) per visit payment rates.
Apart from the payment adjustments, here are other notable updates:
- A permanent, budget-neutral 5% cap on negative wage index changes
- Recalibration of case-mix weights and LUPA thresholds under PDGM
- An 8.7% final home infusion therapy payment rate update for CY 2023
- End of the temporary suspension of OASIS data collection on non-Medicare and non-Medicaid patients
- Changes to the Home Health Value-Based Purchasing Program, including new definitions for the baseline years
It is important to note that when HHVBP goes nationwide, the baseline year for home health agencies will be 2022 if they became Medicare certified before January 1, 2019. The baseline year had previously been 2019 for those providers. For providers with a Medicare certification date before January 1, 2022, the baseline year has been changed from 2021 to 2022.
Allocating Resources Wisely
Depending on each provider’s perspective, the final rule could be viewed as good or bad news. Either way, it will impel them to consider where they spend their time, money, and resources during the rest of this year and the next one.
On top of the payment changes, agencies are still faced with new requirements related to value-based care and added complexities in the documentation. Employing the right support, such as technology or outsourcing clinical back-office functions, can make a significant difference in supporting home health businesses to maintain profitability and pursue growth.