What is CMS 2023 Proposed Rule

by Keith Grunig

Home Health Numbers

What is in the CMS Proposed Rule 2023?

On Friday, June 17th, CMS released it's proposed payment rate update for Calendar Year 2023.  We will try hard to not offer opinion on the rule, but we will inform agencies what it says.   You can read the fact sheet here.  

Proposed Pay Rates

CMS has suggested a net -4.2% pay decrease (-$810 million) compared to FY 2022.  There are multiple components to the decrease.  CMS is suggested a 2.9% pay increase ($560 million) for payment of services.  However, CMS is suggesting a -7.65% decrease for behavioral assumption adjustement (-$1.3 billion).  There is also a -.2% included that reflects the "eflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($40 million decrease.)  

Cap on Wage Index Decreases

"To achieve the policy goal of increased predictability in home health payments, while aligning with proposals in the FY 2023 Inpatient Prospective Payment System proposed rule and other proposed rules, this rule proposes a permanent, budget neutral approach to smooth year-to-year changes in the pre-floor/pre-reclassified hospital wage index. Specifically, this rule proposes a permanent 5% cap on negative wage index changes (regardless of the underlying reason for the decrease) for home health agencies."

PDGM Case-Mix Weight Tweaking

CMS is always tweaking payment groups and case mix weight from PDGM.  This is normal as PDGM is a new program and continual adjustment is required.  CMS is proposing adjusting functional levels, comorbidity adjustment subgroups, and LUPA thresholds to be more accurate in the payment and care a patient receives. 

PDGM and Behavioral Assumptions

As we have discussed before in prior blogs (PDGM for Dummies How will PDGM Affect Home Health Agencies) PDGM's aim is to reimburse home health agencies based on a complex formula that determines how "sick" a patient is and provide the resources to provide the cost of care.  The thought process is "we stated that we interpret actual behavior change to encompass both behavior changes that were previously outlined, as assumed by CMS when determining the budget-neutral 30-day payment amount for CY 2020, and other behavior changes not identified at the time the 30-day payment amount for CY 2020 is determined. In the CY 2022 home health proposed rule, CMS solicited comments on a repricing methodology to determine the impact of behavior changes on estimated aggregate expenditures. This CY 2023 proposed rule proposes the repricing method, which calculates what the Medicare program would have spent had the PDGM not been implemented in CYs 2020 and 2021, assuming that HHAs would have provided home health services in the same way they do under the PDGM, compared to what actual home health expenditures were under the PDGM in CY 2020 and CY 2021. Using this method, we are proposing a -7.69% permanent adjustment to the 30-day payment rate in CY 2023 to ensure that aggregate expenditures under the new payment system (PDGM) would be equal to what they would have been under the old payment system. While the law also requires CMS to implement one or more temporary adjustments to retrospectively offset for such increases or decreases in estimated aggregate expenditures, CMS also has the discretion to implement these adjustments in a time and manner deemed appropriate, therefore, CMS is not proposing a temporary payment adjustment in CY 2023. However, we are soliciting comments on how best to implement a temporary payment adjustment, estimated to be $2.0 billion for excess estimates in CYs 2020 and 2021." 


Other sections for the proposed payment rule are:  Solicitation for Comments on Data on the use of telecomunications technology under Medicare Home Health Benefit, Updates on Home Infustion Therapy Benefit, Proposal of All-Payer Policy for the Home Health Quality Reporting Program, Baseline Years in the Expanded Home Health Value-Based Purchasing (HHVBP) Model, and Health Equity Request for Information (RFI)


Conclusion and Thoughts

Home Health companies are up against some pretty significant payment decreases.  There is no mention of iflation adjustment for home health agencies. CMS will have a comment period on the proposed rule.  Agencies can impact the final rule by commenting publicy and joining advocacy with trade associations like your state agency or NAHC.  

We suggest that having accurate coding and OASIS is essential to be able to weather the storms.  If agencies are going to take a reduction in reimbursement, the least they can do is make sure that reimbursement is maximized so that agencies get the most reimbursement and care for their patients.  

You can request a free trial here so that you can have a good idea of what reimbursement you are potentially missing out on now- to prepare you for potential futher cuts.  

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