What is the CY 2023 home health Prospective Payment System Rate Update?

by Keith Grunig

Image of Net Worth graphic for Home Health


What is the CY 2023 home health Prospective Payment System Rate Update?

Every year, with baited breath, home health agencies await the proposed final rule that comes out usually in mid-June or early July.  Experts and agencies scout over it to try to get an idea of what they can expect for the next year.  Then, around the end of October, after a period of public comment, advocacy, hand wringing, and negotiation, the final rule is published.  Agencies find out if there is a trick or a treat in store for them in the next year.  It basically all comes out a wash.  

In a previous post (Proposed Final Rule 2023),  we highlighted what the proposed rule was.  In the final rule, CMS gives what the Prospective Payment System Rate will be.  In June, CMS proposed a reduction of nearly 8% in payments citing "behavioral adjustment."  CMS compared payments on claims pre-PDGM and then compared against post PDGM.  Somehow, CMS decided that an 8% reduction was an appropriate move.  Seemed a little tone deaf considering the inflationary pressures on both materials, labor rate, labor supply, fuel, and nearly everything else agencies were battling. 

Fortunately, CMS settled on a 3.95% rate cut this year, and another 3.95% next year to adjust for "behavioral adjustment."  However, it isn't as bad as it looks.  CMS recognized some of the challenges and increased payments by 4% ($725 million) to offset the behavioral adjustment for a net increase of 0.7%.  

CMS Says "This rule finalizes routine, statutorily required, updates to the home health payment rates for CY 2023. CMS estimates that Medicare payments to HHAs in CY 2023 will increase in the aggregate by 0.7%, or $125 million, compared to CY 2022, based on the finalized policies. This increase reflects the effects of the 4.0% home health payment update percentage ($725 million increase), an estimated 3.5% decrease that reflects the effects of the prospective permanent behavioral assumption adjustment of -3.925% ($635 million decrease) that is being phased-in, and an estimated 0.2% increase that reflects the effects of an update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($35 million increase). We note that the overall impact of the -3.925% permanent behavioral assumption adjustment is -3.5%, as the permanent adjustment is only made to the 30-day payment rate and not the Low Utilization Payment Adjustment (LUPAs) per visit payment rates."  

You can read the fact sheet on the proposed rule here.  For some really light reading, you can read the full final rule here.

CMS gave predictons on what the 30 day average Payment Rate should be in 2020.  That rate was $1,777.19 per 30 days with assumed behavioral changes.  The actual 30 day rate was $1,751.90.  In 2021, The average actual base rate was $1,901.12.  In order to remain budget neutral per the statute, CMS proposed to reduce it back to the original base rate of $1,751.90- an 8% decrease.  CMS elected to split the cut to 4% over two years, but made it clear that it was necessary to do that to prevent even larger cuts later.  

How can Home Care Answers help?  

Home Care answers helps by ensuring that coding and OASIS is accurate thereby allowing agencies to be reimbursed commensurate with the actual cost of care for their patients.  Our view is that most patients are actually less dependent and more sick than what clinicians are reporting.  For example (*patient not an actual patient),  a clinician assesses a patient with a recent fall and subsequent hip replacement.  The patient has diabetes, Parkinson's, dementia, history of smoking, osteoarthritis in multiple joints,  depression, and a few other diagnoses.   The clinician performing the assessment scores the patients as independent throughout the assessment.  The patient can stand, put on a house coat, walk with a walker, shower, and use the toilet.  The patient is coded but missed the diagnosis of depression and dementia as that didn't seem pertinent to the case.  The agency is paid and then moves on.  

Home Care Answers can help because we ensure all pertinent diagnoses are coded and the OASIS is appropriately scored given the documentation, diagnoses, and OASIS guidelines.  In reality, the patient likely was not independent prior to the fall given the diagnoses listed.  The patient probably couldn't ambulate independently, and really couldn't ambulate safely.  So Home Care Answers would suggest changing the OASIS on M1860 to something more appropriate and ACCURATE to show the picture of the ACTUAL condition of the patient at the time of assessment.  

Upon discharge, the patient is able to ambulate more independently.  With the previous assessment, there was no room for improvement on the OASIS because the patient was already independent (not accurate).  With Home Care Answers, the patient is more accurately assessed and shows improvement, which increases outcomes.  This helps improve star ratings and Home Health Value Based Purchasing performance.  (To read more about HHVBP click here (HHVBP for Dummies) and here (What is Home Health Value Based Purchasing). Home Care Answers wants to ensure accuracy.  Accurate OASIS and accurate diagnosis coding are what we're trying to find.  Reimbursement follows accuracy.  Compliance follows accuracy.  Outcomes follow accuracy.  

Here's what that means for reimbursement.  Without the appropriate OASIS scoring, the agency theoretically would have been reimbursed $3,741.79 for 60 days.  That would be $2,416.58 for the first 30 days and $1,325.21 for the second 30 days.  Given the decreased independence and higher acuity based on Home Care Answers coding and OASIS review, the agency would now be reimbursed $4,290.44.  Because of the increased accuracy, the Home Care Answers helped the agency find $548.65 in additional reimbursement to help care for the paitent.  The Case mix went up appropriately to show the acuity that the patient was all along, it just was not accurately reflected in the prior audit amount or case mix.  

,Updated PDGM Reimbursement


Home Care Answers is a buffer against budget cuts.  We help agencies find more reimbursement because of increased accuracy. In 2023,  Our average 30 day reimbursement across the company for the year, (pre audit) is $1,732.56 (60 day $3,465.12).  Our average post audit 30 day reimbursement is $1975.80.  That's a difference of 243.24 gain per chart per 30 days.  We've helped our agencies find $5.9 Million in reimbursement that would have been left on the table.  That's an average gain of $486.  


2023 Average Reimbursement Gain


We can quantify what agencies are leaving on the table.  Find out how we can help you offset continual budget cuts going forward.  


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