What is the CMS Final Rule for Home Health in 2024?

by Keith Grunig

Questions on CMS regulatory changes

What is the 2024 Home Health Final Rule? 

Trick?  Treat?  In typical fashion, CMS released it's final rule on November 1, 2023.  Preparing for the worst, hoping for the best, home health agencies waited with baited breath to discover if what was proposed in June 2023 for the final rule would, in fact, become reality.  In 2022, CMS had proposed a massive cut for "behavioral assumption adjustment" of 7.9%.  Due to advocacy efforts, CMS then changed the cut and proposed to do that over 2 years.  Even then, it was cut in roughly half for the final rule in 2023.  You can read about the proposed rule here.

Every year, CMS proposes a rule in June, waits for a public comment period, and then publishes the final rule on or around Nov 1 every year.  The Final Rule outlines changes for the next year that will take place starting January 1, 2024.  It defines what the Propective Payment System will be.  This is what agencies will be paid for the next year.  PDGM really changed the financial landscape for a lot of agencies and many have struggled to adapt since then.  Because of inflationary pressures due to wages, supplies, costs, COVID related expenses, interest rates, et. al, agencies have struggled to balance cost increases with reimbursement rates as the rates have not reflected the inflationary pressure agencies have faced.  Proposing a rate reduction amidst the inflationary pressure understandably had agencies worried about immediate and future viability given that home health is the least expensive and most effective setting for seniors to receive post accute care in terms of cost and outcomes.  

What is the Home Health Payment Rule in 2024?

The short answer is a net increase of $140 million or 0.8%.  This is compared against a proposed 2.2% decrease originally proposed in June.  So that means, agencies can expect to receive essentially the same reimbursement as 2023.  Given cost increases, that's not great news, but it is much better compared to the larger reductions previously proposed in 2022 and 2023.  "“The $140 million increase in estimated payments for CY 2024 reflects the effects of the CY 2024 home health payment update percentage of 3.0% ($525 million increase), an estimated 2.6% decrease that reflects the effects of the permanent behavioral assumption adjustment ($455 million) and an estimated 0.4% increase that reflects the effects of an updated FDL ($70 million increase)."  Interestingly, CMS proposes the behavioral adjustment to compensate against the actual results compared to the previous PPS prior to PDGM and then align payment rates closer to that. National Association of Homecare and Hospice puts it this way, "Medicare law requires CMS to make permanent and temporary adjustments intended to ensure that the transition to the PDGM payment model is budget neutral in comparison to expected Medicare spending if the 2019 payment model were in place through 2026. CMS originally proposed a 7.85% permanent rate adjustment in 2023 based on the conclusion that HHAs were overpaid in 2020 and 2021 due to provider behavior changes in coding and services provided. Ultimately, CMS applied a 3.925% permanent rate reduction."

 In essense, CMS is paying more now compared to pre-PDGM and wants to get back to the tune of nearly $3.5 billion that CMS allegedly overpaied (based on the budget neutral approach).  You can review our article on PDGM here.

Here are the basics details of the final rule from NAHC.   You can also review the CMS Final Rule Fact Sheet here.

The Final Rule includes the following:

  • A net 3.0% inflation update (3.3%% Market Basket Index — 0.3% Productivity Adjustment)

Note: CMS refuses to recognize its unprecedented forecasting error in CY2022 and 2023 rates where the inflation update fell short of reality by a cumulative 5.2%. That error will impact base rates permanently if not corrected. All Medicare sectors have suffered from the CMS forecasting error with CMS rejected all calls for correcting the error with an adjustment.

  • A 2.890% Budget Neutrality permanent adjustment to account for one-half of the remaining 3.925% adjustment from CY2023 plus the additional 2022 adjustment of 1.636%.
  • A $3,489,523,364 alleged overpayment in 2020-2022. CMS has not scheduled a collection of the alleged overpayment in 2024 or any other year yet.
  • Recalibration of the 432 case mix weights as CMS has done multiple times in recent years. The recalibration leads to a separate budget neutrality adjustment in the payment rates of +1.0124%.
  • Overall, CMS estimates that the Final Rule will increase CY2024 Medicare spending by $140 million ($525 million inflation update – $455 million rate adjustment + $ 70 million outlier FDL change).

How Can Agencies Stay Profitable with PDGM?

A wise person once said "You can bang your head against the wall about CMS and their rules, but all you'll end up with is a headache."  Advocacy efforts are ongoing to try to change the methodology into CMS calculations and methodology used to develop the 2024 Final Rule.  Until those things have resolved, agencies need to operate within the boundaries that CMS has set.  Home Care Answers helps solve that problem by ensuring correct and accurate data is sent to CMS so that the best data is used to make the most informed decisions.  Sadly, not all agencies are doing that and it impacts all agencies.  

In the last year, Home Care Answers has helped our partner agencies be reimbursed over $27 million in reimbursement that would have been otherwise unclaimed. That equates to an increase of 14.28% of revenue and 12.76% It's not witchcraft.  It's not a trick or a gimmick.  It's not too good to be true.  It's accurate.  Revenue follows the accuracy.  Outcomes follow the accuracy.  Even if CMS would have been successful in implementing the 4% budget cuts as proposed, Home Care Answers mitigates that loss and agencies end up with a net 8% profit increase and 10% revenue increase on revenue that would be left on the table.  It also provides accurate data.  We always say "data drives decsisions, but gread data drives great decisions."  It still holds true.  Contact Home Care Answers (HCA) to find out how you can increase accuracy and revenue through our services and data analytics.

HHVBP Update

CMS also included a few updates around HHVBP.  There were no major deviations from the proposed rule. 

From CMS:

For the expanded HHVBP Model, CMS is finalizing its proposals to:

  • Codify in the Code of Federal Regulations the measure removal factors finalized in the CY 2022 HH PPS final rule;
  • Replace the two Total Normalized Composite Measures (for Self-Care and Mobility) with the Discharge Function Score measure effective January 1, 2025;
  • Replace the OASIS-based Discharge to Community (DTC) measure with the claims-based Discharge to Community-Post Acute Care (PAC) Measure for Home Health Agencies, effective January 1, 2025;
  • Replace the claims-based Acute Care Hospitalization During the First 60 Days of Home Health Use and the Emergency Department Use without Hospitalization During the First 

60 Days of Home Health measures with the claims-based Potentially Preventable Hospitalization measure effective January 1, 2025;

  • Change the weights of individual measures due to the change in the total number of measures; and
  • Beginning with performance year CY 2025, update the Model baseline year to CY 2023 for all applicable measures in the finalized measure set, including those measures included in the current measure set with the exception of the 2-year DTC-PAC measure, which would be CY 2022 and CY 2023.

Appeals Process

CMS is finalizing an additional opportunity to request a reconsideration of the annual Total Performance Score (TPS) and payment adjustment. 

Public Reporting Reminder 

CMS is including a reminder for HHAs and other stakeholders that public reporting of HHVBP performance data and payment adjustments will begin in December 2024.   


Update on Lymphedema Compression Treatment Items

"In response to concerns by commenters, this rule establishes that Medicare will pay for an increase in daytime garments over the amount previously proposed. As such, Medicare will pay for three daytime garments every six months and two nighttime garments every two years for each affected extremity or part of the body."





Related content