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CMS Issues the Home Health Proposed Rule for CY 2024

07/26/2023 Dave Macke

The Centers for Medicare and Medicaid Services (CMS) issued the public display proposed rule for the Calendar Year 2024 Home Health Update on Friday, June 30.  The actual rule was published in the July 10, 2023, Federal Register.

There were significant changes in the proposed rule.  The following are the key changes.

Payment rate cuts
Wage Index changes
Case mix weight changes
Provider Enrollment changes
HH Value Based Purchasing Tweaks
HH Quality Reporting Program changes
Request for Information for access to Home Health Aide Services

Payment Rate Cuts

The overall cut in reimbursement is a 2.2% reduction.  This is a combination of three separate factors.

+2.7%               net inflation increase (+$460 million)

-5.653%            reduction for permanent PDGM Budget Neutrality adjustment (-$870 million)

+0.2%               increase for updated fixed dollar ratio (+$35 million)

The total projected home health spend is a reduction of $375 million. The permanent PDGM Budget Neutrality adjustment is obviously the elephant in the room.  The industry is pushing back on this against.  The National Association for Home Care and Hospice has filed a lawsuit against CMS on this.

The dollar impact of the Budget Neutrality Adjustment is $118.30.  If this adjustment was not made, the new standard rate for 2024 would be $2,092.68.

Calendar Year 2024 Payment Rates

This is a $36.31 decrease in the national standard rate or 1.8%.  The LUPA rates are also being adjusted but there is no case mix weight calibration factor for LUPAs.

CMS estimates that the overall expected spending decrease is $375 million for CY 2024.

Assessing Impact of Rate Changes

Home Health Agencies need to be careful when evaluating the impact of the reimbursement changes in standard rates for their specific agency.   Even though there is a reduction of $36.31 in the standard rate, the real change can be much greater, either positive or negative.  There are two other very important factors to be considered when computing the actual payment for an individual episode.

Change in case mix weights
Change in wage index values

Change in case mix weights

There are 189 case mix categories that increased and 240 categories that decreased while three remain unchanged.  The largest increases were in the MMTA – Endocrine, Behavioral Health and MMTA Cardiac clinical groupings.  The largest decreases were seen in MS Rehab, Neuro and MMTA – Surgical Aftercare.  There are 29 categories with an increase of over 3% and 26 with a decrease of over 2%.  The recalibration of the weights is based on the CY 2022 home health claims data with linked OASIS data.


Change in wage index

There are four states with an increase in the rural wage index over 2.0% with North Dakota the largest at 11.06%.  There are 9 states with a decrease in the rural wage index over 3%.  Three states are capped at the 5% decrease – Hawaii, Washington, and Arizona.

On the urban CBSA’s, there are 35 CBSA’s that increased over 4% with Santa Fe, NM leading the way at 26.64%.  There are 64 CBSA’s that decreased over 4% with 45 CBSA’s at the 5% cap.

The labor share of the payment amount has decreased from 76.1% to 74.9%.  All these factors will impact the actual payment for a specific patient episode.

CMS has calculated “overpayments” from 2020 to 2022 due to a time-lag in data that prevented an earlier budget neutrality calculation.  These overpayments are:

2020                 $   873,073,121

2021                 $1,211,002,953

2022                 $1,355,208,655

Total     `           $3,439,284,729

At this time, CMS has not scheduled any payment adjustments for this potential “claw back”.


The loss sharing ratio remains at 80% but the fixed dollar loss (FDL) ratio is dropping from 0.35 to 0.31.  A lower FDL means that more episodes can qualify for an outlier payment adjustment.

Provider Enrollment

CMS is proposing a revision to change the timeframe for lack of billing Medicare claims from 12 months to 6 months.  If this proposal is finalized, a provider’s billing privileges and provider agreement could be deactivated related to no billing of claims after 6 months.

There is also a proposal to impose the 36-month rule for change of ownership on Hospice providers.  This would be the same as the rule implemented for Home Health Agencies several years ago.

Request for Information – Access to Home Health Aide Services

CMS has also issued a Request for Information – Access to Home Health Aide Services.  Home Health Aide services continues to decline in Medicare home health.  CMS is concerned about this decrease.

Some of the concerns that CMS would like to know relating to HH Aide services.

Why is utilization of home health aide services continuing to decline?

To what extent are higher acuity individuals eligible for Medicare having more difficulty accessing home health care services, specifically home health aide services?

What are notable barriers or obstacles that home health agencies experience relating to recruiting and retaining home health aides?  What steps could home health agencies take to improve the recruitment and retention of home health aides?

Are HHA’s paying home health aides less than equivalent positions in other care settings?  What are the reasons for the disparity in hourly wages or total pay for equivalent services?

In what ways could HHAs ensure that home health aides are consistently paid wages that are commensurate with the impact they have on patient care that they provide to Medicare beneficiaries?

How effective is the coordination between Medicare and Medicaid to ensure adequate access to home health aide services?  Please share insights on the level of utilization of Medicaid benefits by dually eligible beneficiaries for additional home health aide  services that are not being provided by Medicare.

Are physicians’ plans of care less reliant on home health services in the past, or are HHAs less willing / able to provide these services?  If so, what are the primary reasons such services are not provided?

What are the consequences of beneficiary difficulty in accessing home health aide services?

Congressional Action

There is Congressional action that would help home health agencies.  This legislation would eliminate or reduce the permanent and temporary rate adjustments.  This legislation is S. 2137, which is co-sponsored by Sen. Debbie Stabenow (D-MI) and Sen. Susan Collins (R-ME).


Other Important Links

CY 2024 Proposed HH PPS Wage index and CY 2024 Proposed PDGM Case Mix Weights and LUPA Thresholds

Please contact Healthcare Reimbursement expert, Dave Macke, at dmacke@vlcpa.com or 800-887-0437 with any questions.

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