Legislation Update: Home Health Prospective Payment System (HHPS) Final Rule for 2023

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On October 31, CMS released the Home Health Prospective Payment System (HHPS) Final Rule for Calendar Year (CY) 2023. Unfortunately, this rule includes a permanent 7.85% payment cut to Medicare home health services.

While this will impact many states around the country, Texas will endure a serious hit. According to the Partnership for Quality Home Healthcare, these cuts will bring 51.8% of the 1,627 home health agencies in the state to negative margins and will have a gross impact of -$128,346,2411.

These cuts are a result of CMS’s efforts to meet a 2018 budget neutrality requirement as part of the transition to the Patient-Driven Groupings Model (PDGM). While developing the PDGM, CMS was given the ability to make adjustments to the base payment rates to account for behavioral assumptions, causing serious backlash from the industry.

In addition, CMS made additional adjustments to maintain budget neutrality between projections of what would have been spent under the former system and what has been spent under the PDGM. Last year, they indicated that a 6% cut to the payment rate would be necessary but did not institute the cut due to COVID-19. Now, it has risen an additional 1.85% to 7.85%, resulting in $635 million in cuts for 2023 and potentially $18.15 billion in cuts over the next 10 years.

Additionally, “clawback cuts” of more than $2 billion for services provided during COVID-19 will be cut from home health services beginning as early as 2024.

A Sign of Relief

Thankfully, several members of congress have recognized the drastic impact these cuts will have on the industry and the patients in need of home health services.

The Preserving Access to Home Health Act of 2022 (S. 4605/H.R. 8581) proposes a delay in the 7.85% proposed payment cut for 2023 and would block the additional “clawback cuts” that are set to begin as soon as 2024.

Most importantly, S. 4605/H.R. 8581 prevents CMS from implementing any permanent or temporary adjustment to home health prospective payment rates prior to 2026. This would delay the current proposed cuts and allow more time for CMS to refine its approach to determining budget neutrality in the industry. 

What This Means

Home health has grown increasingly popular since the start of COVID-19. The proposed 7.85% cuts will have drastic impacts on home health as a whole and will tremendously reduce access to these vital services around the country.

If S. 4605/H.R. 8581 were to pass, it would provide stability in the industry, strengthen disclosure, accountability, and transparency of the payment rate-setting methodology used by CMS.

As a member of the home health industry, if you’re wondering how you can help, it starts with contacting your elected officials and asking for their support in S. 4605/H.R. 8581.

If 97% of Medicare beneficiaries want the federal government to maintain Medicare coverage for in-home healthcare services2, why are we proposing billion-dollar cuts?

1 https://pqhh.org/wp-content/uploads/2022/10/PQHH_Medicare_Cuts-StateOnePager_Aug2022-v03_Texas.pdf

2 https://pqhh.org/article/new-national-poll-finds-strong-support-for-medicare-home-health-services-preserving-access-to-home-health-act/