On June 26, 2024, the Centers for Medicare & Medicaid Services (CMS) released the 2025 Home Health Prospective Payment System (HHPPS) proposed rule, which would reduce Medicare home health payments by 1.7% ($280 million) next year. This adjustment includes a 2.5% ($415 million) market basket increase, offset by a -3.6% ($595 million) reduction due to a permanent behavior assumption adjustment, and a -0.6% ($100 million) decrease from an updated fixed-dollar-loss ratio.

In addition to payment adjustments, CMS proposes changes to the Medicare Conditions of Participation (CoPs), requiring home health agencies to develop, consistently apply, and maintain a service acceptance policy. This policy aims to enhance transparency by providing patients with clear information about available services and limitations.

Furthermore, CMS proposes updates to the Outcome and Assessment Information Set (OASIS), including four new assessment items and modifications to one item, alongside resuming all-payer data collection. The rule also explores strategies for integrating health equity into the Home Health Value-Based Purchasing (HHVBP) Model.

These proposed cuts follow previous reductions of 3.925% in 2023 and 2.89% in 2024 under the Patient-Driven Groupings Model (PDGM) introduced in 2020. Since 2020, cumulative cuts are projected to total $20 billion by 2029, resulting in agency closures, reduced service areas, and declining patient access to home health care. This year alone, 500,000 fewer patients received Medicare home health services compared to 2019, despite increasing demand. These ongoing cuts pose significant challenges to home health agencies already grappling with high labor costs and workforce shortages.

Stakeholders are encouraged to submit comments on the proposal by the August 26 deadline. For more detailed information on the proposed rule, including the full text and instructions for submitting comments, access the CMS fact sheet here.

Following CMS's announcement, the National Association for Home Care & Hospice (NAHC) announced plans to renew its lawsuit challenging Medicare's payment methodology and application of the PDGM budget neutrality adjustment, which imposed both permanent and temporary calculations with a methodology that NAHC believes is noncompliant with the law.

Additionally, bipartisan legislation, the Preserving Access to Home Health Act (S.2137/H.R.5159), has been introduced in Congress to block further Medicare home health payment cuts. Click here to visit the HCAF Legislative Action Center to urge your members of Congress to cosponsor this critical legislation protecting patient access to Medicare home health services.