Calendar Year (CY) 2025 Home Health Prospective Payment System Final Rule Fact Sheet (CMS-1803-F)

On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS) final rule, which updates Medicare payment policies and rates for Home Health Agencies (HHAs). This rule also updates the intravenous immune globulin (IVIG) items and services’ payment rate for CY 2025 for Durable Medical Equipment (DME) suppliers. As described further below, CMS estimates that Medicare payments to HHAs in CY 2025 would increase in the aggregate by 0.5%, or $85 million, compared to CY 2024.

This rule finalizes a permanent prospective adjustment of -1.975% (half of the calculated permanent adjustment of -3.95%) to the CY 2025 home health payment rate to account for the impact of implementing the Patient-Driven Groupings Model (PDGM). This adjustment, which is required by the Bipartisan Budget Act of 2018 and amended section 1895(b) of the Social Security Act, accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY 2020 implementation of the PDGM and the change to a 30-day unit of payment. For CY 2023 and CY 2024, CMS previously applied a 3.925% reduction and a 2.890% reduction, respectively, which were half of the estimated required permanent adjustments.

In addition, CMS is finalizing a crosswalk for mapping responses on the current Outcome and Assessment Information Set-E (OASIS-E) to the prior OASIS-D responses for use in the methodology to analyze the difference between assumed and actual behavior changes on estimated aggregate expenditures; recalibrated PDGM case-mix weights; and updated low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups. CMS is also finalizing and adopting the most recent Office of Management and Budget (OMB) Core-Based Statistical Area (CBSA) delineations for the home health wage index; an occupational therapy (OT) LUPA add-on factor and updated physical therapy (PT), speech-language pathology (SLP), and skilled nursing (SN) LUPA add-on factors; and an updated CY 2025 fixed-dollar loss ratio (FDL) for outlier payments. Additionally, this rule finalizes the rate update for the CY 2025 intravenous immune globulin (IVIG) items and services’ payment under the IVIG benefit. Furthermore, CMS is finalizing updates to the HHA Conditions of Participation (CoPs) to reduce avoidable care delays by helping ensure that referring entities and prospective patients can select the most appropriate HHA based on their care needs.

The actions CMS is taking in this final rule will help improve patient care and protect the Medicare program’s sustainability for future generations.

CY 2025 Payment and Policy Updates for Home Health Agencies

This rule finalizes routine, statutorily required updates to the home health payment rates for CY 2025. The CY 2025 updated rates include the final CY 2025 home health payment update of 2.7% ($445 million increase), which is offset by an estimated 1.8% decrease that reflects the permanent behavior adjustment ($295 million decrease) and an estimated 0.4% decrease that reflects the updated FDL ($65 million decrease). CMS estimates that Medicare payments to HHAs in CY 2025 would increase in the aggregate by 0.5%, or $85 million, compared to CY 2024, based on the finalized policies.

PDGM and Behavior Assumptions
On January 1, 2020, CMS implemented the home health PDGM and a 30-day unit of payment, as required by section 1895(b) of the Social Security Act, as amended by the Bipartisan Budget Act of 2018. The PDGM better aligns payments with patient care needs, especially for clinically complex individuals. The law requires CMS to make assumptions about behavior changes that could occur because of the 30-day unit of payment and the PDGM. CMS finalized three behavior assumptions in the CY 2019 HH PPS final rule: clinical group coding, comorbidity coding, and LUPA threshold. The law also requires CMS to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026, and to make temporary and permanent increases or decreases, as needed, to the 30-day payment amount to offset such increases or decreases. Additionally, in the CY 2019 HH PPS final rule (83 FR 56455), CMS stated that we interpret actual behavior change to encompass both behavior changes that were previously outlined, as assumed by CMS when determining the budget-neutral 30-day payment amount for CY 2020, and other behavior changes not identified at the time the 30-day payment amount for CY 2020 was determined.

In the CY 2023 HH PPS final rule (87 FR 66790), CMS finalized a methodology for analyzing the impact of the differences between assumed and actual behavior changes on estimated aggregate expenditures and calculated levels of actual and estimated aggregate expenditures. Based on analyses of CYs 2020 and 2021 claims data, CMS determined a permanent adjustment was needed and finalized implementing half (-3.925%) of the permanent adjustment estimated at the time (7.85%).

In the CY 2024 HH PPS final rule (88 FR 77676), using CY 2022 claims and the finalized methodology, CMS determined that an additional permanent adjustment needed to be applied and finalized implementing half (-2.890%) of the permanent adjustment estimated at the time (5.779%). This estimated permanent adjustment necessary for CY 2024 included the remaining     -3.925% (to account for CYs 2020 and 2021) that was not applied to the CY 2023 payment rate.

For the CY 2025 HH PPS final rule, using CY 2023 claims and the methodology finalized in the CY 2023 HH PPS final rule, CMS determined that Medicare is still paying more under the new system than it would have under the old system. We determined a total permanent behavior adjustment of -3.95% is needed to be applied to the 30-day base payment rate to account for overpayments in CY 2023, as well as the remaining adjustment of 2.890% that CMS delayed finalizing in CY 2024. However, in response to commenter concerns that this would impose too large a reduction in a single year, we are finalizing only half of the adjustment (1.975%) to the CY 2025 payment rate. This adjustment will continue to satisfy the statutory requirements at section 1895(b)(3)(D) of the Act to offset any increases or decreases resulting from the impact of differences between assumed behavior and actual behavior changes on estimated aggregate expenditures, reduce the need for any future large permanent behavior adjustments, and help slow the accrual of the temporary payment adjustment amount. The final permanent behavior adjustment is also anticipated to lessen any potential temporary adjustments in future years. While we did not propose to implement a temporary behavior adjustment in CY 2025, the final rule does provide the calculated temporary behavior adjustment dollar amount (approximately $971 million) based on analysis of CY 2023 claims. The law provides CMS the discretion to make any future permanent or temporary behavior adjustments in a time and manner determined appropriate through analysis of estimated aggregate expenditures through CY 2026.

Crosswalk for Mapping OASIS-D Data Elements to The Equivalent OASIS-E Data Elements
The Outcome and Assessment Information Set (OASIS)-D was the home health assessment instrument used under the prior 153-group system and the first three years (CYs 2020-2022) of the current PDGM. However, the Office of Management and Budget (OMB) approved an updated version of the OASIS instrument, OASIS-E, on November 30, 2022, effective January 1, 2023 (OMB-control number 0938-1279). To accurately determine payments under the 153-group system, we use the October 2019 3M Home Health Grouper (v8219) to assign a Health Insurance Prospective Payment System (HIPPS) code to each simulated 60-day episode of care. This older version of the Home Health Grouper requires responses from OASIS-D. Therefore, to continue with the methodology, CMS will need to impute responses for the three items from OASIS-D that have changed in the OASIS-E. Additionally, 13 items on the OASIS-E are no longer required to be asked at a follow-up visit. For these items, we can use the most recent Start of Care or Resumption of Care assessment (SOC/ROC) to determine a response, which would not require imputation. We are finalizing a crosswalk to address this issue by mapping the OASIS-E items back to the OASIS-D in this final rule.

Final OT LUPA Add-on Factor and LUPA Add-on Factor Updates
With sufficient recent claims data available, and to establish equitable compensation for all home health services, CMS proposed to establish a definitive occupational therapy (OT) specific LUPA add-on factor and discontinue the temporary use of the physical therapy (PT) LUPA add-on factor as a proxy. We are finalizing the establishment of the OT LUPA add-on factor with the same methodology used to establish the skilled nursing (SN), physical therapy (PT), and speech-language pathology (SLP) LUPA add-on factors, as described in the CY 2014 HH PPS final rule. The final OT LUPA add-on factor is 1.7238, to be used when that discipline is the first skilled visit in a LUPA episode that occurs as the only episode or an initial episode in a sequence of adjacent episodes.

Additionally, we are finalizing updates to the SN, PT, and SLP LUPA add-on factors to more accurately reflect current health care practices and costs, by using recent claims through CY 2023. The SN, PT, and SLP LUPA add-on factors are 1.7200, 1.6225, and 1.6696, respectively.

Recalibration of PDGM Case-Mix Weights
Each of the 432 payment groups under the PDGM has an associated case-mix weight and LUPA threshold. CMS’ policy is to annually recalibrate the case-mix weights and LUPA thresholds using the most complete utilization data available at the time of rulemaking. In this final rule, CMS is finalizing the recalibrated case-mix weights — including the functional levels and comorbidity adjustment subgroups — and LUPA thresholds using CY 2023 data to more accurately pay for the types of patients HHAs are serving.

Wage Index Update
This rule finalizes an update to the home health wage index and adopts the new labor market delineations from the July 21, 2023, OMB Bulletin No. 23-01 based on data collected from the 2020 Decennial Census. The July 21, 2023, OMB Bulletin No. 23-01 contains several significant changes. It is standard practice to adopt the latest OMB update when available, as using the most recent OMB statistical area delineations results in a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. For example, there are new CBSAs, urban counties that have become rural, rural counties that have become urban, and existing CBSAs that have been split. We note that existing home health PPS regulations limit one-year wage index decreases to 5%, which will help mitigate the impact of CBSA changes on payment.

Home Health Conditions of Participation (CoPs) Updates

CMS is finalizing updates to the HHA CoPs to reduce avoidable care delays by helping ensure that referring entities and prospective patients can select the most appropriate HHA based on their care needs. CMS is finalizing a new standard that requires HHAs to develop, implement, and maintain, through an annual review, a patient acceptance-to-service policy that is applied consistently to each prospective patient referred for home health care. We are finalizing a requirement that the policy must address, at a minimum, the following criteria related to the HHA’s capacity to provide patient care: the anticipated needs of the referred prospective patient, the HHA’s caseload and case mix, the HHA’s staffing levels, and the skills and competencies of the HHA staff. This final rule does not prevent HHAs from maintaining their existing acceptance-to-service policies; rather, it is intended to complement them. Additionally, CMS is finalizing that HHAs must make available to the public accurate information regarding the services offered by the HHA and any service limitations related to types of specialty services, service duration, or service frequency. The HHA must review this information as frequently as the services are changed, but no less often than annually.

Home Health (HH) Quality Reporting Program (QRP) Updates

CMS is finalizing four new items as standardized patient assessment data elements in the social determinants of health (SDOH) category and modifying one item collected as a standardized patient assessment data element in the SDOH category, beginning with the CY 2027 HH QRP via the OASIS. The four assessment items are: one living situation item, two food items, and one utilities item. In addition, CMS is modifying the current transportation item beginning with the CY 2027 HH QRP via the OASIS instrument.

CMS is also changing all-payer data collection to begin with the start of care OASIS data collection timepoint instead of the discharge timepoint.

Expanded Home Health Value-Based Purchasing (HHVBP) Model

Request for Information (RFI) on Future Performance Measure Concepts for the Expanded HHVBP Model
This final rule summarizes comments received on a summary of responses to RFI that will build on input from the Expanded Home Health Value-Based Purchasing (HHVBP) Model’s Implementation and Monitoring technical expert panel (TEP), which met in November 2023. Discussions included potential future measure concepts that could fill measurement gaps in the expanded HHVBP Model. These include function measures complementing the existing cross-setting Discharge (DC) Function measure. These measures include care activities like bathing and dressing, which are important for home health patients and caregivers but are not included in the DC Function measures. Based on TEP feedback, CMS may also consider adding the existing Medicare Spending per Beneficiary measure in future rulemaking. Other potential areas for measure development activities discussed with the TEP include family caregiver status and claims-based falls with major injuries. We will share a summary of the comments with the TEP.

Health Equity Update
CMS is including an update on health equity, affirming our commitment to meaningfully advance health equity in the expanded HHVBP Model. As we move this important work forward, we will continue to take input from home health stakeholders and monitor the application of proposed health equity policies across CMS initiatives, such as proposed payment adjustments in the Hospital and SNF Value-Based Purchasing Programs. We have summarized the comments received and will share them with the TEP.

Long-Term Care (LTC) Facility Acute Respiratory Illness Data Reporting

CMS is finalizing a new data reporting standard to address a broader range of acute care respiratory illnesses. Beginning on January 1, 2025, LTC facilities are required to electronically report information about COVID-19, influenza, and respiratory syncytial virus (RSV) in a standardized format and frequency specified by the Secretary. This new standard replaces the current COVID-19 reporting standards for LTC facilities that sunset in December 2024. CMS is finalizing that the new data elements for which reporting will be required include facility census; resident vaccination status for COVID-19, influenza, and RSV; confirmed resident cases of COVID-19, influenza, and RSV (overall and by vaccination status); and hospitalized residents with confirmed cases of COVID-19, influenza, and RSV (overall and by vaccination status). CMS continues to believe that sustained data collection and reporting of respiratory illnesses outside of emergencies will help LTC facilities gain important insights related to their evolving infection control needs.

We are also finalizing that, in the event of a declared national public health emergency (PHE) for an acute respiratory illness, there may be additional categories or reporting required, such as: reporting data up to a daily frequency and additional or modified data elements relevant to the PHE — including but not limited to relevant confirmed infections, supply inventory shortages, staffing shortages, and relevant medical countermeasures and therapeutic inventories.

Medicare Provider Enrollment

CMS is adding providers and suppliers that are reactivating their Medicare billing privileges to the categories of new providers and suppliers subject to a provisional period of enhanced oversight (PPEO). CMS may impose a PPEO for 30 days to one year for new providers and suppliers. The goal of a PPEO is to reduce and prevent fraud, waste, and abuse. During a PPEO, CMS may, among other things, conduct prepayment medical review and cap payments. CMS can apply a PPEO to new providers or suppliers, which are defined as providers or suppliers that are: (1) newly enrolling; (2) undergoing a change of ownership under 42 CFR § 489.18; and/or (3) undergoing a 100% change of ownership via a change of information. This final rule adds reactivating providers and suppliers as another category of new providers and suppliers subject to a PPEO.

Resources

For additional information about the Home Health Prospective Payment System, visit: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps and https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.

For additional information about the Home Health Patient-Driven Groupings Model, visit https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM.

For additional information about the expanded Home Health Value-Based Purchasing Model, visit: https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model.

The final rule can be downloaded from the Federal Register at: https://public-inspection.federalregister.gov/2024-25441.pdf.