AHA, Home Health Agencies Oppose Proposed Medicare Payment Rate Cuts

Written by: Jay Asser, Associate Editor of HealthCare Leaders

August 31, 2022

The updates in CMS’ proposed rule would slash Medicare payments to home health agencies by $810 million in 2023.

The American Hospital Association (AHA) and the Partnership for Quality Home Healthcare (PQHH) have expressed concern to CMS regarding the Calendar Year (CY) 2023 Home Health Prospective Payment System Rate Update, arguing the proposed cut is steep and technically flawed.

In their respective written letters to the federal agency, the groups advised reconsideration for the market basket update which would decrease Medicare payments to home health agencies by $810 million in 2023.

Under the proposed Patient-Drive Groupings Model (PDGM) behavioral offset, an offset of 7.69% to the 30-day payment rate for CY 2023 will be applied in addition to the original offset of 4.36% in CY 2020. CMS states that the additional offset ensures PDGM budget neutrality, but AHA argues that it fails to account for the drop in average per-episode therapy services.

“As such, we urge CMS not to finalize any budget neutrality adjustment for CY 2023,” AHA writes. “Instead, we ask the agency to reevaluate its PDGM budget neutrality methodology to account for the drop in therapy in CY 2020 and subsequent years. Doing so could substantially reduce or negate the need for any behavioral offset, or actually create the need for a future restoration of funds.”

PQHH, meanwhile, decries CMS’ implementation of the PDGM, pointing to the negative effects on patients and quality of care.

“The payment reductions proposed in this rule conflict with the law and will be disastrous for patient access and care delivery and will undermine CMS’ broader goals to advance health equity and quality improvement,” PQHH writes.

The groups take issue with the market basket increase of 3.3% minus a 0.4% productivity adjustment. The proposed permanent adjustment to the -7.69% results in a decrease in payments of 4.2%, or $810 million lost.

PQHH highlight the many challenges facing home health facilities and how the increase to the proposed payment rates doesn’t reflect the increase in costs during the COVID-19 pandemic.

“Currently, well-documented staffing shortages and dramatic increases in the cost of labor, fuel, medical supplies, and other resources necessary to deliver care have created challenges for home health providers,” PQHH write. “We are concerned that annual increases to the home health payment rates based on the current market basket have not kept pace with recent cost increases. The significant increase in such costs adds to financial pressure on providers already facing numerous challenges and impacts access to care for patients.”

Jay Asser is an associate editor for HealthLeaders.

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