Comments to the Proposed Rule (968 as of 9-15-24) – available upon request (an excel file)

On Friday, Nov 1, 2024, CMS published at the Federal Register Public Inspection Desk the 2025 HH PPS FINAL Rule.

Note: IFS for HH offers a ‘bookmarked’ PDF version of this Final Rule.  If interested, please use the ‘Contact Us‘ webpage to inquire about obtaining a copy of this PDF document.  You will need Adobe Acrobat to be able to utilize the bookmarks (internal hyperlinks) within this document.  

Executive Summary

CMS projects the overall economic impact of this FINAL Rule will equate to $85 million (0.5%).

Note:  This is a projected increase in home health (HH) spending for CY2025 (compared to CY2024).  This is a projected increase in HH Spending of 0.5% compared to 2024.  This DOES NOT mean that HHAs can expect their Medicare payment rates to increase by 0.5% (although many say that is what this means).  The 0.5% increase applies to overall HH Spending, not to individual Medicare payment rates.  Some will see their Medicare payment rates increase by more than 0.5%, others will see an increase, but less than 0.5%, while others (probably about 50% of all HHAs) will realize a decrease in their Medicare payment rates.  For example, in my testing thus far, I have seen the following payment rate changes in unique CBSA/Service Areas:

CBSAs that will have 400+ (of the 432) payment rates decreasing:

• • • • • • with pmts decreasing as much as 5.6% and
          • over 280 pmt rates (per HIPPS Codes) decreasing by 2.2% or more, and
          • over 415 of the pmt rate changes will be <= +0.5%
          • So HHAs in these CBSA/Service Areas are likely to realize a decrease in their 2025 Medicare revenues; not an increase!

But I have also seen a CBSA that will have all 432 pmt rates increasing:

• • • • • • with the MAX pmt increase exceeding 22%, and
          • the MIN pmt increase exceeding 11%
          • So HHAs here will see an increase in their Medicare revenues exponentially higher than the 0.5% increase (in HH spending) projected by CMS

This is why you should not expect the change in HH Spending identified in the Proposed or FINAL Rule each year to be what the change in your Medicare revenues will be for the upcoming year.  Because CMS is projecting the change in HH Spending for the entire HH industry, not what that impact will be for any given agency.  The only way to identify this is to calculate this, and this has been the case since PPS was implemented back in 2000.  

Projected Impact in $

CMS notes that this $85 million increase is made up of the following changes:

• The inflation (Market-Basket Update) increase of $460 million (+2.7%) to HH Spending
• A reduction to HH Spending of approx. $305 million (-1.8%) due to the Permanent Behavioral Adjustment
• and an adjustment to the Fixed-Dollar Loss (FDL) of -$70 million (-0.4%) to HH Spending

Note: Compared to the Proposed Rule which included the following:

• • • An overall decrease of $280 million in HH Spending (-1.7%), made up of:
    • +2.5% inflation update (+415 million to HH Spending)
    • -3.6% Permanent Behavioral Adjustment (-$595 million) and
    • -0.6% FDL Adjustment (-$100 million)

Therefore, you can see that the FINAL 2025 HH PPS Rule was not as punitive as the Proposed Rule.

The Permanent Behavioral Adjustment

CY2025 is the third consecutive year in which CMS has utilized the Permanent Behavioral Adjustment to reduce HH Spending.  Originally, in the Proposed Rule, CMS planned in implementing a -3.6% reduction attributable to the Permanent Behavioral Adjustment, which was projected to reduce HH Spending by $595 million!  Based on advocacy efforts but a small portion of the stakeholders, this was reduced to a -1.8% cut, totaling $305 million.

Keep in mind that the Behavioral Adjustment is based on CMS’ assumption that the industry; not a handful of HHAs, but the vast majority of all HHAs are gaming the system (the OASIS, pt charts, etc…) to increase their own Medicare revenues based on issues that have nothing to do with patient needs/patient care.  

Following are the Permanent Behavioral Adjustments that CMS has implemented over the last 3 years:

• • CY2025   -1.8% reduction to HH Spending (-$305 million)
  • CY2024   -5.1% reduction to HH Spending (-$870 million)
  • CY2023   -6.9% reduction to HH Spending (-$1.3 Billion)

This means that the HH Spending updates have been reduced by almost $2.5 Billion since 2023.

The Estimated Impact on Home Health Spending

For the last few years, I have been requesting that CMS prepare a table and update it annually to identify net HH Spending so that we in the industry can track and compare to what CMS projects.  Needless to say, that has not happened.  Therefore, I am going to estimate projected HH Spending (by year, since 2020), based on the relationship between the % and $ amount of the HH Spending impacts projected by CMS each year.  This will not be as accurate as what CMS could have provided, but I believe this is something that everyone in the industry should see to get a better idea of what is actually happening to HH Spending.

See the following table I have prepared to track/trend HH Spending:

Estimated HH Spending 2018 thru 2025

The above are just rough estimates based on CMS data, but it should certainly be in the ballpark.

Note that 2025 HH Spending is estimated to be roughly equivalent to 2020 HH Spending.  So, we have to do more, with less! (Consider what inflation has been since 2020)

2025 HH PPS FINAL Rule Fact Sheet (CMS-1803-F) _ CMS

Following, I am including a link to the 2025 HH PPS FINAL Rule Fact Sheet (CMS-1803-F) published by CMS.  This is the ‘Cliff Notes’  of this FINAL Rule.  It’s lacking the details, the comments from the industry and CMS’ responses to those comments, but it does give a ‘Big Picture‘ perspective of all the significant changes included in this rule – see the following:

Link to the 2025 HH PPS FINAL Rule Fact Sheet from CMS

If you would like some help in digesting this rule and the impact it is likely to have on your financial and/or operational results, please contact us at your earliest convenience to begin this conversation, and analysis if applicable.

As an fyi, CMS is now offering membership into several interactive Groups to encourage high-level discourse of the pertinent subject matter per the applicable Groups, with ‘Reimbursement and Federal Regulations‘ (which would include the annual Proposed and FINAL HH PPS Rules) as one of those Groups.