June 26, 2024

Home Health Leaders: More Home Health Cuts in 2025 Further Undermine Patient Access to Care

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For the third consecutive year, CMS has proposed cuts that threaten the stability of the Medicare home health program

Congressional action is critical this year to stop mounting cuts to home health

WASHINGTON – The Partnership for Quality Home Healthcare today warned that the permanent -4.067 percent payment cut to home health services proposed by the Centers for Medicare & Medicaid Services (CMS) will further undermine the delivery of high-quality home healthcare services to millions of older Americans. Despite several years of significant Medicare home health payment cuts and reliable data demonstrating a troubling decline in the number of home health patients and patient visits, CMS has again proposed additional permanent cuts to home health in 2025.

“For the third consecutive year, CMS has proposed cuts that make it significantly harder for home health providers to meet the care demands for an increasingly complex and aging patient population,” said Joanne Cunningham, CEO of the Partnership. “The status quo of continuous cuts is unsustainable: Medicare’s continued application of permanent cuts to home health further undermines a community that is facing historic labor costs and workforce shortages. We fear that CMS’s proposed actions for 2025 will have unintended consequences on older Americans who want to receive care at home.”

The Home Health Prospective Payment System (“HHPPS”) Proposed Rule for Calendar Year (CY) 2025 includes the full current remaining permanent adjustment of -4.067 percent to the CY 2025 home health base payment rate. The overall economic impact related to the changes in payments under the HH PPS for CY 2025 is estimated to be -$280 million (-1.7 percent).

Since adopting a new payment model for the Medicare Home Health Program, annual cuts to home health have diminished the provider community’s ability to maintain an adequate workforce to meet patient need, transfer patients home following hospitalization, and ensure home health services are accessible to Medicare beneficiaries across the country. To summarize the impact of Medicare’s home health cuts to date:

  • Starting in 2020, CMS’s cuts are producing an estimated total cut of $20 billion from Medicare home health payments through 2029.
  • These deep and destabilizing cuts have already resulted in agency closures, service area reductions, and a reduction in home health services.
  • Patient access to home health is already declining, with 500,000 fewer patients receiving care through the Medicare home health program this year compared to 2019—despite increasing demand for care.
  • The costs to hire and deploy clinicians to deliver care in the home are increasing (outpacing CMS’s market basket updates), as are related costs such as fuel and medical supplies.
  • Home health agencies struggle to recruit, retain, and sustain a steady workforce to meet patient demand, as healthcare workers are in short supply.

In a February 2024 letter to CMS, the Partnership and the National Association for Home Care & Hospice wrote, “Our members continue to report closures, declining capacity, and immense challenges as they struggle to hire nurses and address other workforce constraints… In addition, while inflation has cooled somewhat from its peak, costs remain high, and CMS’ annual payment updates have not kept pace with inflation… The financial pressures created by the combination of these factors make it extremely challenging to provide high-quality services and support continued access in broader services areas, including rural locations.”

CMS has again used the market basket increase (+2.5%) to mask the impact of the permanent reimbursement rate cut (-4.067%), an approach that is unsustainable and inconsistent with the purpose of an update to account for increases in the costs of care.

In addition to the permanent payment cut, CMS also calculated temporary adjustments of $4.55 billion to be recouped in future years. CMS recognizes in the new proposed rule that “implementing both the permanent and temporary adjustments in the same year may adversely affect HHAs.”

“We are very disappointed that CMS did not use its authority to suspend further reductions to home health payments in CY 2025, despite our repeated requests and data demonstrating decreased access to home health services,” added Cunningham. “The role of Congress in alleviating the burden of these cuts is now increasingly important, and we will be calling on our champions in Congress to finish the job on legislation to block these harmful cuts this year.”

A bipartisan group of lawmakers has introduced legislation to block further cuts to the Medicare home health benefit. The Preserving Access to Home Health Act (S. 2137/H.R. 5159) – introduced by Senators Debbie Stabenow (D-MI) and Susan Collins (R-ME) and Representatives Terri Sewell (D-AL) and Adrian Smith (R-NE) – prevents CMS from implementing cuts to the Medicare Home Health Program in 2025 and in future years.

To read more on recent Medicare home health cuts, CLICK HERE.