Home Health Leaders Warn Proposed Medicare Home Health Payment Rule Cuts for 2024 will Further Restrict Patient Access

Washington, D.C. –– The Partnership for Quality Home Healthcare is deeply concerned with the additional 5.653% payment cut to home healthcare services included in the Centers for Medicare & Medicaid Services’ (CMS) Home Health Prospective Payment System (“HHPPS”) Proposed Rule for Calendar Year (CY) 2024, which will 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 evidence demonstrating reduced access to home health services as a result – CMS has proposed further cuts in 2024 and beyond. CMS estimates the overall impact of the rule to be a $375 million (-2.2 percent) decrease in estimated payments for home health for CY 2024.

“The Partnership has repeatedly expressed concerns with CMS’ actions aimed at cutting Medicare home health reimbursement, primarily because of the serious impacts on access to the home-based care that patients and families overwhelmingly prefer,” said Joanne Cunningham, CEO of the Partnership. “The home health provider community is gravely concerned that CMS’s proposed actions for 2024 will only continue to degrade beneficiary access to home healthcare services.”

According to the Partnership, CMS continues to rely on a deeply flawed methodology that inappropriately produces devastating cuts to Medicare home health. CMS reduced the standard payment amount for a 30-day home health episode from $2,031.64 in 2022 to $2,010.69 in 2023, and now CMS is proposing a further reduction to $1,974.38 for 2024. Overall, the Partnership estimates cuts will total more than $18 billion over the next decade at a time when home health providers have faced rising costs and significant challenges hiring the skilled nurses, therapists, and other caregivers necessary for patient care. Compounding this crisis, CMS’ own data shows that recent annual updates to Medicare’s payment rates for 2021 and 2022 have significantly underestimated inflation, including labor costs, by more than 5 percent resulting in significant underfunding of the resources necessary to provide patient care.

For 2023, CMS acknowledged that a proposed 7.85% cut would create “hardship” for providers, so the agency opted to apply only half of the reduction – 3.925% – in 2023. Even with half of the expected cut implemented this year, home health leaders have seen an increasing rate of referral rejections by agencies that simply do not have the capacity to accept new patients. An additional 5.653% payment cut as proposed for 2024 would exacerbate these challenges.

The Partnership is once again deeply disappointed that Medicare’s proposed rule does not reflect sound policy or the detailed technical recommendations made by the home health community to ensure fair and accurate payments that support high quality care. Instead, it appears CMS has maintained its previous flawed methodology for determining payment adjustments, resulting in the proposed total 9.36% permanent payment cut (including a new 5.653% in addition to cuts already in place in 2023).

In addition to the permanent payment cut, CMS also calculates temporary adjustments of $3,439,284,729 to be recouped in future years. CMS itself acknowledges that the magnitude of both the temporary and permanent adjustment would result in a “significant reduction of the payment rate.”

“CMS’s market basket projections are not keeping up with the real-world costs to home healthcare providers, and home health agencies cannot absorb compounding cuts in this environment,” said Cunningham. “This latest round of proposed cuts will further exacerbate an already fragile economic environment in the home health sector.”

The Partnership will continue to review the HHPPS Proposed Rule and provide formal comments to CMS within the comment period.

“While we will continue to analyze the impacts of the Proposed Rule, it is disappointing that the agency appears to have again disregarded the thoughtful and data-driven technical and policy recommendations the provider community has discussed with CMS,” added Cunningham.

On June 22, Senators Debbie Stabenow (D-MI) and Susan Collins (R-ME) introduced the Preserving Access to Home Health Act of 2023 to safeguard access to essential home-based, clinically advanced healthcare services by preventing CMS from implementing the permanent cuts of negative 9.36%, as well as the additional $3.44 Billion in temporary cuts to the Medicare Home Health Program.

To read the letter to CMS on the market basket projections, click here.

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