On Wednesday, November 1, the Center for Medicare & Medicaid Services (CMS) released its Home Health Prospective Payment System Rate Update final rule for CY 2024 (the Final Rule). The Rule estimates that the aggregate increase to Medicare home health payments for 2024 will be 0.8 percent, or $140 million. This 0.8 percent increase results from the combined effects of three forecasted rate changes: (1) a 3.0 percent increase to home health payments, (2) a 2.6 percent decrease based on the permanent behavior assumption adjustment, and (3) a 0.4 percent increase resulting from an update to the fixed-dollar loss ratio, which is used to determine outlier payments. The 0.8 percent increase is a departure from the Proposed Rule, which estimated a cut in payments of up to 3 percent.

The Final Rule also includes a permanent payment adjustment of -2.89 percent, just half of the -5.1 percent projected in the Proposed Rule. While CMS did reduce this adjustment in response to concerns that the adjustment would overburden home health agencies, the reduction still represents a significant decrease in payments on top of the -3.925 percent adjustment made in 2023.

Other changes contained in the final rule include:

• Rebasing and revising the market basket used to update home health payments
• Updating and implementing the revised labor-related share
• Codifying requirements for home health patients needing negative pressure wound therapy using a disposable device
• Recalibrating case-mix weight and LUPA threshold using updated utilization data

We will continue to monitor changes to home health payments as these updated estimates take effect.