On June 30, the Centers for Medicare and Medicaid Services (CMS) released the proposed rule for the Home Health Prospective Payment System for the 2024 calendar year. The proposed rule aims to permanently update the payment rate for home health based on the “impact of the implementation of the Patient-Driven Groupings Model (PDGM).” The PDGM demonstrates the difference between the assumed and actual behavior changes and their effects on the estimated aggregate expenditures.

CMS estimates that the discrepancy will result in a 2.2% decrease in Medicare payments to home health agencies in the calendar year 2024, resulting in a total of $375 million less in the aggregate compared to calendar year 2023. The proposed payment updates and policy changes for 2024 aim to ensure effective healthcare delivery, protection of patient interests and maintenance of the financial sustainability of the Medicare program.

As part of the proposal, CMS is soliciting comments on ensuring appropriate access to and the delivery of home health aide services under the home health benefit, and includes questions regarding difficulties in the recruitment and retention of home health aides, as well as solutions for wage issues. 

CMS is also proposing several provider enrollment regulatory changes to combat hospice fraud, waste, and abuse. The proposed hospice enrollment-related regulatory changes include expanding the home health agency 36-month rule for changes in ownership to hospices.  

The proposed rule also makes changes to the home health value-based purchasing program to update measures as well as update the model baseline year to 2023 for the 2025 performance year.

Healthcare providers are already pushing back on the proposed payment decrease, with one lawsuit filed this past week. We continue to monitor developments.