Author: Maxwell Healthcare Associates
On November 1, 2023, the Centers for Medicare & Medicaid Services (CMS) made a significant announcement, releasing the Calendar Year (CY) 2024 Home Health Prospective Payment System Rate Update and Home Infusion Therapy Services Payment Update Final Rule. This long-anticipated rule outlines key policies that will directly impact the Medicare home health benefit in CY 2024, affecting both payment structures and quality-related programs. These changes will come into effect on January 1, 2024. For provider clarity and assistance, Maxwell Healthcare Associates (MHA) is here to dispense valuable analysis and recommendations. We'll break down the key takeaways from this latest ruling and explore what it means for providers success in the post-acute healthcare landscape.
Key Takeaways from the CY24 Home Health Final Rule:
- Budget Neutrality, Permanent Adjustments, and Temporary Adjustments:
In alignment with the Patient-Driven Groupings Model (PDGM), the Centers for Medicare & Medicaid Services (CMS) have set their sights on achieving budget neutrality as they transition to the new home health payment model. While CMS recognized the necessity of implementing temporary adjustments totaling approximately $3.5 million for the years 2020 through 2022, it is worth noting that these adjustments were absent from the Final Rule. This absence underscores CMS's intention to address these adjustments in future rulings. Furthermore, it is important to recognize that CMS's decision to refrain from fully implementing permanent adjustments in CY 2024 is indicative of their acknowledgment that the total funds subject to future temporary adjustments will grow, underscoring the continuous changes and adaptations within the Medicare home health payment system to ensure budget neutrality.
- Payment Adjustments and Mitigations:
The CY 2024 Final Rule brings forth significant reductions in home health payments. To mitigate the impact of the proposed -5.65 percent permanent adjustment to the 30-day payment rate, CMS has implemented measures that are expected to yield an overall increase of approximately +0.8 percent for home health providers in CY 2024. However, it is essential to note that CMS is still proceeding with a -2.89 percent reduction, which raises concerns about potential future payment cuts.
- Routine Annual Payment Update:
The Final Rule ushers in a notable improvement with an annual payment update of 3.0 percent, which is a positive deviation from the Proposed Rule's modest +0.3 percent update. Nevertheless, this favorable adjustment is counterbalanced by the influence of the CY 2024 permanent adjustment, which exerts an impact on payment rates.
- Impact Analysis:
The collective impact of payment adjustments within the home health Prospective Payment System for CY 2024 is expected to yield a net increase of approximately $140 million, constituting a positive shift of +0.8 percent. This estimation considers the payment update percentage, the permanent behavior adjustment, and the updated outlier thresholds. As a result, the 30-day payment amount for CY 2024 is set to rise to $2,038.13 under the provisions of the Final Rule.
- Case Mix Weights, LUPAs, and Outliers:
CMS has solidified its plans to recalibrate the case-mix weights and revise the Low Utilization Payment Adjustment (LUPA) thresholds for the Patient-Driven Groupings Model (PDGM) in CY 2024, utilizing data from CY 2022. This recalibration aims to fine-tune the payment system for home health services. Additionally, a fixed-dollar loss ratio (FDL) of 0.27 will be introduced for outlier payments, ensuring adherence to legal requirements while accommodating the evolving landscape of home health payment models.
- Wage Index:
In CY 2024, CMS is set to refresh the wage index, with the updates relying on the FY 2020 hospital cost report data. This move aims to maintain accuracy and relevancy in the calculation of wage-related adjustments within the home health payment system. Furthermore, CMS has decided to retain the 5 percent cap on declines in the wage index value from one year to the next, ensuring stability and predictability in this aspect for CY 2024 and the foreseeable future.
- Rebasing of Home Health Market Basket:
CMS has moved forward with a proposed update to the home health market basket index, signifying a shift toward more current data for payment rate adjustments. This update involves a transition from a 2016 base year to a 2021 base year for the market basket cost weights, incorporating information gleaned from Medicare cost reports submitted by freestanding home health providers. Notably, this transition leads to a reduced "Labor Share" percentage of 74.9 percent, with consequential effects on providers, particularly those in high-wage areas, who may experience specific impacts on their reimbursement rates.
- Home Health Value-Based Purchasing (HHVBP):
The policies introduced in CY 2022 for the HHVBP program, including measure removal factors, measure set changes, and appeals process amendments, are being finalized for CY 2024.
- Quality Reporting Program (QRP):
CMS has finalized policies related to the QRP for CY 2024, encompassing the codification of the previously finalized 90 percent Outcome and Assessment Information Set (OASIS) data completion threshold, public reporting of measures, and measure removals.
- Aide Services:
In the initial Proposed Rule, CMS actively solicited input regarding access to home health aide services for beneficiaries who are recipients of care under the home health benefit. The Final Rule now incorporates a thorough discussion of the feedback received during this phase, underscoring the importance of stakeholder perspectives in shaping future policy initiatives aimed at improving coordination within the context of the home health benefit. This signifies a commitment to ensuring that beneficiary needs and service access remain central considerations in the development of home health policies.
The CY 2024 Final Rule introduces a series of impactful policies and changes that will shape the landscape of the post-acute industry in the coming years. These provisions aim to strike a balance between budgetary considerations and the provision of quality care. Stakeholders are encouraged to engage with CMS to ensure that these evolving regulations best serve the needs of Medicare beneficiaries and providers. As the healthcare landscape continues to evolve, staying informed and actively participating in the regulatory process will be key to navigating these changes effectively. In this dynamic environment, it's crucial for home health agencies to adopt automation where possible, centralize opportunities for efficiency, and leverage the necessary tools to provide the best care to patients while optimizing costs. Patient outcomes, reductions in hospitalizations, ER visits, and overall improved care must be the focus. Despite the challenges posed by rate reductions that fall short of cost-of-living increases, organizations must maximize productivity and outcomes per patient, eliminate Agency Impacted LUPAs, enhance payer profitability, and deliver the highest standard of care to each patient.
In this ever-evolving healthcare landscape, staying informed and adapting to regulatory changes is crucial. As we navigate these challenges, post-acute agencies can benefit from the expertise and support of professionals like Maxwell Healthcare Associates. With a deep understanding of all aspects of the industry, MHA remains the leading partner for extensive strategic assistance and tech-enabled intervention.
Together, we continue to provide high-quality care and improve patient outcomes in the post-acute industry. With strategic initiatives from leading experts across all avenues of post-acute care, we stand with you along the way to unrivaled success. To learn more about how to adapt and succeed in this changing environment, visit www.maxwellhca.com or contact us at [email protected].