The Feds Just Proposed Massive Cuts in Home Health Nursing Payments. The Reaction Was Swift.

Gayle Morris, MSN
Updated July 17, 2023
    Permanent changes to a proposed CMS rule may close some home health agencies. The Federal Register offers the option to comment on the decision.
    Home health nurse assisting elderly patientCredit: Getty Images
    • A new proposed rule from the CMS would dramatically cut home healthcare reimbursement.
    • A lawsuit was filed within days by the NAHC, claiming the rule violates the Bipartisan Budget Act of 2018.
    • Healthcare professionals and others can comment on the proposed rule until August 29, 2023.

    On June 30, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that updated payment rates for home health agencies. The rule proposes permanent and sweeping changes to the payment system that CMS claims would improve patient care and protect Medicare’s sustainability.

    The proposal for calendar year 2024 includes a reduction of 5.1% in payments to agencies. The assumption is that behavioral adjustments in billing practices would increase payments for an estimated overall reduction of 2.2% or $375 million compared to calendar year 2023.

    Industry groups believe this could result in reduced access to home healthcare services by Medicare beneficiaries. In some rural areas, the home health nurse CMS cuts may force agencies out of business, according to the National Association for Home Care & Hospice (NAHC) lawsuit. This will place a real strain on rural communities where nearly one-third of small hospitals in rural areas are at risk of closing.

    Just three business days after the proposals’ release, the NAHC filed a lawsuit to strike down and vacate the proposals known as the Home Health Prospective Payment System (HHPPS) for 2023 and stop the 2024 payments from taking effect.

    In its complaint, NAHC wrote that CMS’ approach “unlawfully rebases home health payment rates to reduce overall expenditures” and “the Secretary has unlawfully slashed the payments provided for home health services.”

    “We have done everything possible to get Medicare to understand the disastrous consequences of its actions. We have presented hard facts, deep legal analyses, and extensive data to Medicare that demonstrate the errors in its policies to no avail,” said NAHC President William Dombi in a press release. “As a last resort, we have filed this lawsuit to protect Medicare beneficiaries and the home health agencies that care for them.”

    The basis of the argument dates back to the Bipartisan Budget Act of 2018, which in part eliminated certain thresholds that CMS used to make payments. This was the beginning of the movement toward a prospective payment system designed to overhaul billing without changing Medicare payments.

    The Bipartisan Budget Act of 2018 also called for a budget-neutral process to ensure that as the new payment system was implemented, there would not be an increase or decrease in the total amount of Medicare payments.

    Included in the HHPPS proposals for 2024 is a clause for a permanent behavior adjustment. This would decrease payments by $870 million in 2024. CMS hopes these decreases will offset payment increases the agency believes will result from assumed behavior changes at home health nurse agencies when billing for services.

    NAHC opposed assumption-based adjustments when they were first proposed in 2019, which Dombi made clear in a statement to Home Health Care News.

    “The Bipartisan Budget Act of 2018 requires that the home health payment model reform be budget neutral,” Dombi said. “While it permits behavioral adjustment to payment rates, NAHC believes that assumption-based rate calculation should not occur because of the high risks of error and the creation of an incentive to change behavior solely to maintain Medicare revenues. Instead, NAHC supports adjustments only after actual behavioral changes have occurred.”

    The Real-World Impact

    The Medicare spending cuts included in the 2023 HHPPS was a net 0.7% increase for home health agencies after estimated behavioral adjustments offset the 3.925% spending cut.

    However, the 2024 budget is not within a 1% increase or decrease but is estimated to result in a 2.2% loss of income from home health nurse CMS cuts.

    “If the Secretary’s unlawful actions are not corrected, the final rule will leave numerous Medicare beneficiaries with limited or no access to vital home health services, directly contrary to Congress’s intent,” NAHC wrote in its civil action. “Instead of reforming Medicare reimbursement rates to be more patient-centric and less therapy-centric, as Congress directed, the Secretary’s final rule will disrupt the market, penalize home health agencies that relied on Congress’s statutory reforms, and prevent beneficiaries from accessing the essential home health services they need.”

    The Road Ahead and What Nurses Can Do

    It is expected these budget cuts will be felt by many Medicare beneficiaries who receive home health nurse care. Nurses and other healthcare providers interested in engaging in the process can find a full copy of the proposed rate update at the National Archives Federal Register, where they can submit a formal comment.

    The deadline for commentary is August 29, after which the proposed rule moves to the next step in the regulatory process. The CMS receives the authority to issue regulations from Congress, but agencies are not allowed to go beyond the authority given to them.

    The public comment period can be 30 or 60 days, but the agency can extend or reopen the common period if it’s not satisfied with the number of quality comments received.

    Regulations do not allow CMS to base its final decision on the number of comments in support of or in opposition to the proposed rule. If the agency receives convincing data, policy arguments, questions, or criticisms, it can choose to terminate the rule or amend it.

    The law also allows individuals and other entities like the NAHC to claim in court that the rule could damage or adversely affect individuals. If the court vacates any part of the HHPPS for calendar year 2024, the rule will be sent back to the agency which must correct the deficiencies and may be instructed to reopen another comment period before finalizing the proposed rule.

    It is crucial that nurses and other healthcare providers submit their comments through the Federal Register while the court considers the lawsuit brought by NAHC. The court will consider the extent to which the proposed rule by CMS goes beyond the limits set by the Bipartisan Budget Act of 2018.

    However, if this action is not successful in mandating a change to the ruling, the CMS must consider the comments received by August 29.