CMS Finalizes Home Health Care Increase in 2025: CLA

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule updating home health agency (HHA) payment rates and policies for the Home Health Prospective Payment System (PPS) for calendar year (CY) 2025. CMS estimates a 2.7% increase, but when combined with behavioral offsets and other payment changes in the rule, this update represents an increase of 0.5% (approximately $85 million) compared to 2024.

The final rule also includes changes to the Home Health Care Quality Reporting Program (HHQRP) and the HH Value-Based Purchasing Program (HHVBP) for 2025 and beyond.

Continue reading for more information or download the final rule at: Federal Register.

Market basket and payment updates

CMS has finalized a 2.2% increase in home health payment rates in 2025. This is the final determined market basket update of 2.7% minus the required productivity adjustment of 0.5%.

Additionally, the payment update includes a 1.8% reduction in the nationally standardized 30-day payment rate to reflect the full permanent behavior adjustment. This adjustment takes into account the differences between actual and anticipated behavior changes resulting from CMS’ implementation of the Patient-Driven Group Model (PDGM). All payment renewals add up to an increase of 0.5% compared to 2024.

Regarding behavioral offsets, CMS has finalized a methodology to “meet legal requirements, reduce the need for large permanent adjustments in the future, and delay the accrual of one-time payment adjustment amounts.” Note: CMS has already completed two previous cuts that account for half of the required permanent adjustments. In 2023 it will be 3.925% and in 2024 it will be 2.890%. The final 2025 percentage is based on the final 2023 bill. In response to concerns expressed in comments, CMS will only finalize half of the adjustment, or 1.975% in 2025.

CMS updates the PDGM case mix weights annually. For CY 2025, the final budget neutrality factor for the case mix is ​​1.0039.

CMS finalized a fixed dollar loss rate of 0.35 through 2025 in determining outlier payments.

CMS has finalized the Occupational Therapy (OT) Low Utilization Payment Adjustment (LUPA) add-on. CMS is establishing a definitive OT-specific LUPA add-on element and discontinuing the past temporary practice of using the physical therapy (PT) LUPA add-on element as a surrogate. The CMS was completed using the same methodology used for the PT, skilled nursing, and speech pathology components. The OT LUPA add-on factor is fixed at 1.7238.

CMS will increase the individual payment for disposable negative pressure wound therapy to the 2024 payment amount of $270.09, updated from the June 2024 Consumer Price Index for all urban consumers, less the productivity adjustment. The final decision was made to set it up. The rate for 2025 is set at $276.57.

CMS has finalized the payment fee for intravenous immunoglobulin products and services at $430.99. This is based on a 2024 payment rate of $420.48 adjusted with a confirmed home health payment update of 2.5%.

Wage index update

As with other 2025 Medicare payment mechanisms, CMS finalized the adoption of the Office of Management and Budget’s (OMB) July core-based statistical area (CBSA) delineations. Doing so affects the regional wage index.

The new OMB line has some major changes, including urban CBSAs becoming rural and rural CBSAs becoming urban. The series of tables in the final rule provides an overview of:

• Table 13 outlines changes specific to Connecticut’s request to replace eight counties with nine planning areas.
• Table 14 shows the 54 urban counties that are rural.
• Table 15 lists the 54 rural counties that are urban.
• Table 16 lists urban CBSAs that will change names or numbers.
• Table 17 shows the metropolitan areas covered by the different CBSAs.
• Table 18 lists the 73 counties that will switch to new or revised urban CBSAs.
• Table 19 is a list of counties that CMS has indicated must use transition codes (50XXX).

CMS did not finalize the phase-in of these changes. Rather, we believe that the current 5% annual cap on changes in the wage index is sufficient.

Finally, Table 20 contains information on North Dakota’s wage index, and CMS indicates that Delaware will have one rural county. This means that the local wage index value is 1.0385.

Home Health Care Quality Reporting Program

CMS is finalizing four new measures, changing one existing measure, and updating all payer data collection in OASIS. This measure relates to the administration’s ongoing focus on social determinants of health. The new measures include living conditions, food and utilities from reporting year 2027.

CMS has finalized amendments to transportation items for the Inpatient Psychiatric Facility Quality Reporting Program and the Inpatient Quality Reporting Program beginning in the CY 2027 program year.

CMS has finalized data collection changes to use start of care (SOC) points for non-Medicare/non-Medicaid patients. The SOC is the first assessment that can be submitted after January 1, 2025 for a phase-in period, or after July 1, 2025 for a mandatory period.

Home Health Value-Based Purchasing Model

CMS is integrating comments received in response to the RFI into a proposed rule regarding future performance measurement concepts for the HHVBP model. New measurement concepts include:

• family caregiver
• Injuries caused by falls (claim basis)
• Medicare spending per beneficiary
• Functional measures to complement the existing cross setting discharge function

CMS remains focused on integrating health equity concepts into the expanded HHVBP model. CMS is considering incorporating health equity adjustments such as SNF value-based purchasing in FY2027 and adding measures that more directly focus on specific disparities. Examples of these are underserved community measures based on within-provider differences in underserved community performance and based on the worst performing groups.

Home Care Conditions of Participation (CoP)

CMS has finalized a requirement for home health agencies to establish an acceptance policy for services. This will help address concerns regarding the initiation of home health services, variation in referrals, and the impact on future and current patients.

This policy requires agencies to consider the agency’s caseload and case mix (volume and complexity of patients currently being treated), anticipated needs of prospective patients, staffing levels, and staff skills and competencies. It is necessary to deal with it.

CMS intends this rule to supplement, not replace, the current acceptance policies that agencies have in place. CMS has indicated that this policy should be applied consistently regardless of payer, so that home health agencies should accept only patients who can reasonably be expected to meet the patient’s needs.

CMS also finalized requirements for home health agencies to publicly disclose accurate information regarding the services provided, any limitations associated with specialty services, and the duration or frequency of services. For this reason, home health agencies should set limits on staffing differences to provide more information to referral sources.

Respiratory disease reporting for nursing homes

CMS has finalized the replacement of respiratory reporting expiring on December 31, 2024 with new reporting requirements on January 1, 2025. CMS has finalized the continuation of weekly and electronic reporting by NHSN for coronavirus disease (COVID-19), influenza, and RSV. In standard format. The data required for this report are the facility’s census, resident vaccination status for a range of respiratory illnesses, confirmed resident cases of a range of respiratory illnesses, and hospitalizations for a range of respiratory illnesses. residents, etc.

how we can help

For more information about this final rule and how it affects home health agencies, please contact CLA. our Our medical team is on the front lines of ongoing healthcare provider regulatory, policy, and payment changes and can provide guidance to meet your specific needs.