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CMS Proposes Over 4% Cut To Home Health Medicare Payments In 2025

CMS Proposes Over 4% Cut to Home Health Medicare Payments In 2025

The U.S. Centers for Medicare & Medicaid Services (CMS) unveiled its proposed FY 2025 home health payment rule in the month of June, suggesting significant cuts ahead for providers. In an effort to achieve budget neutrality under the Patient-Driven Groupings Model (PDGM), CMS is proposing a permanent prospective adjustment of -4.067% to the CY 2025 home health payment rate, following reductions of 3.925% for CY 2023 and 2.890% for CY 2024.

According to CMS, these adjustments aim to reconcile expected and actual spending changes post the PDGM’s CY 2020 implementation, which shifted to a 30-day payment model.

Despite a proposed 2.5% payment update for CY 2025, CMS estimates an overall 1.7% decrease in Medicare payments to home health agencies, amounting to approximately $280 million less than 2024 levels, due to additional PDGM rebalancing and fixed dollar losses.

Stacey Smith of AccentCare criticized CMS’s approach as draconian, warning of adverse impacts on patient care and advocating for Congressional intervention. Joanne Cunningham from the Partnership for Quality Home Healthcare echoed concerns, emphasizing the strain on providers amidst rising costs and staffing shortages.

CMS’s proposed rule also includes recalibrations to PDGM case-mix weights, updates to the Low-Utilization Payment Adjustment (LUPA) system, and revisions to the home health wage index, among other regulatory adjustments.

The nonprofit association LeadingAge highlighted mounting staffing pressures in home health care, attributing them to payment cuts and regulatory decisions that could hinder access to care for older adults and families.

These developments underscore ongoing challenges faced by home health providers in meeting the needs of an aging population amidst regulatory uncertainty and financial constraints.