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Home health trade group suing CMS, HHS over payment cuts

Written on Jul 14, 2023

A trade group that represents home health and hospice providers is suing the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) over cuts to Medicare payment rates to home health agencies that the organization argues will have “disastrous consequences” for care access. 

The National Association for Home Care and Hospice is challenging a 3.9% pay cut for 2023 and a proposed 5.7% rate cut for next year. The adjustments come after Congress directed the CMS to change the home health payment methodology. 

The NAHC argued regulators used “an illogical and invalid methodology” to analyze home health spending, resulting in “slashed” payments for home health services. The lawsuit, filed in the U.S. District Court for the District of Columbia, is asking to reverse the 2023 rate adjustments withhold the 2024 rule until changes are made.  

In 2018, Congress directed regulators to change how Medicare pays for home health services, shifting away from reimbursing for the number of therapy sessions and focusing instead on the complexity of care provided. Regulators also calculated a new 30-day episode of care down from a 60-day version. 

The Patient-Driven Groupings Model went into effect in 2020, but the new payment system was intended to be budget-neutral and result in neither a net increase nor decrease in total Medicare payments. Regulators had to update payments based on how they thought home health agencies would change their practices going forward.  

The CMS on July 7 released a proposed rule on reimbursement for home health in 2024, which would pay providers $375 million less than they received in 2023. The agency said it determined Medicare paid more under the new model, and the adjustment that went into effect this year was half of what was estimated at the time. 

The NAHC alleges that the regulators’ final rule violates Congress’ orders, saying they aren’t measuring changes in behavior, that the rule is actually reducing home health expenditure and that the final rule is still tying payments to the amount of therapy provided. 

Industry groups blasted the proposal, saying the cuts will hurt quality and access to care in an already unstable financial environment.  

“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,” William Dombi, president of the NAHC, said in a statement. “As a last resort, we have filed this lawsuit to protect Medicare beneficiaries and the home health agencies that care for them.” 

A CMS spokesperson said the agency doesn’t comment on litigation matters. The proposed payment rule for 2024 is set to publish the week of July 10, and the CMS will accept comments though the end of August. 

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