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Proposed Rule2024-14254

Medicare Program; Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS) Rate Update; HH Quality Reporting Program Requirements; HH Value-Based Purchasing Expanded Model Requirements; Home Intravenous Immune Globulin (IVIG) Items and Services Rate Update; and Other Medicare Policies

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Published

July 3, 2024

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This proposed rule would set forth routine updates to the Medicare home health payment rates; the payment rate for the disposable negative pressure wound therapy (dNPWT) devices; and the intravenous immune globulin (IVIG) items and services payment rate for CY 2025 in accordance with existing statutory and regulatory requirements. In addition, it proposes changes to the Home Health Quality Reporting Program (HH QRP) requirements and provides an update on potential approaches for integrating health equity in the Expanded Health Value Based Purchasing (HHVBP) Model. It also proposes a new standard for acceptance to service policy in the HH conditions of participation (CoPs) and includes requests for information (RFIs) soliciting input on permitting rehabilitative therapists to conduct the initial and comprehensive assessment and the factors that may influence the patient referral and intake processes. Lastly, it proposes updates to provider and supplier enrollment requirements and changes to the long-term care reporting requirements for acute respiratory illnesses.

Full Text

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[Federal Register Volume 89, Number 128 (Wednesday, July 3, 2024)]
[Proposed Rules]
[Pages 55312-55425]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-14254]

[[Page 55311]]

Vol. 89

Wednesday,

No. 128

July 3, 2024

Part II

Department of Health and Human Services

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Centers for Medicare and Medicaid Services

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42 CFR Parts 424, 483, and 484

Medicare Program; Calendar Year (CY) 2025 Home Health Prospective
Payment System (HH PPS) Rate Update; HH Quality Reporting Program
Requirements; HH Value-Based Purchasing Expanded Model Requirements;
Home Intravenous Immune Globulin (IVIG) Items and Services Rate Update;
and Other Medicare Policies; Proposed Rule

Federal Register / Vol. 89 , No. 128 / Wednesday, July 3, 2024 /
Proposed Rules

[[Page 55312]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 424, 483, and 484

[CMS-1803-P]
RIN 0938-AV28

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth routine updates to the
Medicare home health payment rates; the payment rate for the disposable
negative pressure wound therapy (dNPWT) devices; and the intravenous
immune globulin (IVIG) items and services payment rate for CY 2025 in
accordance with existing statutory and regulatory requirements. In
addition, it proposes changes to the Home Health Quality Reporting
Program (HH QRP) requirements and provides an update on potential
approaches for integrating health equity in the Expanded Health Value
Based Purchasing (HHVBP) Model. It also proposes a new standard for
acceptance to service policy in the HH conditions of participation
(CoPs) and includes requests for information (RFIs) soliciting input on
permitting rehabilitative therapists to conduct the initial and
comprehensive assessment and the factors that may influence the patient
referral and intake processes. Lastly, it proposes updates to provider
and supplier enrollment requirements and changes to the long-term care
reporting requirements for acute respiratory illnesses.

DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on August 26, 2024.

ADDRESSES: In commenting, please refer to file code CMS-1803-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Comments, including mass comment
submissions, must be submitted in one of the following three ways
(please choose only one of the ways listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1803-P, P.O. Box 8013, Baltimore, MD
21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1803-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Brian Slater, (410) 786-5229, for home
health and home IVIG payment inquiries.
For general information about the Home Health Prospective Payment
System (HH PPS), send your inquiry via email to
<a href="/cdn-cgi/l/email-protection#490126242c012c28253d21192625202a30092a243a6721213a672e263f">[email&#160;protected]</a>.
For information about the Home Health Quality Reporting Program (HH
QRP), send your inquiry via email to <a href="/cdn-cgi/l/email-protection#89c1c1d8dbd9f8fcecfafde0e6e7fac9eae4faa7e1e1faa7eee6ff">[email&#160;protected]</a>.
For more information about the expanded Home Health Value-Based
Purchasing Model, please visit the Expanded HHVBP Model web page at
<a href="https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model">https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model</a>.
Frank Whelan (410) 786-1302, for Medicare provider and supplier
enrollment inquiries.
Mary Rossi-Coajou at <a href="/cdn-cgi/l/email-protection#167b77646f38647965657f3b7579777c796356757b65387e7e6538717960">[email&#160;protected]</a> or Molly
Anderson at <a href="/cdn-cgi/l/email-protection#375a585b5b4e19565953524544585977545a44195f5f4419505841">[email&#160;protected]</a>, for more information about the
home health conditions of participation (HH CoPs).
Kim Roche (<a href="/cdn-cgi/l/email-protection#bcd7d5d192ced3dfd4d98dfcdfd1cf92d4d4cf92dbd3ca">[email&#160;protected]</a>), for more information about the
long-term care requirements for participation.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>. Follow the search instructions on that website to
view public comments.

Table of Contents

I. Executive Summary
A. Purpose and Legal Authority
B. Summary of the Provisions of This Proposed Rule
C. Summary of Costs, Transfers, and Benefits
II. Home Health Prospective Payment System
A. Overview of the Home Health Prospective Payment System
B. Monitoring the Effects of the Implementation of PDGM
C. Proposed CY 2025 Payment Adjustments Under the HH PPS
D. Proposed CY 2025 Home Health Low Utilization Payment
Adjustment (LUPA) Thresholds, Functional Impairment Levels,
Comorbidity Sub-Groups, Case-Mix Weights, and Reassignment of
Specific ICD-10-CM Codes Under the PDGM
III. Home Health Quality Reporting Program (HH QRP)
A. Background and Statutory Authority
B. Summary of the Provision of This Proposed Rule
C. Quality Measures Currently Adopted for the CY 2024 HH QRP
D. Proposal To Collect Four New Items as Standardized Patient
Assessment Data Elements and Modify One Item Collected as a
Standardized Patient Assessment Data Element Beginning With the CY
2027 HH QRP
E. Proposal To Update OASIS All-Payer Data Collection
F. Form, Manner, and Timing of Data Submission Under the HH QRP
G. HH QRP Quality Measure Concepts Under Consideration for
Future Years--Request for Information (RFI)
IV. The Expanded Home Health Value Based Purchasing (HHVBP) Model
A. Background
B. Request for Information on Future Performance Measure
Concepts for the Expanded HHVBP Model
C. Future Approaches to Health Equity in the Expanded HHVBP
Model
D. Social Risk Factors
E. Approaches to a Potential Health Equity Adjustment for the
Expanded HHVBP Model
F. Other Health Equity Measures
V. Medicare Home Intravenous Immune Globulin (IVIG) Items and
Services
A. General Background
B. Scope of Expanded IVIG Benefit
C. Home IVIG Administration Items and Services Payment
D. Home IVIG Items and Services Payment Rate

[[Page 55313]]

VI. Home Health CoP Changes and Long Term (LTC) Requirements for
Acute Respiratory Illness Reporting
A. Home Health CoP Changes
B. Long-term Care (LTC) Requirements for Acute Respiratory
Illness Reporting
VII. Provider Enrollment--Provisional Period of Enhanced Oversight
A. Background
B. Proposed Provisions--Provisional Period of Enhanced Oversight
(PPEO)
VIII. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. Information Collection Requirements (ICRs)
IX. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Detailed Economic Analysis
D. Regulatory Review Cost Estimation
E. Alternatives Considered
F. Accounting Statements and Tables
G. Regulatory Flexibility Act (RFA)
H. Unfunded Mandates Reform Act (UMRA)
I. Federalism
J. Conclusion
X. Response to Comments

I. Executive Summary

A. Purpose and Legal Authority

1. Home Health Prospective Payment System (HH PPS)
As required under section 1895(b) of the Social Security Act (the
Act), this proposed rule would update the CY 2025 payment rates for
home health agencies (HHAs) and the CY 2025 payment rate for the
disposable negative pressure wound therapy (dNPWT) device. In this
proposed rule, we include analysis on home health utilization, as well
as analysis determining the difference between assumed versus actual
behavior change on estimated aggregate expenditures for home health
payments as result of the change in the unit of payment to 30 days and
the implementation of the Patient Driven Groupings Model (PDGM) case-
mix adjustment methodology. This rule proposes a crosswalk for mapping
the Outcome and Assessment Information Set-D (OASIS-D) data elements to
the equivalent OASIS-E data elements for use in the methodology to
analyze the difference between assumed versus actual behavior change on
estimated aggregate expenditures and proposes a permanent prospective
behavior adjustment to the CY 2025 home health payment rate. In
addition, this rule proposes to recalibrate the PDGM case-mix weights
and to update the low-utilization payment adjustment (LUPA) thresholds,
functional impairment levels, and comorbidity adjustment subgroups
under section 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day
periods of care in CY 2025; proposes to adopt the most recent Office of
Management and Budget (OMB) Core-Based Statistical Area (CBSA)
delineations for the home health wage index; and proposes an
occupational therapy (OT) LUPA add-on factor and updates to the
physical therapy (PT), speech-language pathology (SLP), and skilled
nursing (SN) LUPA add-on factors. Additionally, this rule proposes to
update the CY 2025 fixed-dollar loss ratio (FDL) for outlier payments
(so that outlier payments as a percentage of estimated total payments
are projected not to exceed 2.5 percent, as required by section
1895(b)(5)(A) of the Act).
2. Home Health (HH) Quality Reporting Program (QRP)
In accordance with the statutory authority at section
1895(b)(3)(B)(v) of the Act, we are proposing updated policies. We are
proposing to add four new assessment items and to modify one assessment
item on the OASIS, an update to the removal of the suspension of OASIS
all-payer data collection, and we are seeking information on future HH
QRP quality measure (QM) concepts.
3. Expanded Home Health Value-Based Purchasing (HHVBP) Model
In accordance with the statutory authority at section 1115A of the
Act, we are doing the following for the expanded HHVBP Model: (1)
providing an update on potential approaches for integrating health
equity that are being considered; and (2) including a request for
information (RFI) related to future performance measure concepts.
4. Home Intravenous Immune Globulin (IVIG) Items and Services
In section V.D.1. of this proposed rule, we propose a rate update
for the CY 2025 IVIG items and services payment under the home
intravenous immune globulin (IVIG) benefit.
5. Home Health CoP Changes
In section VI. A. of this proposed rule, we are proposing to add a
new standard at Sec. 484.105(i) that would require HHAs to develop,
consistently apply, and maintain an acceptance to service policy,
including specified factors, that would govern the process for
accepting patients to service. We also propose that HHAs would be
required to make specified information about their services and service
limitations available to the public. Section VI.B. of this proposed
rule includes an RFI to obtain information from stakeholders on whether
CMS should shift its longstanding policy and permit rehabilitative
therapists to conduct the initial and comprehensive assessment for
cases that have both therapy and nursing services ordered as part of
the plan of care. In addition, we are seeking public comments on other
factors that influence the patient referral and intake processes.
6. Provider and Supplier Enrollment Requirements
In accordance with section 1866(j)(3)(A) of the Act, we are
proposing to revise our requirements in 42 CFR 424.527(a) regarding the
application of provisional periods of enhanced oversight (PPEO).
Section 1866(j)(3)(A) of the Act states that the Secretary shall
establish procedures to provide for a provisional period of between 30
days and 1 year during which new providers and suppliers--as the
Secretary determines appropriate, including categories of providers or
suppliers--will be subject to enhanced oversight. We are proposing to
expand the definition of ``new provider or supplier'' (solely for
purposes of applying a PPEO) to include providers and suppliers that
are reactivating their Medicare enrollment and billing privileges.
7. Long-Term Care (LTC) Requirements for Acute Respiratory Illness
Reporting
Sections 1819(d)(3) and 1919(d)(3) of the Act explicitly require
that LTC facilities develop and maintain an infection control program
that is designed, constructed, equipped, and maintained in a manner to
protect the health and safety of residents, personnel, and the general
public. In addition, sections 1819(d)(4)(B) and 1919(d)(4)(B) of the
Act explicitly authorize the Secretary to issue any regulations he
deems necessary to protect the health and safety of residents. As such,
we are proposing streamlined weekly data reporting requirements for
certain respiratory illnesses. We are also proposing additional,
related data elements that could be activated in the event of a future
acute respiratory illness public health emergency (PHE).

B. Summary of the Provisions of This Proposed Rule

1. Home Health Prospective Payment System (HH PPS)
In section II.B.1. of this proposed rule, we provide monitoring and
data analysis on PDGM utilization.
In section II.C.1 of this proposed rule, we propose a permanent
adjustment to the base payment rate under the HH PPS. Additionally, we
propose a

[[Page 55314]]

crosswalk for mapping the OASIS-D data elements to the equivalent
OASIS-E data elements for use in the methodology to analyze the
difference between assumed versus actual behavior change on estimated
aggregate expenditures.
In section II.D. of this proposed rule, we discuss a proposal to
recalibrate the CY 2025 home health LUPA thresholds, case-mix weights,
and co-morbidity subgroups. Additionally, we discuss providers'
suggestions regarding the reassignment of specific ICD-10-CM diagnosis
codes under the PDGM.
In section II.E. of this proposed rule, we propose to update the
home health wage index and adopt the new labor market delineations from
the July 21, 2023, OMB Bulletin No. 23-01 based on data collected from
the 2020 Decennial Census. This section includes the CY 2025 national,
standardized 30-day period payment rate update, the updated CY 2025
national per-visit payment amounts by the home health payment update
percentage, and the OT LUPA add-on factor and PT, SLP, and SN add-on
factor updates. The proposed home health payment update percentage for
CY 2025 is 2.5 percent. Additionally, this rule proposes the CY 2025
FDL ratio to ensure that aggregate outlier payments are projected not
to exceed 2.5 percent of the total aggregate payments, as required by
section 1895(b)(5)(A) of the Act.
In section II.F.4. of this proposed rule, we propose the CY 2025
payment rate update for dNPWT devices.
2. Home Health Quality Reporting Program (HH QRP)
In section III. of this proposed rule, we are proposing to collect
four new items as standardized patient assessment data elements in the
social determinants of health (SDOH) category and modify one item
collected as a standardized patient assessment data element in the SDOH
category beginning with the CY 2027 HH QRP. The four assessment items
proposed for collection are: one Living Situation item, two Food items,
and one Utilities item. We also propose modifying the current
Transportation item beginning with the CY 2027 HH QRP. We are also
proposing an update to the removal of the suspension of OASIS all-payer
data collection to change all-payer data collection to begin with the
start of care OASIS data collection timepoint instead of discharge
timepoint. Lastly, we seek input on future HH QRP measure concepts.
3. Expanded Home Health Value Based Purchasing (HHVBP) Model
In section IV. of this proposed rule, we include an RFI related to
future measure concepts for the expanded HHVBP Model. We are also
including an update to the RFI, Future Approaches to Health Equity in
the Expanded HHVBP Model, that was published in the CY 2023 HH PPS
final rule (87 FR 66874, November 4, 2022) and subsequently updated in
the CY 2024 HH PPS final rule (88 FR 77687, November 13, 2023).
4. Home Intravenous Immune Globulin (IVIG) Items and Services
In section V.D.1. of this proposed rule, we propose a rate update
for CY 2025 IVIG items and services payment under the home intravenous
immune globulin (IVIG) benefit.
5. Home Health CoP Changes
In section VI.A. of this proposed rule, we are proposing to add a
new standard at Sec. 484.105(d) that would require HHAs to develop,
implement, and maintain an acceptance to service policy that is applied
consistently to each prospective patient referred for home health care.
We also propose that the policy must address, at minimum, the following
criteria related to the HHA's capacity to provide patient care: the
anticipated needs of the referred prospective patient, the HHA's case
load and case mix, the HHA's staffing levels, and the skills and
competencies of the HHA staff. We also propose that HHAs would be
required to make specified information available to the public that is
reviewed at least annually. Section VI.B. of this proposed rule we
include an RFI to obtain information from stakeholders on whether CMS
should shift its longstanding policy and permit rehabilitative
therapists to conduct the initial and comprehensive assessment for
cases that have both therapy and nursing services ordered as part of
the plan of care. Specifically, we are seeking information regarding
the training and education of rehabilitative therapists that is
relevant to conducting the initial and comprehensive assessments and
any additional information on any patient health and safety benefits or
unintended consequences of expanding the category of clinicians that
can conduct the initial and comprehensive assessments. In addition, we
are seeking public comments on other factors that influence the patient
referral and intake processes.
6. Provider and Supplier Enrollment Requirements
Section 1866(j)(3)(A) of the Act states that the Secretary shall
establish procedures to provide for a provisional period of between 30
days and 1 year during which new providers and suppliers--as the
Secretary determines appropriate, including categories of providers or
suppliers--will be subject to enhanced oversight. We are proposing to
expand the definition of ``new provider or supplier'' (solely for
purposes of applying a PPEO) to include providers and suppliers that
are reactivating their Medicare enrollment and billing privileges.
7. Long-Term Care (LTC) Requirements for Acute Respiratory Illness
Reporting
The current LTC requirements for reporting COVID-19 related data
expire on December 31, 2024, except for reporting COVID-19 resident and
staff vaccination status. Given the utility of LTC facility data, we
propose to replace these requirements with streamlined continued data
reporting requirements for certain respiratory illnesses. We are also
proposing additional, related data elements that could be activated in
the event of a future acute respiratory illness PHE.

C. Summary of Costs, Transfers, and Benefits

BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP03JY24.000

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[GRAPHIC] [TIFF OMITTED] TP03JY24.001

BILLING CODE 4120-01-C

II. Home Health Prospective Payment System

A. Overview of the Home Health Prospective Payment System

1. Statutory Background
Section 1895(b)(1) of the Act requires the Secretary to establish a
Home Health Prospective Payment System (HH PPS) for all costs of home
health services paid under Medicare. Section 1895(b)(2) of the Act
requires that, in defining a prospective payment amount, the Secretary
will consider an appropriate unit of service and the number, type, and
duration of visits provided within that unit, potential changes in the
mix of services provided within that unit and their cost, and a general
system design that provides for continued access to quality services.
In accordance with the statute, as amended by the Balanced Budget Act
of 1997 (BBA) (Pub. L. 105-33), we issued a final rule which appeared
in the July 3, 2000, Federal Register (65 FR 41128) to implement the HH
PPS legislation.
Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L.
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v)
to the Act, requiring home health agencies (HHAs) to submit data for
purposes of measuring health care quality, and linking the quality data
submission to the annual applicable home health payment update
percentage increase. This data submission requirement is applicable for
CY 2007 and each subsequent year. If an HHA does not submit quality
data, the home health market basket percentage increase is reduced by 2
percentage points. In the November 9, 2006, Federal Register (71 FR
65935), we issued a final rule to implement the pay-for-reporting
requirement of the DRA, which was codified at Sec. 484.225(h) and (i)
in accordance with the statute. The pay-for-reporting requirement was
implemented on January 1, 2007.
Section 51001(a)(1)(B) of the Bipartisan Budget Act of 2018 (BBA of
2018) (Pub. L. 115-123) amended section 1895(b) of the Act to require a
change to the home health unit of payment to 30-day periods beginning
January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new
subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the
Secretary to calculate a standard prospective payment amount (or
amounts) for 30-day units of service furnished that end during the 12-
month period beginning January 1, 2020, in a budget neutral manner,
such that estimated aggregate expenditures under the HH PPS during CY
2020 are equal to the estimated aggregate expenditures that otherwise
would have been made under the HH PPS during CY 2020 in the absence of
the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of
the Act requires that the calculation of the standard prospective
payment amount (or amounts) for CY 2020 be made before the application
of the annual update to the standard prospective payment amount as
required by section 1895(b)(3)(B) of the Act.
Additionally, section 1895(b)(3)(A)(iv) of the Act requires that in
calculating the standard prospective payment amount (or amounts), the
Secretary must make assumptions about behavior changes that could occur
as a result of the implementation of the 30-day unit of service under
section 1895(b)(2)(B) of the Act and case-mix adjustment factors
established under section 1895(b)(4)(B) of the Act. Section
1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide
a description of the behavior assumptions made in notice and comment
rulemaking. CMS finalized these behavior assumptions in the CY 2019 HH
PPS final rule with comment period (83 FR 56461).
Section 51001(a)(2)(B) of the BBA of 2018 also added a new
subparagraph (D) to section 1895(b)(3) of the Act. Section
1895(b)(3)(D)(i) of the Act requires the Secretary annually to
determine the impact of differences between assumed behavior changes,
as described in section 1895(b)(3)(A)(iv) of the Act, and actual
behavior changes on estimated

[[Page 55317]]

aggregate expenditures under the HH PPS with respect to years beginning
with 2020 and ending with 2026. Section 1895(b)(3)(D)(ii) of the Act
requires the Secretary, at a time and in a manner determined
appropriate, through notice and comment rulemaking, to provide for one
or more permanent increases or decreases to the standard prospective
payment amount (or amounts) for applicable years, on a prospective
basis, to offset for such increases or decreases in estimated aggregate
expenditures, as determined under section 1895(b)(3)(D)(i) of the Act.
Additionally, section 1895(b)(3)(D)(iii) of the Act requires the
Secretary, at a time and in a manner determined appropriate, through
notice and comment rulemaking, to provide for one or more temporary
increases or decreases to the payment amount for a unit of home health
services for applicable years, on a prospective basis, to offset for
such increases or decreases in estimated aggregate expenditures, as
determined under section 1895(b)(3)(D)(i) of the Act. Such a temporary
increase or decrease shall apply only with respect to the year for
which such temporary increase or decrease is made, and the Secretary
shall not take into account such a temporary increase or decrease in
computing the payment amount for a unit of home health services for a
subsequent year. Finally, section 51001(a)(3) of the BBA of 2018 amends
section 1895(b)(4)(B) of the Act by adding a new clause (ii) to require
the Secretary to eliminate the use of therapy thresholds in the case-
mix system for CY 2020 and subsequent years.
Division FF, section 4136 of the Consolidated Appropriations Act,
2023 (CAA, 2023) (Pub. L. 117-328) amended section 1834(s)(3)(A) of the
Act to require that, beginning with 2024, the separate payment for
furnishing negative pressure wound therapy (NPWT) be for just the
device and not for nursing and therapy services. Payment for nursing
and therapy services are to be included as part of payments under the
HH PPS. The separate payment for 2024 was required to be equal to the
supply price used to determine the relative value for the service under
the Medicare Physician Fee Schedule (as of January 1, 2022) for the
applicable disposable device updated by the percentage increase in the
Consumer Price Index for All Urban Consumers (CPI-U). The separate
payment for 2025 and each subsequent year is to be the payment amount
for the previous year updated by the percentage increase in the CPI-U
(United States city average) for the 12-month period ending in June of
the previous year reduced by the productivity adjustment as described
in section 1886(b)(3)(B)(xi)(II) of the Act for such year. The CAA,
2023 also added section 1834(s)(4) of the Act to require that beginning
with 2024, as part of submitting claims for the separate payment, the
Secretary shall accept and process claims submitted using the type of
bill that is most commonly used by home health agencies to bill
services under a home health plan of care.
2. Current System for Payment of Home Health Services
For home health periods of care beginning on or after January 1,
2020, Medicare makes payment under the HH PPS on the basis of a
national, standardized 30-day period payment rate that is adjusted for
case-mix and area wage differences in accordance with section
51001(a)(1)(B) of the BBA of 2018. The national, standardized 30-day
period payment rate includes payment for the six home health
disciplines (skilled nursing, home health aide, physical therapy,
speech-language pathology, occupational therapy, and medical social
services). Payment for non-routine supplies (NRS) is also part of the
national, standardized 30-day period rate. Durable medical equipment
(DME) provided as a home health service, as defined in section 1861(m)
of the Act, is paid the fee schedule amount or is paid through the
competitive bidding program and such payment is not included in the
national, standardized 30-day period payment amount. Additionally, the
30-day period payment rate does not include payment for certain
injectable osteoporosis drugs and disposable negative pressure wound
therapy (dNPWT) devices, but such drugs and devices must be billed by
the HHA while a patient is under a home health plan of care, as the law
requires consolidated billing of osteoporosis drugs and dNPWT devices.
To better align payment with patient care needs and to better
ensure that clinically complex and ill beneficiaries have adequate
access to home health care, in the CY 2019 HH PPS final rule with
comment period (83 FR 56406), we finalized case-mix methodology
refinements through the Patient-Driven Groupings Model (PDGM) for home
health periods of care beginning on or after January 1, 2020. The PDGM
did not change eligibility or coverage criteria for Medicare home
health services, and as long as the individual meets the criteria for
home health services as described at 42 CFR 409.42, the individual can
receive Medicare home health services, including therapy services. For
more information about the role of therapy services under the PDGM, we
refer readers to the Medicare Learning Network (MLN) Matters article
SE20005 available at <a href="https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005">https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005</a>. To adjust for
case-mix for 30-day periods of care beginning on and after January 1,
2020, the HH PPS uses a 432-category case-mix classification system to
assign patients to a home health resource group (HHRG) using patient
characteristics and other clinical information from Medicare claims and
the Outcome and Assessment Information Set (OASIS) assessment
instrument. These 432 HHRGs represent the different payment groups
based on five main case-mix categories under the PDGM, as shown in
figure 1. Each HHRG has an associated case-mix weight that is used in
calculating the payment for a 30-day period of care. For periods of
care with visits less than the low-utilization payment adjustment
(LUPA) threshold for the HHRG, Medicare pays national per-visit rates
based on the discipline(s) providing the services. Medicare also
adjusts the national standardized 30-day period payment rate for
certain intervening events that are subject to a partial payment
adjustment. For certain cases that exceed a specific cost threshold, an
outlier adjustment may also be available.
Under this case-mix methodology, case-mix weights are generated for
each of the different PDGM payment groups by regressing resource use
for each of the five categories (admission source, timing, clinical
grouping, functional impairment level, and comorbidity adjustment)
using a fixed effects model. A detailed description of each of the
case-mix variables under the PDGM have been described previously, and
we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through
70305).
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B. Monitoring the Effects of the Implementation of PDGM

1. Routine PDGM Monitoring
CMS routinely analyzes Medicare home health benefit utilization,
including but not limited to, overall total 30-day periods of care and
average periods of care per HHA user; distribution of the type of
visits in a 30-day period of care; the percentage of periods that
receive the LUPA; estimated costs; the percentage of 30-day periods of
care by clinical group, comorbidity adjustment, admission source,
timing, and functional impairment level; and the proportion of 30-day
periods of care with and without any therapy visits, nursing visits,
and/or aide/social worker visits. For the monitoring included in this
proposed rule, we examine simulated data for CYs 2018 and 2019 and
actual data for CYs 2020, 2021, 2022, and 2023 for 30-day periods of
care. For CYs 2018 and 2019, because the HH PPS accounted for care in
60-dayepisodes, before the transition to 30-day periods of care
beginning in 2020, this actual data was simulated to reflect 30-day
periods of care. We refer readers to the CY 2022 HH PPS final rule (86
FR 35881) for further discussion about simulated data for CYs 2018 and
2019. In this proposed rule, we are also including monitoring of home
health visits using telecommunications technology and remote patient
monitoring, which we began collecting on claims submitted voluntarily
beginning January 1, 2023, and which was required beginning July 1,
2023.
a. Utilization
Table 2 shows the overall utilization of home health. The data
indicate the average number of 30-day periods of care per unique HHA
user is similar per 30-day periods of care between CY 2022 and CY 2023.
The data also show a decreasing trend in the overall number of 30-day
periods of care between CY 2018 and CY 2023. Table 2 shows utilization
of visits per 30-day period of care by home health discipline over
time. Table 2 shows the proportion of 30-day periods of care that are
LUPAs and the average number of visits per discipline of those LUPA 30-
day periods of care over time. The data show a

[[Page 55319]]

decreasing trend in the average number of visits per 30-day period and
average number of visits per discipline for LUPA 30-day periods of care
between CY 2018 and CY 2023.
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b. Analysis of 2022 Cost Report Data for 30-Day Periods of Care
In the CY 2024 HH PPS proposed rule (88 FR 43664), we provided a
summary of analysis on FY 2021 HHA cost report data, as this was the
most recent and complete cost report data at the time of rulemaking,
and CY 2022 claims to estimate 30-day period of care costs. Our
analysis showed that the CY 2022 national, standardized 30-day period
payment rate of $2,031.64 was approximately 45 percent more than the
estimated CY 2022 estimated 30-day period cost of $1,402.27.
Using this same process in this proposed rule to compare home
health payment to costs, we examined 2022 HHA Medicare cost reports, as
this is the most recent and complete cost report data at the time of
rulemaking, and CY 2023 home health claims, to estimate 30-day period
of care costs. We excluded LUPAs and visits with partial episode
payments (PEPs) when calculating the average number of visits. The 2022
average NRS costs per visit is $4.38. To update the estimated 30-day
period of care costs, we begin with the 2022 average costs per visit
with NRS for each discipline and multiply that amount by the CY 2023
home health payment update factor of 1.04. That amount for each
discipline is then multiplied by the 2023 average number of visits by
discipline to determine the 2023 Estimated 30-day Period Costs. Table 5
shows the estimated average costs for 30-day periods of care by
discipline with NRS and the total estimated 30-day period of care costs
with NRS for CY 2023.
[GRAPHIC] [TIFF OMITTED] TP03JY24.006

[[Page 55321]]

The CY 2023 national standardized 30-day period payment rate was
$2,010.69, which is approximately 32 percent more than the estimated CY
2023 30-day period average facility cost of $1,527.23. In its March
2024 Report to Congress, MedPAC assumed costs will increase by only
0.55 percent, the average of the increases in costs per 30-day period
for 2021 and 2022.\1\ Furthermore, MedPAC noted that for more than a
decade, payments under the HH PPS have significantly exceeded HHAs'
costs. MedPAC also noted an increase of 4.0 percent in the costs per
30-day period for freestanding HHAs in 2022, a reversal of the trend
for 2021, where costs per 30-day period decreased by 2.9 percent. This
increase in 2022 was due to higher costs per visit, but it was offset
by a reduction in the number of in-person visits per 30-day period. As
shown in table 5 in this proposed rule, HHAs have reduced visits under
the PDGM in CY 2022.
---------------------------------------------------------------------------

\1\ Report to Congress, Medicare Payment Policy. Home Health
Care Services, Chapter 7. MedPAC. March 2024 (<a href="https://www.medpac.gov/wp-content/uploads/2024/03/Ch7_Mar24_MedPAC_Report_To_Congress_SEC.pdf">https://www.medpac.gov/wp-content/uploads/2024/03/Ch7_Mar24_MedPAC_Report_To_Congress_SEC.pdf</a>).
---------------------------------------------------------------------------

c. Clinical Groupings and Comorbidities
Each 30-day period of care is grouped into one of 12 clinical
groups, which describe the primary reason for which a patient is
receiving home health services under the Medicare home health benefit.
The clinical grouping is based on the principal diagnosis reported on
the home health claim. Table 6 shows the distribution of the 12
clinical groups over time.
[GRAPHIC] [TIFF OMITTED] TP03JY24.007

Thirty-day periods of care will receive a comorbidity adjustment
category based on the presence of certain secondary diagnoses reported
on home health claims. These diagnoses are based on a home health
specific list of clinically and statistically significant secondary
diagnosis subgroups with similar resource use. We refer readers to
section II.B.4.c. of this proposed rule and the CY 2020 final rule with
comment period (84 FR 60493) for further information on the comorbidity
adjustment categories. Home health 30-day periods of care can receive a
low or a high comorbidity adjustment, or no comorbidity adjustment.
Table 7 shows the distribution of 30-day periods of care by comorbidity
adjustment category for all 30-day periods.

[[Page 55322]]

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d. Admission Source and Timing
Each 30-day period of care is classified into one of two admission
source categories--community or institutional--depending on what
healthcare setting was utilized in the 14 days prior to receiving home
health care. Thirty-day periods of care for beneficiaries with any
inpatient acute care hospitalizations, inpatient psychiatric facility
(IPF) stays, skilled nursing facility (SNF) stays, inpatient
rehabilitation facility (IRF) stays, or long-term care hospital (LTCH)
stays within 14 days prior to a home health admission will be
designated as institutional admissions. The institutional admission
source category will also include patients that had an acute care
hospital stay during a previous 30-day period of care and within 14
days prior to the subsequent, contiguous 30-day period of care and for
which the patient was not discharged from home health and readmitted.
Thirty-day periods of care are classified as ``early'' or ``late''
depending on when they occur within a sequence of 30-day periods of
care. The first 30-day period of care is classified as early and all
subsequent 30-day periods of care in the sequence (second or later) are
classified as late. A subsequent 30-day period of care would not be
considered early unless there is a gap of more than 60 days between the
end of one previous period of care and the start of another.
Information regarding the timing of a 30-day period of care comes from
Medicare home health claims data and not the OASIS assessment to
determine if a 30-day period of care is ``early'' or ``late''. Table 8
shows the distribution of 30-day periods of care by admission source
and timing.
[GRAPHIC] [TIFF OMITTED] TP03JY24.009

e. Functional Impairment Level
Each 30-day period of care is placed into one of three functional
impairment levels (low, medium, or high) based on responses to certain
OASIS functional items associated with grooming, bathing, dressing,
ambulating, transferring, and risk for hospitalization. The specific
OASIS items that are used for the functional impairment level are found
in table 8 in the CY 2020 HH PPS final rule with comment period (84 FR
60490).\2\ Responses to these OASIS items are grouped together into
response categories with similar resource use and each response
category has associated points. A more detailed description as to how
these response categories were established can be found in the
technical report, ``Overview of the Home Health Groupings Model''
posted on the HHA web page.\3\ The sum of these points results in a
functional

[[Page 55323]]

impairment score used to group 30-day periods of care into a functional
impairment level with similar resource use. The scores associated with
the functional impairment levels vary by clinical group to account for
differences in resource utilization. A patient's functional impairment
level will remain the same for the first and second 30-day periods of
care unless there is a significant change in condition that warrants an
``other follow-up'' assessment prior to the second 30-day period of
care. For each 30-day period of care, the Medicare claims processing
system will look for occurrence code 50 on the claim to correspond to
the M0090 date of the applicable assessment. Table 9 shows the
distribution of 30-day periods by functional impairment level.
---------------------------------------------------------------------------

\2\ CMS continues to use the M1800-1860 items to determine
functional impairment level for case mix purposes while we continue
to analyze the relationship between the analogous GG items (required
as standardized patient assessment data) and the M1800 items used
for payment.
\3\ <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM</a>.
[GRAPHIC] [TIFF OMITTED] TP03JY24.010

f. Therapy Visits
Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act
eliminated the use of therapy thresholds in calculating payments for CY
2020 and subsequent years. Prior to implementation of the PDGM, HHAs
could receive an adjustment to payment based on the number of therapy
visits provided during a 60-day episode of care. We examined the
proportion of actual 30-day periods of care with and without therapy
visits. To be covered as skilled therapy, the services must require the
skills of a qualified therapist (that is, PT, OT, or SLP) or qualified
therapist assistant and must be reasonable and necessary for the
treatment of the patient's illness or injury.\4\ As shown in table 10,
we monitor the number of visits per 30-day period of care by each home
health discipline. Any 30-day period of care can include both therapy
and non-therapy visits. If any 30-day period of care consisted of only
visits for PT, OT, and/or SLP, then this 30-day period of care is
considered ``therapy only''. If any 30-day period of care consisted of
only visits for skilled nursing, home health aide, or social worker,
then this 30-day period of care is considered ``no therapy''. If any
30-day period of care consisted of at least one therapy visit and one
non-therapy, then this 30-day period of care is considered ``therapy +
non-therapy''. Table 10 shows the proportion of 30-day periods of care
with only therapy visits, at least one therapy visit and one non-
therapy visit, and no therapy visits. Figure 2 shows the proportion of
30-day periods of care by the number of therapy visits (excluding zero)
provided during 30-day periods of care.
---------------------------------------------------------------------------

\4\ Medicare Benefit Policy Manual, Chapter 7 Home Health
Services, Section 40.2 Skilled Therapy Services (<a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf</a>).
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[[Page 55324]]

[GRAPHIC] [TIFF OMITTED] TP03JY24.012

Both table 10 and figure 2, as previously discussed, indicate there
have been changes in the distribution of both therapy and non-therapy
visits in CY 2023 compared to CY 2022. For example, the percent of 30-
day periods with one through seven therapy visits during a 30-day
period increased in CY 2023 compared to CY 2022. Comparing therapy
utilization from before the PDGM (CYs 2018 and 2019) to after the
implementation of the PDGM (CYs 2020-2023), we have also seen a decline
in therapy visits across all clinical groups, as shown in figure 2.

[[Page 55325]]

[GRAPHIC] [TIFF OMITTED] TP03JY24.013

We also examined the proportion of 30-day periods of care with and
without skilled nursing, social work, or home health aide visits. Table
12 shows the number of 30-day periods of care with only skilled nursing
visits, at least one skilled nursing visit and one other visit type
(therapy or non-therapy), and no skilled nursing visits. Table 12 shows
the number of 30-day periods of care with and without home health aide
and/or social worker visits.

[[Page 55326]]

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[GRAPHIC] [TIFF OMITTED] TP03JY24.015

g. Home Health Services Using Telecommunications Technology
As discussed in the CY 2023 final rule (87 FR 66858), we began
collecting data on the use of telecommunications technology used during
a home health period using three new G-codes reported on home health
claims. Collecting data on services furnished via telecommunications
technology on claims allows CMS to analyze the characteristics of
patients using services provided remotely and have a broader
understanding of the social determinants that affect who benefits most
from these services, including what barriers may potentially exist for
certain subsets of patients. The monitoring discussion illustrates
which services are most frequently furnished via telecommunication
technology and generally how long remote patient monitoring is
utilized.
We began collecting this information from HHAs on January 1, 2023,
on a voluntary basis and have required this information to be reported
on claims starting on July 1, 2023 (87 FR 66858). The three new G-codes
help identify when home health services are furnished using synchronous
telemedicine rendered via a real-time two-way audio and video
telecommunications system (G320); synchronous telemedicine rendered via
telephone or other real-time interactive audio-only telecommunications
system (G0321); and the collection of physiologic data digitally stored
and/or transmitted by the patient to the home health agency, that is,
remote patient monitoring (G0322). We capture the usage and length of
remote patient monitoring using the start date of the remote patient
monitoring and the number of days of monitoring indicated on the claim.
We also looked at the disciplines most often providing remote patient
monitoring. We examined the utilization of telecommunications
technology device during a home health period and remote patient
monitoring by looking at home health claims that included the three G-
codes. Tables 14 and 15 shows that the use of telecommunications
services reported on CY 2023 home health claims are low (roughly 1
percent of all CY 2023 claims) and are mainly associated with skilled
nursing.

[[Page 55327]]

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BILLING CODE 4120-01-C
We will continue to monitor the provision of home health services,
including any changes in the number and duration of home health visits,
composition of the disciplines providing such services,
telecommunications technology used during home health periods, and
overall home health payments to determine if refinements to the case-
mix adjustment methodology or other policies may be needed in the
future.

C. Proposed CY 2025 Payment Adjustments Under the HH PPS

1. Proposed Behavior Assumption Adjustments Under the HH PPS

a. Background

As discussed in section II.A.1. of this proposed rule, starting in
CY 2020, the Secretary was statutorily required by section
1895(b)(2)(B) of the Act, to change the unit of payment under the HH
PPS from a 60-day episode of care to a 30-day period of care. CMS was
also required to make assumptions about behavior changes that could
occur as a result of the implementation of the 30-day unit of payment
and the case-mix adjustment factors that eliminated the use of therapy
thresholds. In the CY 2019 HH PPS final rule with comment period (83 FR
56455), we finalized three behavior change assumptions which were also
described in the CY 2022 and 2023 HH PPS rules (86 FR 35890, 87 FR
37614, and 87 FR 66795 through 66796). In the CY 2020 HH PPS final rule
with comment period (84 FR 60519), we included these behavioral change
assumptions in the calculation of the 30-day budget neutral payment
amount for CY 2020, finalizing a negative 4.36 percent behavior change
assumption adjustment (``assumed behaviors''). We did not propose any
changes for CYs 2021 and 2022 relating to the behavior assumptions
finalized in the CY 2019 HH PPS final rule with comment period, or to
the negative 4.36 percent behavior change assumption adjustment,
finalized in the CY 2020 HH PPS final rule with comment period.
In the CY 2023 HH PPS final rule (87 FR 66796), we stated, based on
our annual monitoring at that time, the three

[[Page 55328]]

assumed behavior changes did occur as a result of the implementation of
the PDGM and that other behaviors, such as changes in the provision of
therapy and changes in functional impairment levels also occurred. We
also reminded readers that in the CY 2020 HH PPS final rule with
comment period (84 FR 60513) we stated we interpret actual behavior
changes to encompass both behavior changes that were previously
outlined as assumed by CMS, and other behavior changes not identified
at the time the budget-neutral 30-day payment rate for CY 2020 was
established. In the CY 2023 HH PPS final rule (87 FR 66796) we provided
supporting evidence that indicated the number of therapy visits
declined in CYs 2020 and 2021, as well as a slight decline in therapy
visits beginning in CY 2019 after the finalization of the removal of
therapy thresholds, but prior to implementation of the PDGM. In section
II.B.1. of this proposed rule, our analysis continues to show overall
the actual 30-day periods are similar to the simulated 30-day periods
and there continues to be a decline in therapy visits, indicating that
HHAs changed their behavior to reduce therapy visits. Although the
analysis demonstrates evidence of individual behavior changes (for
example, in the volume of visits for LUPAs, therapy sessions, etc.), we
use the entirety of the behaviors in order to calculate estimated
aggregate expenditures. The law instructs us to ensure that estimated
aggregate expenditures under the PDGM are equal to the estimated
aggregate expenditures that otherwise would have been made under the
prior system.
Section 4142(a) of the CAA, 2023, required CMS to present, to the
extent practicable, a description of the actual behavior changes
occurring under the HH PPS from CYs 2020-2026. This subsection of the
CAA, 2023, also required CMS to provide datasets underlying the
simulated 60-day episodes and discuss and provide time for stakeholders
to provide input and ask questions on the payment rate development for
CY 2023. CMS complied with these requirements by posting online both
the supplemental limited data set (LDS) and descriptive files and the
description of actual behavior changes that affected CY 2023 payment
rate development. Additionally, on March 29, 2023, CMS conducted a
webinar entitled Medicare Home Health Prospective Payment System (HH
PPS) Calendar Year (CY) 2023 Behavior Change Recap, 60-Day Episode
Construction Overview, and Payment Rate Development. The webinar was
open to the public and discussed the actual behavior changes that
occurred upon implementation of the PDGM, our approach used to
construct simulated 60-day episodes using 30-day periods, payment rate
development for CY 2023, and information on the supplemental data files
containing information on the simulated 60-day episodes and actual 30-
day periods used in calculating the permanent adjustment to the payment
rate. Materials from the webinar, including the presentation and the CY
2023 descriptive statistics from the supplemental LDS files, containing
information on the number of simulated 60-day episodes and actual 30-
day periods in CY 2021 that were used to construct the permanent
adjustment to the payment rate, as well as information such as the
number of episodes and periods by case-mix group, case-mix weights, and
simulated payments, can be found on the Home Health Patient-Driven
Groupings Model web page at https://www.cms.gov/medicare/medicare-fee-
for-service-payment/homehealthpps/hh-pdgm.
b. Method to Annually Determine the Impact of Differences Between
Assumed Behavior Changes and Actual Behavior Changes on Estimated
Aggregate Expenditures
In the CY 2023 HH PPS final rule (87 FR 66804), we finalized the
methodology to evaluate the impact of the differences between assumed
and actual behavior changes on estimated aggregate expenditures. In the
CY 2024 HH PPS final rule (88 FR 77687 through 77688) we provided an
overview of the methodology with detailed instructions for each step.
The overall methodology as finalized remains the same for evaluating
the impact of behavior changes as required by law; however, due to an
update of the Outcome and Assessment Information Set (OASIS)
instrument, we need to update two minor technical parts and are
proposing to add new assumptions in the first step (creating simulated
60-day episodes from 30-day periods These new assumptions are described
in this section.
Section 1895(b)(3)(B)(v) of the Act requires HHAs to report certain
quality data. As described in regulation at 42 CFR 484.250(a), this
data is required to be reported using the OASIS instrument. Under the
prior 153-group system (and the first three years for assessments
associated with the PDGM completed prior to CY 2023), HHAs submitted
the OASIS-D version. However, OMB approved an updated version of the
OASIS instrument, OASIS-E, on November 30, 2022, effective January 1,
2023. Thus, OASIS-E is the current version of the OASIS instrument
used. The valid OMB control number for this information collection is
0938-1279.
There are 13 items from the OASIS-D used in the 153-group system
that are included in the OASIS-E; however, the responses for these
items are now only recorded at the start of care (SOC) or resumption of
care (ROC) assessments in the OASIS-E and not at all for follow-up
assessments as shown in the following figure 3.
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Three items in the OASIS-E differ slightly from the OASIS-D by
incorporating more specific questions and responses than in the OASIS-
D. These three items, as shown in figure 4, ask about therapies
(M1030), vision (M1200), and the frequency of pain interfering with
activity (M1242). Additionally, these three items are only asked at
SOC/ROC and not follow-up.

[[Page 55330]]

[GRAPHIC] [TIFF OMITTED] TP03JY24.019

The differences in these three items from what is included in
OASIS-E necessitate a mapping methodology to impute the OASIS-D
responses using OASIS-E to create simulated 60-day episodes under the
153-group case mix system from 30-day periods under the PDGM. For each
of the three items, we considered the clinical relationship between the
responses in the OASIS-E items that differ from the OASIS-D items. CMS
also considered the response distribution between the OASIS-D and
OASIS-E items when creating the mapping of the responses.
CMS believes the following two proposals on assumptions are the
most appropriate to address the changes from the OASIS-D to the OASIS-E
to continue to create simulated 60-day episodes from 30-day periods.
<bullet> If the simulated 60-day episode matches to a SOC or ROC
assessment then we are proposing not to impute the 13 items. If the
simulated 60-day episode matches to a follow-up assessment, then we are
proposing to look back for the most recent 30-day period that is linked
to a SOC or ROC assessment and impute the 13 responses for follow-up
using the responses at the most recent SOC or ROC assessment. We would
limit the look back period to the beginning of the calendar year that
precedes the calendar year for the claim. For example, a simulated 60-
day episode with a follow-up assessment on June 1, 2023, would have a
look-back period for a 30-day period linked to a SOC or ROC assessment
that began on or after January 1, 2022. If we cannot find a SOC or ROC
assessment in that time period, we are proposing to exclude the claim
from analysis because we would not have sufficient timely data to
impute responses.
<bullet> If the simulated 60-day episode matches to an OASIS-D
assessment, then we are proposing to use the OASIS-D for responses. If
the simulated 60-day episode matches to an OASIS-E assessment, we are
proposing to apply the following mapping for the therapies, vision, and
pain items to impute responses as these responses are required for
accurate payment calculation under the prior 153-group system. We are
also proposing to apply the look-back period as described in the
assumption earlier when necessary.

[[Page 55331]]

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Note, if an OASIS-E assessment has a response of ``no'' to all
three items (O0110H--IV medication, K0520--Parenteral/IV feeding, and
K0520--Feeding Tube), as shown in figure 5, then the mapping for M1030
would be a response of ``none of the above''.
[GRAPHIC] [TIFF OMITTED] TP03JY24.021

[[Page 55332]]

On the OASIS-D there was one pain item (M1242--Frequency of Pain
Interfering with patient's activity or movement) used for payment
policy. There are three pain related items on the OASIS-E (J0510--pain
effect on sleep, J0520--pain interference with therapy activities, and
J0530--pain interference with day-to-day activities) that correspond to
the one OASIS-D pain item used for calculating payments. Therefore, we
believe using the response from J0510, J0520, or J0530 that reflects
the maximum severity would be the most appropriate for mapping back to
the OASIS-D. For example, if J0510 (pain effect on sleep) has a
response of ``rarely'', J0520 (pain interference with therapy
activities) has a response of ``frequently'', and J0530 has a response
of ``occasionally'', then we would use the response from J0520
(``frequently'') for mapping as this is the most severe response.
Figure 7 shows the proposed mapping based on the maximum severity
response for any of the three pain items.
[GRAPHIC] [TIFF OMITTED] TP03JY24.022

BILLING CODE 4120-01-C
As this overall methodology was previously finalized in the CY 2023
HH PPS final rule (87 FR 66804) and we are just proposing technical
updates based on the updated OASIS instrument, CMS will continue to
ensure that estimated aggregate expenditures under the PDGM are equal
to the estimated aggregate expenditures that otherwise would have been
made under the prior system for assessing behavior changes as required
by law. We refer readers to the CY 2024 HH PPS final rule (88 FR 77687
through 77688) for an overview of the methodology with detailed
instructions for each step. We are soliciting comments on these new
proposed assumptions related to mapping of the OASIS-E items.
c. Calculating Permanent and Temporary Payment Adjustments
To offset prospectively for such increases or decreases in
estimated aggregate expenditures as a result of the impact of
differences between assumed behavior changes and actual behavior
changes, in any given year, we calculate a permanent prospective
adjustment by calculating the percent change between the actual 30-day
base payment rate and the recalculated 30-day base payment rate. This
percent change is converted into an adjustment factor and applied in
the annual rate update process.
To offset retrospectively for such increases or decreases in
estimated aggregate expenditures as a result of the impact of
differences between assumed behavior changes and actual behavior
changes in any given year, we calculate a temporary prospective
adjustment by calculating the dollar amount difference between the
estimated aggregate expenditures from all 30-day periods using the
recalculated 30-day base payment rate, and the aggregate expenditures
for all 30-day periods using the actual 30-day base payment rate for
the same year. In other words, when determining the temporary
retrospective dollar amount, we use the full dataset of actual 30-day
periods using both the actual and recalculated 30-day base payment
rates to ensure that the utilization and distribution of claims are the
same. In accordance with section 1895(b)(3)(D)(iii) of the Act, the
temporary adjustment is to be applied on a prospective basis and shall
apply only with respect to the year for which such temporary increase
or decrease is made. Therefore, after we determine the dollar amount to
be reconciled in any given year, we calculate a temporary adjustment
factor to be applied to the base payment rate for that year. The
temporary adjustment factor is based on an estimated number of 30-day
periods in the next year using historical data trends, and as
applicable, we control for a permanent adjustment factor, case-mix
weight recalibration neutrality factor, wage index budget neutrality
factor, and the home health payment update. The temporary adjustment
factor is applied last. We refer readers to the CY 2024 HH PPS final
rule (88 FR 77689 through 77694) for analysis for CYs 2020 through 2022
claims. Additionally, at the end of this section we provide a summary
table for the permanent adjustment and temporary dollar amounts
calculated for each year.
d. CY 2023 Preliminary Claims Results
We will continue the practice of using the most recent complete
home health claims data available at the time of rulemaking. While the
CY 2023 analysis presented in this proposed rule is the most complete
data available at the time of this proposed rule, it is considered
preliminary and, as more data become available from the latter half of
CY 2023, we will update our results in the final rule. The CY 2025
final rule will utilize the CY 2023 finalized data for determining any
permanent adjustment needed to the CY 2025 payment rate. However, while
the claims data and the

[[Page 55333]]

permanent and temporary adjustment results will be considered complete,
any adjustments to future payment rates may be subject to additional
considerations such as permanent adjustments taken in previous years.
The claims data used in rulemaking is released twice each year in
the HH PPS Limited Data Set (LDS) file, one for the proposed and one
for the final. Accordingly, the HH PPS LDS file released with this
proposed rule includes two files: the actual CY 2023 30-day periods and
the CY 2023 simulated 60-day episodes.
We remind readers a data use agreement (DUA) is required to
purchase the CY 2025 proposed HH PPS LDS file. Access will be granted
for both the 30-day periods and the simulated 60-day episodes under one
DUA. Visit the HH PPS LDS web page for more information.\5\ In
addition, the proposed CY 2025 Home Health Descriptive Statistics from
the LDS Files spreadsheet is available on the HH PPS Regulations and
Notices webpage,\6\ does not require a DUA, and is available at no cost
to interested parties. The spreadsheet contains information on the
number of simulated 60-day episodes and actual 30-day periods in CY
2023 that were used to determine the adjustments. The spreadsheet also
provides information such as the number of episodes and periods by
case-mix group, case-mix weights, and simulated payments.
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\5\ <a href="https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds">https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds</a>.
\6\ <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices</a>.
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e. Applying the Methodology to CY 2023 Data To Determine the CY 2025
Permanent and Temporary Adjustments
Using the methodology finalized in the CY 2023 HH PPS final rule
and described most recently in the CY 2024 HH PPS final rule (88 FR
77687 through 77688), as well as the two new assumptions related to the
OASIS-E mapping, we simulated 60-day episodes using actual CY 2023 30-
day periods to determine what the permanent and temporary payment
adjustments should be to offset for such increases or decreases in
estimated aggregate expenditures as a result of the impact of
differences between assumed behavior changes and actual behavior
changes.
Using the preliminary CY 2023 dataset, we began with 8,133,377 30-
day periods of care and dropped 452,253 30-day periods of care that had
claim occurrence code 50 date after October 31, 2023. We also excluded
866,293 30-day periods of care that had claim occurrence code 50 date
before January 1, 2023, to ensure the 30-day period would not be part
of a simulated 60-day episode that began in CY 2022. Applying the
additional exclusions and assumptions as described in the finalized
methodology (87 FR 66804), an additional 12,906 30-day periods were
excluded.
Additionally, we excluded 166,441 simulated 60-day episodes of care
where no OASIS information was available in the CCW VRDC, a recent SOC/
ROC OASIS was not available, or the episode could not be grouped to a
HIPPS due to a missing primary diagnosis or other reason. Our simulated
60-day episodes of care produced a distribution of two 30-day periods
of care (68.9 percent) and single 30-day periods of care (31.1 percent)
that was similar to what we found when we simulated two 30-day periods
of care for implementation of the PDGM. After all exclusions and
assumptions were applied, the final dataset for this proposed rule
included 6,494,947 actual 30-day periods of care and 3,845,954
simulated 60-day episodes of care for CY 2023.
Using the preliminary dataset for CY 2023 (6,494,947 actual 30-day
periods which made up the 3,845,954 simulated 60-day episodes) we
determined the estimated aggregate expenditures under the pre-PDGM HH
PPS were lower than the actual estimated aggregate expenditures under
the PDGM HH PPS. This indicates that aggregate expenditures under the
PDGM were higher than if the 153-group payment system was still in
place in CY 2023 and therefore, we determined the CY 2023 30-day base
payment rate should have been $1,873.17 based on actual behavior, as
shown in table 16 As stated in the CY 2024 final rule (88 FR 77693) we
determined for CYs 2020 through CY 2022 a total of -5.779 percent
permanent adjustment was needed (after accounting for the -3.925
percent applied to the CY 2023 payment rate). In order to determine
behavior changes for only CY 2023, we simulated what the CY 2023 base
payment rate would have been if the full -5.779 percent adjustment that
we determined using CY 2022 claims data had been implemented.
Using the recalculated CY 2022 base payment rate of $1,839.10 (88
FR 77693), multiplied by the CY 2023 case-mix weights recalibration
neutrality factor (0.9904), the CY 2023 wage index budget neutrality
factor (1.0001) and the CY 2023 home health payment update factor
(1.040), the CY 2023 base payment rate for assumed behavior would have
been $1,894.49. For the CY 2023 annual permanent adjustment, we
calculated the percent change between the two payment rates for only CY
2023 (assuming the -5.779 percent adjustment was already taken). For
the temporary adjustment we calculated the difference in aggregate
expenditures in dollars for all CY 2023 PDGM 30-day claims using the
actual payment rate ($2,010.69) and recalculated payment ($1,873.17).
This difference is shown as the retrospective dollar amount needed to
offset payment in a future year. Our results for the CY 2023 annual
(single year) permanent and temporary adjustment calculations using CY
2023 preliminary claims data are shown in table 16.

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[GRAPHIC] [TIFF OMITTED] TP03JY24.023

As shown in table 16, a permanent prospective adjustment of -1.125
percent to the CY 2025 30-day payment rate (assuming the -5.779 percent
adjustment was already taken) for CY 2023 would be required to offset
for such increases in estimated aggregate expenditures in future years.
To illustrate this calculation:
[GRAPHIC] [TIFF OMITTED] TP03JY24.024

Additionally, we determined that our initial estimate of the base
payment rate ($2,010.69) resulted in excess expenditures of
approximately $966 million in CY 2023. This would require a temporary
adjustment, where the dollar amount ($966 million) would be converted
to a factor when implemented, to offset for such increases in estimated
aggregate expenditures for CY 2023.
f. Proposed CY 2025 Permanent Adjustment and Temporary Adjustment
Calculations
In the preceding section we describe how we annually analyzed CY
2023 preliminary data to determine the effects of actual behavior
change on estimated aggregate expenditures. Again, that analysis
included simulations that assumed that the full payment adjustment (-
5.779 percent) was already taken. We note that CMS did not implement
the full payment adjustment, so the calculations set forth later in
this section reflect the lagging adjustments that are still needed.
That is, the calculation in this section includes any of the
remaining adjustments not applied in previous years (that is, CYs 2020
to 2022), as well as the adjustment needed to account for CY 2023
claims. In calculating the full permanent adjustment needed to the CY
2025 30-day payment rate, we compare estimated aggregate expenditures
under the PDGM and the prior system. Unlike the annual adjustments
described in table 16, we do not assume the full adjustment from prior
years had been taken.
As discussed in section II.C.1.d. of this proposed rule, using the
preliminary dataset for CY 2023 (6,494,947 actual 30-day periods which
made up the 3,845,954 simulated 60-day episodes) we determined the CY
2023 30-day base payment rate should have been $1,873.17 based on
actual behavior, rather than the actual CY 2023 30-day base payment
rate ($2,010.69) based on assumed behaviors. The percent change, as
shown in table 17, between the actual CY 2023 base payment rate of
$2,010.69 (based on assumed behaviors and included a -3.925 percent
adjustment applied to the CY 2023 payment rate) and the CY 2023
recalculated base payment rate of $1,873.17 (based on actual behaviors)
is the total permanent adjustment need for CYs 2020 through 2023.

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[GRAPHIC] [TIFF OMITTED] TP03JY24.025

As shown in table 17, a permanent prospective adjustment of -6.839
percent to the CY 2025 30-day payment rate for CYs 2020 through 2023
would be required to offset for such increases in estimated aggregate
expenditures in future years. To illustrate this calculation:
[GRAPHIC] [TIFF OMITTED] TP03JY24.026

As we stated in the CY 2024 HH PPS final rule (88 FR 77697),
applying a -2.890 percent permanent adjustment to the CY 2024 30-day
payment rate would not adjust the rate fully to account for differences
in behavior changes on estimated aggregate expenditures in CYs 2020,
2021, and 2022. Using CY 2023 claims data, as shown in table 17, a
permanent prospective adjustment of -6.839 percent to the CY 2025 30-
day payment rate would be required to offset for such increases in
estimated aggregate expenditures for CYs 2020 through 2023. We remind
readers adjustment factors are multiplied in this payment system and
therefore, individual numbers (that is, percentages) cannot be added or
subtracted together to determine the final adjustment. Therefore, we
cannot determine the CY 2025 proposed permanent adjustment, which would
include estimated aggregate expenditures in CY 2023, by simply
subtracting the -2.890 percent applied in CY 2024 from the total
permanent adjustment of -6.839 percent.
Instead, we account for the permanent adjustment applied in CY 2024
of -2.890 percent when we calculate the CY 2025 permanent adjustment by
solving the following equation (1-0.0289) x (1-[chi]) = (1-0.06839). To
illustrate this calculation we used the following approach.
[GRAPHIC] [TIFF OMITTED] TP03JY24.027

We are required by law \7\ to annually analyze data from CY 2020
through CY 2026 and offset any increases or decreases in estimated
aggregate expenditures at a time and manner determined appropriate. We
now have 4 years of claims data under the PDGM, as well as 1 year with
a partial permanent adjustment applied. In previous years' rules, we
provided the permanent adjustment calculated for each discrete year of
claims.
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\7\ Sections 1895(b)(3)(D)(i) and 1895(b)(3)(D)(ii) of the Act.
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Permanent Adjustments Calculated:

CY 2020 Claims = -6.52% (87 FR 66805)
CY 2021 Claims = -1.42% (87 FR 66806)
CY 2022 Claims = -1.767% (88 FR 77692)
CY 2023 Claims = -1.125% (Table 16)

Permanent Adjustments Applied:

CY 2023 Rate = -3.925% (88 FR 66808)
CY 2024 Rate = 2.890% (88 FR 77697)

Accounting for the previous permanent adjustments applied to the
30-day payment rate in CYs 2023 and 2024, we can simulate the permanent
adjustment calculation with the simulated annual permanent adjustment
percentage shown previously for CY 2025:

(1-0.0652)(1-0.0142)(1-0.01767)(1-0.01125) = (1-0.03925)(1-0.0289)(1-
x).
Solving, x = 4.067%.

In table 18 we provide the base payment rate for assumed behaviors
(simulates all prior adjustments were taken), the recalculated base
payment rate for actual behaviors, the annual permanent adjustments
calculated (assuming prior adjustments had been taken), the cumulative
permanent adjustments calculated in each year, the final permanent
adjustments implemented in rulemaking, and the temporary adjustment
dollar amount based on actual payment rates.
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[GRAPHIC] [TIFF OMITTED] TP03JY24.029

BILLING CODE 4120-01-C
In both the CY 2023 and 2024 final rules (87 FR 66790, 88 FR
77696), we acknowledged that the full permanent adjustment may be
burdensome for some providers. In those final rules, we finalized only
half of the permanent adjustment percentages (-3.925 percent in CY 2023
and -2.890 percent in CY 2024). However, in this proposed rule, we are
proposing to apply the full current remaining permanent adjustment of -
4.067 percent in CY 2025, as this would satisfy the statutory
requirements at section 1895(b)(3)(D) of the Act to offset any
increases or decreases on the impact of differences between assumed
behavior and actual behavior changes on estimated aggregate
expenditures, reduce the need for any future large permanent
adjustments, and help slow the accrual of the temporary payment
adjustment amount. In addition, we explained in the CY 2023 HH PPS
final rule (87 FR 66808) and the CY 2024 HH PPS final rule (88 FR
77697) that when we applied a reduced permanent adjustment in CY 2023
and CY 2024, that we would need to continue to implement a reduction in
future years to satisfy the statutory requirements. Therefore, we
believe that CMS has been clear through notice and

[[Page 55337]]

comment rulemaking that the remainder of these permanent adjustments
would be applied, thereby giving HHAs adequate notice to prepare for
this year's proposed rate reduction. Accordingly, we are proposing to
apply the full remaining permanent adjustment of -4.067 percent to the
CY 2025 home health base payment rate, noting that we will update this
percentage using more complete claims data in the final rule.
We stated in the CY 2023 HH PPS final rule (87 FR 66804), the CY
2024 HH PPS proposed rule (88 FR 43674) and in this proposed rule, that
after we determine the total dollar amount to be reconciled, we will
calculate a temporary adjustment factor to be applied to the base
payment rate for the year in which it is implemented. That is, the
temporary adjustment dollar amount (currently estimated at $4.5
billion) will be converted to a factor to be applied to the payment
rate in a time and manner determined appropriate. As we noted in the CY
2023 HH PPS proposed rule (87 FR 37682) and CY 2024 HH PPS proposed
rule (88 FR 43678), we recognize that implementing both the permanent
and temporary adjustments in the same year may adversely affect HHAs.
Given that the magnitude of both the temporary and permanent
adjustments together for CY 2025 rate setting may result in a
significant reduction of the payment rate, we are not proposing to take
the temporary adjustment in CY 2025. In future year rulemaking, we will
propose a temporary adjustment factor to the national, standardized
base payment rate in a time and manner determined appropriate. As noted
previously, we will update these permanent and temporary adjustments in
the final rule to reflect more complete claims data for CY 2023. We
solicit comments on the proposal to apply a -4.067 percent permanent
adjustment to the CY 2025 base payment rate.

D. Proposed CY 2025 Home Health Low Utilization Payment Adjustment
(LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub-
Groups, Case-Mix Weights, and Reassignment of Specific ICD-10-CM Codes
Under the PDGM

1. Proposed CY 2025 PDGM LUPA Thresholds
Under the HH PPS, LUPAs are paid when a certain visit threshold for
a payment group during a 30-day period of care is not met. In the CY
2019 HH PPS final rule with comment period (83 FR 56492), we finalized
a policy setting the LUPA thresholds at the 10th percentile of visits
or two visits, whichever is higher, for each payment group. This means
the LUPA threshold for each 30-day period of care varies depending on
the PDGM payment group to which it is assigned. If the LUPA threshold
for the payment group is met under the PDGM, the 30-day period of care
will be paid the full 30-day period case-mix adjusted payment amount
(subject to any partial payment adjustment or outlier adjustments). If
a 30-day period of care does not meet the PDGM LUPA visit threshold,
then payment will be made using the per-visit payment amounts as
described in section II.C.4.f.2 of this proposed rule. For example, if
the LUPA visit threshold is four, and a 30-day period of care has four
or more visits, it is paid the full 30-day period payment amount; if
the period of care has three or fewer visits, payment is made using the
per-visit payment amounts.
In the CY 2019 HH PPS final rule with comment period (83 FR 56492),
we finalized our policy that the LUPA thresholds for each PDGM payment
group would be reevaluated every year based on the most current
utilization data available at the time of rulemaking. However, as CY
2020 was the first year of the new case-mix adjustment methodology, we
stated in the CY 2021 HH PPS final rule (85 FR 70305, 70306) that we
would maintain the LUPA thresholds that were finalized and shown in
table 17 of the CY 2020 HH PPS final rule with comment period (84 FR
60522) for CY 2021 payment purposes. We stated that at that time, we
did not have sufficient CY 2020 data to reevaluate the LUPA thresholds
for CY 2021.
In the CY 2022 HH PPS final rule with comment period (86 FR 62249),
we finalized the proposal to recalibrate the PDGM case-mix weights,
functional impairment levels, and comorbidity subgroups while
maintaining the LUPA thresholds for CY 2022. We stated that because
there are several factors that contribute to how the case-mix weight is
set for a particular case-mix group (such as the number of visits,
length of visits, types of disciplines providing visits, and non-
routine supplies) and the case-mix weight is derived by comparing the
average resource use for the case-mix group relative to the average
resource use across all groups, we believe the COVID-19 PHE would have
impacted utilization within all case-mix groups similarly. Therefore,
the impact of any reduction in resource use caused by the PHE on the
calculation of the case-mix weight would be minimized since the impact
would be accounted for both in the numerator and denominator of the
formula used to calculate the case-mix weight. However, in contrast,
the LUPA thresholds are based on the number of overall visits in a
particular case-mix group (the threshold is the 10th percentile of
visits or 2 visits, whichever is greater) instead of a relative value
(like what is used to generate the case-mix weight) that would control
for the impacts of the COVID-19 PHE. We noted that visit patterns and
some of the decrease in overall visits in CY 2020 may not be
representative of visit patterns in CY 2022. Therefore, to mitigate any
potential future and significant short-term variability in the LUPA
thresholds due to the COVID-19 PHE, we finalized the proposal to
maintain the LUPA thresholds finalized and displayed in table 17 in the
CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY 2022
payment purposes.
For CY 2024, we proposed to update the LUPA thresholds using CY
2022 Medicare home health claims (as of March 17, 2023) linked to OASIS
assessment data. We believed that CY 2022 data will be more indicative
of visit patterns in CY 2024 rather than continuing to use the LUPA
thresholds derived from the CY 2018 data pre-PDGM. Therefore, we
finalized a policy to update the LUPA thresholds for CY 2024 using data
from CY 2022.
For CY 2025, we are proposing to update the LUPA thresholds using
CY 2023 home health claims utilization data (as of March 19, 2024), in
accordance with our policy to annually recalibrate the case-mix weights
and update the LUPA thresholds, functional impairment levels and
comorbidity subgroups. After reviewing the CY 2023 home health claims
utilization data, we determined that LUPA visit patterns in 2023 were
similar to visits in 2021. The proposed LUPA thresholds for the CY 2025
PDGM payment groups with the corresponding Health Insurance Prospective
Payment System (HIPPS) codes and the case-mix weights are listed in
table 20. We solicit public comments on the proposed updates to the
LUPA thresholds for CY 2025. The proposed LUPA thresholds will be
updated based on more complete CY 2023 claims data in the final rule.
2. Proposed CY 2025 Functional Impairment Levels
Under the PDGM, the functional impairment level is determined by
responses to certain OASIS items associated with activities of daily
living and risk of hospitalization; that is, responses to OASIS items
M1800-M1860 and M1033. A home health period of care receives points
based on

[[Page 55338]]

each of the responses associated with these functional OASIS items,
which are then converted into a table of points corresponding to
increased resource use. The sum of all these points results in a
functional impairment score which is used to group home health periods
into a functional level with similar resource use. That is, the higher
the points, the more the response is associated with increased resource
use, or increased impairment. The three functional impairment levels of
low, medium, and high were designed so that approximately one-third of
home health periods from each clinical group falls within each level.
This means home health periods in the low impairment level have
responses for the functional OASIS items that are associated with the
lowest resource use, on average. Home health periods in the high
impairment level have responses for the functional OASIS items that are
associated with the highest resource use on average.
For CY 2025, we propose to use CY 2023 claims data to update the
functional points and functional impairment levels by clinical group.
The CY 2018 HH PPS proposed rule (82 FR 35320) and the technical report
from December 2016, posted on the Home Health PPS Archive web page
located at: <a href="https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive">https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive</a>, provides a more detailed explanation as to the
construction of these functional impairment levels using the OASIS
items. We are proposing to use the same methodology previously
finalized to update the functional impairment levels for CY 2025. The
updated OASIS functional points table and the table of functional
impairment levels by clinical group for CY 2025 are listed in tables 20
and 21, respectively. We solicit public comments on the updates to
functional points and the functional impairment levels by clinical
group.
BILLING CODE 4120-01-P
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3. Proposed CY 2025 Comorbidity Subgroups
Thirty-day periods of care receive a comorbidity adjustment
category based on the presence of certain secondary diagnoses reported
on home health claims. These diagnoses are based on a home-health
specific list of clinically and statistically significant secondary
diagnosis subgroups with similar resource use, meaning the diagnoses
have at least as high as the median resource use and are reported in
more than 0.1 percent of 30-day periods of care. Home health 30-day
periods of care can receive a comorbidity

[[Page 55340]]

adjustment under the following circumstances:
<bullet> High comorbidity adjustment: There are two or more
secondary diagnoses on the home health-specific comorbidity subgroup
interaction list that are associated with higher resource use when both
are reported together compared to when they are reported separately.
That is, the two diagnoses may interact with one another, resulting in
higher resource use.
<bullet> Low comorbidity adjustment: There is a reported secondary
diagnosis on the home health-specific comorbidity subgroup list that is
associated with higher resource use.
<bullet> No comorbidity adjustment: A 30-day period of care
receives no comorbidity adjustment if no secondary diagnoses exist or
do not meet the criteria for a low or high comorbidity adjustment.
In the CY 2019 HH PPS final rule with comment period (83 FR 56406),
we stated that we would continue to examine the relationship of
reported comorbidities on resource utilization and make the appropriate
payment refinements to help ensure that payment is in alignment with
the actual costs of providing care. For CY 2025, we propose to use the
same methodology used to establish the comorbidity subgroups to update
the comorbidity subgroups using CY 2023 home health data with linked
OASIS data (as of March 19, 2024).
For CY 2025, we propose to update the comorbidity subgroups to
include 22 low comorbidity adjustment subgroups as identified in table
22 and 90 high comorbidity adjustment interaction subgroups as
identified in table 23. The proposed CY 2025 low comorbidity adjustment
subgroups and the high comorbidity adjustment interaction subgroups
including those diagnoses within each of these comorbidity adjustments
will also be posted on the HHA Center web page at <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.
We invite comments on the proposed updates to the low comorbidity
adjustment subgroups and the high comorbidity adjustment interactions
for CY 2025.
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4. Proposed CY 2025 PDGM Case-Mix Weights
As finalized in the CY 2019 HH PPS final rule with comment period
(83 FR 56502), the PDGM places patients into meaningful payment
categories based on patient and other characteristics, such as timing,
admission source, clinical grouping using the reported principal
diagnosis, functional impairment level, and comorbid conditions. The
PDGM case-mix methodology results in 432 unique case-mix groups called
home health resource groups (HHRGs). We also finalized a policy in the
CY 2019 HH PPS final rule with comment period (83 FR 56515) to annually
recalibrate the PDGM case-mix weights using a fixed effects model with
the most recent and complete utilization data available at the time of
annual rulemaking. Annual recalibration of the PDGM case-mix weights
ensures that the case-mix weights reflect, as accurately as possible,
current home health resource use and changes in utilization patterns.
To generate the proposed recalibrated CY 2025 case-mix weights, we used
CY 2023 home health claims data with linked OASIS data (as of March 19,
2024). These data are the most current and complete data available at
this time. We believe that recalibrating the case-mix weights using
data from CY 2023 would be reflective of PDGM utilization and patient
resource use for CY 2025. The proposed recalibrated case-mix weights
will be updated based on more complete CY 2023 claims data in the final
rule.
The claims data provide visit-level data and data on whether non-
routine supplies (NRS) were provided during the period and the total
charges of NRS. We determine the case-mix weight for each of the 432
different PDGM payment groups by regressing resource use on a series of
indicator variables for each of the categories using a fixed effects
model as described in the following steps:
Step 1: Estimate a regression model to assign a functional
impairment level to each 30-day period. The regression model estimates
the relationship between a 30-day period's resource use and the
functional status and risk of hospitalization items included in the
PDGM, which are obtained from certain OASIS items. We refer readers to
table 18 for further information on the OASIS items used for the
functional impairment level under the PDGM. We measure resource use
with the cost-per-minute + NRS approach that uses information from 2022
home health cost reports. We use 2022 home health cost report data
because it is the most complete cost report data available at the time
of rulemaking. Other variables in the regression model include the 30-
day period's admission source, clinical group, and 30-day period
timing. We also include home health agency level fixed effects in the
regression model. After estimating the regression model using 30-day
periods, we divide the coefficients that correspond to the functional
status and risk of hospitalization items by 10 and round to the nearest
whole number. Those rounded numbers are used to compute a functional
score for each 30-day period by summing together the rounded numbers
for the functional status and risk of hospitalization items that are
applicable to each 30-day period. Next, each 30-day period is assigned
to a functional impairment level (low, medium, or high) depending on
the 30-day period's total functional score. Each clinical group has a
separate set of functional thresholds used to assign 30-day periods
into a low, medium or high functional impairment level. We set those
thresholds so that we assign roughly a third of 30-day periods within
each clinical group to each functional impairment level (low, medium,
or high).
Step 2: A second regression model estimates the relationship
between a 30-day period's resource use and indicator variables for the
presence of any of the comorbidities and comorbidity interactions that
were originally examined for inclusion in the PDGM. Like the first
regression model, this model also includes home health agency level
fixed effects and includes control variables for each 30-day period's
admission source, clinical group, timing, and functional impairment
level. After we estimate the model, we assign comorbidities to the low
comorbidity adjustment if any comorbidities have a coefficient that is
statistically significant (p-value of 0.05 or less) and which have a
coefficient that is larger than the 50th percentile of positive and
statistically significant comorbidity coefficients. If two
comorbidities in the model and their interaction term have coefficients
that sum together to exceed $150 and the interaction term is
statistically significant (p-value of 0.05 or less), we assign the two
comorbidities together to the high comorbidity adjustment.
Step 3: After Step 2, each 30-day period is assigned to a clinical
group, admission source category, episode timing category, functional
impairment level, and comorbidity adjustment category. For each
combination of those variables (which represent the 432 different
payment groups that comprise the PDGM), we then calculate the 10th
percentile of visits across all 30-day periods within a particular
payment group. If a 30-day period's number of visits is less than the
10th percentile for their payment group, the 30-day period is
classified as a Low Utilization Payment Adjustment (LUPA). If a payment
group has a 10th percentile of visits that is less than two, we set the
LUPA threshold for that payment group to be equal to two. That means if
a 30-day period has one visit, it is classified as a LUPA and if it has
two or more visits, it is not classified as a LUPA.
Step 4: Take all non-LUPA 30-day periods and regress resource use
on the 30-day period's clinical group, admission source category,
episode timing category, functional impairment level, and comorbidity
adjustment category. The regression includes fixed effects at the level
of the home health agency. After we estimate the model, the model
coefficients are used to predict each 30-day period's resource use. To
create the case-mix weight for each 30-day period, the predicted
resource use is divided by the overall resource use of the 30-day
periods used to estimate the regression.
The case-mix weight is then used to adjust the base payment rate to
determine each 30-day period's payment. Table 24 shows the coefficients
of the payment regression used to generate the weights, and the
coefficients divided by average resource use.
BILLING CODE 4120-01-P

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The case-mix weights proposed for CY 2025 are listed in table 25
and will also be posted on the HHA Center web page \8\ upon display of
this proposed rule.
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\8\ HHA Center web page: <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.

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BILLING CODE 4120-01-C
Changes to the PDGM case-mix weights are implemented in a budget
neutral manner by multiplying the CY 2025 national standardized 30-day

[[Page 55361]]

period payment rate by a case-mix budget neutrality factor. Typically,
the case-mix weight budget neutrality factor is also calculated using
the most recent, complete home health claims data available. For CY
2025, we will continue the practice of using the most recent complete
home health claims data at the time of rulemaking, which is CY 2023
data. The case-mix budget neutrality factor is calculated as the ratio
of 30-day base payment rates such that total payments when the CY 2025
PDGM case-mix weights (developed using CY 2023 home health claims data)
are applied to CY 2023 utilization (claims) data are equal to total
payments when CY 2024 PDGM case-mix weights (developed using CY 2022
home health claims data) are applied to CY 2023 utilization data. This
produces a case-mix budget neutrality factor for CY 2025 of 1.0035.
We invite public comments on the CY 2025 proposed case-mix weights
and proposed case-mix weight budget neutrality factor.
5. Suggested Reassignment of Specific ICD-10-CM Codes Under the PDGM
a. Background
The 2009 final rule, ``HIPAA Administrative Simplification:
Modifications to Medical Data Code Set Standards To Adopt ICD-10-CM and
ICD-10-PCS'' (74 FR 3328, January 16, 2009), set October 1, 2013, as
the compliance date for all covered entities under the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) to use the
International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) and the International Classification of
Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) medical
data code sets. The ICD-10-CM diagnosis codes are granular and specific
and provide HHAs a better opportunity to report codes that best reflect
the patient's conditions that support the need for home health
services. However, as stated in the CY 2019 HH PPS final rule with
comment period (83 FR 56473), because the ICD-10-CM is comprehensive,
it also contains many codes that may not support the need for home
health services. For example, diagnosis codes that indicate death as
the outcome are Medicare covered codes but are not relevant to home
health. In addition, diagnosis and procedure coding guidelines may
specify the sequence of ICD-10-CM coding conventions. For example, the
underlying condition must be listed first (for example, Parkinson's
disease must be listed prior to Dementia if both codes were listed on a
claim). Therefore, not all the ICD-10-CM diagnosis codes are
appropriate as principal diagnosis codes for grouping home health
periods into clinical groups or to be placed into a comorbidity
subgroup when listed as a secondary diagnosis. As such, each ICD-10-CM
diagnosis code is assigned, including those diagnosis codes designated
as ``not assigned'' (NA), to a clinical group and comorbidity subgroup
within the HH PPS grouper software (HHGS). We reminded readers the ICD-
10-CM diagnosis code list is updated each fiscal year with an effective
date of October 1st and therefore, the HH PPS is generally subject to a
minimum of two HHGS releases, one in October and one in January of each
year, to ensure that claims are submitted with the most current code
set available. Likewise, there may be new ICD-10-CM diagnosis codes
created (for example, codes for emergency use) or a new or revised edit
in the Medicare Code Editor (MCE) so an update to the HHGS may occur on
the first of each quarter (January, April, July, October). We encourage
readers to check the HHGS routinely at these times, as we do not
anticipate posting changes to the home health web page.
b. Methodology for ICD-10-CM Diagnosis Code Assignments
Although it is not our intent to review all ICD-10-CM diagnosis
codes each year, we recognize that occasionally some ICD-10-CM
diagnosis codes may require changes to their assigned clinical group
and/or comorbidity subgroup. For example, there may be an update to the
MCE unacceptable principal diagnosis list, or we receive public
comments from interested parties requesting specific changes. Any
addition or removal of a specific diagnosis code to the ICD-10-CM code
set (for example, three new diagnosis codes, Z28.310, Z28.311 and
Z28.39, for reporting COVID-19 vaccination status were effective April
1, 2022) or minor tweaks to a descriptor of an existing ICD-10-CM
diagnosis code generally could be implemented as appropriate and may
not be discussed in rulemaking.
We rely on the expert opinion of our clinical reviewers (for
example, nurse consultants and medical officers) and current ICD-10-CM
coding guidelines to determine if the ICD-10-CM diagnosis codes under
review for reassignment are significantly similar or different to the
existing clinical group and/or comorbidity subgroup assignment. As we
stated in the CY 2018 HH PPS proposed rule (82 FR 35313), the intent of
the clinical groups is to reflect the reported principal diagnosis,
clinical relevance, and coding guidelines and conventions. Therefore,
for the purposes of assignment of ICD-10-CM diagnosis codes into the
PDGM clinical groups we would not conduct additional statistical
analysis as such decisions are clinically based and the clinical groups
are part of the overall case-mix weights.
As we noted in the CY 2019 HH PPS final rule with comment period
(83 FR 56486), the home health-specific comorbidity list is based on
the principles of patient assessment by body systems and their
associated diseases, conditions, and injuries to develop larger
categories of conditions that identified clinically relevant
relationships associated with increased resource use, meaning the
diagnoses have at least as high as the median resource use and are
reported in more than 0.1 percent of 30-day periods of care. If
specific ICD-10-CM diagnosis codes are to be reassigned to a different
comorbidity subgroup (including NA), we will first evaluate the
clinical characteristics (as discussed previously for clinical groups)
and if the ICD-10-CM diagnosis code does not meet the clinical
criteria, then no reassignment will occur. However, if an ICD-10-CM
diagnosis code does meet the clinical criteria for a comorbidity
subgroup reassignment, then we will evaluate the resource consumption
associated with the ICD-10-CM diagnosis codes, the current assigned
comorbidity subgroup, and the proposed (reassigned) comorbidity
subgroup. This analysis is to ensure that any reassignment of an ICD-
10-CM diagnosis code (if reported as secondary) in any given year would
not significantly alter the overall resource use of a specific
comorbidity subgroup. For resource consumption, we use non-LUPA 30-day
periods to evaluate the total number of 30-day periods for the
comorbidity subgroup(s) and the ICD-10-CM diagnosis code, the average
number of visits per 30-day periods for the comorbidity subgroup(s) and
the ICD-10-CM diagnosis code, and the average resource use for the
comorbidity subgroup(s) and the ICD-10-CM diagnosis code. The average
resource use measures the costs associated with visits performed during
a home health period and was previously described in the CY 2019 HH PPS
final rule with comment period (83 FR 56450).

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c. Request for ICD-10-CM Diagnosis Code Reassignments to a PDGM
Clinical Group or Comorbidity Subgroup--Renal 3 Comorbidity Subgroup
We received questions from interested parties regarding the ICD-10-
CM diagnosis codes N30.00- (acute cystitis) and the ICD-10-CM diagnosis
code N39.0 (urinary tract infection, site not specified). Specifically,
CMS received a request to reassign N30.00 to the same clinical and
comorbidity group as N39.0. The ICD-10-CM diagnosis codes N30.00-
(acute cystitis) are currently assigned to clinical group J (MMTA--
Gastrointestinal tract and Genitourinary system) when listed as a
primary diagnosis and not assigned to a comorbidity subgroup when
listed as a secondary diagnosis. The ICD-10-CM diagnosis code N39.0
(urinary tract infection, site not specified) is currently assigned to
clinical group J (MMTA--Gastrointestinal tract and Genitourinary
system) when listed as a primary diagnosis and assigned to the renal 3
comorbidity subgroup when listed as a secondary diagnosis.
We reviewed the ICD-10-CM diagnosis codes related to cystitis
(N30.-) and determined all 14 of the codes are not assigned to a
comorbidity subgroup when listed as a secondary diagnosis. Our clinical
reviewers advised that cystitis, including N30.00- (acute cystitis), is
to report inflammation of the urinary bladder; whereas N39.0 (urinary
tract infection, site not specified) is to report the presence of the
infectious microorganisms in the urinary tract system. In addition, we
evaluated resource consumption related to the comorbidity subgroup
renal 3, as well as diagnosis codes N30.00- (acute cystitis) and N39.0
(urinary tract infection, site not specified) and found that acute
cystitis on average has a lower resource use than urinary tract
infection. As described earlier, based on clinical review and resources
use analysis, the ICD-10-CM diagnosis codes N30.00- (acute cystitis)
are currently assigned to the most appropriate comorbidity group, not
assigned. Therefore, we are not proposing a reassignment of N30.00-
(acute cystitis) at this time.

E. Proposed CY 2025 Home Health Payment Rate Updates

1. Proposed CY 2025 Home Health Market Basket Update for HHAs
Section 1895(b)(3)(B) of the Act requires that the standard
prospective payment amounts for home health be increased by a factor
equal to the applicable home health market basket update for those HHAs
that submit quality data as required by the Secretary. In the CY 2024
HH PPS final rule (88 FR 77726), we finalized a rebasing of the home
health market basket to reflect 2021 cost report data. We also
finalized a policy for CY 2024 and subsequent years that the labor-
related share would be 74.9 percent and the non-labor-related share
would be 25.1 percent. A detailed description of how we rebased the HHA
market basket and labor-related share is available in the CY 2024 HH
PPS final rule (88 FR 77726 through 77742).
In the CY 2015 HH PPS final rule (79 FR 38384), we finalized our
methodology for calculating and applying the multifactor productivity
adjustment. As we explained in that rule, section 1895(b)(3)(B)(vi) of
the Act, requires that, in CY 2015 (and in subsequent calendar years,
except CY 2018 (under section 411(c) of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted April 16,
2015)), the market basket percentage under the HH PPS as described in
section 1895(b)(3)(B) of the Act be annually adjusted by changes in
economy-wide productivity. Section 1886(b)(3)(B)(xi)(II) of the Act
defines the productivity adjustment to be equal to the 10-year moving
average of change in annual economy-wide private nonfarm business
multifactor productivity (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, calendar year, cost
reporting period, or other annual period). The Bureau of Labor
Statistics (BLS) publishes the official measures of productivity for
the United States economy. We note that previously the productivity
measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act was
published by BLS as private nonfarm business multifactor productivity.
Beginning with the November 18, 2021, release of productivity data, BLS
replaced the term ``multifactor productivity'' with ``total factor
productivity'' (TFP). BLS noted that this is a change in terminology
only and will not affect the data or methodology. As a result of the
BLS name change, the productivity measure referenced in section
1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as ``private
nonfarm business total factor productivity''. We refer readers to
<a href="https://www.bls.gov">https://www.bls.gov</a> for the BLS historical published TFP data. A
complete description of IGI's TFP projection methodology is available
on the CMS website at <a href="https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information">https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information</a>.
The proposed home health update percentage for CY 2025 is based on
the estimated home health market basket percentage increase, specified
at section 1895(b)(3)(B)(iii) of the Act, of 3.0 percent (based on IHS
Global Inc.'s first quarter 2024 forecast with historical data through
fourth-quarter 2023). The estimated CY 2025 home health market basket
percentage increase of 3.0 percent is then reduced by a productivity
adjustment, in accordance with section 1895(b)(3)(B)(vi) of the Act.
Based on IGI's first quarter 2024 forecast, the proposed productivity
adjustment is currently estimated to be 0.5 percentage point for CY
2025. Therefore, the proposed productivity-adjusted CY 2025 home health
market basket update is 2.5 percent (3.0 percent market basket
percentage increase, reduced by a 0.5 percentage point productivity
adjustment). Furthermore, we propose that if more recent data
subsequently become available (for example, a more recent estimate of
the market basket and/or productivity adjustment), we would use such
data, if appropriate, to determine the CY 2025 market basket percentage
increase and productivity adjustment in the final rule.
Section 1895(b)(3)(B)(v) of the Act requires that the home health
percentage update be decreased by 2 percentage points for those HHAs
that do not submit quality data as required by the Secretary. For HHAs
that do not submit the required quality data for CY 2025, the proposed
home health payment update percentage is 0.5 percent (2.5 percent minus
2 percentage points).
We invite public comment on our proposals for the CY 2025 home
health market basket percentage increase and productivity adjustment.
2. Proposed Adoption of the CBSA Delineations for Wage Index
In general, OMB issues major revisions to statistical areas every
10 years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses.
On February 28, 2013, OMB issued Bulletin No. 13-01, announcing
revisions to the delineations of MSAs, Micropolitan Statistical Areas,
and CBSAs, and guidance on uses of the delineation of these areas. In
the CY 2015 HH PPS final rule (79 FR 66085 through 66087), we adopted
OMB's area delineations using a 1-year transition.

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On August 15, 2017, OMB issued Bulletin No. 17-01 in which it
announced that one Micropolitan Statistical Area, Twin Falls, Idaho,
now qualifies as a Metropolitan Statistical Area. The new CBSA (46300)
comprises the principal city of Twin Falls, Idaho in Jerome County,
Idaho and Twin Falls County, Idaho. The CY 2025 HH PPS wage index value
for CBSA 46300, Twin Falls, Idaho, will be 0.8555. Bulletin No. 17-01
is available at <a href="https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/bulletins/2017/b-17-01.pdf">https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/bulletins/2017/b-17-01.pdf</a>.
On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which
superseded the August 15, 2017, OMB Bulletin No. 17-01. On September
14, 2018, OMB issued OMB Bulletin No. 18-04 which superseded the April
10, 2018, OMB Bulletin No. 18-03. These bulletins established revised
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of OMB Bulletin No. 18-04 may be obtained at: <a href="https://www.bls.gov/bls/omb-bulletin-18-04-revised-delineations-of-metropolitan-statistical-areas.pdf">https://www.bls.gov/bls/omb-bulletin-18-04-revised-delineations-of-metropolitan-statistical-areas.pdf</a>.
On March 6, 2020, OMB issued Bulletin No. 20-01, which provided
updates to and superseded OMB Bulletin No. 18-04 that was issued on
September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided
detailed information on the update to statistical areas since September
14, 2018, and were based on the application of the 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas to Census
Bureau population estimates for July 1, 2017, and July 1, 2018. (For a
copy of this bulletin, we refer readers to <a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf</a>.) In OMB Bulletin No. 20-
01, OMB announced one new Micropolitan Statistical Area, one new
component of an existing Combined Statistical Area and changes to New
England City and Town Area (NECTA) delineations. In the CY 2021 HH PPS
final rule (85 FR 70298), we stated that if appropriate, we would
propose any updates from OMB Bulletin No. 20-01 in future rulemaking.
After reviewing OMB Bulletin No. 20-01, we have determined that the
changes in Bulletin 20-01 encompassed delineation changes that would
not affect the Medicare home health wage index for CY 2022.
Specifically, the updates consisted of changes to NECTA delineations
and the re-designation of a single rural county into a newly created
Micropolitan Statistical Area. The Medicare home health wage index does
not utilize NECTA definitions, and, as most recently discussed in the
CY 2021 HH PPS final rule (85 FR 70298) we include hospitals located in
Micropolitan Statistical areas in each State's rural wage index. In
other words, these OMB updates did not affect any geographic areas for
purposes of the HH PPS wage index calculation.
In the CY 2021 HH PPS final rule (85 FR 70298), we finalized our
proposal to adopt the revised OMB delineations with a 5-percent cap on
wage index decreases in CY 2021. As described in the CY 2023 HH PPS
final rule (87 FR 66851 through 66853), we finalized a policy that the
CY HH PPS wage index would include a 5-percent cap on wage index
decreases for CY 2023 and each subsequent year. Specifically, we
finalized for CY 2023 and subsequent years, the application of a
permanent 5-percent cap on any decrease to a geographic area's wage
index from its wage index in the prior year, regardless of the
circumstances causing the decline. That is, we finalized a policy
requiring that a geographic area's wage index for CY 2023 would not be
less than 95 percent of its final wage index for CY 2022, regardless of
whether the geographic area is part of an updated CBSA, and that for
subsequent years, a geographic area's wage index would not be less than
95 percent of its wage index calculated in the prior CY. Previously
this methodology was applied to all the counties that make up a CBSA or
statewide rural area. However, as discussed in section II.E.2. of this
proposed rule, if we adopt the proposed revised OMB delineations, we
are also proposing that this methodology would also be applied to
individual counties.
On July 21, 2023, OMB issued Bulletin No. 23-01, which updates and
supersedes OMB Bulletin No. 20-01, issued on March 6, 2020. OMB
Bulletin No. 23-01 establishes revised delineations for the MSAs,
Micropolitan Statistical Areas, Combined Statistical Areas, and
Metropolitan Divisions, collectively referred to as Core Based
Statistical Areas (CBSAs). According to OMB, the delineations reflect
the 2020 Standards for Delineating Core Based Statistical Areas (CBSAs)
(the ``2020 Standards''), which appeared in the Federal Register (86 FR
37770 through 37778) on July 16, 2021, and application of those
standards to Census Bureau population and journey-to-work data (for
example, 2020 Decennial Census, American Community Survey, and Census
Population Estimates Program data). A copy of OMB Bulletin No. 23-01 is
available online at: <a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf</a>.
The July 21, 2023, OMB Bulletin No. 23-01 contains a number of
significant changes. For example, there are new CBSAs, urban counties
that have become rural, rural counties that have become urban, and
existing CBSAs that have been split apart. We believe it is important
for the HH PPS wage index to use the latest OMB delineations available
in order to maintain a more accurate and up-to-date payment system that
reflects the reality of population shifts and labor market conditions.
We further believe that using the most current OMB delineations would
increase the integrity of the HH PPS wage index by creating a more
accurate representation of geographic variation in wage levels. We are
proposing to implement the new OMB delineations as described in the
July 21, 2023, OMB Bulletin No. 23-01 for the HH PPS wage index
effective beginning in CY 2025. This proposal is also consistent with
the proposals to adopt the revised OMB delineations in the IPPS and
other post-acute care payment systems.
a. Micropolitan Statistical Areas
As discussed in the CY 2006 HH PPS proposed rule (70 FR 40788) and
final rule (70 FR 68132), CMS considered how to use the Micropolitan
statistical area definitions in the calculation of the wage index. At
the time, OMB defined a ``Micropolitan Statistical Area'' as a ``CBSA''
associated with at least one urban cluster that has a population of at
least 10,000, but less than 50,000 (75 FR 37252). We referred to these
as Micropolitan Areas. After extensive impact analysis, consistent with
the treatment of these areas under the IPPS as discussed in the FY 2005
IPPS final rule (69 FR 49029 through 49032), we determined the best
course of action would be to treat Micropolitan Areas as ``rural'' and
include them in the calculation of each state's home health rural wage
index (see 70 FR 40788 and 70 FR 68132). Thus, the HH PPS statewide
rural wage index is determined using IPPS hospital data from hospitals
located in non-Metropolitan Statistical Areas (MSAs). In the CY 2021 HH
PPS final rule (85 FR 70298), we finalized a policy to continue to
treat Micropolitan Areas as ``rural'' and to include Micropolitan Areas
in the calculation of each state's rural wage index.
The OMB ``2020 Standards'' continue to define a ``Micropolitan
Statistical Area'' as a CBSA with at least one urban area that has a
population of at least

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10,000, but less than 50,000. The Micropolitan Statistical Area
comprises the central county or counties containing the core, plus
adjacent outlying counties having a high degree of social and economic
integration with the central county, or counties as measured through
commuting (86 FR 37778). Overall, there are the same number of
Micropolitan Areas (542) under the new OMB delineations based on the
2020 Census as there were using the 2010 Census. We note, however, that
a number of urban counties have switched status and have joined or
become Micropolitan Areas, and some counties that once were part of a
Micropolitan Area, and thus were treated as rural, have become urban
based on the 2020 Decennial Census data. We believe that the best
course of action would be to continue our established policy and
include Micropolitan Areas in each state's rural wage index as these
areas continue to be defined as having relatively small urban cores
(populations of 10,000 to 49,999). Therefore, in conjunction with our
proposal to implement the new OMB labor market delineations beginning
in CY 2025, and consistent with the treatment of Micropolitan Areas
under the IPPS, we are also proposing to continue to treat Micropolitan
Areas as ``rural'' and to include Micropolitan Areas in the calculation
of each state's rural wage index.
b. Change to County-Equivalents in the State of Connecticut
In a June 6, 2022, Notice (87 FR 34235-34240), the Census Bureau
announced that it was implementing the State of Connecticut's request
to replace the eight counties in the State with nine new ``Planning
Regions.'' Planning regions are included in OMB Bulletin No. 23-01 and
now serve as county-equivalents within the CBSA system. We have
evaluated the change and are proposing to adopt the planning regions as
county equivalents for wage index purposes. We believe it is necessary
to adopt this migration from counties to planning region county-
equivalents in order to maintain consistency with our established
policy of adopting the most recent OMB updates. We are providing the
following crosswalk in table 26 for counties located in Connecticut
with the current and proposed Federal Information Processing Series
(FIPS) county and county-equivalent codes and CBSA assignments.
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c. Urban Counties That Would Become Rural
Under the revised OMB statistical area delineations (based upon OMB
Bulletin No. 23-01), a total of 53 counties (and county equivalents)
that are currently considered urban would be considered rural beginning
in CY 2025. Table 27 lists the 53 counties that would become rural if
we adopt as final our proposal to implement the revised OMB
delineations.
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d. Rural Counties That Would Become Urban
Under the revised OMB statistical area delineations (based upon OMB
Bulletin No. 23-01), a total of 54 counties (and county equivalents)
that are currently located in rural areas would be considered located
in urban areas under the revised OMB delineations beginning in CY 2025.
Table 28 lists the 54 counties that would be urban if we adopt as final
our proposal to implement the revised OMB delineations.

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e. Urban Counties That Would Move to a Different Urban CBSA Under the
Revised OMB Delineations
In addition to rural counties becoming urban and urban counties
becoming rural, several urban counties would shift from one urban CBSA
to a new or existing urban CBSA under our proposal to adopt the revised
OMB delineations. In other cases, applying the new OMB delineations
would involve a change only in CBSA name or number, while the CBSA
would continue to encompass the same constituent counties. For example,
CBSA 35154 (New Brunswick-Lakewood, NJ) would experience both a change
to its number and its name and become CBSA 29484 (Lakewood-New
Brunswick, NJ), while all three of its constituent counties would
remain the same. In other cases, only the name of the CBSA would be
modified. Table 29 lists CBSAs that would change in name and/or CBSA
number only, but the

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constituent counties would not change (except in instances where an
urban county became rural or a rural county became urban, as discussed
in the previous section).
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In some cases, all urban counties from a CY 2024 CBSA would be
moved and subsumed by another CBSA in CY 2025. Table 30 lists the CBSAs
that, under our proposal to adopt the revised OMB statistical area
delineations, would be subsumed by another CBSA.
[GRAPHIC] [TIFF OMITTED] TP03JY24.058

In other cases, if we adopt the new OMB delineations, some counties
would shift between existing and new CBSAs, changing the constituent
makeup of the CBSAs. In another type of change, some CBSAs have
counties that would split off to become part of, or to form entirely
new labor market areas. For example, the District of Columbia, DC,
Charles County, MD and Prince Georges County, MD would move from CBSA
47894 (Washington-Arlington-Alexandria, DC-VA-MD-WV) into CBSA 47764
(Washington, DC-MD). Calvert County, MD would move from CBSA 47894
(Washington-Arlington-Alexandria, DC-VA-MD-WV) into CBSA 30500
(Lexington Park, MD). The remaining counties that currently make up
47894 (Washington-Arlington-Alexandria, DC-VA-MD-WV) would move into
CBSA 11694 (Arlington-Alexandria-Reston, VA-WV). Finally, in some
cases, a CBSA would lose counties to another existing CBSA if we adopt
the new OMB delineations. For example, Grainger County, TN would move
from CBSA 34100 (Morristown, TN) into CBSA 28940 (Knoxville, TN). Table
31 lists the 73 urban counties that would move from one urban CBSA to a
new or modified urban CBSA if we adopt the revised OMB delineations.

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BILLING CODE 4120-01-C
f. Proposed Transition Period
In the past we have provided for transition periods when adopting
changes that have significant payment implications, particularly large
negative impacts, in order to mitigate the potential impacts of
proposed home health policies. For example, we have proposed and
finalized budget-neutral transition policies to help mitigate negative
impacts on HHAs following the adoption of the new CBSA delineations
based on the 2010 Decennial Census data in the CY 2015 HH PPS final
rule (79 FR 66032). Specifically, we implemented a 1-year 50/50 blended
wage to the new OMB delineations. We applied a blended wage index for 1
year (CY 2015) for all geographic areas that would consist of a 50/50
blend of the wage index values using OMB's old area delineations and
the wage index values using OMB's new area delineations. That is, for
each county, a blended wage index was calculated equal to 50 percent of
the CY 2015 wage index using the old labor market area delineation and
50 percent of the CY 2015 wage index using the new labor market area
delineation, which resulted in an average of the two values.
Additionally, in the CY 2021 HH PPS final rule (85 FR 70312), we
proposed and finalized a transition policy to apply a 5-percent cap on
any decrease in a geographic area's wage index value from the wage
index value from the prior CY. This transition allowed the effects of
our adoption of the revised CBSA delineations from OMB Bulletin 18-04
to be phased in over 2 years, where the estimated reduction in a
geographic area's wage index was capped at five percent in CY 2021
(that is, no cap was applied to the reduction in the wage index for the
second year (CY 2022)). We explained that we believed a 5-percent cap
on the overall decrease in a geographic area's wage index value would
be appropriate for CY 2021, as it provided predictability in payment
levels from CY 2020 to CY 2021 and additional transparency because it
was administratively simpler than our prior one-year 50/50 blended wage
index approach.
In the CY 2023 HH PPS final rule (87 FR 66851 through 66853), we
adopted a permanent 5-percent cap on wage index decreases beginning in
CY 2023 and each subsequent year. The policy applies a permanent 5-
percent cap on any decrease to a geographic area's wage index from its
wage index in the prior year, regardless of the circumstances causing
the decline, so that a geographic area's wage index would not be less
than 95 percent of its wage index calculated in the prior CY.
For CY 2025, we believe that the permanent 5-percent cap on wage
index decreases would be sufficient to mitigate any potential negative
impact caused by adopting the revised OMB delineations and that no
further transition is necessary. Previously, the 5-percent cap had been
applied at the CBSA or statewide rural area level, meaning that all the
counties that make up the CBSA or rural area received the 5-percent
cap. However, for CY 2025, to mitigate any potential negative impact
caused by the adoption of the revised delineations, we propose that in
addition to the 5-percent cap being calculated for an entire CBSA or
statewide rural, the cap would also be calculated at the county level,
so that individual counties moving to a new delineation would not
experience more than a 5 percent decrease in wage index from the
previous calendar year. Specifically, we are proposing for CY 2025,
that the 5-percent cap would also be applied to counties that would
move from a CBSA or statewide rural area with a higher wage index value
into a new CBSA or rural area with a lower wage index value, so that
the county's CY 2025 wage index would not be less than 95 percent of
the county's CY 2024 wage index value under the old delineation despite
moving into a new delineation with a lower wage index.
Due to the way that we propose to calculate the 5-percent cap for
counties that experience an OMB designation change, some CBSAs and
statewide rural areas could have more than one wage index value because
of the potential for their constituent counties to have different wage
index values. Specifically, some counties that change OMB designations
would have a wage index value that is different than the wage index
value assigned to the other constituent counties that make up the CBSA
or statewide rural area that they are moving into because of the
application of the 5-percent cap. However, for home health claims
processing, each CBSA or statewide rural area can have only one wage
index value assigned to that CBSA or statewide rural area.
Therefore, HHAs that serve beneficiaries in a county that would
receive the cap would need to use a number other than the CBSA or
statewide rural area number to identify the county's appropriate wage
index value on home health claims in CY 2025. We are proposing that
beginning in CY 2025, counties that have a different wage index value
than the CBSA or rural area into which they are designated after the
application of the 5-percent cap would use a wage index transition
code. These special codes are five digits in length and begin with
``50'' and the remaining digits are unique for that code. We are using
Xs to show how the transition codes could be labeled. The 50XXX \9\
wage index transition codes would be used only in specific counties;
counties located in CBSAs and rural areas that do not correspond to a
different transition wage index value will still use the CBSA number.
For example, FIPS county 13171 Lamar County, GA is currently part of
CBSA 12060 Atlanta-Sandy Springs-Alpharetta. However, for CY 2025 we
are proposing that Lamar County would be redesignated into the Rural
Georgia Code 99911. Because the wage index value of rural Georgia is
more than a 5-percent decrease from the wage index value that Lamar
County previously received under CBSA 12060, the CY 2025 wage index for
Lamar County would be capped at 95 percent of the CY 2024 wage index
value for CBSA 12060. Additionally, because rural Georgia can only have
one wage index value assigned to code 99911, in order for Lamar County
to receive the capped wage index for CY 2025, transition code 50003
would be used on a home health claim instead of rural Georgia code
99911.
---------------------------------------------------------------------------

\9\ The remaining 3 characters of the code to be determined if
finalized.
---------------------------------------------------------------------------

We are also proposing that the 5-percent cap would apply to a
county that corresponds to a different wage index value than the wage
index value in the CBSA or rural area in which they are designated due
to a delineation change until the county's new wage index is more than
95 percent of the wage index from the previous calendar year.
Therefore, in order to capture the correct wage index value, an HHA
would continue to use the assigned 50XXX transition code for the county
until the county's wage index value calculated for that calendar year
using the new OMB delineations is not less than 95 percent of the
county's capped wage index from the previous calendar year. Thus, in
the example mentioned earlier, claims for Lamar County would use
transition code 50003 until the wage index in its revised designation
of Rural Georgia is equal to or more than 95 percent of its wage index
value from the previous calendar year. The counties that will require a
transition code and the corresponding 50XXX codes are shown in table 32
and will also be shown in the last column of the CY 2025 HH PPS wage
index file.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
The proposed wage index file applicable to CY 2025 provides a
crosswalk between the CY 2025 wage index using the current OMB
delineations and the CY 2025 wage index using the proposed revised OMB
delineations that would be in effect in CY 2025 if these proposed
changes are finalized. This file shows each state and county and its
corresponding proposed wage index along with the previous CBSA number,
the proposed CBSA number or proposed transition code, and the proposed
CBSA name. The proposed HH PPS wage index file applicable for CY 2025
(January 1, 2025, through December 31, 2025) is available on the CMS
website at: <a href="https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center">https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center</a>.
3. Proposed CY 2025 Home Health Wage Index
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to provide appropriate adjustments to the proportion of the
payment amount under the HH PPS that account for area wage differences,
using adjustment factors that reflect the relative level of wages and
wage-related costs applicable to the furnishing of home health
services. Since the inception of the HH PPS, we have used inpatient
hospital wage data in developing a wage index to be applied to home
health payments. We propose to continue this practice for CY 2025, as
it is our belief that, in the absence of home health-specific wage data
that accounts for area differences, using inpatient hospital wage data,
including any changes made by the Office of Management and Budget (OMB)
to Metropolitan Statistical Area (MSA) definitions, is appropriate and
reasonable for the HH PPS. The appropriate wage index value is applied
to the labor portion of the HH PPS rates based on the site of service
for the beneficiary (defined by section 1861(m) of the Act as the
beneficiary's place of residence).
For CY 2025, we propose to base the HH PPS wage index on the FY
2025 hospital pre-floor, pre-reclassified wage index for hospital cost
reporting periods beginning on or after October 1, 2020, and before
October 1, 2021 (FY 2021 cost report data), with the revised OMB
delineations. The proposed CY 2025 HH PPS wage index would not take
into account any geographic reclassification of hospitals, including
those in accordance with section 1886(d)(8)(B) or 1886(d)(10) of the
Act but would include the 5-percent cap on wage index decreases.
There exist some geographic areas where there are no hospitals, and
thus, no hospital wage data on which to base the calculation of the HH
PPS wage index. To address those geographic areas in which there are no
inpatient hospitals, and thus, no hospital wage data on which to base
the calculation of the CY 2025 HH PPS wage index, we propose to
continue to use the same

[[Page 55374]]

methodology discussed in the CY 2007 HH PPS final rule (71 FR 65884) to
address those geographic areas in which there are no inpatient
hospitals.
For urban areas without inpatient hospitals, we use the average
wage index of all urban areas within the State as a reasonable proxy
for the wage index for that CBSA. For CY 2025, the only urban area
without inpatient hospital wage data is Hinesville, GA (CBSA 25980).
Using the average wage index of all urban areas in Georgia as a proxy,
we propose the CY 2025 wage index value for Hinesville, GA, would be
0.8608.
For rural areas that do not have inpatient hospitals, we propose to
use the average wage index from all contiguous Core Based Statistical
Areas (CBSAs) as a reasonable proxy. The term ``contiguous'' means
sharing a border (72 FR 49859). For CY 2025, as part of our proposal to
adopt the revised OMB delineations discussed further in section
III.E.2. of this proposed rule, we are proposing that rural North
Dakota would now become a rural area without a hospital from which
hospital wage data can be derived. Therefore, in order to calculate the
wage index for rural area 99935, North Dakota, we are proposing to use
as a proxy, the average pre-floor, pre-reclassified hospital wage data
from the contiguous CBSAs: CBSA 13900-Bismark, ND, CBSA 22020-Fargo,
ND-MN, CBSA 24220-Grand Forks, ND-MN, and CBSA 33500, Minot, ND, which
results in a proposed CY 2025 HH PPS wage index of 0.8334 for rural
North Dakota.
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Previously, the only rural area without a hospital from which
hospital wage data could be derived was in Puerto Rico. However, for
rural Puerto Rico, we did not apply this methodology due to the
distinct economic circumstances that exist there (for example, due to
the proximity of one another of almost all of Puerto Rico's various
urban and non-urban areas, this methodology would produce a wage index
for rural Puerto Rico that is higher than that in half of its urban
areas). Instead, we used the most recent wage index previously
available for that area, which was 0.4047. For CY 2025, due to our
proposal to adopt the revised OMB delineations discussed previously,
there is now a hospital in rural Puerto Rico from which hospital wage
data can be derived. Therefore, we are proposing that the wage index
for rural Puerto Rico would now be based on the hospital wage data for
the area instead of the previously available wage index of 0.4047. The
unadjusted CY 2025 proposed wage index for rural Puerto Rico would
equal 0.2520. However, because 0.2520 is more than a 5 percent decline
in the CY 2024 wage index, the 5-percent cap would be applied. We are
proposing that the CY 2025 5-percent cap adjusted wage index for rural
Puerto Rico would be set equal to 95 percent of the CY 2024 wage index,
which results in a proposed wage index value of 0.3845.
Finally, due to the proposal to adopt the revised OMB delineations,
Delaware, which was previously an all-urban state, would now have one
rural area with a hospital from which hospital wage data can be
derived. As such, the proposed CY 2025 wage index for rural Delaware
would be 1.0429.
The complete proposed CY 2025 wage index is available on the CMS
website at: <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.
4. Proposed CY 2025 Home Health Payment Update
a. Background
The HH PPS has been in effect since October 1, 2000. As set forth
in the July 3, 2000, final rule (65 FR 41128), the base unit of payment
under the HH PPS was a national, standardized 60-day episode payment
rate. As finalized in the CY 2019 HH PPS final rule with comment period
(83 FR 56406), and as described in the CY 2020 HH PPS final rule with
comment period (84 FR 60478), the unit of home health payment changed
from a 60-day episode to a 30-day period effective for those 30-day
periods beginning on or after January 1, 2020.
As set forth in Sec. 484.220, we adjust the national, standardized
prospective payment rates by a case-mix relative weight and a wage
index value based on the site of service for the beneficiary. To
provide appropriate adjustments to the proportion of the payment amount
under the HH PPS to account for area wage differences, we apply the
appropriate wage index value to the labor portion of the HH PPS rates.
In the CY 2024 HH PPS final rule (88 FR 77676), we finalized the
rebasing of the home health market basket to reflect 2021 Medicare cost
report data. We also finalized that for CY 2024 and subsequent years
the labor-related share would be 74.9 percent and the non-labor-related
share would be 25.1 percent. The following are the steps we take to
compute the case-mix and wage-adjusted 30-day period payment amount for
CY 2025:
<bullet> Multiply the national, standardized 30-day period rate by
the patient's applicable case-mix weight.
<bullet> Divide the case-mix adjusted amount into a labor (74.9
percent) and a non-labor portion (25.1 percent).
<bullet> Multiply the labor portion by the applicable wage index
based on the site of service of the beneficiary.
<bullet> Add the wage-adjusted portion to the non-labor portion,
yielding the case-mix and wage adjusted 30-day period payment amount,
subject to any additional applicable adjustments. We provide annual
updates of the HH PPS rate in accordance with section 1895(b)(3)(B) of
the Act. Section 484.225 sets forth the specific annual percentage
update methodology. In accordance with section 1895(b)(3)(B)(v) of the
Act

[[Page 55375]]

and Sec. 484.225(i), for an HHA that does not submit home health
quality data, as specified by the Secretary, the unadjusted national
prospective 30-day period rate is equal to the rate for the previous
calendar year increased by the applicable home health payment update
percentage, minus 2 percentage points. Any reduction of the percentage
change would apply only to the calendar year involved and would not be
considered in computing the prospective payment amount for a subsequent
calendar year. The final claim that the HHA submits for payment
determines the total payment amount for the period and whether we make
an applicable adjustment to the 30-day case-mix and wage-adjusted
payment amount. The end date of the 30-day period, as reported on the
claim, determines which calendar year rates Medicare will use to pay
the claim. We may adjust a 30-day case-mix and wage-adjusted payment
based on the information submitted on the claim to reflect the
following:
<bullet> A LUPA is provided on a per-visit basis as set forth in
Sec. Sec. 484.205(d)(1) and 484.230.
<bullet> A partial payment adjustment as set forth in Sec. Sec.
484.205(d)(2) and 484.235.
<bullet> An outlier payment as set forth in Sec. Sec.
484.205(d)(3) and 484.240.
(b) CY 2025 National, Standardized 30-Day Period Payment Amount
Section 1895(b)(3)(A)(i) of the Act requires that the standard
prospective payment rate and other applicable amounts be standardized
in a manner that eliminates the effects of variations in relative case-
mix and area wage adjustments among different home health agencies in a
budget-neutral manner. To determine the CY 2025 national, standardized
30-day period payment rate, we will continue our practice of using the
most recent, complete utilization data at the time of rulemaking; that
is, we are using CY 2023 claims data for CY 2025 payment rate updates.
We apply a permanent adjustment factor, a case-mix weights
recalibration budget neutrality factor, a wage index budget neutrality
factor, and the home health payment update percentage to update the CY
2025 payment rate. As discussed in section II.C.1. of this proposed
rule, we are proposing to implement a permanent adjustment of -4.067
percent to ensure that payments under the PDGM do not exceed what
payments would have been under the 153-group payment system as required
by law. The proposed permanent adjustment factor is 0.95933. As
discussed previously, to ensure the changes to the PDGM case-mix
weights are implemented in a budget neutral manner, we apply a case-mix
weight budget neutrality factor to the CY 2025 national, standardized
30-day period payment rate. The proposed case-mix weight budget
neutrality factor for CY 2025 is 1.0035.
Additionally, we apply a wage index budget neutrality factor to
ensure that wage index updates and revisions are implemented in a
budget neutral manner. To calculate the wage index budget neutrality
factor, we first determine the payment rate needed for non-LUPA 30-day
periods using the CY 2025 wage index (with the proposed revised
delineations and the 5-percent cap) so those total payments are
equivalent to the total payments for non-LUPA 30-day periods using the
CY 2024 wage index (with the old delineations and the 5-percent cap)
and the CY 2024 national standardized 30-day period payment rate
adjusted by the case-mix weights recalibration neutrality factor. Then,
by dividing the payment rate for non-LUPA 30-day periods using the CY
2025 wage index (with the proposed revised delineations and a 5-percent
cap on wage index decreases) by the payment rate for non-LUPA 30-day
periods using the CY 2024 wage index (with the old delineations and a
5-percent cap on wage index decreases), we obtain a wage index budget
neutrality factor of 0.9985. We then apply the wage index budget
neutrality factor of 0.9985 to the 30-day period payment rate.
Next, we propose to update the 30-day period payment rate by the
proposed CY 2025 home health payment update percentage of 2.5 percent.
The CY 2025 national standardized 30-day period payment rate is
calculated in table 34.
BILLING CODE 4120-01-P
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The CY 2025 national standardized 30-day period payment rate for an
HHA that does not submit the required quality data is updated by the
proposed CY 2025 home health payment update percentage of 0.5 percent
(2.5 percent minus 2 percentage points) and is shown in table 35.

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c. CY 2025 National Per-Visit Rates for 30-Day Periods of Care
The national per-visit rates are used to pay LUPAs and are also
used to compute imputed costs in outlier calculations. The per-visit
rates are paid by type of visit or home health discipline. The six home
health disciplines are as follows:
<bullet> Home health aide (HH aide).
<bullet> Medical Social Services (MSS).
<bullet> Occupational therapy (OT).
<bullet> Physical therapy (PT).
<bullet> Skilled nursing (SN).
<bullet> Speech-language pathology (SLP).
To calculate the proposed CY 2025 national per-visit rates, we
started with the CY 2024 national per-visit rates. Then we applied a
wage index budget neutrality factor to ensure budget neutrality for
LUPA per-visit payments. We calculated the wage index budget neutrality
factor by simulating total payments for LUPA 30-day periods of care
using the CY 2025 wage index with the new delineations and the 5-
percent cap on wage index decreases and comparing it to simulated total
payments for LUPA 30-day periods of care using the CY 2024 wage index
with the old delineations and the 5-percent cap. By dividing the total
payments for LUPA 30-day periods of care using the CY 2025 wage index
by the total payments for LUPA 30-day periods of care using the CY 2024
wage index, we obtained a wage index budget neutrality factor of
0.9991. We apply the wage index budget neutrality factor in order to
calculate the CY 2025 national per-visit rates.
The LUPA per-visit rates are not calculated using case-mix weights.
Therefore, no case-mix weight budget neutrality factor is needed to
ensure budget neutrality for LUPA payments. Additionally, we are not
applying the permanent adjustment to the per visit payment rates but
only to the case-mix adjusted 30-day payment rate. Lastly, the per-
visit rates for each discipline are updated by the proposed CY 2025
home health payment update percentage of 2.5 percent. The national per-
visit rates are adjusted by the wage index based on the site of service
of the beneficiary. The per-visit payments for LUPAs are separate from
the LUPA add-on payment amount, which is paid for episodes that occur
as the only episode or initial episode in a sequence of adjacent
episodes. The CY 2025 national per-visit rates for HHAs that submit the
required quality data are updated by the proposed CY 2025 home health
payment update percentage of 2.5 percent and are shown in table 36.
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The CY 2025 per-visit payment rates for HHAs that do not submit the
required quality data are updated by the proposed CY 2025 home health
payment update percentage of 2.5 percent minus 2 percentage points and
are shown in table 37.

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BILLING CODE 4120-01-C
d. LUPA Add-On Factors
Prior to the implementation of the 30-day unit of payment, LUPA
episodes were eligible for a LUPA add-on payment if the episode of care
was the first or only episode in a sequence of adjacent episodes. As
stated in the CY 2008 HH PPS final rule, the average visit lengths in
these initial LUPAs are 16 to 18 percent higher than the average visit
lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes that
occur as the only episode or as an initial episode in a sequence of
adjacent episodes are adjusted by applying an additional amount to the
LUPA payment before adjusting for area wage differences.
In the CY 2014 HH PPS final rule (78 FR 72305), we changed the
methodology for calculating the LUPA add-on amount, whereby we
finalized the approach of multiplying the per-visit payment amount for
the first skilled nursing (SN), physical therapy (PT), or speech
language pathology (SLP) visit in LUPA episodes that occur as the only
episode or an initial episode in a sequence of adjacent episodes by 1 +
the proportional increase in minutes for an initial visit over non-
initial visits. Specifically, we updated the analysis using 100 percent
of LUPA episodes and a 20 percent sample of non-LUPA first episodes
from CY 2012 claims data. The analysis showed that the average excess
of minutes for the first visit in LUPA episodes that were the only
episode or an initial LUPA in a sequence of adjacent episodes are 37.27
minutes for the first visit if SN, 31.69 minutes for the first visit if
PT, and 31.56 minutes for the first visit if SLP. The average minutes
for all non-first visits in non-LUPA episodes were 44.10 minutes for
SN, 47.30 minutes for PT, and 50.37 minutes for SLP. To determine the
final LUPA add-on factors for each discipline, we calculated the ratio
of the average excess minutes for the first visits in LUPA claims to
the average minutes for all non-first visits in non-LUPA claims. (Of
note, the average excess minutes for the first visit in LUPA add-on
claims equal, for each discipline, is equal to the average minutes for
the first visit in LUPA add-on claims minus the average minutes for
non-first visits in LUPA add-on claims.) We then added one to these
ratios to obtain the respective finalized add on factors: 1.8451 for
SN; 1.6700 for PT; and 1.6266 for SLP. In the CY 2019 HH PPS final rule
with comment period (83 FR 56440), in addition to finalizing a 30-day
unit of payment, we finalized our policy of continuing to multiply the
per-visit payment amount for the first SN, PT, or SLP visit in LUPA
periods that occur as the only period of care or the initial 30-day
period of care in a sequence of adjacent 30-day periods of care by the
appropriate add-on factor (using the already established LUPA add-on
factors of 1.8451 for SN, 1.6700 for PT, and 1.6266 for SLP) to
determine the LUPA add-on payment amount for 30-day periods of care
under the PDGM.
At this time, in an effort to enhance the accuracy and relevance of
LUPA add-on factors to reflect current healthcare practices and costs,
CMS is proposing to update the LUPA add-on factors for PT, SN, and SLP,
which have not been revised since the CY 2014 HH PPS final rule, during
which CY 2012 data was used. For this proposed rule, we are proposing
to use the same methodology used to establish the LUPA add-on amount
for CY 2014, using updated claims data.
Specifically, we are proposing to update the LUPA add-on factors by
using 100 percent of LUPA periods and a 100 percent sample of non-LUPA
first periods from CY 2023 claims data. In doing so, the analysis
demonstrates that the average excess of minutes for the first visit in
LUPA periods that were the only period or an initial LUPA in a sequence
of adjacent periods are 30.00 minutes for the first visit if SN, 28.18
minutes for the first visit if PT, and 31.59 minutes for the first
visit if SLP. The average minutes for all non-first visits in non-LUPA
episodes are 41.51 minutes for SN, 45.11 minutes for PT, and 47.13
minutes for SLP. The following table 38 shows the average excess
minutes for the first visit in LUPA periods, the average minutes for
all non-first visits in non-LUPA episodes, as well as the current LUPA
add-on factors, the proposed LUPA add-on factors, and the percent
change between the current and the proposed LUPA add-on factors. This
table also shows the proposed OT LUPA add-on factor outlined in section
II.4.e. of this proposed rule as follows:

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To determine the LUPA add-on factors for each discipline in
relation to the aforementioned proposed LUPA add-on factor updates, we
calculate the ratio of the average excess minutes for the first visits
in LUPA claims to the average minutes for all non-first visits in non-
LUPA claims. We then add one to these ratios to obtain the proposed add
on factors: 1.7227 for SN; 1.6247 for PT; and 1.6703 for SLP. As an
example of the application of the proposed add-on factors for CY 2025,
for LUPA periods that occur as the only episode or an initial period in
a sequence of adjacent periods, if the first skilled visit is SN, the
payment for that visit would be $297.03 (1.7227 multiplied by $172.42).
The proposed LUPA add-on factors will be updated based on more complete
CY 2023 claims data in the final rule. As such, we solicit comments on
the proposals to update the LUPA factors using the 2014 methodology and
based on these updated numbers, re-price the LUPA payment amounts.
e. Occupational Therapy LUPA Add-On Factor
In order to implement Division CC, section 115, of the
Consolidation Appropriations Act (CAA), 2021, CMS finalized changes to
regulations at Sec. 484.55(a)(2) and (b)(3) that allowed occupational
therapists to conduct initial and comprehensive assessments for all
Medicare beneficiaries under the home health benefit when the plan of
care does not initially include skilled nursing care, but included OT,
as well as either PT or SLP (86 FR 62351). This change necessitated the
establishment of a LUPA add-on factor for calculating the LUPA add-on
payment amount for the first skilled OT visit in LUPA periods that
occurs as the only period of care or the initial 30-day period of care
in a sequence of adjacent 30-day periods of care. However, at the time
of the implementation, as we stated in the CY 2022 HH PPS final rule
(86 FR 62289), there was not sufficient data regarding the average
excess of minutes for the first visit in LUPA periods when the initial
and comprehensive assessments are conducted by occupational therapists.
Therefore, we finalized that we would use the PT LUPA add-on factor of
1.6700 as a proxy. We also stated in the CY 2022 final rule that we
would use the PT LUPA add-on factor as a proxy until we have CY 2022
data to establish a more accurate OT add-on factor for the LUPA add-on
payment amounts (86 FR 62289). Ultimately, we refrained from using CY
2022 data (and instead utilized the PT LUPA add-on factor as a proxy
for the OT LUPA add-on factor), as we marked the first year that
occupational therapists were permitted to conduct the initial
assessment. Therefore, we wanted to extend our analysis to ensure we
had sufficient data to reflect OT time spent conducting initial
assessments to establish a discrete OT LUPA add-on factor (86 FR
62240). Accordingly, we continued analyzing claims data and have opted
to utilize CY 2023 data to make this proposal.
With sufficient recent claims data available, and to establish
equitable compensation for all home health services, CMS is now
proposing to establish a definitive OT-specific LUPA add-on factor and
discontinue the temporary use of the PT LUPA add-on factor as a proxy.
For this proposal, we are using the same methodology used to establish
the LUPA add-on amount for CY 2014, as also described previously for
the SN, PT and SLP add-on factors. Specifically, we are updating the
analysis using 100 percent of LUPA periods and a 100 percent sample of
non-LUPA first periods from CY 2023 claims data. The analysis shows
that the average excess of minutes for the first OT visit in LUPA
periods that were the only period or an initial LUPA in a sequence of
adjacent periods is 33.40 minutes for the first visit. The average
number of minutes for all non-first visits in non-LUPA periods is 45.97
minutes for OT.
To determine the LUPA add-on factors for OT to adequately adjust
LUPA payments to account for the excess minutes during the first visit
in a LUPA period, we are proposing to calculate the ratio of the
average excess minutes for the first visits in LUPA claims to the
average minutes for all non-first visits in non-LUPA claims. We are
proposing to then add one to this ratio to obtain the proposed add on
factor: 1.7266 for OT. As an example of the application of the proposed
add-on factor, for LUPA periods that occur as the only period or as an
initial period in a sequence of adjacent periods, if the first skilled
visit is OT, the payment for that visit will be $327.62 (1.7266
multiplied by $189.75). Table 38 shows the current LUPA add-on factors
and the proposed LUPA add-on factors. The proposed OT LUPA add-on
factor will be updated based on more complete CY 2023 claims data in
the final rule. As such, we solicit comments on the proposed use of OT
data to determine the OT LUPA add-on factor, as well as the proposed
methodology to determine this OT LUPA add-on factor.
f. Payments for High-Cost Outliers Under the HH PPS
(1) Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the home health payment amount otherwise made
in the case of outliers because of unusual variations in the type or
amount of medically necessary care. Under the HH PPS and the previous
unit of payment (that is, 60-day episodes), outlier payments were made
for 60-day episodes whose estimated costs exceed a threshold amount for
each HHRG. The episode's estimated cost was established as the sum of
the national wage-adjusted per visit payment amounts delivered during
the episode. The outlier threshold for each case-mix group or PEP
adjustment defined as the 60-day episode payment or PEP adjustment for
that group plus a fixed-dollar loss (FDL) amount. For the purposes of
the HH PPS, the FDL amount is calculated by multiplying the home health
FDL ratio by a case's wage-adjusted national, standardized 60-day
episode payment rate, which yields an FDL dollar amount for the case.
The outlier threshold amount is the sum of

[[Page 55379]]

the wage and case-mix adjusted PPS episode amount and wage-adjusted FDL
amount. The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost that surpasses the wage-adjusted threshold. The
proportion of additional costs over the outlier threshold amount paid
as outlier payments is referred to as the loss-sharing ratio.
As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through
70399), section 3131(b)(1) of the Affordable Care Act amended section
1895(b)(3)(C) of the Act to require that the Secretary reduce the HH
PPS payment rates such that aggregate HH PPS payments were reduced by 5
percent. In addition, section 3131(b)(2) of the Affordable Care Act
amended section 1895(b)(5) of the Act by redesignating the existing
language as section 1895(b)(5)(A) of the Act and revised the language
to state that the total amount of the additional payments or payment
adjustments for outlier episodes could not exceed 2.5 percent of the
estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of
the Affordable Care Act also added section 1895(b)(5)(B) of the Act,
which capped outlier payments as a percent of total payments for each
HHA for each year at 10 percent.
As such, beginning in CY 2011, we reduced payment rates by 5
percent and targeted up to 2.5 percent of total estimated HH PPS
payments to be paid as outliers. To do so, we first returned the 2.5
percent held for the target CY 2010 outlier pool to the national,
standardized 60-day episode rates, the national per visit rates, the
LUPA add-on payment amount, and the NRS conversion factor for CY 2010.
We then reduced the rates by 5 percent as required by section
1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the
Affordable Care Act. For CY 2011 and subsequent calendar years we
targeted up to 2.5 percent of estimated total payments to be paid as
outlier payments, and apply a 10-percent agency-level outlier cap.
In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through
43742 and 81 FR 76702), we described our concerns regarding patterns
observed in home health outlier episodes. Specifically, we noted the
methodology for calculating home health outlier payments may have
created a financial incentive for providers to increase the number of
visits during an episode of care in order to surpass the outlier
threshold; and simultaneously created a disincentive for providers to
treat medically complex beneficiaries who require fewer but longer
visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR
76702), we finalized changes to the methodology used to calculate
outlier payments, using a cost-per-unit approach rather than a cost-
per-visit approach. This change in methodology allows for more accurate
payment for outlier episodes, accounting for both the number of visits
during an episode of care and the length of the visits provided. Using
this approach, we now convert the national per-visit rates into per 15-
minute unit rates. These per 15-minute unit rates are used to calculate
the estimated cost of an episode to determine whether the claim will
receive an outlier payment and the amount of payment for an episode of
care. In conjunction with our finalized policy to change to a cost-per-
unit approach to estimate episode costs and determine whether an
outlier episode should receive outlier payments, in the CY 2017 HH PPS
final rule we also finalized the implementation of a cap on the amount
of time per day that would be counted toward the estimation of an
episode's costs for outlier calculation purposes (81 FR 76725).
Specifically, we limit the amount of time per day (summed across the
six disciplines of care) to 8 hours (32 units) per day when estimating
the cost of an episode for outlier calculation purposes.
In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we
did not plan to re-estimate the average minutes per visit by discipline
every year. Additionally, the per unit rates used to estimate an
episode's cost were updated by the home health update percentage each
year, meaning we would start with the national per visit amounts for
the same calendar year when calculating the cost-per-unit used to
determine the cost of an episode of care (81 FR 76727). We will
continue to monitor the visit length by discipline as more recent data
becomes available and may propose to update the rates as needed in the
future.
In the CY 2019 HH PPS final rule with comment period (83 FR 56521),
we finalized a policy to maintain the current methodology for payment
of high-cost outliers upon implementation of PDGM beginning in CY 2020
and calculated payment for high-cost outliers based upon 30-day period
of care. Upon implementation of the PDGM and 30-day unit of payment, we
finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020.
Given that CY 2020 was the first year of the PDGM and the change to a
30-day unit of payment, we finalized maintaining the same FDL ratio of
0.56 in CY 2021 as we did not have sufficient CY 2020 data at the time
of CY 2021 rulemaking to propose a change to the FDL ratio for CY 2021.
In the CY 2022 HH PPS final rule with comment period (86 FR 62292), we
estimated that outlier payments would be approximately 1.8 percent of
total HH PPS final rule payments if we maintained an FDL of 0.56 in CY
2022. Therefore, in order to pay up to, but no more than, 2.5 percent
of total payments as outlier payments we finalized an FDL of 0.40 for
CY 2022. In the CY 2023 HH PPS final rule (87 FR 66875), using CY 2021
claims utilization data, we finalized an FDL of 0.35 in order to pay up
to, but no more than, 2.5 percent of the total payment as outlier
payments in CY 2023. In the CY 2024 HH PPS final rule (88 FR 77749),
using CY 2022 claims utilization data, we finalized an FDL of 0.27 for
CY 2024.
(2) Proposed FDL Ratio for CY 2025
For a given level of outlier payments, there is a trade-off between
the values selected for the FDL ratio and the loss-sharing ratio. A
high FDL ratio reduces the number of periods that can receive outlier
payments but makes it possible to select a higher loss-sharing ratio,
and therefore, increase outlier payments for qualifying outlier
periods. Alternatively, a lower FDL ratio means that more periods can
qualify for outlier payments, but outlier payments per period must be
lower.
The FDL ratio and the loss-sharing ratio are selected so that the
estimated total outlier payments do not exceed the 2.5 percent
aggregate level (as required by section 1895(b)(5)(A) of the Act).
Historically, we have used a value of 0.80 for the loss-sharing ratio,
which, we believe, preserves incentives for agencies to attempt to
provide care efficiently for outlier cases. With a loss-sharing ratio
of 0.80, Medicare pays 80 percent of the additional estimated costs
that exceed the outlier threshold amount. Using CY 2023 claims data (as
of March 19, 2024) and given the statutory requirement that total
outlier payments do not exceed 2.5 percent of the total payments
estimated to be made under the HH PPS, we are proposing an FDL ratio of
0.38 for CY 2025 which is higher than the finalized CY 2024 FDL of
0.27. CMS will update the FDL, if needed, in the final rule once we
have more complete CY 2023 claims data.

F. Annual Rate Update for Disposable Negative Pressure Wound Therapy
(dNPWT) Device

1. Background
Negative pressure wound therapy (NPWT) is a medical procedure in
which a vacuum dressing is used to enhance and promote healing in
acute, chronic, and burn wounds. The therapy

[[Page 55380]]

involves using a sealed wound dressing attached to a pump to create a
negative pressure environment in the wound. The therapy can be
administered using the conventional NPWT system, classified as durable
medical equipment (DME), or can be administered using a disposable
device. A disposable NPWT (dNPWT) device is a single-use integrated
system that consists of a non-manual vacuum pump, a receptacle for
collecting exudate, and wound dressings. Unlike conventional NPWT
systems classified as DME, dNPWT devices have preset continuous
negative pressure, no intermittent setting, are pocket-sized and easily
transportable, and are generally battery-operated with disposable
batteries. In order for a beneficiary to receive dNPWT under the home
health benefit, the beneficiary must qualify for the home health
benefit in accordance with existing eligibility requirements.
2. Payment Policies for dNPWT Devices
Prior to CY 2024, the separate payment amount for dNPWT included
the furnishing of services as well as the dNPWT device. The separate
payment amount was set equal to the amount of the payment that would be
made under the Medicare Hospital Outpatient Prospective Payment System
(OPPS) using the CPT codes 97607 and 97608. Payment for visits where
the sole purpose of a home health visit was to furnish dNPWT was not
made under the HH PPS. Therefore, visits performed solely for the
purpose of furnishing a new dNPWT device were not reported on the HH
PPS claim (TOB 32x), instead HHAs submitted these claims on a TOB 34x.
However, if a home health visit included the provision of other home
health services in addition to, and separate from, furnishing dNPWT,
the HHA submitted both a TOB 32x and TOB 34x--the TOB 32x for other
home health services and the TOB 34x for furnishing NPWT using a
disposable device.
Beginning in CY 2024, Division FF, section 4136 of the CAA, 2023
(Pub. L. 117-328) amended section 1834 of the Act (42 U.S.C. 1395m(s))
and mandated several amendments to the Medicare separate payment for
dNPWT. These changes included--
<bullet> For CY 2024, the separate payment amount for an applicable
dNPWT device was set equal to the supply price used to determine the
relative value for the service under the Physician Fee Schedule (PFS)
under section 1848 as of January 1, 2022 (CY 2022), updated by the
percent increase in the CPI-U for the 12-month period ending with June
of the preceding year reduced by m the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act for such year;
<bullet> For 2025 and each subsequent year, the separate payment
amount was to be set equal to the payment amount established for the
device in the previous year, updated by the percent increase in the
CPI-U for the 12-month period ending with June of the preceding year
reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) for such year.
<bullet> The separate payment amount for applicable devices
furnished on or after January 1, 2024, would no longer include payment
for nursing or therapy services described in section 1861(m) of the Act
so that payment for such nursing or therapy services are now made under
the HH PPS, and is no longer separately billable.
<bullet> Claims for the separate payment amount of an applicable
dNPWT device are now accepted and processed on claims submitted using
the type of bill (TOB) 32X.
In the CY 2024 HH PPS final rule (88 FR 77676), we finalized our
proposal to codify these changes to dNPWT payments mandated by the CAA,
2023. Beginning January 1, 2024, the separate payment for a dNPWT
device is made to an HHA for an individual who is under a home health
plan of care using Healthcare Common Procedure Coding System (HCPCS)
code A9272. The code HCPCS A9272 is defined as a wound suction,
disposable, includes dressing, all accessories and components, any
type, each. The HHA reports the HCPCS code A9272 for the device only on
the home health TOB 32X. The services related to the application of the
device are included in the home health payment and are excluded from
the separate payment amount for the device. The CY 2024 single payment
amount for a dNPWT device for individuals under a home health plan of
care was set equal to $270.09, which equaled the supply price of an
applicable device under the Medicare PFS (as of January 1, 2022) of
$263.25 updated by the 2.6 percent increase in the CPI-U for the 12-
month period ending in June of 2023, minus the productivity adjustment.
3. CY 2025 Separate Payment Amount for dNPWT Device
For CY 2025, we are proposing that the separate payment amount for
a dNPWT device would be set equal to the CY 2024 payment amount of
$270.09 updated by the CPI-U for June 2024, minus the productivity
adjustment, as mandated by the CAA, 2023. The application of the
productivity adjustment may result in a net update that may be less
than 0.0 for a year and may result in the separate payment amount for
an applicable device for a year being less than such separate payment
amount for such device for the preceding year. We note that the CPI-U
for the 12-month period ending in June of 2024 is not available at the
time of this proposed rulemaking. Therefore, the CY 2025 payment
amount, as well as the CPI-U for the 12-month period ending in June of
2024, and the corresponding productivity adjustment will be updated in
the final rule.
For CY 2026 and subsequent years, if CMS does not intend to propose
changes to its established methodology for calculating dNPWT payments,
payment rates will be updated using CMS's established methodology via
the Home Health Prospective Payment System Rate Update Change Request
and posted on the HHA Center website at <a href="https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center">https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center</a>. For
more in-depth information regarding the finalized policies associated
with the scope of the payment for dNPWT and conditions for payment, we
refer readers to the CY 2024 HH PPS final rule (88 FR 77749 through
77752).

III. Home Health Quality Reporting Program (HH QRP)

A. Background and Statutory Authority

The HH QRP is authorized by section 1895(b)(3)(B)(v) of the Act.
Section 1895(b)(3)(B)(v)(II) of the Act requires that, for 2007 and
subsequent years, each home health agency (HHA) submit to the Secretary
in a form and manner, and at a time, specified by the Secretary, such
data that the Secretary determines are appropriate for the measurement
of health care quality. To the extent that an HHA does not submit data
in accordance with this clause, the Secretary shall reduce the home
health market basket percentage increase applicable to the HHA for such
year by 2 percentage points. As provided at section 1895(b)(3)(B)(vi)
of the Act, depending on the market basket percentage increase
applicable for a particular year, as further reduced by the
productivity adjustment (except in 2018 and 2020) described in section
1886(b)(3)(B)(xi)(II) of the Act, the reduction of that increase by 2
percentage points for failure to comply with the requirements of the HH
QRP may result in the home health market basket percentage increase
being less than 0.0 percent for a year, and may result in payment rates
under the Home

[[Page 55381]]

Health PPS for a year being less than payment rates for the preceding
year. Section 1890A of the Act requires that the Secretary establish
and follow a pre-rulemaking process, in coordination with the
consensus-based entity (CBE) with a contract under section 1890 of the
Act, to solicit input from certain groups regarding the selection of
quality and efficiency measures for the HH QRP. The HH QRP regulations
can be found at 42 CFR 484.245 and 484.250.
Based on feedback from patients and stakeholders, CMS has launched
an effort to update and shorten the Home Health Consumer Assessment of
Healthcare Providers and Systems (HHCAHPS) survey. In 2023 CMS tested a
shortened survey across a variety of different types of HHAs. We are
reviewing the findings of the field test and plan to propose in the
future updates to the survey with the intent to shorten it.

B. Summary of the Provision of This Proposed Rule

In this proposed rule, we are proposing to add four new items and
to modify one assessment item on the OASIS. Second, we propose an
update to the removal of the suspension of OASIS all-payer data
collection. Third, we are seeking information on future HH QRP quality
measure concepts. These proposals are further specified in the
following sections.
For a detailed discussion of the considerations, we historically
use for measure selection for the HH QRP quality, resource use, and
other measures, we refer readers to the CY 2016 HH PPS final rule (80
FR 68695 through 68696). In the CY 2019 HH PPS final rule with comment
period (83 FR 56548 through 56550) we finalized the factors we consider
for removing previously adopted HH QRP measures.

C. Quality Measures Currently Adopted for the CY 2024 HH QRP

The HH QRP currently includes 21 measures for the CY 2024 program
year, as described in table 39.
BILLING CODE 4120-01-P

[[Page 55382]]

[GRAPHIC] [TIFF OMITTED] TP03JY24.068

[[Page 55383]]

BILLING CODE 4120-01-C

D. Proposal To Collect Four New Items as Standardized Patient
Assessment Data Elements and Modify One Item Collected as a
Standardized Patient Assessment Data Element Beginning With the CY 2027
HH QRP

In this proposed rule, we are proposing to add four new items \10\
to be collected as standardized patient assessment data elements under
the social determinants of health (SDOH) category HH QRP: Living
Situation (one item); Food (two items); and Utilities (one item). We
are also proposing to modify one of the current items collected as
standardized patient assessment data under the SDOH category (the
Transportation item) as described in section III.D.5. of this proposed
rule.
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\10\ Items may also be referred to as ``data elements.''
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1. Definition of Standardized Patient Assessment Data
Section 1895(b)(3)(B)(v) of the Act requires that for CY 2007 and
subsequent years, HHAs submit quality data to the Secretary. Section
1899B(a)(1)(C) of the Act requires, in part, the Secretary to modify
the post-acute care (PAC) assessment instruments for PAC providers,
including HHAs, to submit standardized patient assessment data under
the Medicare program. Section 1899B(b)(1)(A) of the Act requires PAC
providers to submit standardized patient assessment data under
applicable reporting provisions (which, for HHAs, is the HH QRP) for
the admission (start and resumption of care) and discharge of an
individual (and more frequently as the Secretary deems appropriate).
Section1899B(b)(1)(B) of the Act defines standardized patient
assessment data as data required for at least the quality measures
described in section 1899B(c)(1) of the Act and that is concerning the
following categories: (1) functional status, such as mobility and self-
care at admission to a PAC provider and before discharge from a PAC
provider; (2) cognitive function, such as ability to express ideas and
to understand, and mental status, such as depression and dementia; (3)
special services, treatments, and interventions, such as need for
ventilator use, dialysis, chemotherapy, central line placement, and
total parenteral nutrition; (4) medical conditions and comorbidities,
such as diabetes, congestive heart failure, and pressure ulcers; (5)
impairments, such as incontinence and an impaired ability to hear, see,
or swallow, and (6) other categories deemed necessary and appropriate
by the Secretary.
2. Social Determinants of Health (SDOH) Collected as Standardized
Patient Assessment Data Elements
Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to
collect standardized patient assessment data elements with respect to
other categories deemed necessary and appropriate. Accordingly, we
finalized the creation of the SDOH category of standardized patient
assessment data elements in the CY 2020 HH PPS final rule (84 FR 60597
through 60608). SDOH are the socioeconomic, cultural, and environmental
circumstances in which individuals live that impact their health.\11\
According to the World Health Organization research shows that the SDOH
can be more important than health care or lifestyle choices in
influencing health, accounting for between 30-55% of health
outcomes.\12\ This is a part of a growing body of research that
highlights the importance of SDOH on health outcomes. Subsequent to the
CY 2020 HH PPS final rule, we expanded our definition of SDOH: SDOH are
the conditions in the environments where people are born, live, learn,
work, play, worship and age that affect a wide range of health,
functioning, and quality-of-life outcomes and risks.13 14 15
This expanded definition aligns our definition of SDOH with the
definition used by HHS agencies, including OASH, the Centers for
Disease Control and Prevention (CDC) and the White House Office of
Science and Technology Policy.16 17 We currently collect
seven items in this SDOH category of standardized patient assessment
data elements: ethnicity, race, preferred language, interpreter
services, health literacy, transportation, and social isolation (84 FR
60597 through 60608).\18\ In accordance with our authority under
section 1899B(b)(1)(B)(vi) of the Act, we similarly finalized the
creation of the SDOH category of standardized patient assessment data
elements for skilled nursing facilities (SNFs) in the FY 2020 SNF PPS
final rule (84 FR 38805 through 38817), for Inpatient Rehabilitation
Facilities (IRFs) in the FY 2020 IRF PPS final rule (84 FR 39149
through 39161), and for Long Term Acute Hospitals (LTCHs) in the FY
2020 LTCH PPS final rule (84 FR 42577 through 42579). We also collect
the same seven SDOH items in these PAC providers' respective patient/
resident assessment instruments (84 FR 38817, 39161, and 42577,
respectively).
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\11\ Office of the Assistant Secretary for Planning and
Evaluation (ASPE). Second Report to Congress on Social Risk and
Medicare's Value-Based Purchasing Programs. June 28, 2020. Available
at: <a href="https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs">https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs</a>.
\12\ World health Organization. Social determinants of health.
Available at: <a href="https://www.who.inte/health-topics/social-determinants-of-health#tab=tab_1">https://www.who.inte/health-topics/social-determinants-of-health#tab=tab_1</a>.
\13\ Using Z Codes: The Social Determinants of Health (SDOH).
Data Journey to Better Outcomes.
\14\ Improving the Collection of Social Determinants of Health
(SDOH) Data with ICD-10-CM Z Codes. <a href="https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf">https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf</a>.
\15\ <a href="http://CMS.gov">CMS.gov</a> Measures Management System (MMS). CMS Focus on
Health Equity. Health Equity Terminology and Quality Measures.
<a href="https://mmshub.cms.gov/about-qulaity-quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology">https://mmshub.cms.gov/about-qulaity-quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology</a>.
\16\ Centers for Disease Control and Prevention. Social
Determinants of Health (SDOH) and PLACES Data.
\17\ ``U.S. Playbook to Address Social Determinants of Health''
from the White House Office Of Science And Technology Policy
(November 2023).
\18\ These SDOH data are also collected for purposes outlined in
section 2(d)(2)(B) of the Improving Medicare Post-Acute Care
Transitions Act (IMPACT Act). For a detailed discussion on SDOH data
collection under section 2(d)(2)(B) of the IMPACT Act, see the CY
2020 HH PPS final rule (84 FR 60597 through 60608).
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Adding access to standardized data relating to SDOH on a national
level permits us to conduct periodic analyses, and to assess their
appropriateness as risk adjustors or in future quality measures. Our
ability to perform these analyses and to make adjustments relies on
existing data collection of SDOH items from PAC settings. We adopted
these SDOH items using common standards and definitions across the four
PAC providers to promote interoperable exchange of longitudinal
information among these PAC providers, including HHAs, and other
providers. We believe this information may facilitate coordinated care,
improve patient focused care planning, and allow for continuity of the
discharge planning process from PAC settings.
We noted in our CY 2020 HH PPS final rule that each of the items
was identified in the 2016 National Academies of Sciences, Engineering,
and Medicine (NASEM) report as impacting care use, cost, and outcomes
for Medicare beneficiaries (84 FR 60598 through 60602). At that time,
we acknowledged that other items may also be useful to understand. The
SDOH items we are proposing to collect as standardized patient
assessment data elements under the SDOH category in this proposed rule
were also identified

[[Page 55384]]

in the 2016 NASEM report \19\ or the 2020 NASEM report \20\ as
impacting care use, cost and outcomes for Medicare beneficiaries. These
items have the potential to affect treatment preferences and goals of
patients and their caregivers. Identification of the SDOH items may
also help HHAs be in a position to offer assistance, by connecting
patients and their caregivers with these associated needs to social
support programs, as well as inform our understanding of patient
complexity.
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\19\ Social Determinants of Health. Healthy People 2020. <a href="https://www.healthypeople.gov/2020/gopics-objectives/topic/social-determinnats-of-health">https://www.healthypeople.gov/2020/gopics-objectives/topic/social-determinnats-of-health</a>. February 2019.
\20\ National Academies of Sciences, Engineering, and Medicine.
2020. Leading Health Indicators 2030: Advancing Health, Equity, and
Well-Being. Washington, DC: The National Academies Press. <a href="https://doi.org/1017226/25682">https://doi.org/1017226/25682</a>.
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Health-related social needs (HRSNs) are the resulting effects of
SDOH, which are individual-level, adverse social conditions that
negatively impact a person's health or health care.\21\ Examples of
HRSN include lack of access to food, housing, or transportation, and
these have been associated with poorer health outcomes, greater use of
emergency departments and hospitals, and higher health care
costs.22 23 Certain HRSNs can lead to unmet social needs
that directly influence an individual's physical, psychosocial, and
functional status.\24\ This is particularly true for food security,
housing stability, utilities security, and access to
transportation.\25\ Evidence supports the positive impact on health
outcomes of interventions aimed at addressing HRSNs.\26\
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\21\ Centers for Medicare & Medicaid Services. ``A Guide to
Using the Accountable Health Communities Health-Related Social Needs
Screening Tool: Promising Practices and Key Insights.'' August 2022.
Available at <a href="https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion">https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion</a>.
\22\ Berkowitz, S.A., T.P. Baggett, and S.T. Edwards,
``Addressing Health-Related Social Needs: Value-Based Care or
Values-Based Care?'' Journal of General Internal Medicine, vol. 34,
no. 9, 2019, pp. 1916-1918, <a href="https://doi.org/10.1007/s11606-019-05087-3">https://doi.org/10.1007/s11606-019-05087-3</a>.
\23\ Whitman A, De Lew N, Chappel A, Aysola V, Zuckerman R, &
Sommers B D. Addressing social determinants of health: Examples of
successful evidence-based strategies and current federal efforts.
ASPE (Assistant Secretary for Planning and Evaluation) Office of
Health Policy. Report HP-2022-12 April 1, 2022. SDOH-Evidence-
Review.pdf (<a href="http://hhs.gov">hhs.gov</a>). Accessed 3/1/2024.
\24\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and
Misunderstandings: A Social Determinants of Health Lexicon for
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund,
November 18, 2019, <a href="https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/">https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/</a>.
\25\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and
Misunderstandings: A Social Determinants of Health Lexicon for
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund,
November 18, 2019, <a href="https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/">https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/</a>.
\26\ Whitman A, De Lew N, Chappel A, Aysola V, Zuckerman R, &
Sommers B D. Addressing social determinants of health: Examples of
successful evidence-based strategies and current federal efforts.
ASPE (Assistant Secretary for Planning and Evaluation) Office of
Health Policy. Report HP-2022-12 April 1, 2022. SDOH-Evidence-
Review.pdf (<a href="http://hhs.gov">hhs.gov</a>). Accessed 5/29/2024.
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We are proposing to require HHAs collect and submit four new items
in the OASIS as standardized patient assessment data elements under the
SDOH category because these items would collect information not already
captured by the current SDOH items. Specifically, we believe the
ongoing identification of SDOH would have three significant benefits.
First, promoting screening for SDOH could serve as evidence-based
building blocks for supporting healthcare providers in actualizing
their commitment to address disparities that disproportionately impact
underserved communities. Second, screening for SDOH advances health
equity through identifying potential social needs so the HHA may
address those with the patient, their caregivers, and community
partners during the home health episode and discharge planning process,
if indicated.\27\ Third, these SDOH items would support ongoing HH QRP
initiatives by providing data with which to stratify HHAs' performance
on current and future quality measures to improve care quality across
different populations.
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\27\ American Hospital Association (2020). Health Equity,
Diversity & Inclusion Measures for Hospitals and Health System
Dashboards. December 2020. Accessed: January 18, 2022. Available at:
<a href="https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf">https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf</a>.
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Additional collection of SDOH items would permit us to continue
developing the statistical tools necessary to maximize the value of
Medicare data and improve the quality of care for all beneficiaries.
For example, we recently developed and released the Health Equity
Confidential Feedback Reports, which provided data to HHAs on whether
differences in quality measure outcomes are present for their patients
by dual-enrollment status and race and ethnicity.\28\ We note that
advancing health equity by addressing the health disparities that
underlie the country's health system is one of our strategic pillars
\29\ and a Biden-Harris Administration priority.\30\
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\28\ In October 2023, we released two new annual Health Equity
Confidential Feedback Reports to HHAs: The Discharge to Community
(DTC) Health Equity Confidential Feedback Report and the Medicare
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback
Report. The PAC Health Equity Confidential Feedback Reports
stratified the DTC and MSPB measures by dual-enrollment status and
race/ethnicity. For more information on the Health Equity
Confidential Feedback Reports, please refer to the Education and
Outreach materials available here: <a href="https://www.cms.gov/medicare/quality/snf-quality-reporting-program/training">https://www.cms.gov/medicare/quality/snf-quality-reporting-program/training</a>.
\29\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go
from Here: A Strategic Vision for CMS. Centers for Medicare &
Medicaid. Available at: <a href="https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms">https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms</a>.
\30\ The White House. The Biden-Harris Administration Immediate
Priorities. <a href="https://www.whitehouse.gov/priorities/">https://www.whitehouse.gov/priorities/</a>.
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3. Proposal to Collect Four New Items as Standardized Patient
Assessment Data Elements Beginning January 1, 2027, for the CY 2027 HH
QRP Program Year \31\
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\31\ Per the authority for the OASIS assessment instrument under
1891(d)(1), Home Health Conditions of Participation [42 U.S.C.
1395bbb].
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We are proposing to require HHAs collect four new items as
standardized patient assessment data elements under the SDOH category
using the OASIS: one item for living situation, as described in
III.D.3.a. of this proposed rule; two items for food, as described in
section III.D.3.b. of this proposed rule; and one item for utilities,
as described in section III.D.3.c of this proposed rule.
We selected the proposed SDOH items from the Accountable Health
Communities (AHC) HRSN Screening Tool developed for the AHC Model. The
AHC HRSN Screening Tool is a universal, comprehensive screening for
HRSNs that was developed by a technical expert panel (TEP) in July 2016
to discuss opportunities and challenges involved in screening for
HRSNs, consider and pare down CMS' list of evidence-based screening
questions, and recommend a short list of questions for inclusion in the
final tool.32 33 The TEP agreed to prioritize the inclusion
of five SDOH domains as follows: (1) housing instability (for example,
homelessness, poor housing quality); (2) food insecurity; (3)
transportation difficulties; (4) utility assistance needs; and (5)
interpersonal safety concerns (for example, intimate-

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partner violence, elder abuse, child maltreatment).\34\
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\32\ Centers for Medicare & Medicaid Services. ``A Guide to
Using the Accountable Health Communities Health-Related Social Needs
Screening Tool: Promising Practices and Key Insights.'' August 2022.
Available at <a href="https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion">https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion</a>.
\33\ Billioux, A., K. Verlander, S. Anthony, and D. Alley. 2017.
Standardized screening for health-related social needs in clinical
settings: The accountable health communities screening tool.
Discussion Paper, National Academy of Medicine, Washington, DC.
<a href="https://nam.edu/wp-content/uploads/2017/05/Standardized-Screening-for-Health-Related-Social-Needsin-Clinical-Settings.pdf">https://nam.edu/wp-content/uploads/2017/05/Standardized-Screening-for-Health-Related-Social-Needsin-Clinical-Settings.pdf</a>.
\34\ More information about the AHC HRSN Screening Tool is
available on the website at <a href="https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf">https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf</a>.
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We believe that requiring HHAs to report new items that are
currently included in the AHC HRSN Screening Tools would further
standardize the screening of SDOH across patient assessment instruments
and the various quality reporting programs. For example, our proposal
would align, in part, with the

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