CMS recently released the 2023 Home Health Final Rule (CMS-1766-F), which includes updates to the home health and home infusion therapy services payment rates for calendar-year (CY) 2023.
The provisions of the CY 2023 proposed home health payment rule issued earlier this year were estimated to result in an aggregate decrease in payments of 4.2%; however, the provisions in the final payment rule are estimated to result in an aggregate increase in payments of 0.7%. CMS estimates this will result in an overall $125 million increase in Medicare home health payments compared to CY 2022. While the news of the finalized aggregate increase in payment rates (versus the proposed decrease) came as relief, the national standardized 30-day payment period amount for 2023 is lower than that of 2022. This is due to the payment rate update being offset by other factors as shown below.
| CY 2022 National Standardized 30-Day Period Payment |
CY 2023 Permanent Behavioral Adjustment Factor |
CY 2023 Case-Mix Weights Recalibration Neutrality Factor |
CY 2023 Wage Index Budget Neutrality Factor |
CY 2023 Home Health Payment Update |
CY 2023 National Standardized 30-Day Period Payment |
| $2,031.64 | 0.96075 | 0.9904 | 1.0001 | 1.040 | $2,010.69 |
The aggregate increase of 0.7% includes a 4% increase to the home health payment update percentage, less an estimated 3.5% decrease for the phase-in of a prospective permanent behavioral assumption adjustment and an estimated 0.2% increase for the fixed-dollar loss ratio used for outlier payments.
The permanent behavioral adjustment decrease represents half of the total rate reduction that CMS calculated was due for overpayments made in 2020 and 2021, based on its conclusion of assumed behavioral changes in coding and service provided with the transition to the Patient-Driven Grouping Model (PDGM) payment model, as this change in payment model was intended to be budget neutral. The second half of the related rate reduction is set to be implemented in CY 2024.
Effective CY 2023 and beyond, a permanent cap on wage index decreases was finalized, whereby the decrease to the geographic area wage index from the previous year is capped at 5%.
In an effort to more accurately correlate payment to the type of patients served under the home health benefit, CMS finalized the recalibration of case-mix weights and Low Utilization Payment Adjustment (LUPA) thresholds using CY 2021 data.
Included in CMS’ overall estimate of increased spending for home health payments for CY 2023 are LUPAs that are paid on a per-visit basis. These per-visit rates increased from CY 2022 to CY 2023 for all disciplines as shown below.
| Home Health Discipline | CY 2022 Per-Visit Payment Amount |
CY 2023 Wage Index Budget Neutrality Factor |
CY 2023 Home Health Payment Update |
CY 2023 Per-Visit Payment Amount |
| Home Health Aide | $71.04 | 1.0007 | 1.040 | $73.93 |
| Medical Social Services | $251.48 | 1.0007 | 1.040 | $261.72 |
| Occupational Therapy | $172.67 | 1.0007 | 1.040 | $179.70 |
| Physical Therapy | $171.49 | 1.0007 | 1.040 | $178.47 |
| Skilled Nursing | $156.90 | 1.0007 | 1.040 | $163.29 |
| Speech-Language Pathology | $186.41 | 1.0007 | 1.040 | $194.00 |
Home health agencies that do not submit the required quality data will incur a 2% payment reduction for the year from the rates shown in the tables above.
While overall home health estimated payment rates are expected to increase in 2023, it should be noted that the impact of the various payment rate variables could result in some agencies experiencing an increase in payments while others could experience a decrease. To help in estimating the potential payment impact on your agency, we provide this complimentary home health payment rate tool, available on forvis.com.
In addition to the home health payment rate changes, the payments for the home infusion therapy benefit for CY 2023 were also finalized at an increase of 8.7%.
Stay tuned for further analysis of information from the 2023 home health final rule coming soon. If you have any questions or need assistance, please reach out to a professional at FORVIS.