The National Association for Home Care and Hospice (NAHC) recently filed a lawsuit against the Department of Health and Human Services (HHS) over cuts to Medicare payment rates to home health agencies. The cuts amount to a 3.9% pay cut for 2023 and a proposed 5.7% rate cut for 2024. In the filing, NAHC alleges that the cuts will have “disastrous consequences” for access to care.
The filing argues that regulators used an “illogical and invalid methodology” to analyze home health spending, which has resulted in payments being “slashed” for home health services. The adjustments are made in response to a Congressional direction that the Centers for Medicare and Medicaid Services (CMS) change the home health payment methodology.
In 2018, Congress directed the agencies to change the way Medicare pays for home health services, focusing on the complexity of care provided, not the number of therapy sessions. Additionally, the agencies calculated a 30-day episode of care instead of the 60-day version. The changes went into effect in 2020. The new payment system was supposed to be budget neutral, meaning it should not have resulted in an increase nor decrease in total Medicare payments and the agency was to update payments based on how they thought home health agencies would change their practices.
However, CMS proposed the 2024 rule for reimbursement, resulting in $375 million less paid to providers than they received in 2023. In doing so, the agency said it determined Medicare paid more under the new model and the adjustment that went into effect in 2023 was half of what was estimated at the time of implementation.
NAHC sued in response to the final rule but also citing the 2024 proposed rule, in part alleging that the rules violate the Congressional orders as the agency is not measuring changes in behavior, but it is actually reducing home health expenditure and the rule is still tying payments to the amount of therapy provided, in contradiction to the Congressional intent.
NAHC notes that while the “[final] rule purports to implement Congress’s instruction to measure the difference on aggregate expenditures of assumed and actual behavior changes, the rule does not measure either assumed or actual behavior changes at all, and it certainly does not calculate the difference of their impact on aggregate expenditures.” The agency goes on to argue that the final rule for 2023 “cuts payments because home health agencies have predictably provided fewer therapy sessions” and that it “arbitrarily and capriciously sets payment rates at a level that will result in substantial financial harm to numerous home health agencies across the country.”
If these changes are not corrected, NAHC states, “the final rule will leave numerous Medicare beneficiaries with limited or no access to vital home health services, directly contrary to Congress’s intent.” Instead, the lawsuit notes, “the Secretary shows no sign of reversing course,” and “applied the same flawed methodology to propose yet another decrease in payments for home health agencies” in the proposed 2024 rule.
NAHC asks the court to vacate agency actions that are found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law, and remand any matters herein to the Secretary.” It also asks for HHS to change the regulations to comply with the statutory requirements, and the court to enter an injunction that directs HHS to withdraw or suspend the final rule (to bring it into compliance) and withhold applying the new proposed 2024 rule until the proper revisions have been made to the proposed rule so it will also be in “compliance with the statute.”
Proposed Rule Comments
Comments to the proposed rule for 2024 can be submitted through August 29, 2023.