The U.S. Centers for Medicare & Medicaid Services (CMS) announced its final payment rule for home health services for calendar year 2025 on Friday. This rule includes a projected aggregate increase of 0.5%, equating to $85 million, in home health payments compared to 2024. However, it also introduces a permanent cut starting in the new year.

According to CMS’s fact sheet, “CMS estimates that Medicare payments to home health agencies (HHAs) in CY 2025 would increase in the aggregate by 0.5%, or $85 million, compared to CY 2024.” The new rule establishes a permanent prospective adjustment of -1.975% to the CY 2025 payment rate to reflect the ongoing implementation of the Patient-Driven Groupings Model (PDGM). Previous reductions of 3.925% and 2.890% were applied for CY 2023 and CY 2024, respectively, both of which were also half of the estimated necessary adjustments.

In June, CMS proposed a more significant reduction of 1.7%, or about $280 million, along with a permanent adjustment of -4.067% for the upcoming year. The finalized adjustment is lower than what was initially proposed.

This marks the third consecutive year that CMS has enforced permanent cuts to home health payments.

Steven Landers, CEO of the National Alliance for Care at Home, expressed concern about these developments, stating, “CMS views reduced access to home health services, the closure of numerous agencies, and a decline in Medicare spending as ‘budget neutral.’ While lowering the proposed permanent cut may help, we need CMS to halt the dismantling of these vital services. The projected increase in Medicare spending for 2025 fails to address years of unwarranted cuts and the pressing inflationary pressures affecting care. Access to home health is a critical issue for vulnerable homebound beneficiaries.”

Providers responded to the news, including AccentCare, one of the largest home health organizations in the U.S. An AccentCare spokesperson stated, “CMS’s actions continue to undermine the Medicare home health benefit, leading to a significant reduction in access to quality home care. Despite the administration’s professed support for home care, these further cuts contradict that commitment. It is time for Congress to intervene to protect the Medicare home health benefit.”

In addition to payment adjustments, CMS announced several other changes in the rule. Notably, it will implement updates to the Conditions of Participation (CoPs) to reduce “avoidable care delays.” Home health providers will now be required to establish and maintain a “patient acceptance-to-service policy” that considers the anticipated needs of prospective patients, their caseload, staffing levels, and staff competencies.

Referral rejection rates have surged in recent years, largely attributed to staffing shortages. CMS aims to improve transparency by requiring HHAs to provide accurate public information about their services and any limitations.

The rule also includes adjustments to Low-Utilization Payment Adjustments (LUPAs) and updates to the Outcome and Assessment Information Set (OASIS). CMS plans to introduce a specific occupational therapy LUPA add-on factor, moving away from the temporary use of the physical therapy LUPA as a proxy. Additionally, CMS is making updates to the OASIS-E data elements and streamlining follow-up visit requirements.

Lastly, CMS is enhancing oversight of the home health sector, especially concerning providers reactivating their Medicare billing privileges. New providers may be subject to a provisional period of enhanced oversight to mitigate fraud, waste, and abuse.