Home Health & Hospice Week

Recap: Back in June, the Centers for Medicare & Medicaid Services proposed a 5 percent cap on wage index decreases for HHAs, as it had already done for multiple other provider types. While providers were happy to see this problem addressed, they asked CMS to take action on many other wage index problems as well. Those issues ranged from inequities between the hospital and home health index, steep drops in index values that predate this proposal, and the still-serious impact a 5 percent index drop would have on an agency (see HHHW, Vol. XXXI, No. 33).

In the home health final rule released on Oct. 31, CMS “finalizes a permanent, budget neutral 5 percent cap on negative wage index changes (regardless of the underlying reason for the decrease) for home health agencies to smooth year-to-year changes in the pre-floor/pre-reclassified hospital wage index,” the agency notes in its fact sheet about the rule. But CMS doesn’t act on any of providers’ other concerns.

“While we appreciate these recommendations, these comments are outside the scope of the proposed rule,” CMS responds in the final rule. “Any changes to the way we adjust home health payments to account for geographic wage differences beyond the wage index proposals discussed in the CY 2023 HH PPS proposed rule (87 FR 37600), including the creation of a home health specific wage index and the creation of a home health floor, would have to go through notice and comment rulemaking,” it notes.

In regards to reclassification, “because the reclassification provision applies only to hospitals, we continue to believe the use of the pre-floor and pre-reclassified hospital wage index results in the most appropriate adjustment to the labor portion of the home health payment rates,” CMS offers. “This position is longstanding and consistent with other Medicare payment systems (for example, SNF PPS, IRF PPS, and Hospice),” it adds in the rule.

In response to the multiple commenters that asked for a lower threshold of 2 percent, CMS responds “the 5-percent cap on wage index decreases is an adequate safeguard against any significant payment reductions and … lowering the cap on wage index decreases to 2 percent is not appropriate.” Likewise, using a non-budget-neutral methodology would also “not be appropriate,” CMS maintains.

CMS also shoots down suggestions to extend the cap to big wage index drops seen in 2022 as a result of Office of Management and Budget MSA changes. “While such a policy may benefit some providers, it would change the wage index budget neutrality factor, and would impact the CY 2023 payment rates for all providers without allowing them the opportunity to comment,” according to the rule.

Bottom line: “We believe this methodology will maintain the HH PPS wage index as a relative measure of the value of labor in prescribed labor market areas, increase predictability of home health payments for providers, and mitigate instability and significant negative impacts to providers resulting from significant changes to the wage index,” CMS concludes.

Note: A link to the updated wage index is in the “Downloads” section online at www.cms.gov/medicaremedicare-fee-service-paymenthomehealthppshome-health-prospective-payment-system-regulations/cms-1766-f.