CMS issues 2023 Home Health Prospective Payment System rule (2023)

On June 17, 2022, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2023 Home Health Prospective Payment System (HH PPS) Rate Update proposed rule, which would update Medicare payment policies and rates for home health agencies (HHAs).

This rule includes proposals and routine updates to the Medicare Home Health PPS and the home infusion therapy services’ payment rates for CY 2023, in accordance with existing statutory and regulatory requirements. In addition, CMS is proposing to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for any increases or decreases in aggregate expenditures, as a result of the difference between assumed behavior changes and actual behavior changes, due to the implementation of the Patient-Driven Groupings Model (PDGM) and 30-day unit of payment. CMS is soliciting comments on how best to implement a temporary payment adjustment for CYs 2020 and 2021. CMS is also soliciting comments on the collection of telehealth data on home health claims to allow CMS to analyze the characteristics of the beneficiaries utilizing services furnished remotely. The actions CMS is taking in this proposed rule would help improve patient care and also protect the Medicare program’s sustainability for future generations by serving as a responsible steward of public funds.

Proposals and Updates to the HH PPS for CY 2023

This rule proposes routine, statutorily required updates to the home health payment rates for CY 2023. CMS estimates that Medicare payments to HHAs in CY 2023 would decrease in the aggregate by -4.2%, or -$810 million compared to CY 2022, based on the proposed policies. This decrease reflects the effects of the proposed 2.9% home health payment update percentage ($560 million increase), an estimated 6.9% decrease that reflects the effects of the proposed prospective, permanent behavioral assumption adjustment of -7.69% ($1.33 billion decrease), and an estimated 0.2% decrease that reflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($40 million decrease).

(Video) 2023 Home Health Proposed Payment Rule

Proposed Permanent Cap on Wage Index Decreases

To achieve the policy goal of increased predictability in home health payments, while aligning with proposals in the FY 2023 Inpatient Prospective Payment System proposed rule and other proposed rules, this rule proposes a permanent, budget neutral approach to smooth year-to-year changes in the pre-floor/pre-reclassified hospital wage index. Specifically, this rule proposes a permanent 5% cap on negative wage index changes (regardless of the underlying reason for the decrease) for home health agencies.

Recalibration of Patient-Driven Groupings Model (PDGM) Case-Mix Weights

Each of the 432 payment groups under the PDGM has an associated case-mix weight and Low Utilization Payment Adjustment (LUPA) threshold. CMS’ policy is to annually recalibrate the case-mix weights and LUPA thresholds using the most complete utilization data available at the time of rulemaking. In this proposed rule, CMS is proposing to recalibrate the case-mix weights (including the functional levels and comorbidity adjustment subgroups) and LUPA thresholds using CY 2021 data to more accurately pay for the types of patients HHAs are serving.

(Video) CMS Final Rule For Fiscal Year 2023 Skilled Nursing Facility Prospective Payment System

PDGM and Behavioral Assumptions

On January 1, 2020, CMS implemented the home health PDGM and a 30-day unit of payment, as required by the Bipartisan Budget Act of 2018. The PDGM, which Congress required, better aligns payments with patient care needs, especially for clinically complex beneficiaries that require more skilled nursing care rather than therapy. The law required CMS to make assumptions about behavior changes that could occur because of the implementation of the 30-day unit of payment and the PDGM. In the CY 2019 HH PPS final rule with comment period, CMS finalized three behavioral assumptions (clinical group coding, comorbidity coding, and LUPA threshold). The law also requires CMS to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026, and to make temporary and permanent increases or decreases, as needed, to the 30-day payment amount to offset such increases or decreases. Additionally, in the CY 2019 HH PPS final rule (83 FR 56455), we stated that we interpret actual behavior change to encompass both behavior changes that were previously outlined, as assumed by CMS when determining the budget-neutral 30-day payment amount for CY 2020, and other behavior changes not identified at the time the 30-day payment amount for CY 2020 is determined. In the CY 2022 home health proposed rule, CMS solicited comments on a repricing methodology to determine the impact of behavior changes on estimated aggregate expenditures. This CY 2023 proposed rule proposes the repricing method, which calculates what the Medicare program would have spent had the PDGM not been implemented in CYs 2020 and 2021, assuming that HHAs would have provided home health services in the same way they do under the PDGM, compared to what actual home health expenditures were under the PDGM in CY 2020 and CY 2021.

Using this method, we are proposing a -7.69% permanent adjustment to the 30-day payment rate in CY 2023 to ensure that aggregate expenditures under the new payment system (PDGM) would be equal to what they would have been under the old payment system. While the law also requires CMS to implement one or more temporary adjustments to retrospectively offset for such increases or decreases in estimated aggregate expenditures, CMS also has the discretion to implement these adjustments in a time and manner deemed appropriate, therefore, CMS is not proposing a temporary payment adjustment in CY 2023. However, we are soliciting comments on how best to implement a temporary payment adjustment, estimated to be $2.0 billion for excess estimates in CYs 2020 and 2021.

Comment Solicitation on the Collection of Data on the Use of Telecommunications Technology under the Medicare Home Health Benefit

(Video) #32 - Bracing for 2023 CMS Payment and Regulatory Changes with Claire Ernst, JD

CMS finalized policy changes regarding the use of services furnished via telecommunications systems in the CY 2021 HH PPS final rule. However, the collection of data on the use of telecommunications technology under the home health benefit is limited to a broad category of telecommunications technology costs under administrative costs on the HHA cost reports (reported at the agency level). This proposed rule solicits comments on the collection of data on the use of such services furnished using telecommunications technology on the home health claims (at the individual beneficiary level). Collecting data on the use of telecommunications technology on home health claims would allow CMS to analyze the characteristics of the beneficiaries utilizing services furnished remotely, and could give us 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 beneficiaries.

Updates to the Home Infusion Therapy Benefit for CY 2023

CMS is updating the home infusion therapy services payment rates for CY 2023 as required by law. Section 1834(u)(3) of the Act specifies that annual updates to be equal to the percent increase in the Consumer Price Index for all urban consumers (CPI–U) for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment for CY 2023. The CPI-U for June 2022 was not yet available at the time of this proposed rule.

CMS is proposing to end the suspension of non-Medicare / non-Medicaid data for HHA patients. HHAs would be required to submit all-payer OASIS data for purposes of the HH Quality Reporting Program (QRP), beginning with the CY 2025 program year.

(Video) CMS Proposed Rule For FY 2023 Skilled Nursing Facility Prospective Payment System

For the Expanded HHVBP Model, CMS is proposing to:

· add definitions for HHA baseline year and Model baseline year, and remove the previous definition of baseline year;

· change the HHA baseline year from CY 2019 to CY 2022 for existing HHAs with a Medicare certification date prior to January 1, 2019, and from 2021 to 2022 for HHAs with a Medicare certification date prior to January 1, 2022 starting in the CY 2023 performance year; and,

· change the Model baseline year from CY 2019 to CY 2022 starting in CY 2023.

(Video) 2023 Medicare Regulatory Update: IPPS Final Rule

Health Equity Request for Information (RFI)

CMS is seeking stakeholder feedback on our work around health equity measure development for the Home Health QRP and the potential future application of health equity in the Expanded HHVBP Model’s scoring and payment methodologies.

CMS release


Which is a consequence of the prospective payment system? ›

Under PPS, a hospital may experience an increase or decrease in its overall operating ratio, depending on whether it incurs a Medicare gain or loss. The incentive to economize on inpatient care and substitute post-hospital services was reasoned to be negatively related to this financial impact.

What are the disadvantages of e payment system? ›

Disadvantages of Online Payments
  • Technical problems. ...
  • Password threats. ...
  • Cost of fraud. ...
  • Security Concerns. ...
  • Technological illiteracy. ...
  • Limitations on amount and time. ...
  • Disputed transactions. ...
  • Loss of smart cards.
26 Jul 2022

What are the different advantages and disadvantages of e payment system? ›

Let us see what are the main advantage as well as disadvantages of this payment method.
  • Advantages:
  • Increased speed:
  • Increased Sales:
  • Instant Receipts:
  • Better Deals:
  • Disadvantages:
  • Service Fees:
  • Risk of Theft:
23 Jul 2021

What is a prospective payment system means? ›

A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services).

What are the main advantages of a prospective payment system? ›

Thus, the benefits of prospective payment systems are based on shifting the risk of treating a population of patients to the provider, formulating a fair payment structure that encourages providers to deliver high-value healthcare.

Why did Medicare implement the prospective payment system? ›

The central objectives of PPS were to reduce rates of increase in Medicare inpatient payments and in overall hospital cost inflation.

What is disadvantages of online transaction? ›

Disadvantages of online payment

Without exceptional identity verification measures, such as biometric and facial recognition, any person can use cards and e-wallets belonging to someone else and get away with it. These security concerns might make some people reluctant to use online payment systems.

What are the disadvantages of payment banks? ›

Payment banks cannot issue credit cards. It cannot accept time deposits or NRI deposits. It cannot issue loans. It cannot set up subsidiaries to undertake non-banking financial activities.

What are the advantages and disadvantages of cashless payment modes? ›

In addition to simply eliminating the costs and hassles of managing currency, going cashless may also reduce certain types of crime. The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more.

What are the disadvantages of e transfer? ›

The biggest drawback with Interac e-Transfers is the lower transaction limit, when compared to EFTs. Most banks place a limit of $3,000 per day, which can be challenging if you're looking to move larger sums of money.

What are the problems with traditional payment system? ›

Lack of Flexibility

Something traditional banking payment gateways often don't have. A rigid, inflexible payment gateway can be costly and limit your ability to migrate to a different financial institution, add new features or access reduced financial institution costs.

What are the advantages and disadvantages of direct debit? ›

Whereas card networks tend to cost around 3-5% for transactions, direct debit tends to be much cheaper at around 1%. There is a lower likelihood of payment failures. Card payments may fail due to expiry or cancellation, whereas direct debits are linked to bank details and therefore remove this possibility.

Why was the prospective payment system established? ›

Prospective payment systems are intended to motivate providers to deliver patient care effectively, efficiently and without over utilization of services. The concept has its roots in the 1960s with the birth of health maintenance organizations (HMOs).

What is the difference between PPS and DRG? ›

Acute Inpatient Hospitals

The PPS is the DRG. The DRG is based on the patient diagnosis. The DRG payment is per stay. The amount of reimbursement is based on the relative weight of the DRG.

What are the classification systems used with prospective payments? ›

PPS classification is based on the Ambulatory Payment Classification System (APC).

How do prospective payment systems Ppses and federally qualified healthcare centers FQHCs impact reimbursement practices? ›

FQHC PPS is a bundled payment that drives efficiency, not cost-based reimbursement. Rather than being paid fee-for-service, FQHCs receive a single, bundled rate for each qualifying patient visit. provide – indeed on average, PPS covers 82% of FQHCs' costs of caring for Medicaid patients.

What are the different types of payment systems in healthcare? ›

Four payment methods (fee-for-service, discounted fee-for-service, capitation, and salary) and three payment adjustments (withholds, bonuses, and retrospective utilization targets) are the basis for nearly all contracts between health plans and your physicians, and they are described below.

What are the classification systems used with prospective payments? ›

PPS classification is based on the Ambulatory Payment Classification System (APC).

What is the outpatient prospective payment system? ›

The Outpatient Prospective Payment System (OPPS) is the system through which Medicare decides how much money a hospital or community mental health center will get for outpatient care provided to patients with Medicare. The rate of reimbursement varies with the location of the hospital or clinic.


1. FY 2023 CMS Proposed Rule: Hospital Inpatient & Long Term Care Hospitals Prospective Payment System
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3. E/M 2023 Changes - A Quick Overview
4. 2023 Quality Payment Program Proposed Rule Overview
5. CMS Career Spotlight: Medicaid and Children’s Health Insurance Program and Minority Health Issues
6. CMS Final Rule For Home Health For The Calendar Year 2022
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