CMS Finalizes Home Health Care Increase in 2025

The Centers for Medicare & Medicaid Services (CMS) issued its final rule updating the Home Health Agencies (HHA) payment rates and policies for the calendar year (CY) 2025 Home Health prospective payment system (PPS). CMS estimates a 2.7% increase, but when combined with the behavioral offset and other payment changes in the rule, the update will be a 0.5% increase — approximately $85 million — compared to CY 2024.

Also included in the final rule are changes to the Home Health Quality Reporting Program (HHQRP) and the HH Value-Based Purchasing Program (HHVBP) for 2025 and future years.

Read on for more information or download the final rule from the Federal Register.

Market basket and payment updates

CMS finalized a 2.2% increase in the home health payment rates for CY 2025. This stems from the finalized 2.7% market basket update minus the required productivity adjustment of 0.5%. 

In addition, payment updates include a 1.8% decrease to the national, standardized 30-day payment rate, and reflects the full permanent behavioral adjustment. The adjustment accounts for the differences between the actual and assumed behavior changes resulting from CMS’ implementation of the Patient-Driven Groupings Model (PDGM). All payment updates combined result in a 0.5% increase compared to 2024.

With respect to the behavioral offset, CMS finalized a methodology to “satisfy the statutory requirements … reduce the need for any future large permanent adjustments and help slow the accrual of the temporary payment adjustment amount.” A reminder CMS has already finalized two previous reductions to account for half of the permanent adjustment needed — 3.925% in CY 2023 and 2.890% in CY 2024. The final 2025 percentage amount is based on final CY 2023 claims. In response to concerns expressed in comments, CMS is only finalizing half of the adjustment, 1.975% in CY 2025. 

CMS annually updates the PDGM case-mix weights. For CY 2025, the case-mix finalized budget neutrality factor is 1.0039.

CMS finalized a fixed-dollar loss ratio of 0.35 for CY 2025 when determining outlier payments. 

CMS finalized an occupational therapy (OT) low utilization payment adjustment (LUPA) add-on. CMS is establishing a definitive OT-specific LUPA add-on factor and is discontinuing its past temporary practice of using the physical therapy (PT) LUPA add-on factor as a proxy. CMS finalized using the same methodology used for the PT, skilled nursing, and speech-language pathology factors. The OT LUPA add-on factor is finalized at 1.7238.  

CMS finalized the separate payment of disposable negative pressure wound therapy to be set equal to the CY 2024 payment amount of $270.09 updated by the Consumer Price Index for all urban consumers for June 2024 less the productivity adjustment. The CY 2025 rate is set at $276.57.

CMS finalized a $430.99 payment rate for Intravenous Immune Globulin items and services. This is based on the CY 2024 payment rate of $420.48 adjusted by the finalized home health payment update 2.5%.

Wage index updates 

As it has done in other 2025 Medicare payment mechanisms, CMS finalized the adoption the Office of Management & Budget (OMB) July core-based statistical area (CBSA) delineations. Doing so impacts area wage indexes. 

The new OMB delineations have some larger changes resulting in urban CBSAs becoming rural, rural CBSAs becoming urban — among others. A series of tables in the final rule outlines the following:

• Table 13 outlines changes specific to Connecticut’s request to replace its eight counties with nine planning regions
• Table 14 lists the 54 urban counties that become rural
• Table 15 lists the 54 rural counties that become urban
• Table 16 lists the urban CBSAs that change names or numbers
• Table 17 lists urban areas that are subsumed into another CBSA
• Table 18 lists the 73 counties that switch to a new or modified urban CBSA
• Table 19 lists the counties CMS indicated would need to use a transition code (50XXX)

CMS did not finalize any phase-in of these changes; rather, it believes its current annual 5% cap on any wage-index changes should be sufficient. 

Finally, table 20 includes information on North Dakota’s wage index and CMS notes Delaware will now have one rural county — which means it will have a rural wage index value of 1.0385. 

Home Health Quality Reporting Program

CMS is finalizing four new measures, modifying one existing measure, and updating the OASIS all payer data collection. The measures relate to social determinants of health, an ongoing focus for the administration. The new measures involve living situations, food, and utilities beginning with the CY 2027 reporting year.

CMS finalized the modification of the transportation item   to align with the Inpatient Psychiatric Facility Quality Reporting and Inpatient Quality Reporting programs beginning with the CY 2027 program year.

CMS finalized the change to the data collection to use the start of care (SOC) time point for non-Medicare/non-Medicaid patients. The SOC is the first assessment that can be submitted either on or after January 1, 2025, for the phase-in period or on or after July 1, 2025, or for the mandatory period.

Home Health Value-Based Purchasing model

CMS summarizes comments received in response to the RFI in the proposed rule on future performance measure concepts for the HHVBP model. The new measure concepts include:

• Family caregiver
• Falls with injury (claims based)
• Medicare spending per beneficiary
• Function measures to complement existing cross-setting discharge function

CMS is continuing to focus on integrating health equity concepts into the expanded HHVBP model. CMS is looking at incorporating the Health Equity Adjustment like the SNF Value-Based Purchasing in FY 2027 and adding measures that more directly focus on certain disparities. Examples of these are measures for underserved communities, based on within provider differences in performance for underserved communities, and based on the worst performing group. 

Home Health Conditions of Participation (CoP) 

CMS finalized the requirement for home health agencies to establish an acceptance to service policy. This is to help address concerns related to the variations in initiation of home health services, referrals, and the implications for prospective and current patients. 

The policy would require agencies to address the agency’s case load and case mix (volume and complexity of patients currently receiving care), anticipated needs of the prospective patient, staffing levels, and the skills and competencies of the staff.

CMS does not intend this rule to replace the current acceptance policies agencies have in place, but to complement them. CMS indicates this policy should be applied consistently regardless of payer so home health agencies only accept patients for whom there are reasonable expectations the agency can meet the patient’s needs.

CMS also finalized the requirement for home health agencies to make public accurate information regarding the services offered, limitations related to specialty services, service duration or frequency. This requires home health agencies to make limitations due to variations in staffing to further inform the referral sources. 

Respiratory illness reporting for LTC facilities

CMS has finalized the replacement of the respiratory reporting set to expire on December 31, 2024, with new reporting requirements on January 1, 2025. CMS finalized the continuation of the weekly reporting through NHSN and electronic reporting about COVID-19, influenza, and RSV in a standard format. The data required for this reporting would be facility census, resident vaccination status for a set of respiratory illnesses, confirmed resident cases of a set of respiratory illnesses, and hospitalized residents with a set of respiratory illnesses.

How we can help

Connect with CLA for further clarification on this final rule and how it impacts home health agencies. Our health care team is on the front lines of regulatory, policy, and payment changes for providers across the continuum and can provide guidance to meet your specific needs.