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Hello there, home care comrades—this is your on-the-ground update on the latest shakeup in the home healthcare industry. Today, we’re diving into the CY 2025 Home Health Proposed Rule, hot off the press from Centers for Medicare & Medicaid Services (CMS). 

So, buckle up—there are some major shifts in store. Let’s break it down.

Payment rate updates: Big changes for your bottom line

CMS is proposing a new formula for how home health agencies get reimbursed:

CMS is proposing a 4.067% permanent payment adjustment, a move aimed at rebalancing the Patient-Driven Groupings Model (PDGM). They’re looking to account for differences between expected and actual behavior changes since PDGM first hit the scene. The goal? Bring more balance and accuracy to the system—but it’s not without its ripple effects.

In more concerning news, despite a 2.5% payment bump to account for inflation and economic trends, it’s not all good news for agencies. Add in a 3.6% reduction tied to PDGM and another 0.6% decrease due to a proposed fixed-dollar loss ratio, and we’re staring down an overall 1.7% net decrease in payments—roughly a $280 million cut compared to last year. 

This could mean tighter budgets and tough decisions for home health agencies across the board.

But wait, there’s more. CMS is continuing its push for clawbacks on overpayments from past years. Combine that with rising staffing costs and growing financial pressures, and it’s no surprise providers are worried about how this all might impact care delivery. 

It’s a perfect storm brewing for an industry already grappling with caregiver shortages and increased demand.

The big question

While we’re seeing some adjustments here, the question remains—will agencies be able to manage the new numbers, or will these changes hit them where it hurts? 

Whatsoever may be the case, agencies will need to sharpen their pencils and prepare for a potential squeeze on their revenue streams.

Behavioral adjustments: CMS plays defense

Next up—behavioral adjustments. CMS isn’t just standing by and hoping everything works out. They’re implementing what they call “behavioral assumptions,” anticipating that some providers may try to game the system. For example, agencies might increase their reported therapy visits or modify coding practices to maximize payments.

The response? New adjustments aimed at preventing these practices. These adjustments are aimed at ensuring that payment structures are fair and accurate across the industry.  

The big question

It’s a preemptive strike designed to maintain fairness, but it could lead to tighter reimbursement policies. Some agencies are concerned about how these assumptions will play out in practice—and whether they’ll see cuts to payments that they weren’t expecting.

HHVBP Model: A push toward performance

The Home Health Value-Based Purchasing (HHVBP) model is getting a facelift. This part of the rule encourages agencies to focus on quality of care, not just quantity. 

That means if you’re delivering high-quality service and meeting performance metrics, you’ll see a reward. But if not, well, the consequences could be financially painful. 

The new model is a clear signal from CMS: quality care isn’t optional—it’s the new normal.

The big question(s)

• Agencies worry that it could lead to financial penalties if they fall short of meeting these strict criteria.
• They doubt whether they’ll have the necessary resources to meet the heightened demands of quality care, especially when they’re already grappling with staffing shortages and budget constraints.

Telehealth: Digital tools on the rise

In a nod to the future, telehealth is also in the spotlight. CMS wants home health agencies to embrace technology, using telehealth and remote monitoring to provide care. 

This is great news for agencies already ahead of the tech curve, but for those who’ve been slower to adopt digital tools, it’s a clear message—get on board, or risk falling behind. 

The integration of remote services could reshape the way care is delivered, adding convenience but also new challenges for implementation.

The big question(s)

Agencies want to know:

• Will CMS provide adequate reimbursement for telehealth services?
• What resources or support will be available to help agencies integrate telehealth and remote monitoring tools?
• What are the specific telehealth guidelines, and how will compliance be monitored?
• How will telehealth affect client care, particularly for seniors who may be less familiar with digital technology?

What does the Rule mean for agencies?

On the one hand, there’s an opportunity for agencies to step up their quality game and potentially earn higher reimbursements through value-based care. On the other, there’s a real possibility that smaller agencies could struggle under the financial pressures of these payment adjustments. 

Staffing, training, and resource management will become even more critical as agencies navigate this new terrain.

What’s next?

The proposed Rule is open for public comment, meaning agencies, associations, and other stakeholders have the chance to voice their thoughts. 

After the comments are considered, CMS will make its final decision, with implementation slated for 2025. The countdown is on, and home health agencies should start preparing now to ensure they’re ready for whatever the final rule brings.

The last note…(or not)

And there you have it—the CY 2025 Home Health Proposed Rule, decoded and delivered. Whether you’re ready to embrace the changes or you’re bracing for impact, one thing’s clear: 2025 is going to bring big shifts to the home care industry. 

Stay tuned for more updates as this story develops.