by Kristin Rowan, Editor

CMS Proposed Rule for 2025

Citing “budget neutrality adjustments”, the Centers for Medicare & Medicaid Services (CMS) June 26 issued its proposed rule for 2025 for the home health prospective payment system. Here are the highlights:

  • Overall net reduction in home health payments by $280 million dollars
  • Market basket update of 3.0%
  • Productivity adjustment of -0.5%
  • Base payment rate reduction of 4.067% due to PDGM
  • Update fixed dollar loss for outlier payments
  • Update LUPA thresholds, functional impairment levels, and comorbidity adjustment subgroups
CMS Proposed Rule CY 2025

We did the math. This is an overall reduction in payment by 3.6%. This come after multiple years of similar adjustments that reduced the overall payment rates.

Included in the proposal is an additional adjustment to the fixed-dollar loss amount for high-cost outliers. This will reduce payments another 0.6%.

As we focus primarily on the payment reductions, CMS is looking at additional data. CMS provides a detailed account of the requirements for behavior assumptions and actual changes, as outlined in earlier rules. Using CY 2023 claims, and the methodology from the CY 2023 final rule, CMS believes they paid more under the PDGM system than they would have under the old system, leading to the deduction in base payment rate.

HHA Conditions of Participation

In addition to the payment cuts, CMS is also proposing an update to the Conditions of Participation. This new standard would require HHAs to develop, apply, and maintain a policy for accepting new patients into service.

According to the proposal, CMS is not moving to add or modify any quality measures from the Quality Reporting Program. They do, however, propose to modify some patient assessment items related to health-related social needs. This would require HHAs to collect and report data related to living situation, food, and utilities. This proposed modification would be implemented beginning with the calendar year 2027 QRP.

COVID-19 Reporting

Also included in the CY 2025 proposal is a revision to the infection prevention and control requirements for long-term care facilities. The revision calls for an extension on reporting some of the Covid-19 data elements to the Centers for Disease Control and Prevention. It also requires influenza and RSV reporting beginning January 1, 2025.

Additional Items

CMS also used data from OASIS-D and OASIS-E, making adjustments for missing and altered data from the two different information sets. The proposed rule includes a new methodology to address the issue of varying data sets from OASIS-D to OASIS-E.

LUPA add-ons are meant to establish equitable compensation for all home health services. CMS is proposing an occupational therapy (OT) specific LUPA add-on factor, rather than continuing to use the PT add-on factor for OT.

Payment groups under the PDGM model use an associated case-mix weight and LUPA threshold, specific to each of the 432 payment groups. CMS is proposing a recalibration of the case-mix weights, including funtional levels and comorbidity adjustment subgroups.

Request for Information: CMS is seeking feedback on Future Performance Measure Concepts for the expanded HHVBP Model. New proposed measure include care activities like bathing and dressing, which are not currently included in the function measures. Additional potential measures include family caregiver status and claims-based falls with major injuries.


The American Hospital Association has expressed “serious concerns” about the payment rate adjustments in the proposed rule. “We urge the agency to adequately resource HH providers as they are a critical part of the care continuum,” AHA wrote. “We are particularly concerned about the substantial size of the agency’s proposed budget neutrality adjustment, a cut of 5.653%, and again call on CMS to withdraw it.” The AHA has asked CMS to revise its accounting methodology to more accurately account for changes in the payment system and care delivery due to PDGM.

President of the National Association for Home Care and Hospice (NAHC), Bill Dombi, today released a statement:

“The 2025 proposed version of Medicare home health payment rates shows the ongoing and predictable rate reductions impacting home health agencies since the beginning of the new payment model in 2020. That decline is solely due to a fatally flawed budget neutrality methodology that CMS employed to arrive at the rate adjustments,” stated NAHC President William A. Dombi.

“While this means that Medicare spending on home health services will continue to decline as costs continue rise, the more important element is that care access and utilization continues to decline at significant levels. When Congress set Medicare payment reform in motion starting in 2020, it was not planned or even expected that the outcome would be that nearly 500,000 Medicare beneficiaries would be able to access care or that those who could find care would get fewer services,” he added.

“Congress must step in immediately to put an end to this dismantling of the Medicare home health benefit. The value of home health services is not only undeniable; it has been proven by CMS in its analysis and expansion of the highly successful Home Health Value Purchasing demonstration project. We call on Congress to correct what CMS has done and prevent the growing harm to the millions of highly vulnerable home health patients that depend and will depend in the future on this essential Medicare benefit. Fortunately, longstanding advocates for home health care, Senator Debbie Stabenow (D-MI) and Senator Susan Collins (R-ME) have introduced S. 2137 to eliminate the rate cuts. We urge the Congress to support this legislation and enact it into law before the end of the year. The 2025 rate cuts must not take effect” Dombi added.


CMS has issued a fact sheet with more details on their assumptions and calculations. You can access the fact sheet here. The proposed rule can be downloaded here.

CMS will accept comments on the proposed rule through August 26th.

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Kristin Rowan, Editor
Kristin Rowan, Editor

Kristin Rowan has been working at Healthcare at Home: The Rowan Report since 2008. She has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in event planning, sales, and marketing strategy. She has recently taken on the role of Editor of The Rowan Report and will add her voice to current Home Care topics as well as marketing tips for home care agencies. Connect with Kristin directly or

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