[Federal Register Volume 88, Number 217 (Monday, November 13, 2023)]
[Rules and Regulations]
[Pages 77676-77880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24455]



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Vol. 88

Monday,

No. 217

November 13, 2023

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 409, 410, 414, et al.





Medicare Program; Calendar Year (CY) 2024 Home Health (HH) Prospective 
Payment System Rate Update; HH Quality Reporting Program Requirements; 
HH Value-Based Purchasing Expanded Model Requirements; Home Intravenous 
Immune Globulin Items and Services; Hospice Informal Dispute Resolution 
and Special Focus Program Requirements, Certain Requirements for 
Durable Medical Equipment Prosthetics and Orthotics Supplies; and 
Provider and Supplier Enrollment Requirements; Final Rule

  Federal Register / Vol. 88 , No. 217 / Monday, November 13, 2023 / 
Rules and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 410, 414, 424, 484, 488, and 489

[CMS-1780-F]
RIN 0938-AV03


Medicare Program; Calendar Year (CY) 2024 Home Health (HH) 
Prospective Payment System Rate Update; HH Quality Reporting Program 
Requirements; HH Value-Based Purchasing Expanded Model Requirements; 
Home Intravenous Immune Globulin Items and Services; Hospice Informal 
Dispute Resolution and Special Focus Program Requirements, Certain 
Requirements for Durable Medical Equipment Prosthetics and Orthotics 
Supplies; and Provider and Supplier Enrollment Requirements

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule sets forth routine updates to the Medicare 
home health payment rates for calendar year (CY) 2024 in accordance 
with existing statutory and regulatory requirements. This rule--
discusses comments received regarding access to home health aide 
services; implements home health payment-related changes; rebases and 
revises the home health market basket and revises the labor-related 
share; codifies statutory requirements for disposable negative pressure 
wound therapy (dNPWT); and implements the new items and services 
payment for the home intravenous immune globulin (IVIG) benefit. In 
addition, it--finalizes changes to the Home Health Quality Reporting 
Program (HH QRP) requirements and the expanded Home Health Value-Based 
Purchasing (HHVBP) Model; implements the new Part B benefit for 
lymphedema compression treatment items, codifies the Medicare 
definition of brace, and makes other codification changes based on 
recent legislation; adds an informal dispute resolution (IDR) and 
special focus program (SFP) for hospice programs; codifies DMEPOS 
refill policy; and finalizes proposed revisions for Medicare provider 
and supplier enrollment requirements.

DATES: These regulations are effective on January 1, 2024.

FOR FURTHER INFORMATION CONTACT: 
    Brian Slater, (410) 786-5229, for home health and home IVIG payment 
inquiries.
    For general information about the Home Health Prospective Payment 
System (HH PPS), send your inquiry via email to 
[email protected].
    For information about the Home Health Quality Reporting Program (HH 
QRP), send your inquiry via email to [email protected]
    Frank Whelan (410) 786-1302, for Medicare provider and supplier 
enrollment inquiries.
    For more information about the expanded Home Health Value-Based 
Purchasing Model, please visit the Expanded HHVBP Model web page at 
https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model.
    For more information about the hospice informal dispute resolution 
and special focus program, send your inquiry to 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Executive Summary and Issuance of the Proposed Rule
    A. Executive Summary
    B. Issuance of the Proposed Rule
II. Home Health Prospective Payment System
    A. Overview of the Home Health Prospective Payment System
    B. Monitoring the Effects of the Implementation of PDGM
    C. Provisions for CY 2024 Payment Under the HH PPS
III. Home Health Quality Reporting Program (HH QRP)
    A. Background and Statutory Authority
    B. General Considerations Used for the Selection of Quality 
Measures for the HH QRP
    C. Quality Measures Currently Adopted for the CY 2024 HH QRP
    D. HH QRP Quality Measure Proposals Beginning With the CY 2025 
HH QRP
    E. Form, Manner, and Timing of Data Submission Under the HH QRP
    F. Policies Regarding Public Display of Measure Data for the HH 
QRP
    G. Health Equity Update
    H. Proposal To Codify HH QRP Data Completion Thresholds
    I. Principles for Selecting and Prioritizing HH QRP Quality 
Measures and Concepts Under Consideration for Future Years: Request 
for Information (RFI)
IV. Changes to the Expanded Home Health Value-Based Purchasing 
(HHVBP) Model
    A. Background
    B. Proposed Changes to the Applicable Measure Set
    C. Proposed Changes to the Appeals Process
    D. Public Reporting Reminder
    E. Health Equity Update
V. Medicare Home Intravenous Immune Globulin (IVIG) Items and 
Services
    A. General Background
    B. Proposed Scope of Expanded IVIG Benefit
    C. Proposed IVIG Administration Items and Services Payment
    D. Proposed Home IVIG Items and Services Payment Rate
    E. Billing Procedures for Home IVIG Items and Services
VI. Hospice Informal Dispute Resolution and Special Focus Program
    A. Background and Statutory Authority
    B. Proposed Regulatory Provisions
VII. Final Changes Regarding Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies (DMEPOS)
    A. Medicare Durable Medical Equipment, Prosthetics, Orthotics, 
and Supplies (DMEPOS) Fee Schedule Adjustments
    B. Scope of the Benefit and Payment for Lymphedema Compression 
Treatment Items
    C. Definition of Brace
    D. Documentation Requirements for Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies Products Supplied as Refills to 
the Original Order
VIII. Changes to the Provider and Supplier Enrollment Requirements
    A. Background
    B. Proposed Provisions
IX. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. Information Collection Requirements (ICRs)
    C. Submission of PRA-Related Comments
X. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Detailed Economic Analysis
    D. Regulatory Review Cost Estimation
    E. Alternatives Considered
    F. Accounting Statements and Tables
    G. Regulatory Flexibility Act (RFA)
    H. Unfunded Mandates Reform Act (UMRA)
    I. Federalism
    J. Conclusion
    K. Waiver Fiscal Responsibility Act Requirements Regulations 
Text

I. Executive Summary and Issuance of the Proposed Rule

A. Executive Summary

1. Purpose and Legal Authority
a. Home Health Prospective Payment System (HH PPS)
    As required under section 1895(b) of the Social Security Act (the 
Act), this final rule updates the payment rates for home health 
agencies (HHAs) for CY 2024. In this final rule we discuss comments 
received on our request for information (RFI) related to access to home 
health aide services. This rule finalizes a permanent prospective 
adjustment to the CY 2024 home health payment rate to account for the 
differences between assumed and actual behavior changes on estimated 
aggregate expenditures. It also finalizes the proposal to recalibrate 
the PDGM case-

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mix weights and update the LUPA thresholds, functional impairment 
levels, and comorbidity adjustment subgroups under section 
1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day periods of care 
that start in CY 2024. This rule finalizes the proposal to rebase and 
revise the home health market basket and finalizes the proposal to 
revise the labor-related share. Additionally, this rule finalizes the 
proposal to codify statutory requirements for dNPWT and updates the CY 
2024 fixed-dollar loss ratio (FDL) for outlier payments (so that 
outlier payments as a percentage of estimated total payments are not to 
exceed 2.5 percent, as required by section 1895(b)(5)(A) of the Act).
b. Home Health (HH) Quality Reporting Program (QRP)
    In accordance with the statutory authority at section 
1895(b)(3)(B)(v) of the Act, we are finalizing the addition of two 
quality measures to the HH QRP, the removal of two Outcome and 
Assessment Information Set (OASIS)-based data elements the codification 
of the previously finalized 90 percent OASIS data completion threshold 
policy in the Code of Federal Regulations (CFR) and the public 
reporting of four measures. We also note that the proposed rule 
included a request for information on future HH QRP measure concepts 
and an update on health equity in the HH QRP.
c. Expanded Home Health Value-Based Purchasing (HHVBP) Model
    In accordance with the statutory authority at section 1115A of the 
Act, we are finalizing proposed updated policies, including the 
codification of previously finalized measure removal factors, changes 
to the applicable measure set, updating the Model baseline year, and an 
amendment to the appeals process with conforming regulation text 
changes for the expanded HHVBP Model. We are also including an update 
on health equity and a reminder about public reporting.
d. Home Intravenous Immune Globulin (IVIG) Items and Services
    As required under Division FF, section 4134 of the Consolidated 
Appropriations Act, 2023 (CAA, 2023), this final rule will implement 
coverage and payment for items and services related to the 
administration of IVIG in the home of a patient with a diagnosed 
primary immune deficiency disease (PIDD).
e. Hospice Informal Dispute Resolution and Special Focus Program
    As required under Division CC, section 407 of the Consolidated 
Appropriations Act of 2021 (CAA, 2021), as codified in section 1822(b) 
of the Act, this final rule will implement a special focus program 
(SFP) for poor performing hospices that includes the SFP algorithm 
(including data sources) to identify indicators of hospice poor 
performance, the criteria for selection and completion of the SFP, 
hospice termination from Medicare, and public reporting of the SFP. We 
are also finalizing our proposed regulatory changes to implement an 
informal dispute resolution (IDR) process to provide hospice programs 
an informal opportunity to resolve disputes related to condition-level 
survey findings for those hospice programs that are seeking 
recertification for continued participation in Medicare.
f. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Products and CAA 2023 Related Changes
    Section 3712 of the Coronavirus Aid, Relief, and Economic Security 
Act (CARES) Act (Pub. L. 116-136, March 27, 2020) https://www.govinfo.gov/link/plaw/116/public/136 requires that Medicare payment 
rates for durable medical equipment (DME) in areas other than rural and 
noncontiguous areas during the coronavirus disease 2019 (COVID-19) 
public health emergency (PHE) be equal to 75 percent of the adjusted 
payment amounts (based on the DME competitive bidding program 
information), and 25 percent of the unadjusted fee schedule amounts. 
The regulations at Sec.  414.210(g)(9)(v) codified these payment rates 
for the duration of the PHE. Section 4139 of the Consolidated 
Appropriations Act (CAA), 2023 (Pub. L. 117-328, December 29, 2022) 
requires payment based on these rates through the end of the COVID-19 
PHE or December 31, 2023, whichever is later. We are finalizing the 
proposed changes to the regulations to codify these payment rates 
through the end of the COVID-19 PHE or unless otherwise specified by 
law.
    The scope of the benefit and payment for lymphedema compression 
treatment items in section 4133 of the CAA, 2023 adds section 
1861(s)(2)(JJ) to the Act, adding the Medicare Part B benefit for 
lymphedema compression treatment items effective January 1, 2024. This 
rule addresses the scope of the new benefit by defining what 
constitutes a standard or custom fitted gradient compression garment 
and determining what other compression items may exist that are used 
for the treatment of lymphedema and will fall under the new benefit.
    This rule also implements section 1834(z) of the Act in 
establishing payment amounts for items covered under the new benefit 
and frequency limitations for lymphedema compression treatment items. 
CMS expects to conduct outreach for individuals with Medicare and issue 
provider education regarding this benefit.
    The definition of brace in section 1861(s)(9) of the Act provides 
coverage under Part B for leg, arm, back, and neck braces. This rule 
codifies the existing definition of a brace found in the Medicare 
Benefit Policy Manual (CMS Pub. 100-02) and clarifies that this 
definition encompasses newer, technology-powered devices.
g. Documentation Requirements for Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies Products Supplied as Refills to 
the Original Order
    Section 1893(b)(1) of the Act, authorizes ``[r]eview of activities 
of providers of services or other individuals and entities furnishing 
items and services for which payment may be made under this title . . . 
including medical and utilization review . . .''. The requirement for 
documentation to support DMEPOS refills originally arose in response to 
concerns related to auto-shipments and delivery of DMEPOS products that 
may no longer be needed or not needed at the same level of frequency/
volume. This rule will codify our long-standing refill policy, with 
some changes. We proposed to require documentation indicating that the 
beneficiary has confirmed their need for the refill within the 30-day 
period prior to the end of the current supply. We also proposed to 
codify our requirement that delivery of DMEPOS items (that is, date of 
service) be no sooner than 10 calendar days before the expected end of 
the current supply. We sought comments for potential future rulemaking 
on ways to balance beneficiary burden with the potential program 
integrity risk of not verifying the beneficiary's need for recurring 
supplies for certain individuals with permanent conditions and will 
consider the commenter submissions.
h. Provider and Supplier Enrollment Requirements
    The purpose of our provider enrollment provisions is to strengthen

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and clarify certain aspects of the provider enrollment process. This 
includes, but is not limited to: (1) subjecting a greater number of 
providers and suppliers, such as hospices, to the highest level of 
screening, which includes fingerprinting all 5 percent or greater 
owners of these providers and suppliers; (2) applying the change in 
majority ownership (CIMO) provisions in 42 CFR 424.550(b) to hospices; 
and (3) reducing the period of Medicare non-billing for which a 
provider or supplier can be deactivated under Sec.  424.540(a)(1) from 
12 months to 6 months. These changes are necessary to help ensure that 
payments are made only to qualified providers and suppliers and/or that 
owners of these entities are carefully screened. We believe that 
fulfilling these objectives will assist in protecting the Trust Funds 
and Medicare beneficiaries.
2. Summary of the Provisions of This Final Rule
a. Home Health Prospective Payment System (HH PPS)
    In section II.B.2. of this final rule, we discuss comments related 
to access to home health aide services. In section II.C.1. of this 
rule, we are finalizing a permanent prospective adjustment of -2.890 
percent to the CY 2024 home health payment rate.
    In section II.C.2. of this rule, we are finalizing the proposal to 
recalibrate the PDGM case-mix weights, LUPA thresholds, functional 
levels, and comorbidity adjustment subgroups for CY 2024.
    In section II.C.3. of this rule, we are finalizing the proposals to 
rebase and revise the home health market basket to reflect a 2021 base 
year and revise the labor-related share.
    In section II.C.4. of this rule, we are finalizing our proposals to 
update the home health wage index, the CY 2024 national, standardized 
30-day period payment rates, and the CY 2024 national per-visit payment 
amounts by the home health payment update percentage. The final home 
health payment update percentage for CY 2024 is 3.0 percent. 
Additionally, this rule finalizes the CY 2024 FDL ratio to ensure that 
aggregate outlier payments do not exceed 2.5 percent of the estimated 
total aggregate payments, as required by section 1895(b)(5)(A) of the 
Act.
    In section II.C.5 of this rule, we finalize our proposal to codify 
statutory payment changes for negative pressure wound therapy using a 
disposable device (dNPWT).
b. Home Health Quality Reporting Program (HH QRP)
    In section III. of this final rule, we will finalize the adoption 
of the measure ``COVID-19 Vaccine: Percent of Patients/Residents Who 
Are Up to Date'' (Patient/Resident COVID-19 Vaccine) to the HH QRP 
beginning with the CY 2025 HH QRP. CMS also finalizes the adoption of 
the ``Functional Discharge Score'' (DC Function) measure to the HH QRP 
beginning with the CY 2025 HH QRP. With the addition of the Discharge 
Function measure, we are finalizing the removal of the ``Application of 
Percent of Long-Term Care Hospital (LTCH) Patients with an Admission 
and Discharge Functional Assessment and a Care Plan That Addresses 
Function'' (Application of Functional Assessment/Care Plan) measure 
from the HH QRP beginning with the CY 2025 HH QRP. CMS additionally is 
finalizing the removal of two OASIS items no longer necessary for 
collection, the M0110--Episode Timing and M2200- Therapy Need items. We 
are also finalizing technical changes to Sec.  484.245(b) to codify our 
requirement that HHAs must meet or exceed a data submission threshold 
set at 90 percent of all required OASIS and submit the data through the 
CMS designated data submission systems. Lastly, we summarize input on 
CMS's request for information on future HH QRP measure concepts and CMS 
updates on HH QRP health equity initiatives.
c. Expanded Home Health Value Based Purchasing (HHVBP) Model
    In section IV. of this final rule, we are finalizing codification 
of the HHVBP measure removal factors at Sec.  484.380. We will remove 
five and add three quality measures to the applicable measure set. 
Along with the proposed revisions to the current measure set, we 
proposed to revise the weights of the individual measures within the 
OASIS-based measure category and within the claims-based measure 
category starting in the CY 2025 performance year. We are finalizing to 
update the Model baseline year from CY 2022 to CY 2023 starting in the 
CY 2025 performance year to enable CMS to measure competing HHAs 
performance on benchmarks and achievement thresholds that are more 
current for all applicable measures. Additionally, we are finalizing to 
amend the appeals process such that reconsideration decisions may be 
reviewed by the Administrator. We are also making conforming regulation 
text changes at Sec.  484.375(b)(5). We included an update to the RFI, 
Future Approaches to Health Equity in the Expanded HHVBP Model, that 
was published in the CY 2023 HH PPS rule. We are also including a 
reminder that we will begin public reporting HHVBP performance data on 
or after December 1, 2024.
d. Home Intravenous Immune Globulin (IVIG) Items and Services
    As required under Division FF, section 4134 of the Consolidated 
Appropriations Act, 2023 (CAA, 2023), section V. of this rule finalizes 
proposed regulations to implement coverage and payment of items and 
services related to administration of IVIG in a patient's home for a 
patient with PIDD.
e. Hospice Informal Dispute Resolution and Special Focus Program
    In section VI. of this final rule, we are finalizing our proposal 
for a new hospice informal dispute resolution (IDR) process at Sec.  
488.1130 to align with the process that is available for home health 
agencies (HHAs). We proposed that the hospice IDR would address 
disputes related to condition-level survey findings following a hospice 
program's receipt of the official survey statement of deficiencies. The 
proposed IDR would provide hospice programs an informal opportunity to 
resolve disputes in the survey findings for those hospice programs that 
are seeking recertification from the State Survey Agency (SA) or 
reaccreditation from an accrediting organization (AO) for continued 
participation in Medicare. Additionally, the proposed IDR may be 
initiated for those hospice programs that are currently under SA 
monitoring (either through a complaint investigation or validation 
survey) and those in the finalized SFP. In section VI. of this rule, we 
are finalizing our proposal to add the hospice Special Focus Program 
(SFP) at Sec.  488.1135. In the final rule, we are finalizing the SFP 
algorithm (including data sources) to identify indicators of hospice 
poor performance, the criteria for selection and completion of the SFP, 
hospice termination from Medicare, and public reporting of the SFP. In 
response to previous comments in the CY 2022 HH PPS rule urging CMS to 
seek technical expert panel (TEP) recommendations to better inform the 
development of the SFP, a TEP was convened to gain input from key 
stakeholders on various aspects of the proposed SFP. The finalized 
hospice SFP becomes effective beginning the effective date of this 
final rule with implementation during CY 2024. We will periodically 
review the effectiveness of the finalized methodology and algorithm.

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f. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Products and CAA 2023 Related Changes
    In section VII.A.3. of this rule, we are finalizing without 
modification the conforming changes to Sec.  414.210(g)(9), consistent 
with section 4139(a) and 4139(b) of the CAA, 2023. First, section 4139 
of the CAA, 2023 does not change the current policy under Sec.  
414.210(g)(9)(iii) of paying for DMEPOS items and services furnished in 
rural and non-contiguous non-competitive bidding areas (CBAs) based on 
a 50/50 blend of adjusted and unadjusted fee schedule amounts through 
the duration of the PHE for COVID-19.
    As a result, we are finalizing revisions under Sec.  
414.210(g)(9)(iii), to state that for items and services furnished in 
rural areas and non-contiguous areas (Alaska, Hawaii, and U.S. 
territories) with dates of service from June 1, 2018 through the 
duration of the emergency period described in section 1135(g)(1)(B) of 
the Act (42 U.S.C. 1320b-5(g)(1)(B)) or December 31, 2023, whichever is 
later, based on the fee schedule amount for the area is equal to 50 
percent of the adjusted payment amount established under this section 
and 50 percent of the unadjusted fee schedule amount.
    We are finalizing revisions to Sec.  414.210(g)(9)(v) to state that 
for items and services furnished in areas other than rural or 
noncontiguous areas with dates of service from March 6, 2020 through 
December 31, 2023 or through the remainder of the duration of the 
emergency period described in section 1135(g)(1)(B) of the Act (42 
U.S.C. 1320b-5(g)(1)(B)), whichever is later, the fee schedule amount 
for the area is equal to 75 percent of the adjusted payment amount 
established under this section and 25 percent of the unadjusted fee 
schedule amount.
    We are finalizing our proposal to remove outdated text from Sec.  
414.210(g)(9)(v) that states ``for items and services furnished in 
areas other than rural or noncontiguous areas with dates of service 
from the expiration date of the emergency period described in section 
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), through December 
31, 2020, the fee schedule amount for the area is equal to 100 percent 
of the adjusted payment amount established under this section.''
    We are finalizing our proposal to revise Sec.  414.210(g)(9)(vi) to 
state that for items and services furnished in all areas with dates of 
service on or after January 1, 2024, or the date immediately following 
the duration of the emergency period described in section 1135(g)(1)(B) 
of the Act, whichever is later, the fee schedule amount for the area is 
equal to the adjusted payment amount established under paragraph (g) of 
this section.
    We are finalizing the proposal to make conforming changes to Sec.  
414.210(g)(2) for the rural and non-contiguous areas in order to 
specify the December 31, 2023 date specified in section 4139 of the 
CAA, 2023.
    In section VII.B.8. of this rule, we discuss the amendment of 42 
CFR 410.36(a) to add paragraph (4) and the following new category of 
medical supplies, appliances, and devices covered under Medicare Part 
B, Lymphedema compression items including: standard and custom fitted 
gradient compression garments, gradient compression wraps with 
adjustable straps, compression bandaging systems, and other items 
determined to be lymphedema compression treatment items under the 
process established under Sec.  414.1670. Other covered items will 
include accessories such as zippers, liners, and padding or fillers 
that are necessary for the effective use of a gradient compression 
garment or wrap with adjustable straps.
    We are finalizing our proposal to modify and add to the existing 
HCPCS Level II codes for lymphedema compression treatment items.
    We are finalizing our proposal to add Sec.  414.1670 under new 
subpart Q and use the same process described in Sec.  414.240 to obtain 
public consultation on preliminary benefit category determinations and 
payment determinations for new lymphedema compression treatment items.
    We are finalizing our proposal to add a new subpart Q under the 
regulations at 42 CFR part 414 titled, ``Payment for Lymphedema 
Compression Treatment Items'' to implement the provisions of section 
1834(z) of the Act to establish payment amounts for lymphedema 
compression treatment items.
    We are finalizing our proposal to add Sec.  414.1600 to explain the 
purpose and definitions found in subpart Q.
    We are finalizing our proposal to add Sec.  414.1660 to address 
continuity of pricing when HCPCS codes for lymphedema compression 
treatment items are divided or combined.
    We are finalizing our proposal to add Sec.  414.1680 with details 
regarding frequency limitations for lymphedema compression treatment 
items. Medicare will cover and pay for three daytime garments or wraps 
every six months and two nighttime garments or wraps every 2 years.
    We are finalizing our proposal to revise the regulations for 
competitive bidding under at 42 CFR part 414, subpart F to include 
lymphedema compression treatment items under the competitive bidding 
program as mandated by section 1847(a)(2)(D) of the Act. We are adding 
lymphedema compression treatment items to the definition of item at 
Sec.  414.402. We are revising Sec.  414.408 to indicate that payment 
for these items will be calculated on a lump sum purchase basis and 
payment under the program will be made in accordance with any frequency 
limitations established under subpart Q in accordance with section 
1834(z)(2) of the Act. We are also adding lymphedema compression 
treatment items to Sec.  414.412 to address limiting bids submitted 
under the program using the payment established under subpart Q.
    We are finalizing our proposal to add Sec.  414.1690 indicating 
that the payment amounts established under Sec.  414.1650(b) may be 
adjusted using information on the payment determined for lymphedema 
compression treatment items as part of implementation of the 
competitive bidding programs under subpart F using the methodologies 
set forth at Sec.  414.210(g).
    In section VII.C.3. of this rule, we are finalizing our proposal to 
amend the regulations at 42 CFR 410.2 to add the definition of brace 
and to add clarification at Sec.  410.36(a)(3)(i) for the purpose of 
determining the Medicare Part B benefit and scope for leg, arm, back, 
and neck braces and making benefit category determinations regarding 
specific items in accordance with the review process for benefit 
category and payment determinations under Sec.  414.240.
g. Documentation Requirements for Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies Products Supplied as Refills to 
the Original Order
    We are finalizing our proposed refill documentation requirements. 
We will be updating the refill documentation requirements such that a 
beneficiary affirmation will need to be documented by the supplier. We 
will require documentation indicating that the beneficiary confirmed 
the need for the refill within the 30-day period prior to the end of 
the current supply. We will codify our requirement that delivery of 
DMEPOS items (that is, date of service) be no sooner than 10 calendar 
days before the expected end of the current supply. There is no 
associated paperwork burden as the burden is already accounted for and 
approved by

[[Page 77680]]

the Office of Management and Budget under OMB control number 0938-0969 
(CMS-10417).
h. Provider and Supplier Enrollment Requirements
    We proposed several changes to our Medicare provider and supplier 
enrollment requirements. These included but were not limited to: (1) 
provisions related to hospice enrollment and ownership; and (2) 
deactivation of providers and suppliers.
3. Summary of Costs, Transfers, and Benefits
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13NO23.000


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[GRAPHIC] [TIFF OMITTED] TR13NO23.001

BILLING CODE 4120-01-C

B. Issuance of the Proposed Rule

    The proposed rule titled ``Medicare Program; Calendar Year (CY) 
2024 Home Health (HH) Prospective Payment System Rate Update; HH 
Quality Reporting Program Requirements; HH Value-Based Purchasing 
Expanded Model Requirements; Home Intravenous Immune Globulin Items and 
Services; Hospice Informal Dispute Resolution and Special Focus Program 
Requirements, Certain Requirements for Durable Medical Equipment 
Prosthetics and Orthotics Supplies; and Provider and Supplier 
Enrollment Requirements'' appeared in the Federal Register on July, 10, 
2023 (88 FR 43654) hereinafter referred to as the CY 2024 HH PPS 
proposed rule or July 2023 proposed rule).
    The proposed rule set forth proposed payment and policy changes to 
the Medicare Home Health prospective payment system for CY 2024, 
proposed changes regarding other programs and policies, as well as 
solicited comments.
    In the sections of the rule that follow, we will present the 
proposed policies

[[Page 77682]]

and summarize and respond to the public comments received.

II. Home Health Prospective Payment System

A. Overview of the Home Health Prospective Payment System

1. Statutory Background
    Section 1895(b)(1) of the Act requires the Secretary to establish a 
Home Health Prospective Payment System (HH PPS) for all costs of home 
health services paid under Medicare. Section 1895(b)(2) of the Act 
requires that, in defining a prospective payment amount, the Secretary 
will consider an appropriate unit of service and the number, type, and 
duration of visits provided within that unit, potential changes in the 
mix of services provided within that unit and their cost, and a general 
system design that provides for continued access to quality services. 
In accordance with the statute, as amended by the Balanced Budget Act 
of 1997 (BBA), (Pub. L. 105-33, enacted August 5, 1997) we issued a 
final rule which appeared in the July 3, 2000 Federal Register (65 FR 
41128) to implement the HH PPS legislation.
    Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v) 
to the Act, requiring home health agencies (HHAs) to submit data for 
purposes of measuring health care quality, and linking the quality data 
submission to the annual applicable home health payment update 
percentage increase. This data submission requirement is applicable for 
CY 2007 and each subsequent year. If an HHA does not submit quality 
data, the home health market basket percentage increase is reduced by 2 
percentage points. We issued a final rule which appeared in the 
November 9, 2006 Federal Register (71 FR 65935), to implement the pay-
for-reporting requirement of the DRA, which was codified at Sec.  
484.225(h) and (i) in accordance with the statute. The pay-for-
reporting requirement was implemented on January 1, 2007.
    Section 51001(a)(1)(B) of the Bipartisan Budget Act of 2018 (BBA of 
2018) (Pub. L. 115-123) amended section 1895(b) of the Act to require a 
change to the home health unit of payment to 30-day periods beginning 
January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new 
subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the 
Secretary to calculate a standard prospective payment amount (or 
amounts) for 30-day units of service furnished that end during the 12-
month period beginning January 1, 2020, in a budget neutral manner, 
such that estimated aggregate expenditures under the HH PPS during CY 
2020 are equal to the estimated aggregate expenditures that otherwise 
would have been made under the HH PPS during CY 2020 in the absence of 
the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of 
the Act requires that the calculation of the standard prospective 
payment amount (or amounts) for CY 2020 be made before the application 
of the annual update to the standard prospective payment amount as 
required by section 1895(b)(3)(B) of the Act.
    Additionally, section 1895(b)(3)(A)(iv) of the Act requires that in 
calculating the standard prospective payment amount (or amounts), the 
Secretary must make assumptions about behavior changes that could occur 
as a result of the implementation of the 30-day unit of service under 
section 1895(b)(2)(B) of the Act and case-mix adjustment factors 
established under section 1895(b)(4)(B) of the Act. Section 
1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide 
a description of the behavior assumptions made in notice and comment 
rulemaking. CMS finalized these behavior assumptions in the CY 2019 HH 
PPS final rule with comment period (83 FR 56461).
    Section 51001(a)(2)(B) of the BBA of 2018 also added a new 
subparagraph (D) to section 1895(b)(3) of the Act. Section 
1895(b)(3)(D)(i) of the Act requires the Secretary annually to 
determine the impact of differences between assumed behavior changes, 
as described in section 1895(b)(3)(A)(iv) of the Act, and actual 
behavior changes on estimated aggregate expenditures under the HH PPS 
with respect to years beginning with 2020 and ending with 2026. Section 
1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a 
manner determined appropriate, through notice and comment rulemaking, 
to provide for one or more permanent increases or decreases to the 
standard prospective payment amount (or amounts) for applicable years, 
on a prospective basis, to offset for such increases or decreases in 
estimated aggregate expenditures, as determined under section 
1895(b)(3)(D)(i) of the Act. Additionally, section 1895(b)(3)(D)(iii) 
of the Act requires the Secretary, at a time and in a manner determined 
appropriate, through notice and comment rulemaking, to provide for one 
or more temporary increases or decreases to the payment amount for a 
unit of home health services for applicable years, on a prospective 
basis, to offset for such increases or decreases in estimated aggregate 
expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. 
Such a temporary increase or decrease shall apply only with respect to 
the year for which such temporary increase or decrease is made, and the 
Secretary shall not take into account such a temporary increase or 
decrease in computing the payment amount for a unit of home health 
services for a subsequent year. Finally, section 51001(a)(3) of the BBA 
of 2018 amends section 1895(b)(4)(B) of the Act by adding a new clause 
(ii) to require the Secretary to eliminate the use of therapy 
thresholds in the case-mix system for CY 2020 and subsequent years.
    Division FF, section 4136 of the Consolidated Appropriations Act, 
2023 (CAA, 2023) amended section 1834(s)(3)(A) of the Act to require 
that, beginning with 2024, the separate payment for furnishing negative 
pressure wound therapy (NPWT) using a disposable device be for just the 
device and not for nursing and therapy services. Payment for nursing 
and therapy services are to be included as part of payments under the 
HH PPS. The separate payment for 2024 is to be equal to the supply 
price used to determine the relative value for the service under the 
Medicare Physician Fee Schedule (PFS) (as of January 1, 2022) for the 
applicable disposable device, updated by the percentage increase in the 
Consumer Price Index for All Urban Consumers (CPI-U). The separate 
payment for 2025 and each subsequent year is to be the payment amount 
for the previous year updated by the percentage increase in the CPI-U 
(United States city average) for the 12-month period ending in June of 
the previous year minus the productivity adjustment as described in 
section 1886(b)(3)(B)(xi)(II) for such year. The CAA, 2023 also added 
section 1834(s)(4) of the Act to require that beginning with 2024, as 
part of submitting claims for the separate payment, the Secretary shall 
accept and process claims submitted using the type of bill that is most 
commonly used by home health agencies to bill services under a home 
health plan of care.
2. Current System for Payment of Home Health Services
    For home health periods of care beginning on or after January 1, 
2020, Medicare makes payment under the HH PPS on the basis of a 
national, standardized 30-day period payment rate that is adjusted for 
case-mix and area wage differences in accordance with section 
51001(a)(1)(B) of the BBA of 2018. The national, standardized 30-

[[Page 77683]]

day period payment rate includes payment for the six home health 
disciplines (skilled nursing, home health aide, physical therapy, 
speech-language pathology, occupational therapy, and medical social 
services). Payment for non-routine supplies (NRS) is also part of the 
national, standardized 30-day period rate. Durable medical equipment 
(DME) provided as a home health service, as defined in section 1861(m) 
of the Act, is paid the fee schedule amount or is paid through the 
competitive bidding program and such payment is not included in the 
national, standardized 30-day period payment amount. Additionally, the 
30-day period payment rate does not include payment for certain 
injectable osteoporosis drugs and NPWT using a disposable device 
(though this rule is finalizing changes to this provision pursuant to 
section 4136 of the CAA, 2023), but such drug and services must be 
billed by the HHA while a patient is under a home health plan of care, 
as the law requires consolidated billing of osteoporosis drugs and NPWT 
using a disposable device.
    To better align payment with patient care needs and to better 
ensure that clinically complex and ill beneficiaries have adequate 
access to home health care, in the CY 2019 HH PPS final rule with 
comment period (83 FR 56406), we finalized case-mix methodology 
refinements through the Patient-Driven Groupings Model (PDGM) for home 
health periods of care beginning on or after January 1, 2020. The PDGM 
did not change eligibility or coverage criteria for Medicare home 
health services, and as long as the individual meets the criteria for 
home health services as described at 42 CFR 409.42, the individual can 
receive Medicare home health services, including therapy services. For 
more information about the role of therapy services under the PDGM, we 
refer readers to the Medicare Learning Network (MLN) Matters article 
SE20005 available at https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005. To adjust for 
case-mix for 30-day periods of care beginning on and after January 1, 
2020, the HH PPS uses a 432-category case-mix classification system to 
assign patients to a home health resource group (HHRG) using patient 
characteristics and other clinical information from Medicare claims and 
the Outcome and Assessment Information Set (OASIS) assessment 
instrument. These 432 HHRGs represent the different payment groups 
based on five main case-mix categories under the PDGM, as shown in 
Figure B1. Each HHRG has an associated case-mix weight that is used in 
calculating the payment for a 30-day period of care. For periods of 
care with visits less than the low-utilization payment adjustment 
(LUPA) threshold for the HHRG, Medicare pays national per-visit rates 
based on the discipline(s) providing the services. Medicare also 
adjusts the national standardized 30-day period payment rate for 
certain intervening events that are subject to a partial payment 
adjustment. For certain cases that exceed a specific cost threshold, an 
outlier adjustment may also be available.
    Under this case-mix methodology, case-mix weights are generated for 
each of the different PDGM payment groups by regressing resource use 
for each of the five categories (admission source, timing, clinical 
grouping, functional impairment level, and comorbidity adjustment) 
using a fixed effects model. A detailed description of each of the 
case-mix variables under the PDGM have been described previously, and 
we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through 
70305).
BILLING CODE 4120-01-P

[[Page 77684]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.002

BILLING CODE 4120-01-C

B. Monitoring the Effects of the Implementation of PDGM

1. Routine PDGM Monitoring
    In the CY 2024 HH PPS proposed rule (88 FR 43663), CMS provided 
data analysis on Medicare home health benefit utilization, including 
but not limited to, overall total 30-day periods of care and average 
periods of care per HHA user; distribution of the type of visits in a 
30-day period of care; the percentage of periods that receive the LUPA; 
estimated costs; the percentage of 30-day periods of care by clinical 
group, comorbidity adjustment, admission source, timing, and functional 
impairment level; and the proportion of 30-day periods of care with and 
without any therapy visits, nursing visits, and/or aide/social worker 
visits. We received one comment on the analysis presented in the 
proposed rule.
    Comment: The commenter stated that while the utilization patterns 
before and after PDGM implementation show a continuous downward trend, 
there is lack of data analysis and explanation by CMS indicating 
whether the appropriate level of home health care is being provided to 
beneficiaries. They also suggested that CMS should expand the data 
collected to include geographic, racial, ethnic, socioeconomic, sexual 
orientation and gender identifiers which could highlight whether 
disparities in home health usage vary in diverse populations.
    Response: We thank the commenter for their feedback on the home 
health utilization data presented in the CY 2024 HH PPS proposed rule. 
The intent of the monitoring section is to show the trends in the data 
presented. We discuss our analysis of these data in the discussion of 
our RFI related to home health aides and in the discussion of the PDGM 
behavioral assumption adjustments. We will continue to monitor and 
analyze home health trends and vulnerabilities within the home health 
payment system and will consider the additional monitoring suggested by 
the commenter for future rulemaking.

[[Page 77685]]

2. Request for Information (RFI) for Access to Home Health Aide 
Services
    As we continue to focus on promoting access and value within the 
home health benefit, in the CY 2024 HH PPS proposed rule (88 FR 43654), 
we solicited comments from the public, including home health providers 
as well as patients and advocates, regarding certain trends in the data 
that coincide with home health coverage misinformation obtained 
anecdotally from beneficiaries; that is, information related to the 
provision of home health aide services as needed when a patient is 
under the home health benefit. We queried interested parties on the 
potential basis for continued decline in utilization of home health 
aide services despite persistent need, particularly among higher acuity 
beneficiaries. Also, in an effort to better understand the decline in 
utilization and improve the provision of the home health aide services 
under the home health benefit, we solicited comments specifically on 
how home health agencies' recruitment and retention challenges, wage 
disparities, aide care impact and wage alignment, Medicare-Medicaid 
coordination, physician plans of care, and expected beneficiary 
outcomes might be interconnected.
    In response to our request for information on access to home health 
aide services, we received a total of 85 comments, where commenters 
highlighted a multitude of challenges and offered several 
recommendations to improve the provision of home health aide services 
under Medicare. These comments and our responses are summarized in this 
section of the rule.
    Comment: Commenters broadly stated that the decline in the 
utilization of home health aide services is not indicative of a reduced 
need for such services. Commenters also stated that despite Medicare 
laws allowing for substantial home health aide hours, the actual 
provision is dwindling, especially affecting those with chronic or 
long-term conditions, who often require a combination of skilled and 
aide services for optimal health and safety at home. A commenter 
further stated that both CMS' and home health agencies' policies and 
practices have resulted in barriers that devalue and disincentivize the 
provision of these essential services. Specifically, the commenter 
stated that Medicare's current payment model, PDGM, discourages HHAs 
from employing aides and providing necessary aide services. The 
commenter stated that this is especially true for patients with high 
functional impairments and multiple comorbidities. The commenter stated 
``the PDGM base calculation amount favors post-institutional care and 
the initial 30 days of services through higher case-mix adjustment for 
admission source and timing and there is a low percentage of additional 
reimbursement for beneficiaries with high functional impairments and 
multiple comorbidities, relative to beneficiaries with low functional 
impairments and no co-morbidities.'' The commenter stated that because 
these are ostensibly the beneficiaries that would need the most aide 
services (and HHAs have surmised that the more aide visits they provide 
the lower their overall reimbursement will potentially be in the 
future), this has led HHAs tell patients that ``Medicare does not pay 
for aides.''
    In addition to comments stating that the PDGM discourages the 
provision of aide services, commenters also stated that HHAs' engage in 
selective practices and strategic preference for serving lower acuity 
patients to maximize profits, which they assert has a 
disproportionately negative effect on higher acuity patients (that is, 
those with multiple comorbidities or high functional impairment) and 
often leaves them underserved or completely neglected. Commenters 
suggested that CMS has not fulfilled its oversight of HHAs conducting 
such discriminatory practices and has failed to enforce the 
nondiscrimination conditions of participation for Medicare-certified 
HHAs. They stated that CMS should investigate the practices of HHAs 
that tend to exclude or underserve beneficiaries with chronic, 
disabling conditions and take enforcement action to ensure that 
patients with long-term disabilities do not face discrimination in the 
provision of aide services.
    Commenters identified multiple barriers that they stated affected 
HHAs in recruiting and retaining home health aides, including low 
compensation, competition for labor in different job markets, 
inadequate/limited training opportunities, and demanding work 
conditions. Commenters' suggestions to overcome these barriers included 
improved compensation, including aide services more directly in care 
plans, providing advanced training, and establishing centralized 
systems for employee development.
    Commenters stated that they had noticed wage disparities between 
home health aides and similar positions in other care settings, such as 
inpatient hospitals and nursing homes, attributing the disparities to 
various factors like the nature of work, working conditions, and level 
of institutional support available. They stated that reevaluating 
compensation structures is necessary for parity. A commenter stated 
that CMS's episodic reimbursement for home health does not support 
robust staffing, particularly in rural areas. Commenters stated this 
creates a situation where HHAs cannot justify separate visits by a home 
health aide when nurses or occupational therapists can perform these 
functions within their scope of practice during a skilled or therapy 
visit.
    Commenters urged both HHAs and CMS to overhaul the current 
reimbursement compensation to better incentivize fulfillment of home 
health aide services in order to ensure aides receive fair wages 
commensurate with the critical nature of their role and their impact on 
patient care. A commenter suggested the need for CMS to establish new 
payment mechanisms specifically designed to ensure HHAs are compensated 
fairly for delivering all necessary services, specifically home health 
aide services.
    Commenters stated that the effectiveness of coordination between 
Medicare and Medicaid varies by state and is generally limited 
(especially for dually eligible beneficiaries) and that gaps in 
coordination are a systemic issue arising from differences in 
eligibility, coverage, and administrative factors. Commenters also 
stated that although dually eligible beneficiaries might receive 
somewhat better access to aide services through Medicaid, better care 
coordination is vital for boosting utilization rates and addressing 
disparities in access to services.
    Further, commenters stated that they believed a dual issue affected 
physicians' care plans for home health aide services. They stated there 
is limited availability of aides to provide the aide services included 
on care plans due to difficulties in finding qualified staff and 
inadequate reimbursements from CMS, as well as the fact that physicians 
themselves are increasingly less likely to include home health aide 
services in care plans. Commenters stated that this physician hesitance 
is fueled by HHAs reporting that aide services are either very limited 
or not available at all. Commenters stated that, as a result, 
practitioners have substantially reduced or altogether eliminated 
requests for aide services. Additionally, commenters stated that HHAs 
often refuse to initiate aide services unless family/caregivers commit 
to learning how to perform the aide functions themselves (even if those 
caregivers are not willing and/or able to continue the care and even if 
the patient objects to having a family member

[[Page 77686]]

provide aide care). A few commenters stated that HHAs also have a 
practice of either refusing to staff aides adequately or understaffing 
them deliberately.
    Commenters also stated that there were consequences to 
beneficiaries' lack of adequate access to home health aide services, 
including outcomes such as unnecessary hospitalizations, nursing 
facility admissions, potentiated health complications, family/caregiver 
burnout, and even forced institutionalizations that lead to a 
significant loss of independence and quality of life.
    Response: CMS appreciates the comments and suggestions received 
regarding home health aide service utilization (especially among higher 
acuity Medicare beneficiaries), the status of Medicare and Medicaid 
home health aide coordination, physician care plans, HHA recruitment 
and retention challenges, as well as wage disparities in other care 
settings, in influencing both the availability and quality of home 
health aide services for Medicare beneficiaries. We thank commenters 
for their feedback suggesting various changes for the equitable and 
adequate provision of home health aide services, as well as for payment 
reform, recruitment, and retention strategies, improved inter-program 
coordination between Medicare and Medicaid, and an overall shift in how 
the value of home health aide services is recognized, how home health 
aides are compensated, and how home health aide services are 
effectively integrated into plans of care. We do note that the current 
HH PPS, which generally bundles payment for all goods and services 
furnished in a 30-day period, including home health aide services, is 
set forth by statute. As such, suggestions related to the payment 
structure of the HH PPS, including regarding how aides are paid, are 
more appropriately addressed to Congress for consideration.
    We would like to thank commenters for their responses regarding 
payment rates for home health aide services. In response to the 
comments detailing concern that HHAs may be influencing practitioners 
to curtail or omit aide services, or are refusing to initiate such 
services as ordered, we would like to direct readers' attention to the 
home health Conditions of Participation (CoPs) at 42 CFR 484.60. As a 
reminder, per the regulations, each patient is required to receive home 
health services as delineated in an individualized plan of care. Such 
plan of care must specify the care and services necessary to meet the 
patient-specific needs as identified in the comprehensive assessment, 
including identification of the responsible discipline(s), and the 
measurable outcomes that the HHA anticipates will occur as a result of 
implementing and coordinating the plan of care. It is improper for an 
HHA to unduly influence a practitioner based on the HHA's own service 
constraints.
    Overall, the feedback provided by respondents will help guide our 
policy formulation processes. One of CMS' objectives is to continually 
enhance home health policies to optimize both access and quality of 
care for Medicare beneficiaries. Likewise, in keeping with the 
President's Executive Order (E.O.) on Increasing Access to High-Quality 
Care and Supporting Caregivers,\1\ we find the comments and suggestions 
received relevant to identifying ``gaps in knowledge about the home- 
and community-based workforce serving people with disabilities and 
older adults.'' As such, all comments and suggestions will be 
considered alongside the goals of this E.O., including identifying 
opportunities to expand analyses, supplementing data, or launching new 
efforts to provide important data on the home- and community-based 
workforce, such as home health aides, as appropriate. This information 
may assist in policy development, addressing barriers, and fostering 
coordination under the home health benefit for future regulatory 
updates.
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    \1\ Exec. Order No. 14,095, 3 CFR 24669-24676. (April 18, 2023).
---------------------------------------------------------------------------

C. Provisions for CY 2024 Payment Under the HH PPS

1. CY 2024 Final Behavior Assumption Adjustments Under the HH PPS
(a) Background
    As discussed in section II.A.1. of this rule, starting in CY 2020, 
the Secretary was statutorily required by Section 1895(b)(2)(B) of the 
Act, to change the unit of payment under the HH PPS from a 60-day 
episode of care to a 30-day period of care. CMS was also required to 
make assumptions about behavior changes that could occur as a result of 
the implementation of the 30-day unit of payment and the case-mix 
adjustment factors that eliminated the use of therapy thresholds. In 
the CY 2019 HH PPS final rule with comment period (83 FR 56455), we 
finalized three behavior change assumptions as to documentation, 
coding, and the LUPA thresholds, which were also described in the CY 
2022 and 2023 HH PPS rules (86 FR 35890, 87 FR 37614, and 87 FR 66795 
through 66796). In the CY 2020 HH PPS final rule with comment period 
(84 FR 60519), we included the effects of these behavior change 
assumptions in the calculation of the 30-day budget neutral payment 
amount for CY 2020, finalizing a negative 4.36 percent behavior change 
assumption adjustment (``assumed behaviors''). We did not propose any 
changes in CYs 2021 and 2022 relating to the behavior assumptions that 
were finalized in the CY 2019 HH PPS final rule with comment period, or 
to the negative 4.36 percent behavior change assumption adjustment, 
that was finalized in the CY 2020 HH PPS final rule with comment 
period.
    In the CY 2023 HH PPS final rule (87 FR 66796), we concluded that 
the three assumed behavior changes had in fact occurred. Additionally, 
this monitoring showed that other behavioral changes, such as changes 
in the provision of therapy and functional impairment levels, also 
resulted from implementing the PDGM. We also restated, as we originally 
noted in the CY 2020 HH PPS final rule with comment period (84 FR 
60513), that we interpret actual behavior changes to encompass both 
behavior changes that were previously outlined and assumed by CMS, as 
well as other behavior changes that were not identified at the time the 
budget-neutral 30-day payment rate for CY 2020 was established. In the 
CY 2023 HH PPS final rule (87 FR 66796), we provided supporting 
evidence that other behavior changes occurred, including that the 
number of therapy visits declined in CYs 2020 and 2021, as well as a 
slight decline in therapy visits beginning in CY 2019 after the 
finalization of the removal of therapy thresholds, but prior to 
implementation of the PDGM. In section II.B.1. of the CY 2024 HH PPS 
proposed rule (88 FR 43663 through 43671), we stated that our analysis 
continues to show that the actual 30-day periods are similar to the 
simulated 30-day periods, overall. The number of therapy visits (total 
and average) continue to decline, indicating that HHAs changed their 
behavior to reduce therapy visits. The analysis continues to support 
the presence of the original three assumed behavior changes (for 
example, in the volume of visits for LUPAs), as well as other 
individual behavior changes (for example, therapy visits). To capture 
all such behavior changes, we use the entirety of all behaviors to 
calculate estimated aggregate expenditures. The law instructs CMS to 
ensure that estimated aggregate expenditures under the PDGM are equal 
to the estimated aggregate expenditures that otherwise would have been 
made under the prior system, as required by section 1895(b)(3)(A)(iv)

[[Page 77687]]

and 1895(b)(3)(D) of the Act. We accordingly use the aggregate data.
    Section 4142(a) of the CAA, 2023, requires CMS to present, to the 
extent practicable, a description of the actual behavior changes 
occurring under the HH PPS from CYs 2020-2026. This subsection of the 
CAA, 2023, also required CMS to provide datasets underlying the 
simulated 60-day episodes and discuss and provide time for stakeholders 
to provide input and ask questions on the payment rate development for 
CY 2023. CMS complied with these requirements by posting online both 
the supplemental LDS and descriptive files and the description of 
actual behavior changes that affected CY 2023 payment rate development. 
Additionally, on March 29, 2023, CMS conducted a webinar entitled 
Medicare Home Health Prospective Payment System (HH PPS) Calendar Year 
(CY) 2023 Behavior Change Recap, 60-Day Episode Construction Overview, 
and Payment Rate Development. The webinar was open to the public and 
discussed the actual behavior changes that occurred upon implementation 
of the PDGM, our approach used to construct simulated 60-day episodes 
using 30-day periods, payment rate development for CY 2023, and 
information on the supplemental data files containing information on 
the simulated 60-day episodes and actual 30-day periods used in 
calculating the permanent adjustment to the payment rate. Materials 
from the webinar, including the presentation and the CY 2023 
descriptive statistics from the supplemental LDS files, containing 
information on the number of simulated 60-day episodes and actual 30-
day periods in CY 2021 that were used to construct the permanent 
adjustment to the payment rate, as well as information such as the 
number of episodes and periods by case-mix group, case-mix weights, and 
simulated payments, can be found on the Home Health Patient-Driven 
Groupings Model web page at https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps/hh-pdgm. In the CY 2024 HH PPS 
proposed rule, we continued to describe actual behavior changes (88 FR 
43663 through 43672) identified through our analysis of CYs 2020-2022 
claims data. We posted a descriptive statistics file with the release 
of the CY 2024 HH PPS proposed rule. Additionally, the LDS file 
available for purchase contained the simulated 60-day episodes and 
actual 30-day periods. Furthermore, to promote data transparency, we 
will continue to describe the behavior changes analyzed through CY 2026 
claims and we will continue to post the descriptive statistics file and 
the LDS file with the simulated 60-day episodes and actual 30-day 
periods in annual rulemaking.
(b) Method To Annually Determine the Impact of Differences Between 
Assumed Behavior Changes and Actual Behavior Changes on Estimated 
Aggregate Expenditures
    In the CY 2022 HH PPS proposed rule (86 FR 35889 through 35892) we 
solicited comments on our methodology to annually determine the impact 
of differences between assumed and actual behavior changes on estimated 
aggregate expenditures. We received feedback from this comment 
solicitation, as well as commenter's feedback when this methodology was 
proposed in the CY 2023 HH PPS proposed rule. We finalized this 
methodology in the CY 2023 HH PPS final rule (87 FR 66804) stating that 
this methodology aligns with the statutory requirements as required by 
1895(b)(3)(D) of the Act. Under that methodology, for CYs 2020 through 
2026, we will evaluate whether the 30-day budget neutral payment rate 
and resulting aggregate expenditures are equal under the PDGM to what 
they would have been under the 153-group case-mix system and 60-day 
unit of payment. An overview of the methodology is listed in this 
section, followed by detailed instructions on each step.
     Create simulated 60-day episodes from actual 30-day 
periods.
     Price out the simulated 60-day episodes and determine 
aggregate expenditures.
     Price out only the actual 30-day periods which were used 
to create the simulated 60-day episodes and determine aggregate 
expenditures.
     Compare aggregate expenditures between the simulated 60-
day episodes and actual 30-day periods.
     Determine what the 30-day payment rate should have been to 
equal the simulated 60-day episodes aggregate expenditures using the 
153-group case-mix system and 60-day unit of payment.
(1) Create Simulated 60-Day Episodes From 30-Day Periods
    The first step in our methodology is to determine which PDGM 30-day 
periods of care could be grouped together to form simulated 60-day 
episodes of care. To facilitate grouping, we made some exclusions and 
assumptions as described later in this section prior to pricing out the 
simulated 60-day episodes of care. We note in the early months of CY 
2020, there were 60-day episodes which started in 2019 and ended in 
2020 and therefore, some of these exclusions and assumptions may be 
specific to the first year of the PDGM. We identify, through footnotes, 
if an exclusion or assumption is specific to CY 2020 only.
(a) Exclusions
     Claims where the claim occurrence code 50 date (OASIS 
assessment date) occurred on or after October 31 of that year. This 
exclusion was applied to ensure the simulated 60-day episodes contained 
both 30-day periods from the same year and would not overlap into the 
following year (for example, 2021, 2022, 2023). This is done because 
any 30-day periods with an OASIS assessment date in November or 
December might be part of a simulated 60-day episode that would 
continue into the following year and where payment would have been made 
based on the ``through'' date. For CYs 2021 through 2026, we also 
excluded claims with an OASIS assessment date before January 1 of that 
year.\2\ Again, this is to ensure a simulated 60-day episode (simulated 
from two 30-day periods) does not overlap years.
---------------------------------------------------------------------------

    \2\ There are no 30-day PDGM claims which started in CY 2019 and 
ended in CY 2020, and therefore this exclusion would not apply to 
the CY 2020 dataset.
---------------------------------------------------------------------------

     Beneficiaries and all of their claims if they have 
overlapping claims from the same provider (as identified by CCN).\3\
---------------------------------------------------------------------------

    \3\ Claims are dropped from the same provider that extend into 
the following calendar year to ensure episode timing is accurate for 
simulated 60-day episodes. All of a beneficiary's claims are 
dropped, rather than only a subset, so as not to create a conflict 
in assigning episode timing.
---------------------------------------------------------------------------

     Beneficiaries and all of their claims if three or more 
claims from the same provider are linked to the same occurrence code 50 
date.\4\
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    \4\ This is done because if three or more claims link to the 
same OASIS it would not be clear which claims should be joined to 
simulate a 60-day episode.
---------------------------------------------------------------------------

(b) Assumptions
     If two 30-day periods of care from the same provider 
reference the same OASIS assessment date (using occurrence code 50), 
then we assume those two 30-day periods of care would have been billed 
as a 60-day episode of care under the 153-group system.
     If two 30 day-periods of care reference different OASIS 
assessment dates and each of those assessment dates is referenced by a 
single 30-day period of care, and those two 30-day periods of care 
occur together close in time (that is, the ``from'' date of the later 
30-day period of care is between 0 to 14 days after the ``through'' 
date of the

[[Page 77688]]

earlier 30-day period of care), then we assume those two 30-day periods 
of care also would have been billed as a 60-day episode of care under 
the 153-group system.
     For all other 30-day periods of care, we assume that they 
would not be combined with another 30-day period of care and would have 
been billed as a single 30-day period.
(2) Price Out the Simulated 60-Day Episodes and Determine Aggregate 
Expenditures
    After application of the exclusions and assumptions described 
previously, we have the simulated 60-day episodes dataset for each 
year. We assign each simulated 60-day episode of care as a normal 
episode, PEP, LUPA, or outlier based on the payment parameters 
established in the CY 2020 HH PPS final rule with comment period (84 FR 
60478) for 60-day episodes of care. Next, using the October 2019 3M 
Home Health Grouper (v8219) \5\ we assign a HIPPS code to each 
simulated 60-day episode of care using the 153-group methodology. 
Finally, we price the simulated 60-day episodes of care using the 
payment parameters described in the CY 2020 final rule with comment 
period (84 FR 60537) for 60-day episodes of care.
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    \5\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/CaseMixGrouperSoftware.
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    For CYs 2021 through 2026, we adjust the simulated 60-day base 
payment rate to align with current payments for the analysis year (that 
is, wage index budget neutrality factor and home health payment 
update). For example, to calculate the CY 2021 simulated 60-day episode 
base payment rate, we started with the final CY 2020 60-day base 
payment rate ($3,220.79) and multiplied by the final CY 2021 wage index 
budget neutrality factor (0.9999) and the CY 2021 home health payment 
update (1.020) to get an adjusted 60-day base payment rate ($3,284.88) 
for CY 2021. We used that adjusted 60-day base payment rate ($3,284.88) 
to price out the CY 2021 simulated 60-day claims. Once each claim is 
priced under the pre-PDGM HH PPS, that is each claim is adjusted from 
the base payment rate by case-mix, wage index, etc., we calculate the 
estimated aggregate expenditures for all simulated 60-day episodes in 
CY 2021. This method is then replicated to price out the simulated 60-
day episodes for each year of claims data through CY 2026.
(3) Price Out the 30-Day Periods and Determine Aggregate Expenditures
    Next, we calculated the PDGM aggregate expenditures for the 
specific year (for example, CY 2020) using those specific 30-day 
periods that were used to create the simulated 60-day episodes. 
Therefore, both the actual PDGM expenditures and the simulated pre-PDGM 
aggregate expenditures are based on the exact same claims for the 
permanent adjustment calculation.
(4) Compare Aggregate Expenditures Between the Simulated 60-Day 
Episodes and Actual 30-Day Periods
    We determine if the total aggregate expenditures under the PDGM 
were higher or lower than under the 153-case mix group system in each 
year beginning with CY 2020 through CY 2026. If expenditures were 
higher under the PDGM (that is, we paid more than we would have if the 
153-group payment system was in place), then the actual base payment 
rate we implemented was too high. If the expenditures were lower under 
the PDGM (that is, we paid less than we would have if the 153-group 
payment system was in place), then the actual base payment rate we 
implemented was too low.
(5) Determine What the 30-Day Payment Rate Should Have Been
    Using an iterative process, we determine what the 30-day base 
payment rate should have been, in order to achieve the same estimated 
aggregate expenditures as obtained from the simulated 60-day episodes. 
This is our recalculated (``repriced'') base payment rate.
(c) Calculating Permanent and Temporary Payment Adjustments
    To offset prospectively for such increases or decreases in 
estimated aggregate expenditures as a result of the impact of 
differences between assumed behavior changes and actual behavior 
changes, in any given year, we calculate a permanent prospective 
adjustment by calculating the percent change between the actual 30-day 
base payment rate and the recalculated 30-day base payment rate. This 
percent change is converted into a behavior adjustment factor and 
applied in the annual rate update process.
    To offset retrospectively for such increases or decreases in 
estimated aggregate expenditures as a result of the impact of 
differences between assumed behavior changes and actual behavior 
changes in any given year, we calculate a temporary prospective 
adjustment by calculating the dollar amount difference between the 
estimated aggregate expenditures from all 30-day periods using the 
recalculated 30-day base payment rate, and the aggregate expenditures 
for all 30-day periods using the actual 30-day base payment rate for 
the same year. In other words, when determining the temporary 
retrospective dollar amount, we use the full dataset of actual 30-day 
periods using both the actual and recalculated 30-day base payment 
rates to ensure that the utilization and distribution of claims are the 
same. In accordance with section 1895(b)(3)(D)(iii) of the Act, the 
temporary adjustment is to be applied on a prospective basis and shall 
apply only with respect to the year for which such temporary increase 
or decrease is made. Therefore, after we determine the dollar amount to 
be reconciled in any given year, we calculate a temporary adjustment 
factor to be applied to the base payment rate for that year. The 
temporary adjustment factor is based on an estimated number of 30-day 
periods in the next year using historical data trends, and as 
applicable, we control for a permanent adjustment factor, case-mix 
weight recalibration neutrality factor, wage index budget neutrality 
factor, and the home health payment update. The temporary adjustment 
factor is applied last. While we did not propose any changes to the 
methodology finalized in the CY 2023 HH PPS final rule (87 FR 66804), 
we did receive comments on the CY 2024 HH PPS proposed rule which are 
summarized in this section.
    Comment: Many commenters opposed the behavioral adjustment 
methodology finalized in the CY 2023 HH PPS final rule based on legal 
and technical concerns that mostly repeated objections raised in the 
last rulemaking cycle. The legal arguments mostly restated we are 
violating the Medicare statute. These commenters repeated technical 
concerns including the use of therapy visits, accepted diagnosis codes, 
timing assignment, and missing OASIS items. Commenters stated ``home 
health agencies have predictably provided fewer therapy sessions,'' and 
the methodology's reliance on this change in therapy utilization is not 
appropriate to use in determining behavior changes since the law 
required the elimination of the therapy thresholds. Commenters again 
stated the methodology is unreasonable because ``claims billed under 
one case-mix system, with different incentives, coding and billing 
rules, and unit of payment'' cannot be compared. They requested that 
CMS reverse the permanent payment adjustment taken in CY 2023, withdraw 
the proposal of a permanent payment

[[Page 77689]]

adjustment for CY 2024, and develop and propose a new methodology after 
input from a technical expert panel. Similarly, a few commenters stated 
again that the methodology performs an unauthorized rebasing of the 30-
day payment rate. Lastly, several commenters stated beneficiaries using 
home health are becoming more complex and have higher acuity needs, for 
which reimbursement does not match. We received a new comment on the 
methodology requesting CMS to consider how to further integrate the 
acuity of patients into the behavioral assumption methodology and how 
to better account for acuity overall in the PDGM.
    Response: We appreciate the comments and recommendations we 
received regarding the behavior adjustment methodology. We did not 
propose any changes to the behavior adjustment methodology in this 
year's proposed rule and will not be finalizing any changes. As noted, 
most of these comments were similar to comments we received on the CY 
2023 HH PPS proposed rule, so we refer readers to our responses to 
these concerns in the CY 2023 HH PPS final rule (87 FR 66797 through 
66804). In that rule, for example, we responded to commenters' 
assertions that we violated the Medicare statute, as well as 
commenters' disagreement with technical concerns, including the 
inclusion of therapy provision, with our methodology.
    One such argument to which we responded in the CY 2023 HH PPS final 
rule (87 FR 66802) was a theory that we implemented an unauthorized 
rebasing of the payment rates. The law requires us to determine the 
difference between assumed versus actual behaviors on estimated 
aggregate expenditures. Therefore, we continue to believe that the best 
reading of the law requires us to retrospectively determine if the 30-
day payment amount in CYs 2020 through 2022 resulted in the same 
estimated aggregate expenditures if the 60-day unit of payment and the 
PDGM case-mix adjustment had not been implemented. As stated 
previously, the finalized methodology compares the payment rate and 
aggregate expenditures based on assumed behaviors to what the payment 
rate and estimated aggregate expenditures would have been using actual 
behaviors, which we believe is what the law requires.
    We thank the commenters for their suggestion that they should be 
paid more because patient acuity has increased. We finalized a policy 
in the CY 2019 HH PPS final rule with comment period (83 FR 56515) to 
annually recalibrate the PDGM case-mix weights using a fixed effects 
model, with the most recent and complete utilization data available at 
the time of annual rulemaking. Annual recalibration of the PDGM case-
mix weights ensures that the case-mix weights reflect, as accurately as 
possible, current home health resource use and changes in utilization 
patterns. It also allows us to be as accurate and up to date as 
possible when measuring relationships between resource use and 
functional points, functional threshold levels, comorbidities, LUPA 
thresholds, and case-mix weights. These aspects of the PDGM capture 
patient acuity. Further, because our finalized methodology utilizes the 
most recent claims data (which includes case-mix), patient acuity is 
reflected in the data.
(d) CY 2020 Results
    This section discusses the final results that CMS determined from 
CY 2020 claims data that was previously published in the CY 2023 HH PPS 
final rule (87 FR 66804 through 66805). CMS did not do any 
recalculations for CY 2020 data and this section simply reiterates what 
was done previously for informative purposes only. Using the 
methodology described previously, we simulated 60-day episodes using 
actual CY 2020 30-day periods to determine what the CY 2020 permanent 
and temporary payment adjustments should be to offset for such 
increases or decreases in estimated aggregate expenditures. For CY 
2020, we began with 8,423,688 30-day periods and dropped 603,157 30-day 
periods that had a claim occurrence code 50 date after October 31, 
2020. We also eliminated 79,328 30-day periods that did not appear to 
group with another 30-day period to form a 60-day episode if the 30-day 
period had a ``from date'' before January 15, 2020 or a ``through 
date'' after November 30, 2020. This was done to ensure a 30-day period 
would not have been part of a 60-day episode that would have overlapped 
into CY 2021. Applying the additional exclusions and assumptions as 
described previously, an additional 14,062 30-day periods were excluded 
from this analysis. Additionally, we excluded 66,469 simulated 60-day 
episodes of care where no OASIS information was available in the CCW 
VRDC or could not be grouped to a HIPPS due to a missing primary 
diagnosis or other reason. Our simulated 60-day episodes of care 
produced a distribution of two 30-day periods of care (70.6 percent) 
and single 30-day periods of care (29.4 percent). This distribution is 
similar to what we found when we simulated 30-day periods of care for 
implementation of the PDGM. After all exclusions and assumptions were 
applied, the final dataset included 7,618,061 actual 30-day periods of 
care and 4,463,549 simulated 60-day episodes of care for CY 2020.
    Using the final dataset for CY 2020 (7,618,061 actual 30-day 
periods which made up the 4,463,549 simulated 60-day episodes) we 
determined the estimated aggregate expenditures under the pre-PDGM HH 
PPS were lower than the actual estimated aggregate expenditures under 
the PDGM HH PPS. This indicates that aggregate expenditures under the 
PDGM were higher than if the 153-group payment system was still in 
place in CY 2020. As described previously in the methodology, we needed 
to calculate what the actual CY 2020 30-day base payment rate 
($1,864.03) should have been to equal the aggregate expenditures that 
we calculated using the simulated CY 2020 60-day episodes. We 
determined the CY 2020 30-day base payment rate should have been 
$1,742.52 based on actual behavior rather than the $1,864.03 based on 
assumed behaviors. The percent change between the two payment rates 
(actual and recalculated) would be the permanent adjustment. Next, we 
calculated the difference in aggregate expenditures for all CY 2020 
PDGM 30-day claims using the actual and recalculated payment rates. 
This difference is the retrospective dollar amount needed to offset 
payment. Our results are shown in Table B1.

[[Page 77690]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.003

    As shown in Table B1 and in the CY 2023 HH PPS final rule (87 FR 
66805), a permanent prospective adjustment of -6.52 percent to the CY 
2023 30-day payment rate would be required to offset for such increases 
in estimated aggregate expenditures in future years. Additionally, we 
determined that our initial estimate of base payment rates required to 
achieve budget neutrality resulted in excess expenditures of HHAs of 
approximately $873 million in CY 2020. This would require a temporary 
adjustment to offset for such increase in estimated aggregate 
expenditures for CY 2020.
(e) CY 2021 Results
    This section discusses the final results CMS determined from CY 
2021 claims data that was previously published in the CY 2023 HH PPS 
final rule (87 FR 66805 through 66806). CMS did not do any 
recalculations for CY 2021 data and this section simply reiterates what 
was done previously for informative purposes only. Using the 
methodology described previously, we simulated 60-day episodes using 
actual CY 2021 30-day periods to determine what the permanent and 
temporary payment adjustments should be to offset for such increases or 
decreases in estimated aggregate expenditures as a result of the impact 
of differences between assumed behavior changes and actual behavior 
changes. For CY 2021, we began with 9,269,971 30-day periods of care 
and dropped 570,882 30-day periods of care that had claim occurrence 
code 50 date after October 31, 2021. We also excluded 968,434 30-day 
periods of care that had claim occurrence code 50 date before January 
1, 2021 to ensure the 30-day period would not be part of a simulated 
60-day episode that began in CY 2020. Applying the additional 
exclusions and assumptions as described previously, an additional 5,868 
30-day periods were excluded.
    Additionally, we excluded 14,302 simulated 60-day episodes of care 
where no OASIS information was available in the CCW VRDC or could not 
be grouped to a HIPPS due to a missing primary diagnosis or other 
reason. Our simulated 60-day episodes of care produced a distribution 
of two 30-day periods of care (70.0 percent) and single 30-day periods 
of care (30.0 percent) that was similar to what we found when we 
simulated two 30-day periods of care for implementation of the PDGM. 
After all exclusions and assumptions were applied, the final dataset 
included 7,703,261 actual 30-day periods of care and 4,529,498 
simulated 60-day episodes of care for CY 2021.
    Using the final dataset for CY 2021 (7,703,261 actual 30-day 
periods which made up the 4,529,498 simulated 60-day episodes) we 
determined the estimated aggregate expenditures under the pre-PDGM HH 
PPS were lower than the actual estimated aggregate expenditures under 
the PDGM HH PPS. This indicates that aggregate expenditures under the 
PDGM were higher than if the 153-group payment system was still in 
place in CY 2021. As described previously in the methodology, we needed 
to calculate what the actual CY 2021 30-day base payment rate 
($1,901.12) should have been to equal aggregate expenditures that we 
calculated using the simulated CY 2021 60-day episodes. We determined 
the CY 2021 30-day base payment rate should have been $1,751.90 based 
on actual behavior rather than the $1,901.12 based on assumed 
behaviors. The actual CY 2021 base payment rate of $1,901.12 does not 
account for any behavior adjustments needed for CY 2020, and therefore 
to evaluate changes for only CY 2021 we would need to control for the -
6.52 percent prospective adjustment that we determined for CY 2020. 
Therefore, using the recalculated CY 2020 base payment rate of 
$1,742.52, multiplied by the CY 2021 wage index budget neutrality 
factor (0.9999) and the CY 2021 home health payment update (1.020), the 
CY 2021 base payment rate for assumed behaviors would have been 
$1,777.19. The percent change between the two payment rates would be 
the annual permanent adjustment for CY 2021 (assuming the -6.52 percent 
adjustment was already taken). Next, we calculated the difference in 
aggregate expenditures for all CY 2021 PDGM 30-day claims using the 
actual ($1,901.12, as this was what CMS actually paid in CY 2021) and 
recalculated ($1,751.90) payment rates. This difference is the 
retrospective dollar amount needed to offset payment. Our results are 
shown in Table B2.

[[Page 77691]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.004

    As shown in Table B2 and in the CY 2023 HH PPS final rule (87 FR 
66806), a permanent prospective adjustment of -1.42 percent (assuming 
the -6.52 percent adjustment was already taken) would be required to 
offset for such increases in estimated aggregate expenditures in future 
years. Additionally, we determined that our initial estimate of base 
payment rates required to achieve budget neutrality resulted in excess 
expenditures of approximately $1.2 billion in CY 2021. This would 
require a one-time temporary adjustment factor to offset for such 
increases in estimated aggregate expenditures for CY 2021.
(f) CY 2022 Final Results
    We will continue the practice of using the most recent complete 
home health claims data at the time of rulemaking. The CY 2022 analysis 
presented in the CY 2024 HH PPS proposed rule was considered 
``preliminary'' and as more data became available from the latter half 
of CY 2022, we updated our results. As we did with the CY 2024 HH PPS 
proposed rule, the HH PPS limited data set (LDS) file released with 
this final rule includes two files: the actual CY 2022 30-day periods 
and the CY 2022 simulated 60-day episodes. We remind readers a data use 
agreement (DUA) is required to purchase the CY 2024 final HH PPS LDS 
file. Access will be granted for both the 30-day periods and the 
simulated 60-day episodes under one DUA. Visit the HH PPS LDS web page 
for more information.\6\ In addition, the final CY 2024 Home Health 
Descriptive Statistics from the LDS Files spreadsheet is available on 
the Home Health Prospective Payment System Regulations and Notices web 
page,\7\ does not require a DUA, and is available at no cost to 
interested parties. The spreadsheet contains information on the number 
of simulated 60-day episodes and actual 30-day periods in CY 2022 that 
were used to determine the behavior adjustments. The spreadsheet also 
provides information such as the number of episodes and periods by 
case-mix group, case-mix weights, and simulated payments. The CY 2024 
final rule utilizes the CY 2022 finalized data for determining the 
behavior adjustment needed to calculate the CY 2024 payment rate. 
However, while the claims data and the permanent and temporary behavior 
adjustment results will be considered complete, any adjustments to 
future payment rates may be subject to additional considerations such 
as permanent adjustments taken in previous years.
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    \6\ https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds.
    \7\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.
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    Using the methodology described previously, we simulated 60-day 
episodes using actual CY 2022 30-day periods to determine what the 
permanent and temporary payment adjustments should be to offset for 
such increases or decreases in estimated aggregate expenditures as a 
result of the impact of differences between assumed behavior changes 
and actual behavior changes. For CY 2022, we began with 8,593,266 30-
day periods of care and dropped 539,048 30-day periods of care that had 
claim occurrence code 50 date after October 31, 2022. We also excluded 
894,333 30-day periods of care that had claim occurrence code 50 date 
before January 1, 2022 to ensure the 30-day period would not be part of 
a simulated 60-day episode that began in CY 2021. Applying the 
additional exclusions and assumptions as described previously, an 
additional 6,105 30-day periods were excluded.
    Additionally, we excluded 18,296 simulated 60-day episodes of care 
where no OASIS information was available in the CCW VRDC or could not 
be grouped to a HIPPS due to a missing primary diagnosis or other 
reason. Our simulated 60-day episodes of care produced a distribution 
of two 30-day periods of care (69.6 percent) and single 30-day periods 
of care (30.4 percent) that was similar to what we found when we 
simulated two 30-day periods of care for implementation of the PDGM. 
After all exclusions and assumptions were applied, the final dataset 
included 7,124,359 actual 30-day periods of care and 4,199,746 
simulated 60-day episodes of care for CY 2022.
    Using the final dataset for CY 2022 (7,124,359 actual 30-day 
periods which made up the 4,199,746 simulated 60-day episodes) we 
determined the estimated aggregate expenditures under the pre-PDGM HH 
PPS were lower than the actual estimated aggregate expenditures under 
the PDGM HH PPS as shown in Table B3. This indicates that aggregate 
expenditures under the PDGM were higher than if the 153-group payment 
system was still in place in CY 2022. As described previously in the 
methodology, we needed to calculate what the actual CY 2022 30-day base 
payment rate should have been to equal aggregate expenditures that we 
calculated using the simulated CY 2022 60-day episodes. We determined 
the CY

[[Page 77692]]

2022 30-day base payment rate should have been $1,839.10 based on 
actual behavior rather than the $2,031.64 based on assumed behaviors. 
We note, the actual CY 2022 base payment rate of $2,031.64 does not 
account for any behavior adjustments needed for CYs 2020 and 2021, and 
therefore to evaluate changes for only CY 2022 we need to account for 
the -7.85 percent prospective adjustment that we determined for CYs 
2020 and 2021. Therefore, using the recalculated CY 2021 base payment 
rate of $1,751.90 (shown in Table B2), multiplied by the CY 2022 case-
mix weights recalibration neutrality factor (1.0396), the CY 2022 wage 
index budget neutrality factor (1.0019) and the CY 2022 home health 
payment update (1.026), the CY 2022 base payment rate for assumed 
behavior would have been $1,872.18. The percent change between the two 
payment rates would be the additional permanent adjustment (assuming 
the -7.85 percent adjustment was already taken). Next, we calculated 
the difference in aggregate expenditures for all CY 2022 PDGM 30-day 
claims using the actual ($2,031.64) and recalculated ($1,839.10) 
payment rates. This difference is the retrospective dollar amount 
needed to offset payment. Our results are shown in Table B3.
[GRAPHIC] [TIFF OMITTED] TR13NO23.005

    As shown in Table B3, a permanent prospective adjustment of -1.767 
percent to the CY 2024 30-day payment rate (assuming the -7.85 percent 
adjustment was already taken) would be required to offset for such 
increases in estimated aggregate expenditures in future years. 
Additionally, we determined that our initial estimate of base payment 
rates required to achieve budget neutrality resulted in excess 
expenditures of approximately $1.4 billion in CY 2022. This would 
require a one-time temporary adjustment factor to offset for such 
increases in estimated aggregate expenditures for CY 2022.
(g) CY 2024 Final Permanent Adjustment and Temporary Adjustment 
Calculations
    As discussed in the CY 2023 HH PPS final rule (87 FR 66808), to 
offset fully the increase in estimated aggregate expenditures for CYs 
2020 and 2021 based on the impact of the differences between assumed 
and actual behavior changes, in CY 2023, CMS would have needed to apply 
a -7.85 percent permanent adjustment to the CY 2023 base payment rate, 
as well as implement a temporary adjustment of approximately $2.1 
billion to reconcile retrospective overpayments in CYs 2020 and 2021. 
We recognized that applying the full permanent and temporary adjustment 
immediately would have resulted in a significant negative adjustment in 
a single year. However, as we noted at the time, and as still is 
applicable, if the PDGM 30-day base payment rate remained higher than 
it should be, there will be a compounding effect, potentially creating 
the need for an even larger reduction to adjust for behavioral changes 
in future years. After considering all options, CMS proposed and 
finalized the application of only a permanent adjustment to the CY 2023 
base payment rate. We believed, and continue to believe, this mitigates 
the need for a larger permanent adjustment and reduces the amount of 
any additional temporary adjustments in future years.
    We also recognized the potential hardship to some providers of 
implementing the full -7.85 percent permanent adjustment in a single 
year. We exercised our discretion to implement adjustments in a time 
and manner determined appropriate, under section 1895(b)(3)(D) of the 
Act, to finalize a -3.925 percent (half of the -7.85 \8\ percent) 
permanent adjustment to the CY 2023 30-day payment rate. However, we 
emphasized that the permanent adjustment needed in CY 2023 to account 
fully for actual behavior changes in CYs 2020 and 2021 was -7.85 
percent and applying a -3.925 percent permanent adjustment to the CY 
2023 30-day payment rate would not fully account for differences in 
behavior changes on estimated aggregate expenditures during those 
years, as well as CYs 2022 and 2023. We stated we would need to account 
for that difference (that is, the remaining half not applied to the CY 
2023 payment rate) in future rulemaking, and any additional adjustments 
(for example, CY 2022) needed to the base payment rate, to account for 
behavior change based on more recent data analysis. We note that the 
total permanent adjustment based on CY 2022 data did not have any 
previous behavior adjustments applied.

[[Page 77693]]

However, as described later in this section, we recognize for CY 2024 
we must account for adjustments made in CY 2023.
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    \8\ We initially proposed a -7.69 percent permanent adjustment 
in the CY 2023 HH PPS proposed rule (87 FR 37620). As more data 
became available from the latter half of CY 2021, we updated our 
results.
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    The percent change between the actual CY 2022 base payment rate of 
$2,031.64 (based on assumed behaviors) and the CY 2022 recalculated 
base payment rate of $1,839.10 (based on actual behaviors) (shown in 
Table B3) is the total (cumulative) permanent adjustment for CY 2022. 
The summation of the dollar amount for CYs 2020, 2021, and 2022 is the 
amount that represents the temporary payment adjustment to offset for 
increased aggregate expenditures in CYs 2020, 2021, and 2022. Our 
results are shown in Table B4 and B5.
[GRAPHIC] [TIFF OMITTED] TR13NO23.006

[GRAPHIC] [TIFF OMITTED] TR13NO23.007

    We remind readers when we update the national, standardized 30-day 
period payment amount (section II.C.4.2) that adjustment factors are 
multiplied in this payment system and therefore, individual numbers 
(that is, percentages) do not sum precisely to the permanent adjustment 
needed to account for the total permanent adjustment in that year. 
Additionally, as we stated in the CY 2023 HH PPS final rule (87 FR 
66808), applying a -3.925 percent permanent adjustment to the CY 2023 
30-day payment rate would not adjust the rate fully to account for 
differences in behavior changes on estimated aggregate expenditures in 
CYs 2020 and 2021. Therefore, we cannot determine the CY 2024 final 
permanent adjustment by simply subtracting -3.925 percent from the 
total permanent adjustment of -9.477 percent (updated from -9.356 
percent in the proposed rule as more data became available), as 
described further below.
    Instead, we look at the total permanent adjustment needed for the 
current year of data and account for any prior permanent adjustments 
through multiplication and division of factors. In other words, we 
determined the total permanent adjustment based on CY 2022 data (which 
had no prior adjustments) is -9.477 percent, which is converted to a 
0.90523 factor. We recognize that in CY 2023 we implemented a -3.925 
percent permanent behavior adjustment, converted to a 0.96075 factor, 
and we must account for it in the proposed CY 2024 permanent 
adjustment. Next, we calculated the CY 2024 permanent adjustment factor 
by solving (1-x) = 0.90523 (9.477 percent) divided by 0.96075 (3.925 
percent). The resulting factor (1-x) is 0.94221, which is converted to 
a 5.779 percent (updated from 5.653 percent in the CY 2024 HH PPS 
proposed rule (88 FR 43678) as more data became available) reduction to 
the CY 2024 national, standardized base payment rate. In other words, 1 
minus the factor 0.94221 equals 0.05779 which is equal to a 5.779 
percent reduction. Therefore, to offset the increase in estimated 
aggregate expenditures for CY 2022 based on the impact of the 
differences between assumed and actual behavior changes, and to account 
for the permanent adjustment of -3.925 percent taken in CY 2023 
rulemaking, CMS would need to apply a -5.779 percent permanent 
adjustment to the CY 2024 base payment rate.
    To calculate the temporary adjustment, we would add the CY 2022 
temporary adjustment dollar amount of $1,405,447,290 to the previously 
finalized CYs 2020 and 2021 dollar amounts for a total of 
$3,489,523,364. We stated in the CY 2023 HH PPS final rule (87 FR 
66804) and the CY 2024 HH PPS proposed rule (88 FR 43678), after we 
determine the dollar amount to be reconciled, we will calculate a 
temporary adjustment factor to be applied to the base payment rate for 
that year. That is, the dollar amount will be converted to a factor. 
However, in the CY 2023 HH PPS proposed rule (87 FR 37682), we opted to 
implement only the permanent adjustment and solicit

[[Page 77694]]

comments on the implementation of a temporary adjustment, as we 
believed for that year applying both would result in too significant of 
a reduction in the payment rate in one year. Given that the magnitude 
of implementing both the temporary and permanent adjustments for CY 
2024 rate setting may also result in a significant reduction of the 
payment rate, we similarly did not propose to take the temporary 
adjustment in CY 2024. As we are required by Section 1895(b)(3)(D)(iii) 
of the Act, we will propose a temporary adjustment factor to the 
national, standardized 30-day base payment rate when we propose this 
temporary payment adjustment in future rulemaking.
    We received 343 comments on the permanent prospective behavior 
change adjustment on the CY 2024 home health payment rate which are 
summarized in this section. Similar to comments received on the CY 2023 
permanent adjustment, the majority of commenters disagreed with the 
proposed permanent adjustment to the CY 2024 payment rate.
    Comment: Overall, commenters raised concerns that the proposed rate 
cut would be a threat to home health access. Further, industry 
advocates submitted data from hospitals and health systems to support 
their assertion that HHA referrals for Medicare beneficiaries are 
increasingly being rejected, and the number of patients referred to 
home health and subsequently admitted is dropping.
    These commenters interpret these trends to be indicative of 
declining access to home health services and state that CMS's 
implementation of the PDGM and behavior adjustment resulting in rate 
cuts are major contributors. Commenters stated that a rate cut will 
affect beneficiary access by forcing HHAs to close, sell, reduce 
service areas, reduce admissions, and struggle to retain staff, while 
many others are operating with, or will operate with, negative margins 
if the CY 2024 permanent rate adjustment is finalized. These commenters 
contend that CMS does not have an accurate financial picture of 
industry stability, as we do not account for overall margins (for 
example, Medicare Advantage), rather just Medicare Fee-For-Service 
(FFS) margins when considering margin analyses. A commenter stated that 
``the economic model of HHAs necessitates a view consistent with the 
HHAs' evaluation of its overall financial condition,'' suggesting that 
it is common for Medicare's FFS payment to subsidize shortfalls from 
other payers.
    Response: We appreciate industry advocates' dedication to ensuring 
continued access to home health services. We recognize there is always 
a level of concern that accompanies a payment rate decrease and we 
remind readers that, by law, as described in section 1895(b)(3)(D) of 
the Act, we are required to ensure that estimated aggregate 
expenditures under the HH PPS are equal to our determination of 
estimated aggregate expenditures that otherwise would have been made 
under the HH PPS in the absence of the change to a 30-day unit of 
payment and changes in case-mix adjustment factors. We appreciate 
providers', beneficiaries', and other stakeholders' commitment to the 
sustainability of the home health benefit.
    As we noted above, we reprice the base payment rate based on actual 
behavior changes by HHAs, not on how the behavior changes impact HHA 
margins. In any event, CMS looked closely at our data to ensure the 
payment rate adequately covers the costs reported by HHAs, without 
creating unnecessary hardship to providers and maintaining access to 
quality services for all beneficiaries. Maintaining access is one of 
CMS's priorities when making policy decisions. We do not intend to 
obstruct the provision of home health services to any beneficiary who 
qualifies for this benefit.
    Overall, CMS's data on the cost of providing care (as reported by 
HHAs on the Home Health Medicare Cost Reports (CMS Form 1728-20, OMB 
No. 0938-0022)) and the margin analysis, along with data reported by 
MedPAC in their annual Medicare payment policy reports to the Congress, 
indicate that the cost of providing home health care remains, on 
average, below the base payment rate and that HHAs in general continue 
to experience high profit margins. CMS's analysis, shown in Table B4 of 
the CY 2024 HH PPS proposed rule, indicates that the CY 2022 national, 
standardized 30-day period payment rate was approximately 45 percent 
more than the CY 2022 estimated 30-day period cost (88 FR 43665). 
MedPAC's 2023 March Report to the Congress \9\ found that in 2021, home 
health agencies' average cost per 30-day period decreased by 2.9 
percent and that Medicare's payment per in-person visit increased by 
17.7 percent. Medicare margins for freestanding agencies averaged 24.9 
percent in 2021, up from 20.2 percent in 2020 and 15.4 percent in 2019. 
These high margins indicate that the increase in payments in 2021 far 
exceeded the increase in costs, which undermines commenters' assertion 
that CMS's modest (by comparison) cuts to the base rate in 2023 would 
exacerbate any problems with access to care. Further, MedPAC's 
projected Medicare margin for HHAs for 2023 is 17.0 percent, which 
includes the statutory adjustment to the base payment rate in 
accordance with the statutory requirement to determine the impact of 
differences between assumed behavior changes and actual behavior 
changes on estimated aggregate expenditures in response to the change 
in case-mix adjustment and the 30-day period payment.
---------------------------------------------------------------------------

    \9\ Report to Congress, Medicare Payment Policy. Home Health 
Care Services, Chapter 8. MedPAC. March 2023 https://www.medpac.gov/wp-content/uploads/2023/03/Ch8_Mar23_MedPAC_Report_To_Congress_SEC.pdf.
---------------------------------------------------------------------------

    Some commenters pointed to the number of HHAs with negative 
margins. Using Medicare cost reports with a year end of December 31, 
2022, approximately 21 percent of HHAs have margins below zero percent. 
We are aware that some HHAs face financial difficulties, but the 
behavior adjustment is an aggregate adjustment that impacts the base 
payment rates of all HHAs equally. Our analysis, shown in Table B6, 
indicates that even prior to the PDGM, approximately 20 to 23 percent 
of freestanding HHAs had margins below zero percent, indicating that 
this phenomenon pre-dated the PDGM, and are not the result of the rate 
adjustments related to the initial behavior assumptions applied in CY 
2020.

[[Page 77695]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.008

    With respect to the comment that CMS must look at the HHAs' overall 
financial condition (that is, overall margins), we have never endorsed 
the view that Medicare funds should be used to subsidize reimbursement 
rates from other payers--a policy that would be inconsistent with our 
obligation to be responsible stewards of the Medicare Trust Funds and 
would ultimately increase costs to Medicare beneficiaries, taxpayers, 
or both. As we noted in the CY 2023 HH PPS final rule we responded to 
this assertion stating: ``Medicare has never set payments to cross-
subsidize other payers. Section 1861(v)(1)(A) of the Act states that 
under the methods of determining costs, the necessary costs of 
efficiently delivering covered services to individuals covered by the 
insurance programs established by this title will not be borne by 
individuals not so covered, and the costs with respect to individuals 
not so covered will not be borne by such insurance programs'' (87 FR 
66807).
    While CMS monitors the payment rate to ensure it is adequate for 
providing care, MedPAC further assesses access to care by reviewing 
several indicators to determine the level at which payments will be 
adequate to cover the costs of providing care of a provider in any 
given year. Specifically, they examine the supply of home health 
providers, annual changes in the volume of services, quality of care, 
and access to capital, in addition to the relationship between 
Medicare's payments and providers' costs. Their annual reports indicate 
that prior to and following the implementation of the PDGM, the payment 
adequacy indicators for home health care have been positive.
    Finally, we observed many methodological weaknesses in the analyses 
submitted by commenters. It is unclear whether the proprietary data on 
which commenters base their analyses includes referrals from only 
Medicare FFS beneficiaries or also includes referrals from patients 
covered by other payers, which means the entire analysis may be inapt 
for Medicare FFS policy. In addition, the proportion of hospital 
referrals rejected by HHAs does not equate to the proportion of 
qualifying beneficiaries who are denied care. The data fails to capture 
why the beneficiary was rejected--for example, because the analysis 
focuses on numbers of referrals denied rather than numbers of 
beneficiaries denied care, the rejection referral proportion could be 
inflated by a small number of beneficiaries rejected from multiple 
HHAs, or by beneficiaries rejected from one HHA but who ultimately 
received care from another HHA. It also fails to indicate that the HHA 
did in fact reject the referral and why it was rejected (for example, 
payment or staff related), or whether there was another reason the 
patient did not receive home health services, such as patient refusal 
or readmission to an inpatient facility.
    Further, the data submitted by the commenters is deficient in 
analyzing the characteristics of the beneficiaries who are receiving 
home health services versus those that do not. The usefulness of such 
analysis would be to potentially show whether HHAs are strategic in 
accepting certain types of patients over others. In response to a 
similar home health rate decrease (CY 2011 HH PPS final rule), in which 
CMS finalized a 3.79 percent rate reduction, a commenter stated that 
``HHAs may become more selective in their acceptance of medically 
difficult patients who are likely to utilize more services'' (75 FR 
70375). Additionally, in the CY 2023 HH PPS final rule we quoted an 
article published in February 2020, in which the National Association 
for Home Care and Hospice (NAHC) stated ``categorically, across the 
board, we're going to reduce our therapy services'' because of the PDGM 
(87 FR 66798). A comment letter received by NAHC on the CY 2023 
proposed rule also attempted to outline, how historically, rate cuts to 
Medicare home health services alter how HHAs provide care. 
Compellingly, we also received a significant number of comments in 
response to the CY 2024 HH PPS proposed rule supporting this concept. 
These comments are discussed below.
    Comment: Commenters indicated that HHAs may also choose which 
patients to accept on service to maximize payment. For example, a 
patient advocate group noted that ``HHAs self-select the Medicare 
patients they will serve (or not serve), and then HHAs determine the 
services they provide, based on their hiring choices and OASIS 
assessments.'' This commenter stated that home health care has become 
``big business,'' and stated that ``HHAs focus

[[Page 77696]]

more on profits for shareholders and less on critically needed services 
for patients.'' Another commenter stated, ``the venture capital backed 
agencies are using data-mining solutions to ensure a profit is made. 
This includes everything from the heavily scrutinized referral 
acceptance procedure to ensure `profitable' patients are chosen over 
`non-profitable' patients and the rationing of care based on what the 
data shows to create profit from decreasing direct care costs.''
    Response: Our previous response related to margins suggests that, 
as some commenters have claimed, HHAs may be strategically admitting or 
denying beneficiaries based to maximize their margins. We are concerned 
by suggestions that the ``referral rejections'' and perceived access to 
care issue that industry advocates have cited to us are in fact being 
caused by strategic behavior. We would be interested to receive data 
and analysis comparing beneficiaries who are receiving home health 
services versus those who are not, which could help inform future 
policy proposals. The data we received does not address that issue, and 
CMS's review of utilization software websites designed to guide HHAs to 
the most profitable referrals and to identify ways to decrease costs 
supports these commenters assertions. For these reasons, we cannot 
credit home health agencies' conclusion that either behavioral 
adjustments or the PDGM are the root cause of the access issues 
reported by beneficiaries.
    We will continue to monitor home health utilization, claims data, 
and home health cost reports to identify trends that may indicate 
vulnerabilities and deficiencies in the home health prospective payment 
system and potentially affect access to care. Given this monitoring and 
analyses showing that the home health payment exceeds the cost of 
providing care, we would expect that providers would not have to reject 
referrals because of inadequate payment. In fact, due to the newly 
implemented case-mix system designed to encourage a varied distribution 
of services, we would not only expect that agencies would not have to 
reject referrals but be well-positioned to accept a wide range of 
referrals regardless of the services needed.
    We are aware of the changes in the home health industry, including 
buyouts and increased interest of private equity groups. These shifts 
will undoubtedly change the landscape of home health; however, we 
remind stakeholders that Medicare FFS sets rates to cover costs that 
align with Medicare's principles of reasonable cost determination as 
set out at 42 CFR 413.9, not to ensure high profit margins. The home 
health benefit uses a prospective payment system that is inclusive of 
all care required in a 30-day period of care. This method of payment is 
made based on a predetermined, base payment amount. The home health 
case-mix system, the PDGM, was created to align the payment system more 
closely with patient characteristics and ensure that payment accurately 
meets the resource needs of various types of patients. This helps HHAs 
to be paid appropriately for a wide range of patients with varying care 
needs and improves the likelihood that clinically complex and ill 
beneficiaries and patients coming from the hospital will have adequate 
access to home health care. In the CY 2019 HH PPS final rule with 
comment period (83 FR 56448), where we finalized the implementation of 
the PDGM, there was some commenter concern that the PDGM may introduce 
``inappropriate practice patterns,'' suggesting again that HHAs may 
change how they operate in accordance with payment. However, our 
objective then, as well as now, remains to pay for the care provided as 
required by the statute. As evidenced by the behavior changes described 
in the CY 2023 HH PPS final rule, we understand that providers do 
continue to adjust practice patterns in response to payment and case-
mix changes. We also understand that venture capital and private equity 
groups are buying HHAs. This, however, does not mean that overall 
access to the benefit has been compromised and the analyses presented 
by commenters fails to show evidence that this is the case. Further, 
were the data to show definitively that overall access has been 
affected, there remains no direct link to inadequate payment. It is 
also important to note that while the commenters' data purports to show 
an increase in ``referral rejections'' beginning with the 
implementation of the PDGM and through the beginning of CY 2023, in CY 
2020 (beginning of PDGM) and each subsequent year through CY 2023, CMS 
has instituted a positive rate update for HHAs. It is unclear why HHAs 
would reject referrals when payment rates have increased each year 
since the implementation of the PDGM, and as established earlier, have 
continually exceeded the cost of providing care. Additionally, CMS is 
statutorily required, under Section 1895(b)(3)(D)(i), to ensure that 
estimated aggregate expenditures under the PDGM are equal to the 
estimated aggregate expenditures that otherwise would have been made 
under the prior system, by accounting for the impact of the differences 
between assumed behavior changes and actual behavior changes on 
estimated aggregate expenditures. This requirement under section 
1895(b)(3)(D)(i) resulted in the proposed -5.653 percent adjustment for 
CY 2024.
    We do not believe that the percentage of ``referral rejections'' 
attributable to staffing issues requires a different policy. Commenters 
did not submit any evidence that staffing shortages are due to changes 
in the payment rate or case-mix adjustment rather than the widespread 
staffing shortages that exist across the spectrum of healthcare, and in 
the general labor market. While we recognize the staffing challenges 
faced by HHAs and other healthcare providers, we are accounting for 
those staffing challenges in other ways, such as the market basket 
increase (which includes labor costs), as explained in section II.C.3 
of this final rule.
    In conclusion, we appreciate the concerns that a rate decrease may 
affect access to home health services; however, CMS's analysis of HHA 
cost reports and margin analysis, as well as MedPAC's analysis of 
profit margins, the supply of home health providers, annual changes in 
the volume of services, quality of care, and access to capital shows 
that access should remain adequate. Our discussion above indicates that 
any effect on access would not be a result of CMS paying more 
accurately for the care provided. In addition, the law requires us to 
evaluate the difference between assumed and actual behavior changes on 
estimated aggregate expenditures independently for CYs 2020 through 
2026. The payment adjustment does not include extenuating factors such 
as margins. Further, while the analyses submitted by the commenters 
allegedly show that access to home health services has been 
compromised, CMS does not have access to the proprietary data used to 
create the analysis to confirm the validity of the results.
    Final Decision: We continue to adhere to the methodology finalized 
in the CY 2023 HH PPS final rule (87 FR 66804). However, as in previous 
years, we acknowledge that taking a large permanent adjustment in a 
single year, to comply with the statutory requirement that CMS ensure 
the estimated aggregate expenditures under the PDGM are equal to the 
estimated aggregate expenditures that would have been made under the 
prior system, may be burdensome for some providers. As we have the 
discretion to implement any behavior adjustment in a time and manner 
determined appropriate, we are

[[Page 77697]]

finalizing only a -2.890 percent (half of the -5.779 \10\ percent) 
permanent adjustment for CY 2024. This approach of applying half of the 
permanent adjustment is aligned with the approach finalized in the CY 
2023 HH PPS final rule (87 FR 66808) where CMS finalized half of the 
permanent adjustment to the CY 2023 30-day payment rate.
---------------------------------------------------------------------------

    \10\ We initially proposed a -5.653 percent permanent adjustment 
in the CY 2024 HH PPS proposed rule (88 FR 43679). As more data 
became available from the latter half of CY 2022, we updated our 
results.
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    However, we note the permanent adjustment to account for actual 
behavior changes in CYs 2020, 2021, and 2022, should be -5.779 percent, 
which includes the remaining ``half'' from the CY 2023 HH PPS final 
rule and the additional adjustment based on CY 2022 data. Therefore, 
applying a -2.890 percent permanent adjustment to the CY 2024 30-day 
payment rate would not adjust the rate fully to account for differences 
in behavior changes on estimated aggregate expenditures during those 
years. We will have to account for that difference, and any other 
potential adjustments needed to the base payment rate, to account for 
behavior change based on data analysis in future rulemaking.
    CMS did not propose to adjust the CY 2024 base payment rate using 
our temporary adjustment authority, as section 1895(b)(3)(D)(iii) 
allows any adjustment to be made in a time and manner deemed 
appropriate by the Secretary. However, we remind readers that without 
the full permanent adjustment (-5.779 percent) in effect, the total 
temporary dollar amount will likely continue to increase until the 
permanent adjustment is fully implemented.
2. CY 2024 PDGM LUPA Thresholds and PDGM Case-Mix Weights
(a) CY 2024 PDGM LUPA Thresholds
    Under the HH PPS, LUPAs are paid when a certain visit threshold for 
a payment group during a 30-day period of care is not met. In the CY 
2019 HH PPS final rule with comment period (83 FR 56492), we finalized 
a policy to set the LUPA thresholds at the 10th percentile of visits or 
2 visits, whichever is higher, for each payment group. This means the 
LUPA threshold for each 30-day period of care may vary depending on the 
PDGM payment group to which it is assigned. If the LUPA threshold for 
the payment group is met under the PDGM, the 30-day period of care will 
be paid the full 30-day period case-mix adjusted payment amount 
(subject to any partial payment adjustment or outlier adjustments). If 
a 30-day period of care does not meet the PDGM LUPA visit threshold, 
then payment will be made using the CY 2024 per-visit payment amounts 
as described in section II.C.4.e.3. of this final rule. For example, if 
the LUPA visit threshold is four, and a 30-day period of care has four 
or more visits, it is paid the full 30-day period payment amount; if 
the period of care has three or less visits, payment is made using the 
per-visit payment amounts.
    In the CY 2019 HH PPS final rule with comment period (83 FR 56492), 
we finalized a policy to reevaluate the LUPA thresholds for each PDGM 
payment group every year based on the most current utilization data 
available at the time of rulemaking. However, as CY 2020 was the first 
year of the new case-mix adjustment methodology, we stated in the CY 
2021 HH PPS final rule (85 FR 70305, 70306) that we would maintain the 
LUPA thresholds that were finalized and shown in Table 17 of the CY 
2020 HH PPS final rule with comment period (84 FR 60522) for CY 2021 
payment purposes. We stated that at that time, we did not have 
sufficient CY 2020 data to reevaluate the LUPA thresholds for CY 2021.
    In the CY 2022 HH PPS final rule (86 FR 62249), we discussed the 
influence of the COVID-19 PHE on home health utilization and finalized 
a proposal to recalibrate the PDGM case-mix weights, functional 
impairment levels, and comorbidity subgroups while maintaining the LUPA 
thresholds for CY 2022. We stated that, because there are several 
factors that contribute to how the case-mix weight is set for a 
particular case-mix group (such as the number of visits, length of 
visits, types of disciplines providing visits, and non-routine 
supplies) and the case-mix weight is derived by comparing the average 
resource use for the case-mix group relative to the average resource 
use across all groups, we believed the COVID-19 PHE would have impacted 
utilization within all case-mix groups similarly. Therefore, the impact 
of any reduction in resource use caused by the COVID-19 PHE on the 
calculation of the case-mix weight would be minimal since the impact 
would be accounted for both in the numerator and denominator of the 
formula used to calculate the case-mix weight. However, in contrast, 
the LUPA thresholds are based on the number of overall visits in a 
particular case-mix group (the threshold is the 10th percentile of 
visits or 2 visits, whichever is greater) instead of a relative value 
(like what is used to generate the case-mix weight) that would control 
for the impacts of the COVID-19 PHE. We noted that visit patterns and 
some of the decrease in overall visits in CY 2020 may not be 
representative of visit patterns in CY 2022. Therefore, to mitigate any 
potential future and significant short-term variability in the LUPA 
thresholds due to the COVID-19 PHE, we finalized the proposal to 
maintain the LUPA thresholds finalized and displayed in Table 17 in the 
CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY 2022 
payment purposes.
    For CY 2023, we proposed to update the LUPA thresholds using CY 
2021 Medicare home health claims (as of March 21, 2022) linked to OASIS 
assessment data. After reviewing the CY 2022 home health claims 
utilization data we determined that visit patterns have stabilized. Our 
data analysis indicated that visits in 2022 were similar to visits in 
2020. We believed that CY 2021 data would be more indicative of visit 
patterns in CY 2023 rather than continuing to use the LUPA thresholds 
derived from the CY 2018 pre-PDGM data. Therefore, in the CY 2023 HH 
PPS final rule we finalized a policy to update the LUPA thresholds for 
CY 2023 using data from CY 2021.
    In accordance with our policy, for CY 2024, in the CY 2024 HH PPS 
proposed rule, we proposed to update the LUPA thresholds using CY 2022 
home health claims utilization data (as of March 17, 2023). We 
solicited public comments on the proposed updates to the LUPA 
thresholds for CY 2024. These comments and our responses are summarized 
in this section of the rule.
    Comment: A few commenters expressed support for the proposed LUPA 
thresholds.
    Response: We thank the commenters for their support.
    Comment: Some commenters continued to disagree with the policy to 
reevaluate and update the LUPA thresholds annually. A commenter 
recommended that CMS reduce the LUPA threshold for all case-mix groups 
to two visits. Another commenter recommended CMS not update the LUPA 
thresholds for CY 2024 and reassess the impact of using CY 2023 data 
before making any adjustments. This commenter stated that the change in 
LUPA visit thresholds from two and three visits to the current four and 
five visit thresholds narrows the gap between the LUPA visit threshold 
and the average visits per home health period, and that as the gap 
narrows, LUPA payments will no longer represent outliers. Lastly, a 
commenter questioned the methodology used to calculate the LUPA 
thresholds.

[[Page 77698]]

    Response: We thank the commenters for their recommendations; 
however, in the CY 2019 HH PPS final rule with comment period (83 FR 
56492), we finalized the policies to set LUPA thresholds at the 10th 
percentile of visits or 2 visits, whichever is higher, for each payment 
group, and reevaluate the LUPA thresholds for each PDGM payment group 
every year based on the most current utilization data available at the 
time of rulemaking. We did not propose any changes to our finalized 
LUPA threshold policy in the CY 2024 HH PPS proposed rule. Further, our 
policy to reevaluate the LUPA thresholds ensures that they reflect, as 
accurately as possible, current home health resource use and changes in 
utilization patterns. As such, we believe that we should update the 
LUPA thresholds using CY 2022 home health claims utilization data (as 
of July 15, 2023), to ensure they are representative of the most recent 
visit patterns.
    Final Decision: We are finalizing the proposal to update the LUPA 
thresholds for CY 2024, using CY 2022 claims data (as of July 15, 
2023). The final LUPA thresholds for the CY 2024 PDGM payment groups 
with the corresponding Health Insurance Prospective Payment System 
(HIPPS) codes and the case-mix weights are listed in Table B12 and is 
also available on the HHA Center web page.\11\
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    \11\ https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.
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(b) CY 2024 Functional Impairment Levels
    Under the PDGM, the functional impairment level is determined by 
responses to certain OASIS items associated with activities of daily 
living (ADLs) and risk of hospitalization; that is, responses to OASIS 
items M1800-M1860 and M1033. A home health period of care receives 
points based on each of the responses associated with these functional 
OASIS items, which are then converted into a table of points 
corresponding to increased resource use. The sum of these points 
results in a functional score which is used to group home health 
periods into a functional level with similar resource use. That is, the 
higher the points, the higher the response is associated with increased 
resource use. The sum of these points results in a functional 
impairment score which is used to group home health periods into one of 
three functional impairment levels with similar resource use. The three 
functional impairment levels of low, medium, and high were designed so 
that approximately one-third of home health periods from each of the 
clinical groups fall within each level. This means home health periods 
in the low impairment level have responses for the functional OASIS 
items that are associated with the lowest resource use, on average. 
Home health periods in the high impairment level have responses for the 
functional OASIS items that are associated with the highest resource 
use on average.
    For CY 2024, we proposed to use CY 2022 claims data to update the 
functional points and functional impairment levels by clinical group. 
The CY 2018 HH PPS proposed rule (82 FR 35320) and the technical report 
from December 2016, posted on the Home Health PPS Archive web page 
located at: https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive, provides a more detailed explanation as to the 
construction of these functional impairment levels using the OASIS 
items. We proposed to use the same methodology previously finalized to 
update the functional impairment levels for CY 2024.
    We solicited public comments on the updates to functional points 
and the functional impairment levels by clinical group. A summary of 
these comments and our responses are as follows:
    Comment: Several commenters opposed the proposed, updated CY 2024 
functional impairment points and levels. A commenter recommended 
delaying this update until the effect of the CY 2023 functional 
impairment levels has been assessed. This commenter also suggested that 
if future updates are warranted that it should occur in CY 2025 using 
post pandemic CY 2023 claims data.
    Response: We thank the commenters for their recommendations; 
however, performing a yearly recalibration allows us to be as accurate 
and up to date as possible when measuring the relationship between 
resource use and functional points, functional threshold levels, 
comorbidities, LUPA thresholds and case-mix weights. Therefore, we do 
not believe it would be appropriate to delay updates to the functional 
impairment points and levels for CY 2024. We continue to believe that 
updating the functional impairment levels using current data ensures 
that all variables used as part of the overall case-mix adjustment 
appropriately align home health payment with the actual cost of 
providing home health care services.
    Comment: A commenter disagreed with the method used for assigning 
the functional impairment levels, stating that the update in point 
values appears to be more aimed at achieving an arbitrarily set target 
of one-third in each level rather than a true categorization of the 
patients' clinical presentation.
    Response: We remind commenters that the functional levels are set 
so that roughly a third of periods within each clinical group are 
assigned to low, medium, and high to ensure that the case-mix system 
pays appropriately for differences in functional impairment level. The 
structure of categorizing functional impairment into low, medium, and 
high levels has been part of the home health payment structure since 
the implementation of the HH PPS. The previous HH PPS grouped home 
health episodes using functional scores based on functional OASIS items 
with similar average resource use within the same functional level, 
with approximately a third of episodes classified as low functional 
score, a third of episodes classified as medium functional score, and a 
third of episodes classified as high functional score. Likewise, the 
PDGM groups home health periods of care using functional impairment 
scores based on functional OASIS items with similar resource use and 
has three levels of functional impairment severity: low, medium, and 
high. However, the PDGM differs from the previous HH PPS functional 
variable, in that the three functional impairment level thresholds in 
the PDGM vary between the clinical groups. The PDGM functional 
impairment level structure accounts for the patient characteristics 
within that clinical group associated with increased resource costs 
affected by functional impairment. This is to further ensure that 
payment is more accurately aligned with actual patient characteristics 
and resource needs.
    Comment: Some commenters were concerned that the proposed 
functional impairment levels do not accurately reflect the actual 
functional impairment levels of home health patients or the cost to 
provide care for higher acuity patients, specifically those in the 
musculoskeletal rehabilitation, neuro rehabilitation, surgical 
aftercare, and wounds groups, as these individuals often have intense 
needs for assistance with daily living. A few commenters questioned why 
it appears there would be a reduction in reimbursement for the highest 
acuity patients and suggested that this will limit an agency's ability 
to care for these types of patients. Some commenters indicated that 
they would see fewer patients with high functional impairment, as 
several groups changed from high functional impairment to medium 
functional impairment, while others stated this change will

[[Page 77699]]

incentivize for-profit agencies to hand-pick patients based on their 
predicted case mix grouping. A commenter suggested that the shift of 
patients from high functional impairment to medium functional 
impairment indicates by CMS through the HIPPS code that these patients 
are not as clinically complex and therefore would not require as many 
resources.
    Response: We have noted in past rules that we use the functional 
impairment level case-mix adjustment, developed as part of the PDGM 
case-mix, to provide the necessary payment adjustments to ensure that 
functional care needs are met based on actual patient characteristics. 
As in any case-mix system, there will be certain case-mix groups where 
a patient's costs exceed the average as well as where their costs are 
below the average. However, we do not believe that a patient assignment 
to a HIPPS category should dictate what care the patient needs. We 
expect the provision of services to be made to best meet the patient's 
care needs and in accordance with the home health CoPs at Sec.  484.60 
which sets forth the requirements for the content of the individualized 
home health plan of care which includes the types of services, 
supplies, and equipment required; the frequency and duration of visits 
to be made; as well as patient and caregiver education and training to 
facilitate timely discharge. Therefore, we do not expect HHAs to under-
supply care or services; reduce the number of visits in response to 
payment; or inappropriately discharge a patient receiving Medicare home 
health services as these would be violations of the CoPs and could also 
subject HHAs to program integrity measures.
    Final Decision: We are finalizing the functional points and 
functional impairment levels updates for CY 2024 as proposed, using CY 
2022 claims data (as of July 15, 2023). The updated OASIS functional 
points table and the table of functional impairment levels by clinical 
group for CY 2024 are listed in Tables B7 and B8, respectively.
BILLING CODE 4120-01-P

[[Page 77700]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.009


[[Page 77701]]


[GRAPHIC] [TIFF OMITTED] TR13NO23.010

BILLING CODE 4120-01-C
(c) CY 2024 Comorbidity Subgroups
    Thirty-day periods of care receive a comorbidity adjustment 
category based on the presence of certain secondary diagnoses reported 
on home health claims. These diagnoses are based on a home-health 
specific list of clinically and statistically significant secondary 
diagnosis subgroups with similar resource use, meaning the diagnoses 
have at least as high as the median resource use and are reported in 
more than 0.1 percent of 30-day periods of care. Home health 30-day 
periods of care can receive a comorbidity adjustment under the 
following circumstances:
     Low comorbidity adjustment: There is a reported secondary 
diagnosis on the home health-specific comorbidity subgroup list that is 
associated with higher resource use.

[[Page 77702]]

     High comorbidity adjustment: There are two or more 
secondary diagnoses on the home health-specific comorbidity subgroup 
interaction list that are associated with higher resource use when both 
are reported together compared to when they are reported separately. 
That is, the two diagnoses may interact with one another, resulting in 
higher resource use.
     No comorbidity adjustment: A 30-day period of care 
receives no comorbidity adjustment if no secondary diagnoses exist or 
do not meet the criteria for a low or high comorbidity adjustment.
    In the CY 2019 HH PPS final rule with comment period (83 FR 56406), 
we stated that we would continue to examine the relationship of 
reported comorbidities on resource utilization and make the appropriate 
payment refinements to help ensure that payment is in alignment with 
the actual costs of providing care. For CY 2024, we proposed to use the 
same methodology used to establish the comorbidity subgroups to update 
the comorbidity subgroups using CY 2022 home health data.
    For CY 2024, we proposed to update the comorbidity subgroups to 
include 22 low comorbidity adjustment subgroups as identified in Table 
B19 and 101 high comorbidity adjustment interaction subgroups as 
identified in Table B20 in the CY 2024 HH PPS proposed rule.
    We invited comments on the proposed updates to the low comorbidity 
adjustment subgroups and the high comorbidity adjustment interactions 
for CY 2024. These comments and our responses are summarized as 
follows.
    Comment: A commenter supported the proposed low comorbidity 
subgroups and the high comorbidity interactions. This commenter stated 
that the proposed low comorbidity subgroups achieve the goal of 
ensuring that payment is in alignment with the actual costs of 
providing care and the high comorbidity adjustment interaction 
subgroups acknowledge the impact of multiple diagnoses on care delivery 
complexity and cost.
    Response: We thank the commenter for their support.
    Comment: A commenter requested clarification on the number of 
proposed low comorbidity subgroups for CY 2024. This commenter noted 
that Table B19 included 22 subgroups, but the preamble language listed 
the number of subgroups as 21.
    Response: We thank the commenter for bringing this to our 
attention. The preamble language inadvertently stated that there were 
21 low comorbidity subgroups; however, the 22 subgroups listed in Table 
B19 are accurate. Furthermore, the number of low comorbidity subgroups 
remains 22 for this final rule.
    Comment: A commenter requested that CMS reassign diseases and 
disorders, as well as specific ICD-10 CM diagnosis codes, to different 
comorbidity subgroups and create new high comorbidity interactions. The 
commenter requested the following reassignments:
     Include the Diabetes with mononeuropathy, E.41 codes in 
the Neurological 10 grouping.
     Include rheumatic mitral valve diseases I05. codes and 
aortic rheumatic valve diseases I06 codes in the Heart 9 grouping.
     Add a high comorbidity interaction for Circulatory 1 and 
Skin 4.
     Add a high comorbidity interaction between Neurological 11 
and Skin 4.
     Add a high comorbidity interaction between Skin 1, abscess 
and Skin 4.
    Response: We appreciate the commenter's review of these codes and 
suggested reassignments and may consider these changes in future 
rulemaking. As we stated in the CY 2020 final rule with comment period 
(84 FR 60510), and as described in the technical report ``Overview of 
the Home Health Groupings Model,'' the home health-specific comorbidity 
list is based on the principles of patient assessment by body systems 
and their associated diseases, conditions, and injuries. We used this 
process to develop categories of conditions that identify clinically 
relevant relationships associated with increased resource use. We 
understand the magnitude of clinical conditions and comorbidities, and 
the interactions that exist between them, in the Medicare home health 
population; however, we remind commenters that only those subgroups of 
diagnoses that represent more than 0.1 percent of periods of care and 
that have at least as high as the median resource use will receive a 
low comorbidity adjustment. We describe this method for determining 
statistical significance in the CY 2020 final rule with comment period 
(84 FR 60510). This is based on the knowledge that the average number 
of comorbidities in the aggregate becomes the standard within that 
population for the purpose of payment. However, because we still expect 
HHAs to report all secondary diagnoses that affect care planning, there 
will be comorbidity subgroups included in the home health-specific list 
that do not meet the criteria to receive an adjustment.
    Final Decision: We are finalizing the proposal to update the 
comorbidity adjustment subgroups and the high comorbidity adjustment 
interactions using CY 2022 home health data. For CY 2024, the final 
update to the comorbidity adjustment subgroups includes 22 low 
comorbidity adjustment subgroups as identified in Table B9 and 102 high 
comorbidity adjustment interaction subgroups as identified in Table 
B10. The final CY 2024 low comorbidity adjustment subgroups and the 
high comorbidity adjustment interaction subgroups including those 
diagnoses within each of these comorbidity adjustments will also be 
posted on the HHA Center web page at https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.
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(d) CY 2024 PDGM Case-Mix Weights
    As finalized in the CY 2019 HH PPS final rule with comment period 
(83 FR 56502), the PDGM places patients into meaningful payment 
categories based on patient and other characteristics, such as timing, 
admission source, clinical grouping using the reported principal 
diagnosis, functional impairment level, and comorbid conditions. The 
PDGM case-mix methodology results in 432 unique case-mix groups called 
home health resource groups (HHRGs). We also finalized a policy in the 
CY 2019 HH PPS final rule with comment period (83 FR 56515) to 
recalibrate annually the PDGM case-mix weights using a fixed effects 
model with the most recent and complete utilization data available at 
the time of annual rulemaking. Annual recalibration of the PDGM case-
mix weights ensures that the case-mix weights reflect, as accurately as 
possible, current home health resource use and changes in utilization 
patterns. To generate the proposed recalibrated CY 2024 case-mix 
weights for the CY 2024 HH PPS proposed rule, we used CY 2022 home 
health claims data with linked OASIS data (as of March 17, 2023). These 
data were the most current and complete data available at the time of 
rulemaking. We stated that we believe that recalibrating the case-mix 
weights using data from CY 2022 would be reflective of PDGM utilization 
and patient resource use for CY 2024 and indicated that the proposed 
recalibrated case-mix weights would be updated based on more complete 
CY 2022 claims data for the final rule.
    The claims data provide visit-level data and data on whether non-
routine supplies (NRS) were provided during the period and the total 
charges of NRS. We determine the case-mix weight for each of the 432 
different PDGM payment groups by regressing resource use on a series of 
indicator variables for each of the categories using a fixed effects 
model as described in the following steps:
    Step 1: Estimate a regression model to assign a functional 
impairment level to each 30-day period. The regression model estimates 
the relationship between a 30-day period's resource use and the 
functional status and risk of hospitalization items included in the 
PDGM, which are obtained from certain OASIS items. We refer readers to 
Table B7 for further information on the OASIS items used for the 
functional impairment level under the PDGM. We measure resource use 
with the cost-per-minute + NRS approach that uses information from 2021 
home health cost reports. We use 2021 home health cost report data 
because it is the most complete cost report data available at the time 
of rulemaking. Other variables in the regression model include the 30-
day period's admission source, clinical group, and 30-day period 
timing. We also include home health agency level fixed effects in the 
regression model. After estimating the regression model using 30-day 
periods, we divide the coefficients that correspond to the functional 
status and risk of hospitalization items by 10 and round to the nearest 
whole number. Those rounded numbers are used to compute a functional 
score for each 30-day period by summing together the rounded numbers 
for the functional status and risk of hospitalization items that are 
applicable to each 30-day period. Next, each 30-day period is assigned 
to a functional impairment level (low, medium, or high) depending on 
the 30-day period's total functional score. Each clinical group has a 
separate set of functional thresholds used to assign 30-day periods 
into a low, medium, or high functional impairment level. We set those 
thresholds so that we assign roughly a third of 30-day periods within 
each clinical group to each functional impairment level (low, medium, 
or high).
    Step 2: A second regression model estimates the relationship 
between a 30-day period's resource use and indicator variables for the 
presence of any of the comorbidities and comorbidity interactions that 
were originally examined for inclusion in the PDGM. Like the first 
regression model, this model also includes home health agency level 
fixed effects and includes control variables for each 30-day period's 
admission source, clinical group, timing, and functional impairment 
level. After we estimate the model, we assign comorbidities to the low 
comorbidity adjustment if any comorbidities have a coefficient that is 
statistically significant (p-value of 0.05 or less) and which have a 
coefficient that is larger than the 50th percentile of positive and 
statistically significant comorbidity coefficients. If two 
comorbidities in the model and their interaction term have coefficients 
that sum together to exceed $150 and the interaction term is 
statistically significant (p-value of 0.05 or less), we assign the two 
comorbidities together to the high comorbidity adjustment.
    Step 3: After Step 2, each 30-day period is assigned to a clinical 
group, admission source category, episode timing category, functional 
impairment level, and comorbidity adjustment category. For each 
combination of those variables (which represent the 432 different 
payment groups that comprise the PDGM), we then calculate the 10th 
percentile of visits across all 30-day periods within a particular 
payment group. If a 30-day period's number of visits is less than the 
10th percentile for their payment group, the 30-day period is 
classified as a Low Utilization Payment Adjustment (LUPA). If a payment 
group has a 10th percentile of visits that is less than two, we set the 
LUPA threshold for that payment group to be equal to two. That means if 
a 30-day period has one visit, it is classified as a LUPA and if it has 
two or more visits, it is not classified as a LUPA.
    Step 4: Take all non-LUPA 30-day periods and regress resource use 
on the 30-day period's clinical group, admission source category, 
episode timing category, functional impairment level, and comorbidity 
adjustment category. The regression includes fixed effects at the level 
of the home health agency. After we estimate the model, the model 
coefficients are used to predict each 30-day period's resource use. To 
create the case-mix weight for each 30- day period, the predicted 
resource use is divided by the overall resource use of the 30-day 
periods used to estimate the regression.
    The case-mix weight is then used to adjust the base payment rate to 
determine each 30-day period's payment. Table B11 shows the 
coefficients of the payment regression used to generate the weights, 
and the coefficients divided by average resource use.
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    The final case-mix weights for CY 2024 are listed in Table B12 and 
will also be posted on the HHA Center web page \12\ upon display of 
this final rule.
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BILLING CODE 4120-01-C
    Changes to the PDGM case-mix weights are implemented in a budget 
neutral manner by multiplying the CY 2024 national standardized 30-day 
period payment rate by a case-mix budget neutrality factor. Typically, 
the case-mix weight budget neutrality factor is also calculated using 
the most recent, complete home health claims data available. For CY 
2024, we will continue the practice of using the most recent complete 
home health claims

[[Page 77726]]

data at the time of rulemaking, which is CY 2022 data (as of July 15, 
2023). The case-mix budget neutrality factor is calculated as the ratio 
of 30-day base payment rates such that total payments when the CY 2024 
PDGM case-mix weights (developed using CY 2022 home health claims data) 
are applied to CY 2022 utilization (claims) data are equal to total 
payments when CY 2023 PDGM case-mix weights (developed using CY 2021 
home health claims data) are applied to CY 2022 utilization data. This 
produces a case-mix budget neutrality factor for CY 2024 of 1.0124.
    We invited comments on the proposed CY 2024 case-mix weights, case-
mix weight budget neutrality factor and these are summarized as 
follows.
    Comment: A commenter expressed support for the annual recalibration 
of the case-mix weights using CY 2022 utilization data.
    Response: We thank the commenter for their support.
    Comment: Several commenters opposed recalibrating the PDGM case-mix 
weights for CY 2024. Some commenters expressed concern with the 
frequency of recalibration stating that annual updates create 
instability for home health agencies. Other commenters stated that CMS 
should delay recalibrating the case-mix weights until the impact of 
previous recalibrations on access and care has been reviewed. A 
commenter suggested that an independent analysis should be conducted to 
verify the reliability of the regression model used to set case-mix 
weights during a period of budget neutrality measurement. Lastly, a 
commenter requested transparency as to why and how CMS makes changes to 
the PDGM case-mix weights.
    Response: We recognize that commenters have had concerns regarding 
annual recalibration since we finalized this policy previously; 
however, we continue to believe that annual recalibration of the PDGM 
case-mix weights ensures that the case-mix weights reflect, as 
accurately as possible, current home health resource use, changes in 
utilization patterns, and reflects the types of patients currently 
receiving home health services. We believe that prolonging 
recalibration, rather than recalibrating annually, could lead to more 
significant variation in the case-mix weights than what is observed 
using the most recent utilization data. Therefore, we believe that 
utilizing CY 2022 data to recalibrate the CY 2024 case-mix weights is 
appropriate and do not agree that an independent analysis is necessary. 
Regarding the comment requesting transparency, we direct commenters to 
review the CY 2019 HH PPS final rule with comment period (83 FR 56502) 
for the finalized case-mix adjustment methodology, as well as the 
previously discussed steps we take to determine the case-mix weight for 
each of the 432 different PDGM payment groups which are outlined in 
this final rule.
    Comment: A few commenters requested that CMS analyze the cumulative 
impact of the proposed recalibration of the PDGM case-mix weights, as 
well as the updates to the wage index prior to finalizing any changes.
    Response: It is important to note that both the recalibration of 
the PDGM case-mix weights and updates to the HH PPS are implemented in 
a budget neutral manner so that changes to the case-mix weights, 
functional impairment levels, comorbidity adjustments, as well as 
updated wage data do not impact payments in the aggregate.
    Comment: A commenter had general concerns regarding the diagnosis 
codes included in the clinical grouping case-mix variable. This 
commenter stated that there continues to be no assignment of many 
diagnoses that drive home health need, citing non-specific diagnosis 
codes such as debility and weakness. The commenter stated that while 
there may be no specific medical diagnoses causing these conditions, 
the patient would still greatly benefit from home health care. The 
commenter recommended that CMS allow codes such as R29.6 Repeated 
falls, R54 Age related physical debility, R26.89 Abnormalities of gait, 
M62.81 Muscle weakness, and generalized R41.82 Altered Mental Status 
for home health services.
    Response: As we stated in the CY 2019 HH PPS final rule with 
comment period (83 FR 56473), we believe that the majority of the R-
codes (codes that describe signs and symptoms, as opposed to diagnoses) 
are not appropriate as principal diagnosis codes for grouping home 
health periods into clinical groups. We believe that the use of 
symptoms, signs, and abnormal clinical and laboratory findings would 
make it difficult to meet the requirements of an individualized plan of 
care as required at 42 CFR 484.60. Likewise, we believe that clinically 
it is important for home health providers to have a clear understanding 
of the patients' diagnoses in order to safely and effectively furnish 
home health services. Interventions and treatment aimed at mitigating 
signs and symptoms of a condition may vary depending on the cause. 
Anecdotally, we have heard that a home health referral may be 
nonspecific or that a physician or allowed practitioner may be in the 
process of determining a more definitive diagnosis. However, with 
respect to patient safety and quality of care, we believe it is 
important for a clinician to investigate the cause of the signs and/or 
symptoms for which the referral was made. This may involve calling the 
referring physician or allowed practitioner to gather more information. 
We note that HHAs are required under the home health CoPs at Sec.  
484.60 to participate in care coordination to assure the identification 
of patient needs and factors that could affect patient safety and 
treatment efficacy. ICD-10-CM coding guidelines are clear that R-codes 
are to be used when no more specific diagnosis can be made even after 
all the facts bearing on the case have been investigated. Therefore, 
while these codes should not be used as a principal diagnosis for the 
provision of home health services, they can be reported as secondary 
diagnoses to provide a more complete clinical picture of the patient. 
By the time the patient is referred to home health and meets the 
qualifications of eligibility, we would expect that a more definitive 
code would substantiate the need for services.
    Final Decision: We are finalizing the proposal to recalibrate the 
HH PPS case-mix weights for CY 2024. The proposed recalibrated case-mix 
weights were updated based on more complete CY 2022 claims data (as of 
July 15, 2023) for this final rule. We did not receive any comments on 
the proposed case-mix weight budget neutrality factor. Therefore, we 
are finalizing the proposal to implement the changes to the PDGM case-
mix weights in a budget neutral manner by applying a case-mix budget 
neutrality factor to the CY 2024 national, standardized 30-day period 
payment rate. As stated previously, the final case-mix budget 
neutrality factor for CY 2024 will be 1.0124.
3. Rebase and Revise the Home Health Market Basket and Revise the 
Labor-Related Share
(a) Background
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2024 be increased by a factor equal 
to the applicable home health market basket update for those HHAs that 
submit quality data as required by the Secretary. Effective for cost 
reporting periods beginning on or after July 1, 1980, we developed and 
adopted an HHA input price index (that is, the home health ``market 
basket''). Although ``market basket'' technically describes

[[Page 77727]]

the mix of goods and services used to produce home health care, this 
term is also commonly used to denote the input price index derived from 
that market basket. Accordingly, the term ``home health market basket'' 
used in this document refers to the HHA input price index.
    The percentage change in the home health market basket reflects the 
average change in the price of goods and services purchased by HHAs in 
providing an efficient level of home health care services. We first 
used the home health market basket to adjust HHA cost limits by an 
amount that reflected the average increase in the prices of the goods 
and services used to furnish reasonable cost home health care. This 
approach linked the increase in the cost limits to the efficient 
utilization of resources. For a greater discussion on the home health 
market basket, see the notice with comment period published in the 
February 15, 1980 Federal Register (45 FR 10450, 10451), the notice 
with comment period published in the February 14, 1995 Federal Register 
(60 FR 8389, 8392), and the notice with comment period published in the 
July 1, 1996 Federal Register (61 FR 34344, 34347). Beginning with the 
FY 2002 HH PPS payments, we have used the growth in a home health 
market basket to update payments under the HH PPS.
    We have rebased and revised the home health market basket 
periodically through the years since FY 2002. We rebased the home 
health market basket effective with the FY 2005 update (69 FR 31251-
31255), with the CY 2008 update (72 FR 25435-25442), and with the CY 
2013 update (77 FR 67081). We last rebased and revised the home health 
market basket effective with the CY 2019 update (83 FR 56425 through 
56435) reflecting a 2016 base year. Beginning with CY 2024, we proposed 
to rebase and revise the home health market basket to reflect a 2021 
base year. In the following discussion, we provide an overview of the 
proposed home health market basket and describe the methodologies used 
to determine the 2021-based home health market basket.
    The home health market basket is a fixed-weight, Laspeyres-type 
price index. A Laspeyres-type price index measures the change in price, 
over time, of the same mix of goods and services purchased in the base 
period. Any changes in the quantity or mix of goods and services (that 
is, intensity) purchased over time relative to the base period are not 
measured.
    The index itself is constructed in three steps. First, a base 
period is selected (for the proposed home health market basket, we 
proposed to use 2021 as the base period) and total base period costs 
are estimated for a set of mutually exclusive and exhaustive cost 
categories. Each category is calculated as a proportion of total costs. 
These proportions are called cost weights. Second, each expenditure 
category is matched to an appropriate price or wage variable, referred 
to as a price proxy. In almost every instance, these price proxies are 
derived from publicly available statistical series that are published 
on a consistent schedule (preferably at least on a quarterly basis). 
Finally, the cost weight for each cost category is multiplied by the 
level of its respective price proxy. The sum of these products (that 
is, the cost weights multiplied by their price index levels) for all 
cost categories yields the composite index level of the market basket 
in a given period. Repeating this step for other periods produces a 
series of market basket levels over time. Dividing an index level for a 
given period by an index level for an earlier period produces a rate of 
growth in the input price index over that timeframe.
    As noted previously, the market basket is described as a fixed-
weight index because it represents the change in price over time of a 
constant mix (quantity and intensity) of goods and services needed to 
provide HHA services. The effects on total costs resulting from changes 
in the mix of goods and services purchased subsequent to the base 
period are not measured. For example, an HHA hiring more nurses after 
the base period to accommodate the needs of patients would increase the 
volume of goods and services purchased by the HHA but would not be 
factored into the price change measured by a fixed-weight home health 
market basket. Only when the index is rebased would changes in the 
quantity and intensity be captured, with those changes being reflected 
in the cost weights. Therefore, we rebase the home health market basket 
periodically so that the cost weights reflect recent changes in the mix 
of goods and services that HHAs purchase to furnish inpatient care 
between base periods.
(b) Rebasing and Revising of the Home Health Market Basket
    We believe that it is technically appropriate to rebase the home 
health market basket periodically so that the cost category weights 
reflect changes in the mix of goods and services that HHAs purchase in 
furnishing home health care. For the CY 2024 HH PPS proposed rule, we 
proposed to rebase and revise the home health market basket to reflect 
a 2021 base year using 2021 Medicare cost report data for Medicare-
participating freestanding HHAs, the latest available and most complete 
data on the actual structure of HHA costs at the time of this 
rulemaking. In prior rulemaking, commenters have expressed concern that 
recent cost pressures and the impact of the COVID-19 PHE have impacted 
input price inflation in providing home health services. We proposed to 
use 2021 as the base year because we believe that the Medicare cost 
reports for this year represent the most recent, complete set of 
Medicare cost report data available for developing the home health 
market basket that captures recent cost trends. Given the potential 
impact of the COVID-19 PHE on the Medicare cost report data, we will 
continue to monitor these data going forward and any changes to the 
home health market basket will be proposed in future rulemaking.
    The terms ``rebasing'' and ``revising,'' while often used 
interchangeably, denote different activities. The term ``rebasing'' 
means moving the base year for the structure of costs of an input price 
index (that is, in this exercise, we proposed to move the base year 
cost structure from 2016 to 2021) without making any other major 
changes to the methodology. The term ``revising'' means changing data 
sources, cost categories, and price proxies used in the input price 
index. For the CY 2024 HH PPS proposed rule, we proposed to rebase and 
revise the home health market basket to reflect a 2021 base year.
(c) Derivation of the 2021-Based Home Health Market Basket Major Cost 
Weights
    We proposed to derive the major cost weights for the revised and 
rebased home health market basket from the Medicare cost reports (CMS 
Form 1728-20, OMB No. 0938-0022) for freestanding HHAs whose cost 
reporting period began on or after October 1, 2020 and before October 
1, 2021. Of the 2021 Medicare cost reports for freestanding HHAs, 
approximately 84 percent of the reports had a begin date on January 1, 
2021, approximately 5 percent had a begin date on July 1, 2021, and 
approximately 3 percent had a begin date on October 1, 2020. The 
remaining 8 percent had a begin date within the specified range. Using 
this methodology allowed our sample to include HHAs with varying cost 
report years including, but not limited to, the Federal fiscal or 
calendar year.
    We proposed to maintain our policy of using data from freestanding 
HHAs,

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which account for about 93 percent of HHAs (87 FR 66882), as our 
analysis has determined that they better reflect HHAs' actual cost 
structure. Cost data for hospital-based HHAs can be affected by the 
allocation of overhead costs over the entire institution.
    We proposed to derive seven major cost categories (Wages and 
Salaries, Benefits, Transportation, Professional Liability Insurance 
(PLI), Fixed Capital, Movable Capital, and Medical Supplies) from the 
2021 HHA Medicare cost reports. The residual cost category, ``All 
Other'', reflects all remaining costs not captured in the seven major 
cost categories. Each of the major cost categories and the residual are 
based on those cost centers that are reimbursable under the HH PPS, 
specifically cost centers 16 through 25 (Skilled Nursing Care--RN, 
Skilled Nursing Care--LPN, Physical Therapy, Physical Therapy 
Assistant, Occupational Therapy, Certified Occupational Therapy 
Assistant, Speech-Language Pathology, Medical Social Services, Home 
Health Aide, and Medical Supplies Charged to Patients). While the cost 
centers have changed in CMS Form 1728-20, these generally coincide with 
those cost centers from CMS Form 1728-94 that were used to derive the 
2016-based home health market basket (83 FR 56425). The cost centers 
used from CMS Form 1728-94 were cost centers 6 through 12 (Skilled 
Nursing Care, Physical Therapy, Occupational Therapy, Speech Pathology, 
Medical Social Services, Home Health Aide, and Supplies). Total costs 
for the HH PPS reimbursable services reflect overhead allocation. We 
note that Medical Supplies was not considered to be a major cost 
category in the 2016-based home health market basket because it was not 
derived directly from Medicare cost report data and was instead derived 
from the residual ``All Other'' category using Benchmark Input-Output 
(I-O) data published by the Bureau of Economic Analysis (BEA). Next, we 
provide details on the proposed calculations for the total Medicare 
allowable costs and each of the seven major cost categories derived 
from the Medicare cost report data. Unless otherwise specified, 
calculations are consistent with 2016 methodology.
(1) Total Medicare Allowable Costs
    We proposed that total Medicare allowable costs for HHAs would be 
equal to the sum of total costs for the Medicare allowable cost centers 
as reported on Worksheet B, column 10, lines 16 through 25. We proposed 
that these total Medicare allowable costs for the HHA will be the 
denominator for the cost weight calculations for the Wages and 
Salaries, Benefits, Transportation, Professional Liability Insurance, 
Fixed Capital, Movable Capital, and Medical Supplies cost weights. With 
this work complete, we then set about deriving cost levels for the 
seven major cost categories.
(2) Costs for the Seven Major Cost Categories Derived From the Medicare 
Cost Report Data
(a) Wages and Salaries
    We proposed that wages and salaries costs reflect direct patient 
care wage and salary costs, overhead wage and salary costs (associated 
with the following overhead cost centers: Plant Operations and 
Maintenance, Transportation, Telecommunications Technology, 
Administrative and General, Nursing Administration, Medical Records, 
and Other General Service cost centers), and a portion of direct 
patient care contract labor costs. The estimation of the wage and 
salary costs is derived using a similar methodology to that which was 
implemented for the 2016-based home health market basket, with the 
primary difference being the specific cost report line items now 
available on the HHA cost report form.
(i) Direct Patient Care
    We proposed to calculate direct patient care wages and salaries by 
summing costs from Worksheet A, column 1, lines 16 through 25.
(ii) Overhead
    We proposed to calculate overhead wages and salaries by summing 
costs from Worksheet B, columns 3 through 9, lines 16 through 25 
multiplied by the percentage of costs in the overhead cost centers that 
were reported as salaries. This ratio is calculated as the sum of costs 
on Worksheet A, column 1, lines 3 through 9, divided by the sum of 
costs on Worksheet A, columns 1 through 5, lines 3 through 9.
(iii) Wages and Salaries Portion of Direct Patient Care Contract Labor
    Contract labor costs allocated to wages and salaries costs reflect 
a portion of the direct patient care contract labor costs. 
Specifically, we proposed to calculate direct patient care contract 
labor costs by first summing costs from Worksheet A, column 4, lines 16 
through 25. These contract labor costs are then multiplied by each 
provider's ratio of direct patient care wages and salaries costs to 
total direct patient care wages and salaries and benefits costs. This 
ratio is calculated as the sum of costs on Worksheet A, column 1, lines 
16 through 25, divided by the sum of costs on Worksheet A, columns 1 
and 2, lines 16 through 25. Similarly, the 2016 method for deriving the 
wages and salaries costs multiplied the combined salaries and benefits 
(both Direct Patient Care (DPC) and non-DPC) and DPC contract labor, by 
the ratio of combined DPC and non-DPC salaries to total DPC and non-DPC 
salaries and benefits.
(b) Benefits
    Benefits costs reflect direct patient care benefit costs, overhead 
benefit costs (associated with the following overhead cost centers: 
Plant Operations and Maintenance, Transportation, Telecommunications 
Technology, Administrative and General, Nursing Administration, Medical 
Records, and Other General Service) and a portion of direct patient 
care contract labor costs. Similarly, the 2016 method for deriving the 
benefits costs multiplied the combined salaries and benefits (both DPC 
and non-DPC) and DPC contract labor, by the ratio of combined DPC and 
non-DPC benefits to total DPC and non-DPC salaries and benefits.
(i) Direct Patient Care
    We proposed to calculate the cost of the direct patient care 
benefit costs by summing costs from Worksheet A, column 2, lines 16 
through 25.
(ii) Overhead
    We proposed to calculate overhead benefit costs by summing costs 
from Worksheet B, columns 3 through 9, lines 16 through 25 multiplied 
by the percentage of costs in the overhead cost centers that were 
reported as benefits. This percentage is calculated as the sum of costs 
on Worksheet A, column 2, lines 3 through 9, divided by the sum of 
costs on Worksheet A, columns 1 through 5, lines 3 through 9.
(iii) Benefits Portion of Direct Patient Care Contract Labor
    Contract labor costs allocated to Benefits costs reflect a portion 
of the direct patient care contract labor costs. Specifically, we 
proposed to first calculate direct patient care contract labor costs by 
summing costs from Worksheet A, column 4, lines 16 through 25. These 
contract labor costs are then multiplied by each provider's ratio of 
direct patient care benefits costs to total direct patient care wages 
and salaries and benefits costs. This ratio is calculated as the sum of 
costs on Worksheet A, column 2, lines 16 through 25, divided by the sum 
of costs on Worksheet A, columns 1 and 2, lines 16 through 25.

[[Page 77729]]

(c) Transportation
    Transportation costs reflect direct patient care costs as well as 
transportation costs associated with Capital Expenses, Plant Operations 
and Maintenance, and Administrative and General cost centers. 
Specifically, we proposed to calculate transportation costs by summing 
costs from Worksheet A, column 3, lines 16 through 25; Worksheet A, 
column 3, lines 1 through 3; and costs on Worksheet B, column 4, lines 
16 through 25 multiplied by a ratio that reflects the non-salary and 
benefits portion of these costs. Specifically, this ratio was 
calculated as 1 minus the sum of costs on Worksheet A, columns 1 and 2, 
line 4, divided by the sum of costs on Worksheet A, columns 1 through 
5, line 4.
(d) Professional Liability Insurance
    Professional Liability Insurance reflects premiums, paid losses, 
and self-insurance costs. Specifically, we proposed to calculate 
Professional Liability Insurance by summing costs from Worksheet S-2 
Part I, line 14, columns 1 through 3.
(e) Fixed Capital
    Fixed Capital-related costs reflect the portion of Medicare-
allowable costs reported in Capital Related Buildings and Fixtures 
(Worksheet A, column 5, line 1). We proposed to calculate this Medicare 
allowable portion by first calculating a ratio for each provider that 
reflects fixed capital costs as a percentage of HHA reimbursable 
services. Specifically, this ratio was calculated as the sum of costs 
from Worksheet B, column 1, lines 16 through 25 divided by the sum of 
costs from Worksheet B, column 1, line 1 minus lines 3 through 9. This 
percentage is then applied to the costs from Worksheet A, column 5, 
line 1.
(f) Movable Capital
    Movable Capital-related costs reflect the portion of Medicare 
allowable costs reported in Capital Related Movable Equipment 
(Worksheet A, column 5, line 2). We proposed to calculate this Medicare 
allowable portion by first calculating a ratio for each provider that 
reflects movable capital costs as a percentage of HHA reimbursable 
services. Specifically, this ratio was calculated as the sum of costs 
from Worksheet B, column 2, lines 16 through 25 divided by the sum of 
costs from Worksheet B, column 2, line 2 minus lines 3 through 9. This 
percentage is then applied to the costs from Worksheet A, column 5, 
line 2.
(g) Medical Supplies
    Medical Supplies costs reflect the cost of supplies furnished to 
individual patients and for which a separate charge is made, as well as 
minor medical and surgical supplies not expected to be specifically 
identified in the plan of treatment or for which a separate charge is 
not made. Specifically, we proposed to calculate Medical Supplies as 
the sum of Worksheet A, column 5, line 25; and Worksheet B, column 6, 
line 25 multiplied by a ratio that reflects the non-salary and benefits 
portion of these costs. Specifically, this ratio was calculated as 1 
minus the sum of costs on Worksheet A, columns 1 and 2, line 6, divided 
by the sum of costs on Worksheet A, columns 1 through 5, line 6. We 
note that in the 2016-based home health market basket, the Medical 
Supplies cost weight was derived from the ``All Other'' residual cost 
weight.
(3) Derivation of the Major Cost Weights
    After we derive costs for each of the seven major cost categories 
and total Medicare allowable costs for each provider using the Medicare 
cost report data, we proposed to address data outliers using the 
following steps. First, for each of the seven major cost categories, we 
divide the costs in that category by total Medicare allowable costs 
calculated for the provider to obtain cost weights for the universe of 
HHA providers. We proposed to trim the data to remove outliers (a 
standard statistical process) by: (1) requiring that major costs (such 
as wages and salaries costs) and total Medicare allowable costs be 
greater than zero and requiring that category costs are less than the 
total Medicare allowable costs; and (2) excluding the top and bottom 
five percent of the major cost weight (for example, wages and salaries 
costs as a percent of total Medicare allowable costs). We note that 
missing values are assumed to be zero consistent with the methodology 
for how missing values were treated in the 2016-based home health 
market basket. After these outliers have been excluded, we sum the 
costs for each category across all remaining providers. We then divide 
this by the sum of total Medicare allowable costs across all remaining 
providers to obtain a cost weight for the 2021-based home health market 
basket for the given category.
    Finally, we proposed to calculate the residual ``All Other'' cost 
weight that reflects all remaining costs that are not captured in the 
other categories listed by subtracting the major cost weight 
percentages (Wages and Salaries, Benefits, Transportation, Professional 
Liability Insurance, Fixed Capital, Movable Capital, and Medical 
Supplies) from 1. We note that non-direct patient care contract labor 
costs (such as contract labor costs reported in the Administrative and 
General cost center of the Medicare cost report) are captured in the 
``All Other'' residual cost weight and later disaggregated into more 
detail as described later in this section.
    Table B13 shows the major cost categories and their respective cost 
weights as derived from the Medicare cost reports.

[[Page 77730]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.033

    The decrease in the wages and salaries cost weight of 0.9 
percentage point and the decrease in the benefits cost weight of 0.2 
percentage point is primarily attributable to direct patient care 
contract labor costs as reported on the Medicare cost report data, as 
shown in Table B14. Our analysis of the Medicare cost report data shows 
that a decrease in the compensation cost weight from 2016 to 2021 
occurred, in aggregate, among for-profit, nonprofit, and government 
providers and among providers serving only rural beneficiaries, only 
urban beneficiaries, or both rural and urban beneficiaries.
[GRAPHIC] [TIFF OMITTED] TR13NO23.034

    Additionally, the Medicare cost report data shows that decreased 
contract labor utilization has occurred over most occupational 
categories, including higher-paid specialties, and that utilization of 
direct patient care contract labor has been trending downward since 
2010. We also note that over the 2016 to 2021 time period, the average 
number of full-time equivalents per provider decreased considerably.
(4) Derivation of the Detailed Cost Weights
    We proposed to divide the ``All Other'' residual cost weight 
estimated from the 2021 Medicare cost report data into more detailed 
cost categories. To divide this cost weight, we proposed to use the 
2012 Benchmark I-O ``Use Tables/Before Redefinitions/Purchaser Value'' 
for North American Industrial Classification System (NAICS) 621600, 
Home Health Agencies, published by the BEA. These data are publicly 
available at http://www.bea.gov/industry/io_annual.htm. For the 2016-
based home health market basket, we used the 2007 Benchmark I-O data, 
the most recent data available at the time (83 FR 56427).
    The BEA Benchmark I-O data are generally scheduled for publication 
every five years with the most recent data available for 2012. The 2012 
Benchmark I-O data are derived from the 2012 Economic Census and are 
the building blocks for BEA's economic accounts. Therefore, they 
represent the most comprehensive and complete set of data on the 
economic processes or mechanisms by which output is produced and 
distributed.\13\ Besides Benchmark I-O estimates, BEA also produces 
Annual I-O estimates. While based on a similar methodology, the Annual 
I-O estimates reflect less comprehensive and less detailed data sources 
and are subject to revision when benchmark data become available. 
Instead of using the less detailed Annual I-O data, we proposed to 
inflate the detailed 2012 Benchmark I-O data forward to 2021 by 
applying the annual price changes for each year from the respective 
price proxies to the appropriate market basket cost categories that are 
obtained from the 2012 Benchmark I-O data. Then, we calculated the cost 
shares that each cost category represents of the 2012 I-O data inflated 
to 2021. These resulting 2021 cost shares were applied to the ``All 
Other'' residual cost weight to obtain the detailed cost weights for 
the 2021-based home health market basket. For example, the cost for 
Utilities represents 11.0 percent of the sum of the ``All Other'' 2012 
Benchmark I-O HHA costs inflated to 2021. Therefore, the Utilities cost 
weight represents 11.0 percent of the 2021-based home health market 
basket's ``All Other'' cost category (18.6 percent), yielding a 
Utilities cost weight

[[Page 77731]]

of 2.0 percent in the 2021-based home health market basket (0.110 x 
18.6 percent = 2.0 percent). For the 2016-based home health market 
basket, we used the same methodology while basing it on the 2007 
Benchmark I-O data (aged to 2016).
---------------------------------------------------------------------------

    \13\ http://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
---------------------------------------------------------------------------

    Using this methodology, we proposed to derive eight detailed cost 
categories from the 2021-based home health market basket ``All Other'' 
residual cost weight (18.6 percent). These categories are: (1) 
Utilities; (2) Administrative Support; (3) Financial Services; (4) 
Rubber and Plastics; (5) Telephone; (6) Professional Fees; (7) Other 
Products; and (8) Other Services. We note that the Utilities cost 
category is currently referred to as Operations & Maintenance in the 
2016-based home health market basket; however, the methodology and data 
sources underlying this cost category remain the same.
    Table B15 compares the cost categories and weights for the 2021-
based home health market basket compared to the 2016-based home health 
market basket. In cases where a cost category has been recategorized in 
the 2021-based home health market basket, we have entered ``n/a'' to 
maintain correct totals as they appear in the CY 2019 HH PPS final rule 
with comment period (83 FR 56428).
[GRAPHIC] [TIFF OMITTED] TR13NO23.035

(d) Selection of Price Proxies
    After developing the cost weights for the 2021-based home health 
market basket, we select the most appropriate wage and price proxies 
currently available to represent the rate of price change for each cost 
category. With the exception of the price index for Professional 
Liability Insurance costs, the proposed price proxies are based on 
Bureau of Labor Statistics (BLS) data and are grouped into one of the 
following BLS categories:
     Employment Cost Indexes. Employment Cost Indexes (ECIs) 
measure the rate of change in employment wage rates and employer costs 
for employee benefits per hour worked. These indexes are fixed-weight 
indexes and strictly measure the change in wage rates and employee 
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE) 
as price proxies for input price indexes because they are not affected 
by shifts in occupation or industry mix, and because they measure pure 
price change and are available by both occupational group and by 
industry. The industry ECIs are based on the NAICS and the occupational 
ECIs

[[Page 77732]]

are based on the Standard Occupational Classification System (SOC).
     Producer Price Indexes. Producer Price Indexes (PPIs) 
measure the average change over time in the selling prices received by 
domestic producers for their output. The prices included in the PPI are 
from the first commercial transaction for many products and some 
services (https://www.bls.gov/ppi/).
     Consumer Price Indexes. Consumer Price Indexes (CPIs) 
measure the average change over time in the prices paid by urban 
consumers for a market basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs are only used when the purchases are similar to 
those of retail consumers rather than purchases at the producer level, 
or if no appropriate PPIs are available.
    We evaluate the price proxies using the criteria of reliability, 
timeliness, availability, and relevance:
     Reliability. Reliability indicates that the index is based 
on valid statistical methods and has low sampling variability. Widely 
accepted statistical methods ensure that the data were collected and 
aggregated in a way that can be replicated. Low sampling variability is 
desirable because it indicates that the sample reflects the typical 
members of the population. (Sampling variability is variation that 
occurs by chance because only a sample was surveyed rather than the 
entire population.)
     Timeliness. Timeliness implies that the proxy is published 
regularly, preferably at least once a quarter. The market baskets are 
updated quarterly, and therefore, it is important for the underlying 
price proxies to be up-to-date, reflecting the most recent data 
available. We believe that using proxies that are published regularly 
(at least quarterly, whenever possible) helps to ensure that we are 
using the most recent data available to update the market basket. We 
strive to use publications that are disseminated frequently, because we 
believe that this is an optimal way to stay abreast of the most current 
data available.
     Availability. Availability means that the proxy is 
publicly available. We prefer that our proxies are publicly available 
because this will help ensure that our market basket updates are as 
transparent to the public as possible. In addition, this enables the 
public to be able to obtain the price proxy data on a regular basis.
     Relevance. Relevance means that the proxy is applicable 
and representative of the cost category weight to which it is applied. 
The CPIs, PPIs, and ECIs that we have selected meet these criteria. 
Therefore, we believe that they continue to be the best measure of 
price changes for the cost categories to which they would be applied.
    The following is a detailed explanation of the price proxies we 
proposed for each cost category weight.
(e) 2021-Based Home Health Market Basket Price Proxies
    As part of the revising and rebasing of the home health market 
basket, we proposed to rebase and revise the home health blended Wages 
and Salaries index and the home health blended Benefits index. We 
proposed to use these blended indexes as price proxies for the Wages 
and Salaries and the Benefits categories of the 2021-based home health 
market basket, as we did in the 2016-based home health market basket. 
The following is a more detailed discussion.
(1) Wages and Salaries
    For measuring price growth in the 2021-based home health market 
basket, we proposed to apply six price proxies to six occupational 
subcategories within the Wages and Salaries cost weight, which would 
reflect the 2021 occupational mix in HHAs. This is a similar approach 
that was used for the 2016-based market basket. We proposed to use a 
blended wage proxy because there is not a published wage proxy specific 
to the home health industry.
    We proposed to continue to use the National Industry-Specific 
Occupational Employment and Wage estimates for NAICS 621600, Home 
Health Care Services, published by the BLS Office of Occupational 
Employment and Wage Statistics (OEWS) as the data source for the cost 
shares of the home health blended wage and benefits proxy. We note that 
in the spring of 2021, the Occupational Employment Statistics (OES) 
program began using the name Occupational Employment and Wage 
Statistics (OEWS) to better reflect the range of data available from 
the program. Data released on or after March 31, 2021 reflect the new 
program name. This is the same data source that was used for the 2016-
based HHA blended wage and benefit proxies; however, we proposed to use 
the May 2021 estimates in place of the May 2016 estimates. Detailed 
information on the methodology for the national industry-specific 
occupational employment and wage estimates survey can be found at 
http://www.bls.gov/oes/current/oes_tec.htm.
    The six occupational subcategories (Health-Related Professional and 
Technical, Non- Health-Related Professional and Technical, Management, 
Administrative, Health and Social Assistance Service, and Other Service 
Occupations) for the Wages and Salaries cost weight were tabulated from 
the May 2021 OEWS data for NAICS 621600, Home Health Care Services. 
Table B16 compares the 2021 occupational assignments to the 2016 
occupational assignments of the six CMS designated subcategories. Data 
that are unavailable in the OEWS occupational classification for 2016 
or 2021 are shown in Table B16 as ``n/a.''

[[Page 77733]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.036

    We proposed to calculate total costs by occupation by taking the 
OEWS number of employees multiplied by the OEWS annual average salary 
for each subcategory, and then calculating the proportion of total wage 
costs that each subcategory represents of the total industry wage 
costs. The proportions listed in Table B17 represent the wages and 
salaries blend weights for 2021, and the ECIs for each occupational 
category within the Wages and Salaries price proxy blend, as well as 
the 2016 weights. We note that the current ECI series also reflect the 
2021 occupational mix of workers. We also note that 2018 updates to the 
Standard Occupational Classification (SOC) system included a 
reclassification of Personal Care Aides from SOC code 39-9021 to 31-
1122, which is reflected in the updated weights and represents the 
major reason for the higher weight for health care and

[[Page 77734]]

social assistance services and lower weight for other service 
occupations.\14\
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    \14\ https://www.bls.gov/soc/2018/soc_2018_whats_new.pdf.
    [GRAPHIC] [TIFF OMITTED] TR13NO23.037
    
    [GRAPHIC] [TIFF OMITTED] TR13NO23.038
    
    A comparison of the yearly changes from CY 2021 to CY 2024 for the 
2016-based home health Wages and Salaries proxy blend and the 2021-
based home health Wages and Salaries proxy blend is shown in Table B18. 
The annual increases in the wages and salaries price proxy is 0.3 
percentage point lower in 2021 and 2022 relative to the 2016-based 
price proxy, and the increases are equal in 2023 and 2024. The 
differences are primarily driven by the aforementioned reclassification 
of Personal Care Aides, which caused a shift in the relative share from 
the Other Service Occupations to Health and Social Assistance Services 
as illustrated previously in Table B17.

[[Page 77735]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.039

(2) Benefits
    For measuring Benefits price growth in the 2021-based home health 
market basket, we proposed to apply applicable price proxies to the six 
occupational subcategories that are used for the Wages and Salaries 
price proxy blend. The six categories in Table B19 are the same as 
those in the 2016-based home health market basket and include the same 
occupational mix as listed in Table B17.
[GRAPHIC] [TIFF OMITTED] TR13NO23.040

    There is no available data source that exists for benefit costs by 
occupation for the home health industry. Thus, to construct weights for 
the home health benefits blend we calculated the ratio of benefits to 
wages and salaries for 2021 for the six ECI series we proposed to use 
in the blended `wages and salaries' and `benefits' indexes. To derive 
the relevant benefits weight, we applied the benefit-to-wage ratios to 
the 2021 OEWS wage and salary weights for each of the six occupational 
subcategories and normalized. For example, the 2021 ECI data shows a 
ratio of benefits to wages for the health-related professional & 
technical category of 1.010. We applied this ratio to the 2021 OEWS 
weight for wages and salaries for health-related professional & 
technical (29.7 percent) to get an unnormalized weight of 30.0 (29.7 
times 1.010), and then normalized those weights relative to the other 
five benefit occupational categories to obtain a final benefit weight 
for health-related professional & technical (30.1 percent).
    A comparison of the yearly changes from CY 2021 to CY 2024 for the 
2016-based home health Benefits proxy blend and the 2021-based home 
health Benefits proxy blend is shown in Table B20. With the exception 
of a 0.2 percentage point difference in 2022, the annual increases in 
the two price proxies are the same when rounded to one decimal place.
[GRAPHIC] [TIFF OMITTED] TR13NO23.041


[[Page 77736]]


(3) Medical Supplies
    We proposed to use a 75/25 blend of the PPI Commodity data for 
Surgical and Medical Instruments (BLS series code #WPU1562) and the PPI 
Commodity data for Personal Safety Equipment and Clothing (BLS series 
code #WPU1571), which would replace the current price proxy of the PPI 
for Medical, Surgical, and Personal Aid Devices (BLS series code 
#WPU156). The PPI Commodity data for Personal Safety Equipment and 
Clothing would reflect personal protective equipment (PPE) including 
but not limited to face shields and protective clothing. The 2012 
Benchmark I-O data does not provide specific costs for the two 
categories we proposed to blend. In absence of such data, we have based 
the weights of this blend on the change in the medical supplies weight 
as reported in the Medicare cost reports in the years prior to and 
after the COVID-19 PHE. Specifically, analysis of Medicare cost report 
data found that the average weight for medical supplies for the 2016-
2019 period (stable around 1.5 percent) was about 75 percent of the 
weight observed for the 2020-2021 period (roughly 2.0 percent). Thus, 
we believe that it was likely that the increase in the cost weight was 
mainly attributable to costs such as those associated with personal 
safety equipment and clothing, and we based the 75/25 blend on that 
analysis. We believe this change will more closely proxy the rate of 
change of the underlying costs, including increased utilization of 
personal protective equipment.
(4) Professional Liability Insurance
    We proposed to use the CMS Physician Professional Liability 
Insurance price index to measure price growth of this cost category. To 
generate this index, we collect commercial insurance premiums for a 
fixed level of coverage while holding non-price factors constant (such 
as a change in the level of coverage). The same proxy was used for the 
2016-based home health market basket.
(5) Transportation
    We proposed to use the CPI U.S. city average for Transportation 
(BLS series code #CUUR0000SAT) to measure price growth of this 
category. The same proxy was used for the 2016-based home health market 
basket.
(6) Administrative and Support
    We proposed to use the ECI for Total compensation for Private 
industry workers in Office and administrative support (BLS series code 
#CIU2010000220000I) to measure price growth of this cost category. The 
same proxy was used for the 2016-based home health market basket.
(7) Financial Services
    We proposed to use the ECI for Total compensation for Private 
industry workers in financial activities (BLS series code 
#CIU201520A000000I) to measure price growth of this cost category. The 
same proxy was used for the 2016-based home health market basket.
(8) Rubber and Plastics
    We proposed to use the PPI Commodity data for Rubber and plastic 
products (BLS series code #WPU07) to measure price growth of this cost 
category. The same proxy was used for the 2016-based home health market 
basket.
(9) Telephone
    We proposed to use CPI U.S. city average for Telephone services 
(BLS series code #CUUR0000SEED) to measure price growth of this cost 
category. The same proxy was used for the 2016-based home health market 
basket.
(10) Professional Fees
    We proposed to use the ECI for Total compensation for Private 
industry workers in Professional and related (BLS series code 
#CIS2010000120000I) to measure price growth of this category. The same 
proxy was used for the 2016-based home health market basket.
(11) Utilities
    We proposed to use CPI-U U.S. city average for Fuel and utilities 
(BLS series code #CUUR0000SAH2) to measure price growth of this cost 
category. The same proxy was used for the 2016-based home health market 
basket.
(12) Other Products
    We proposed to use the PPI Commodity data for Final Demand-Finished 
goods less foods and energy (BLS series code #WPUFD4131) to measure 
price growth of this category. The same proxy was used for the 2016-
based home health market basket.
(13) Other Services
    We proposed to use the ECI for Total compensation for Private 
industry workers in Service occupations (BLS series code 
#CIU2010000300000I) to measure price growth of this category. The same 
proxy was used for the 2016-based home health market basket.
(14) Fixed Capital
    We proposed to use the CPI U.S. city average for Owners' equivalent 
rent of residences (BLS series code #CUUS0000SEHC) to measure price 
growth of this cost category. The same proxy was used for the 2016-
based home health market basket.
(15) Movable Capital
    We proposed to use the PPI Commodity data for Machinery and 
equipment (BLS series code #WPU11) to measure price growth of this cost 
category. The same proxy was used for the 2016-based home health market 
basket.
(f) Summary of Price Proxies of the 2021-Based Home Health Market 
Basket
    Table B21 shows the price proxies for the 2021-based home health 
market basket.

[[Page 77737]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.042

    We invited public comment on our proposal to rebase and revise the 
home health market basket to reflect a 2021 base year. The following is 
a summary of the public comments received and our responses.

[[Page 77738]]

    Comment: Several commenters supported the rebasing and revising of 
the home health market basket from a 2016 base year to a 2021 base 
year. Some commenters, while supporting moving forward with a rebasing, 
asked CMS to consider rebasing the home health market basket to a later 
base year, such as 2022 or 2023, when the data become available, to 
more fully incorporate changes to HHA cost structures. They stated that 
there is a significant gap between 2021 and what home health providers 
are experiencing now, and that data from 2021 cost reports neglects to 
capture the rapid rise in labor costs starting in 2022, and, therefore, 
using CY 2023 in future rulemaking would better align permanent changes 
that have occurred in more recent years. A commenter recommended that 
CMS delay rebasing and revising until this data is further explored, 
perhaps using a technical expert panel.
    Response: We appreciate the commenters' support to rebase and 
revise the home health market basket. As discussed in section II.C.3 of 
this final rule, the market basket used to update HH PPS payments has 
been periodically rebased and revised over the history of the HH PPS to 
reflect more recent data on HHA cost structures. We proposed to rebase 
and revise the home health market basket using 2021 Medicare cost 
reports, the most recent year of complete data available at the time of 
CY 2024 rulemaking, which showed a decrease in the compensation cost 
weight between 2016 and 2021. While Medicare cost report data for 2022 
and 2023 are incomplete at this time, we note that preliminary 2022 
data suggest that a decline in the compensation weight may have 
continued. Accordingly, we believe it is more appropriate to update the 
base year cost weights to 2021 to reflect changes since 2016 rather 
than to delay the rebasing. It has been our longstanding practice to 
rebase the market basket on a regular basis to ensure it reflects the 
input cost structure of HHAs. As stated in the CY 2024 HH PPS proposed 
rule (88 FR 43703), given the potential impact of the COVID-19 PHE on 
the Medicare cost report data, we will continue to monitor the Medicare 
cost report data as they become available and, if appropriate, propose 
any changes to the home health market basket in future rulemaking.
    CMS appreciates hearing from stakeholders, through rulemaking or by 
sending an email to [email protected], about any data or analyses 
available to achieve the shared goal of ensuring that the home health 
market basket and its underlying data are technically appropriate. As 
required by statute, any proposed changes to improve and/or update the 
home health market basket occur through the rulemaking process and 
stakeholders have an opportunity to publicly comment and make 
recommendations regarding the appropriateness of proposed changes.
    Comment: A few commenters noted that the rebasing and revising of 
the home health market basket utilizes Medicare cost report data from 
freestanding HHAs, and questioned whether providers that are part of 
health systems are being fairly compensated as a result. A commenter 
noted that if CMS did include data for hospital-based HHAs, their 
analysis of Medicare cost report data indicates that the labor-related 
share would be approximately 76 percent.
    Response: CMS has discussed the CY 2019 HH PPS final rule with 
comment period (83 FR 56425) and explained in the CY 2024 HH PPS 
proposed rule (88 FR 43704), that we believe data from freestanding 
HHAs, which account for over 90 percent of HHAs, better reflect HHAs' 
actual cost structure, as expense data for hospital-based HHAs can be 
affected by the allocation of overhead costs over the entire 
institution. This is a result of freestanding HHAs using an HHA-
specific cost report while HHAs that are hospital-based use the HHA 
component of the hospital cost report. Therefore, we believe that the 
2021-based home health market basket reflects the most current and 
accurate mix of goods and services for the majority of home health 
providers.
    Final Decision: After consideration of public comments, we are 
finalizing the 2021-based home health market basket as proposed without 
modification.
4. CY 2024 Home Health Payment Rate Updates
(a) CY 2024 Home Health Market Basket Percentage Increase
    Based on IHS Global Inc.'s (IGI's) first quarter 2023 forecast, the 
proposed CY 2024 home health market basket percentage increase was 3.0 
percent based on the 2021-based home health market basket. IGI is a 
nationally recognized economic and financial forecasting firm with 
which CMS contracts to forecast the components of the market baskets. 
We proposed that if more recent data subsequently became available (for 
example, a more recent estimate of the market basket), we would use 
such data, if appropriate, to determine the market basket percentage 
increase in the final rule.
    Based on IGI's third quarter 2023 forecast with historical data 
through the second quarter of 2023, the 2021-based home health market 
basket percentage increase for CY 2024 is 3.3 percent. Table B22 
provides a comparison of the yearly percent changes from CY 2019 to CY 
2026 for the 2016-based home health market basket and the 2021-based 
home health market basket based on IGI's third quarter 2023 forecast.

[[Page 77739]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.043

    Table B22 shows that the forecasted percentage increase for CY 2024 
of the 2021-based home health market basket is 3.3 percent, or 0.1 
percentage point lower than growth estimated using the 2016-based home 
health market basket. The average historical estimates of the growth in 
the 2021-based and 2016-based home health market baskets over CY 2019 
through CY 2022 differ by an average of 0.1 percentage point. As 
discussed previously, this is primarily driven by a reclassification of 
Personal Care Aides, which caused a shift in the relative weight of the 
Wages and Salaries and Benefits blended price proxies from Other 
Service Occupations to Health and Social Assistance Services, which 
over this period grew relatively slower. On average, the two indexes 
produce similar updates to one another over the forecasted period. We 
invited public comment on our proposals for the CY 2024 home health 
market basket update. The following is a summary of the public comments 
received on the proposed CY 2024 home health market basket update.
    Comment: Several commenters supported the proposed payment update 
for CY 2024 and the use of the latest available data but expressed 
concern that the CY 2024 payment update does not adequately factor in 
the effects of many challenges faced by HHAs. These challenges included 
the impact of the COVID-19 PHE, increased costs of labor due to 
workforce-shortages, and other increased costs associated with 
infection control, medical supplies, and transportation. Multiple 
commenters reported offering bonuses to attract and retain staff, and 
that it is increasingly difficult to compete with other medical 
providers in their market, such as hospitals and SNFs. A commenter 
stated that they believe the home health market basket update should 
roughly coincide with the CPI and if it does not coincide, CMS should 
explain why it is different.
    A few commenters expressed concern over the accuracy of the 
forecast underlying the proposed market basket update for CY 2024. They 
requested that CMS reexamine the forecasting approach or consider other 
methods and data sources to calculate a final rule market basket update 
that better reflects the rapidly increasing input prices and costs 
facing HHAs.
    Response: We are required to update HH PPS payments by the market 
basket update adjusted for productivity, as directed by section 
1895(b)(3)(B) of the Act. Specifically, section 1895(b)(3)(B)(iii) 
states that the increase factor shall be based on an appropriate 
percentage increase in a market basket of goods and services included 
in home health services in the same manner as the market basket 
percentage increase under section 1886(b)(3)(B)(iii) is determined and 
applied to the mix of goods and services comprising inpatient hospital 
services for the fiscal year or year. As the law specifies which 
specific update factors to use, comparisons to general inflation are 
not relevant to the determination of the home health market basket 
update.
    In the CY 2024 HH PPS proposed rule, we proposed to rebase and 
revise the current 2016-based home health market basket to reflect a 
2021 base year. See section II.C.3 of this final rule for a description 
of this proposal, the comments received, and the final 2021-based home 
health market basket. The home health market basket is a fixed-weight, 
Laspeyres-type index that measures price changes over time and would 
not reflect increases in costs associated with changes in the volume or 
intensity of input goods and services. As such, the home health market 
basket update would reflect the prospective price pressures described 
by the commenters (such as wage growth or higher energy prices) but 
would inherently not reflect other factors that might increase the 
level of costs, such as the quantity of labor used or any shifts 
between contract and staff nurses. We note that cost changes (that is, 
the product of price and quantities) would only be reflected when a 
market basket is rebased and the base year weights are updated to a 
more recent time period. We believe the increase in the 2021-based home 
health market basket adequately reflects the average change in the 
price of goods and services HHAs purchase in order to provide home 
health services and is technically appropriate to use as the home 
health payment update factor. As stated previously, we are finalizing a 
home health market basket that reflects a 2021

[[Page 77740]]

base year and, therefore, any change in the cost structure for HHAs 
that occurred between 2016 and 2021 is now reflected in the cost 
weights for this rebased market basket.
    In response to the commenters' request that we reexamine the 
current forecasting approach for determining the HH PPS market basket 
update, IHS Global Inc. is a nationally recognized economic and 
financial forecasting firm with which CMS contracts to forecast the 
components of the market baskets. We believe that basing the 
prospective update on these forecasts is an appropriate method, while 
also acknowledging that these are expectations of expected trends and 
may differ from actual experience. Thus, we do acknowledge that CY 2022 
compensation price growth for the 2016-based home health market basket 
was higher (5.8 percent) than was forecasted at the time of the CY 2022 
HH PPS final rule (3.3 percent). We note that the lower projected CY 
2024 home health market basket percent increase relative to the CY 2022 
historical increase and the CY 2023 projected increase reflects the 
expectation that wage, and price pressures will lessen in CY 2024 
relative to recent history.
    Comment: A commenter stated the proposed market basket update does 
not reflect the increased cost of giving care and suggested that CMS 
give home health providers a full market basket adjustment that 
recognizes the dramatic increases in the cost of care. The commenter 
referenced a high inflation period prior to the implementation of the 
PPS and noted that cost limits were updated by higher amounts than what 
CMS had proposed for the CY 2024 update.
    Response: As stated previously, the home health market basket 
measures price changes (like other CMS market baskets) over time and 
appropriately would not reflect increases in costs associated with 
changes in the volume or intensity of input goods and services. In FY 
2002, CMS began using the growth in a home health market basket to 
update payments under the HH PPS as stated in section 1895(b)(4)(B) of 
the Act, and effective beginning with 2015, reduced by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
    Comment: Several commenters requested that CMS deviate from its 
usual update and consider making a one-time adjustment to the market 
basket update or apply a forecast error adjustment to account for 
underpayments in CY 2021 through CY 2023.
    Response: As most recently discussed in the CY 2023 HH PPS final 
rule (87 FR 66848), the HH PPS market basket updates are set 
prospectively, which means that the market basket update relies on a 
mix of both historical data for part of the period for which the update 
is calculated and forecasted data for the remainder. For instance, the 
CY 2024 market basket update in this final rule reflects historical 
data through the second quarter of CY 2023 and forecasted data through 
the fourth quarter of CY 2024. The forecast error for a market basket 
update is calculated as the actual market basket increase for a given 
year less the forecasted market basket increase. Due to the uncertainty 
regarding future price trends, forecast errors can be both positive and 
negative. In evaluating the difference between the forecasted increase 
and later acquired actual data for the period from CY 2012 through CY 
2020 (excluding CYs 2018 and CY 2020, which were set by statute), we 
found the forecasted market basket updates for each payment year for 
HHAs were higher than the actual market basket updates. For this final 
rule, we have incorporated more recent historical data and forecasts to 
capture the price and wage pressures facing HHAs and believe it is the 
best available projection of inflation to determine the applicable 
percentage increase for the HHA payments in CY 2024.
    Final Decision: In accordance with section 1895(b)(3)(B)(iii) of 
the Act, we are finalizing our policy to use the most recent data to 
determine the home health market basket update for CY 2024 in this 
final rule. The final CY 2024 home health market basket percentage 
increase is 3.3 percent.
(b) CY 2024 Productivity Adjustment
    In the CY 2015 HH PPS final rule (79 FR 38384), we finalized our 
methodology for calculating and applying the multifactor productivity 
adjustment. As we explained in that rule, section 1895(b)(3)(B)(vi) of 
the Act, requires that, in CY 2015 (and in subsequent calendar years, 
except CY 2018 (under section 411(c) of the Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted April 16, 
2015)), the market basket percentage under the HH PPS as described in 
section 1895(b)(3)(B) of the Act be annually adjusted by changes in 
economy-wide productivity. Section 1886(b)(3)(B)(xi)(II) of the Act 
defines the productivity adjustment to be equal to the 10-year moving 
average of change in annual economy-wide private nonfarm business 
multifactor productivity (as projected by the Secretary for the 10-year 
period ending with the applicable fiscal year, calendar year, cost 
reporting period, or other annual period). The BLS publishes the 
official measures of productivity for the United States economy. We 
note that previously the productivity measure referenced in section 
1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private 
nonfarm business multifactor productivity. Beginning with the November 
18, 2021 release of productivity data, BLS replaced the term 
``multifactor productivity'' with ``total factor productivity'' (TFP). 
BLS noted that this is a change in terminology only and will not affect 
the data or methodology. As a result of the BLS name change, the 
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the 
Act is now published by BLS as ``private nonfarm business total factor 
productivity''. We refer readers to https://www.bls.gov for the BLS 
historical published TFP data. A complete description of IGI's TFP 
projection methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. Based on IGI's 
first quarter 2023 forecast, the proposed productivity adjustment (the 
10-year moving average of TFP for the period ending December 31, 2024) 
for CY 2024 was 0.3 percent. We also proposed that if more recent data 
subsequently became available (for example, a more recent estimate of 
the productivity adjustment), we would use such data, if appropriate, 
to determine the productivity adjustment in the CY 2024 HH PPS final 
rule. Using IGI's third quarter 2023 forecast, the 10-year moving 
average growth of TFP for CY 2024 is projected to be 0.3 percent.
    The following is a summary of the public comments received on the 
proposed CY 2024 productivity adjustment:
    Comment: Several commenters expressed concern about the continued 
application of the productivity adjustment to HHAs. They stated that 
services provided through the home health benefit are hands-on, labor-
intensive services and do not lend themselves to the productivity gains 
realized in other sectors. A commenter noted that CMS has acknowledged 
that health providers, due to the nature of their service, lack the 
ability to add efficiencies in the way other sectors do.\15\ They asked 
CMS to use its

[[Page 77741]]

authority to account for the lack of parity in this adjustment when 
considering its overall payment adjustment to home health providers. A 
commenter recognized that the productivity adjustment is required by 
statute and urged CMS to work with Congress to eliminate it 
permanently. In absence of that elimination, they believe that the home 
health rate increase should include an additional amount equal to the 
productivity adjustment to offset it.
---------------------------------------------------------------------------

    \15\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/ProductivityMemo2016.pdf.
---------------------------------------------------------------------------

    Response: Section 1895(b)(3)(B) of the Act requires the market 
basket percentage under the HHA prospective payment system, as 
described in section 1895(b)(3)(B) of the Act, be annually adjusted by 
changes in economy-wide productivity. Section 1886(b)(3)(B)(xi)(II) of 
the Act defines the productivity adjustment to be equal to the 10-year 
moving average of changes in annual economy-wide private nonfarm 
business multifactor productivity (as projected by the Secretary for 
the 10-year period ending with the applicable fiscal year, year, cost 
reporting period, or other annual period). We acknowledge the concerns 
of the commenters regarding the appropriateness of the productivity 
adjustment; however, we are required pursuant to Section 1895(b)(3)(B) 
of the Act to apply the specific productivity adjustment described 
here. In addition, with respect to providing feedback to Congress, we 
note that MedPAC monitors various factors for Medicare providers in 
terms of profitability and beneficiary access to care and reports the 
findings to Congress on an annual basis. MedPAC did a full analysis of 
payment adequacy for home health care providers in its March 2023 
Report to Congress (https://www.medpac.gov/document/march-2023-report-to-the-congress-medicare-payment-policy/). MedPAC stated that given the 
positive payment adequacy indicators for HHAs, they recommended that 
the home health base payment rate be reduced by 7 percent for CY 2024.
    Final Decision: We are finalizing the CY 2024 productivity 
adjustment of 0.3 percent. Therefore, the final CY 2024 home health 
payment update percentage is 3.0 percent (3.3 percent home health 
market basket percentage increase, reduced by 0.3 percentage point 
productivity adjustment). Section 1895(b)(3)(B)(v) of the Act requires 
that the home health percentage update be decreased by 2 percentage 
points for those HHAs that do not submit quality data as required by 
the Secretary. For HHAs that do not submit the required quality data, 
the CY 2024 final home health payment update percentage is 1.0 percent 
(3.0 percent minus 2 percentage points).
(c) Labor-Related Share
    In the CY 2024 HH PPS proposed rule (88 FR 43715), we proposed to 
update the labor-related share to reflect the 2021-based home health 
market basket Compensation (Wages and Salaries plus Benefits, which 
include direct patient care contract labor costs) cost weight. The 
current labor-related share is based on the Compensation cost weight of 
the 2016-based home health market basket. Based on the 2021-based home 
health market basket, the proposed labor-related share was 74.9 
percent, and the proposed non-labor-related share was 25.1 percent. The 
labor-related share for the 2016-based home health market basket was 
76.1 percent and the non-labor-related share was 23.9 percent. As 
explained earlier, the decrease in the compensation cost weight of 1.2 
percentage points is primarily attributable to a lower cost weight of 
direct patient care contract labor costs as reported in the Medicare 
cost report data. Table B23 details the components of the labor-related 
share for the 2016-based and 2021-based home health market baskets.
[GRAPHIC] [TIFF OMITTED] TR13NO23.044

    The revised labor-related share will be implemented in a budget 
neutral manner through the use of labor-related share budget neutrality 
factor (as described in section II.C.4.e.(2)) so that the aggregate 
payments do not increase or decrease due to changes in the labor-
related share values.
    We invited public comments on the proposed labor-related share. The 
following is a summary of the public comments received and our 
responses.
    Comment: A few commenters opposed the proposal to decrease the 
labor-related share based on the updated cost weights from the 2021 
Medicare cost report data. The commenters state that a drop in the 
compensation cost weight for HHAs is in direct contradiction to their 
real-time experience that labor and associated costs continue to 
increase. A commenter indicated that they believe the decrease in the 
labor-related share is a direct result of factors related to COVID-19, 
and they are concerned a shortage of staff may be artificially 
decreasing the labor-related share based on the 2021 Medicare cost 
report data. They believe that contract labor utilization by HHAs has 
normalized and increased relative to the period CMS proposed to use to 
establish the labor-related share due to increased availability of 
contract staff.
    A commenter stated they are concerned that the 2021 data precedes 
the time period when much of the dramatic growth in labor costs 
occurred, or that the result may have been influenced by inaccuracies 
in the underlying reported costs, including how providers reported 
contract labor costs (for example, in the Administrative and General 
cost center, which would not be captured in the compensation costs 
weight or in direct salaries which would). They suggested that CMS 
ensure the accuracy of the

[[Page 77742]]

compensation weight and underlying 2021 cost report data, including 
ensuring that it is consistent with available 2022 data.
    Response: The labor-related share is composed of the Wages & 
Salaries and Benefits cost weights (which include direct patient care 
contract labor) from the 2021-based home health market basket. These 
cost weights were calculated using the 2021 Medicare cost report data 
(form CMS-1728-20), which is submitted by both rural and urban 
freestanding home health agencies and was the most comprehensive data 
source available for determining the CY 2024 labor-related share at the 
time of rulemaking. We note that the labor-related share has been 
trending downward since 2010, and preliminary Medicare cost report data 
from 2022 (which reflects approximately 80 percent of home health 
agencies) suggest that this trend may continue despite recent increases 
in utilization of contract labor. We understand that these findings may 
appear to conflict with the firsthand experiences of many providers who 
are experiencing increased costs of labor, but the labor-related share 
is intended to reflect the national average and a decrease in the 
labor-related share does not suggest that the cost of labor is 
decreasing, but rather that aggregate labor-related costs have 
increased at a slower rate than aggregate non-labor-related costs since 
2016.
    While we will continue to analyze the home health Medicare cost 
report data on a regular basis to ensure it accurately reflects the 
costs structures facing home health providers, we believe the proposed 
74.9 percent labor-related share reflects the most recent and 
comprehensive data source available and, therefore, is a technical 
improvement to the 2016-based labor-related share, which was based on 
CY 2016 Medicare cost report data.
    Final Decision: After consideration of public comments, we are 
finalizing the labor related share of 74.9 percent and the non-labor- 
related share of 25.1 percent, as proposed. We did not receive any 
comments on our proposal to implement the revised labor-related share 
in a budget neutral manner. Therefore, we are finalizing our proposal 
to implement the revised labor-related share in a budget neutral manner 
using a labor-related share budget neutrality factor. The labor-related 
share budget neutrality factor for CY 2024 is 0.9998.
(d) CY 2024 Home Health Wage Index
    Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the 
Secretary to provide appropriate adjustments to the proportion of the 
payment amount under the HH PPS that account for area wage differences, 
using adjustment factors that reflect the relative level of wages and 
wage-related costs applicable to the furnishing of home health 
services. Since the inception of the HH PPS, we have used inpatient 
hospital wage data in developing a wage index to be applied to home 
health payments. We proposed to continue this practice for CY 2024, as 
it is our belief that in the absence of home health-specific wage data 
accounting for area differences, using inpatient hospital wage data is 
appropriate and reasonable for the HH PPS.
    In the CY 2021 HH PPS final rule (85 FR 70298), we finalized our 
proposal to adopt the revised OMB delineations with a 5-percent cap on 
wage index decreases, where the estimated reduction in a geographic 
area's wage index would be capped at 5-percent in CY 2021 only, meaning 
no cap would be applied to wage index decreases for the second year (CY 
2022). Therefore, we finalized the use of the FY 2022 pre-floor, pre-
reclassified hospital wage index with no 5-percent cap on decreases as 
the CY 2022 wage adjustment to the labor portion of the HH PPS rates 
(86 FR 62285). However, as described in the CY 2023 HH PPS final rule 
(87 FR 66851 through 66853), for CY 2023 and each subsequent year, we 
finalized a policy that the CY HH PPS wage index would include a 5-
percent cap on wage index decreases. Specifically, we finalized for CY 
2023 and subsequent years, the application of a permanent 5-percent cap 
on any decrease to a geographic area's wage index from its wage index 
in the prior year, regardless of the circumstances causing the decline. 
That is, we finalized that a geographic area's wage index for CY 2023 
would not be less than 95 percent of its final wage index for CY 2022, 
regardless of whether the geographic area is part of an updated CBSA, 
and that for subsequent years, a geographic area's wage index would not 
be less than 95 percent of its wage index calculated in the prior 
calendar year. For CY 2024, we proposed to base the HH PPS wage index 
on the FY 2024 hospital pre-floor, pre-reclassified wage index for 
hospital cost reporting periods beginning on or after October 1, 2019 
and before October 1, 2020 (FY 2020 cost report data). The proposed CY 
2024 HH PPS wage index would not take into account any geographic 
reclassification of hospitals, including those in accordance with 
section 1886(d)(8)(B) or 1886(d)(10) of the Act, but would include the 
5-percent cap on wage index decreases. We would apply the appropriate 
wage index value to the revised labor portion of the HH PPS rates based 
on the site of service for the beneficiary (defined by section 1861(m) 
of the Act as the beneficiary's place of residence).
    To address those geographic areas in which there are no inpatient 
hospitals, and thus, no hospital wage data on which to base the 
calculation of the CY 2024 HH PPS wage index, we proposed to continue 
to use the same methodology discussed in the CY 2007 HH PPS final rule 
(71 FR 65884) to address those geographic areas in which there are no 
inpatient hospitals. For rural areas that do not have inpatient 
hospitals, we proposed to use the average wage index from all 
contiguous Core Based Statistical Areas (CBSAs) as a reasonable proxy. 
Currently, the only rural area without a hospital from which hospital 
wage data could be derived is Puerto Rico. However, for rural Puerto 
Rico, we do not apply this methodology due to the distinct economic 
circumstances that exist there (for example, due to the close proximity 
of almost all of Puerto Rico's various urban and non-urban areas to one 
another, this methodology would produce a wage index for rural Puerto 
Rico that is higher than half of its urban areas). Instead, we proposed 
to continue to use the most recent wage index previously available for 
that area. The most recent wage index previously available for rural 
Puerto Rico is 0.4047. For urban areas without inpatient hospitals, we 
use the average wage index of all urban areas within the State as a 
reasonable proxy for the wage index for that CBSA. For CY 2024, the 
only urban area without inpatient hospital wage data is Hinesville, GA 
(CBSA 25980). Using the average wage index of all urban areas in 
Georgia as proxy, the final CY 2024 wage index value for Hinesville, GA 
will be 0.8622.
    On February 28, 2013, OMB issued Bulletin No. 13-01, announcing 
revisions to the delineations of MSAs, Micropolitan Statistical Areas, 
and CBSAs, and guidance on uses of the delineation of these areas. In 
the CY 2015 HH PPS final rule (79 FR 66085 through 66087), we adopted 
OMB's area delineations using a 1-year transition.
    On August 15, 2017, OMB issued Bulletin No. 17-01 in which it 
announced that one Micropolitan Statistical Area, Twin Falls, Idaho, 
now qualifies as a Metropolitan Statistical Area. The new CBSA (46300) 
comprises the principal city of Twin Falls, Idaho in Jerome County, 
Idaho and Twin Falls County, Idaho. The CY 2022 HH PPS wage index value 
for CBSA 46300, Twin

[[Page 77743]]

Falls, Idaho is 0.8707. Bulletin No. 17-01 is available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/bulletins/2017/b-17-01.pdf.
    On April 10, 2018 OMB issued OMB Bulletin No. 18-03, which 
superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14, 
2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10, 
2018 OMB Bulletin No. 18-03. These bulletins established revised 
delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas, and provided 
guidance on the use of the delineations of these statistical areas. A 
copy of OMB Bulletin No. 18-04 may be obtained at: https://www.bls.gov/bls/omb-bulletin-18-04-revised-delineations-of-metropolitan-statistical-areas.pdf.
    On March 6, 2020, OMB issued Bulletin No. 20-01, which provided 
updates to and superseded OMB Bulletin No. 18-04 that was issued on 
September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided 
detailed information on the update to statistical areas since September 
14, 2018, and were based on the application of the 2010 Standards for 
Delineating Metropolitan and Micropolitan Statistical Areas to Census 
Bureau population estimates for July 1, 2017 and July 1, 2018. (For a 
copy of this bulletin, we refer readers to https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). In OMB Bulletin No. 20-
01, OMB announced one new Micropolitan Statistical Area, one new 
component of an existing Combined Statistical Area and changes to New 
England City and Town Area (NECTA) delineations. In the CY 2021 HH PPS 
final rule (85 FR 70298), we stated that if appropriate, we would 
propose any updates from OMB Bulletin No. 20-01 in future rulemaking. 
After reviewing OMB Bulletin No. 20-01, we have determined that the 
changes in Bulletin 20-01 encompassed delineation changes that would 
not affect the Medicare home health wage index for CY 2022. 
Specifically, the updates consisted of changes to NECTA delineations 
and the re-designation of a single rural county into a newly created 
Micropolitan Statistical Area. The Medicare home health wage index does 
not utilize NECTA definitions, and, as most recently discussed in the 
CY 2021 HH PPS final rule (85 FR 70298) we include hospitals located in 
Micropolitan Statistical areas in each State's rural wage index. In 
other words, these OMB updates did not affect any geographic areas for 
purposes of the HH PPS wage index calculation for CY 2024.
    The following is a summary of the comments received on the CY 2024 
wage index and our responses:
    Comment: A few commenters recommended more far-reaching revisions 
and reforms to the wage index methodology used under Medicare fee-for-
service. Some commenters recommended that CMS create a home health 
specific wage index. These commenters stated that it is no longer 
reasonable to believe that the cost of labor is comparable between 
hospitals and home health agencies, and therefore, the IPPS wage index 
is no longer a sufficient proxy for the home health wage index. MedPAC 
recommended that Congress repeal the existing Medicare wage index 
statutes, including current exceptions, and require the Secretary to 
phase in new Medicare wage index systems for hospitals and other types 
of providers that use all-employer, occupation-level wage data with 
different occupation weights for the wage index of each provider type; 
reflect local-area-level differences in wages between and within 
metropolitan statistical areas and statewide rural areas; and smooth 
wage index differences across adjacent local areas.
    Response: We appreciate the commenters' recommendations; however, 
these comments are outside the scope of the proposed rule. Any changes 
regarding the adjustment of home health payments to account for 
geographic wage differences, beyond the wage index proposals discussed 
in the CY 2024 HH PPS proposed rule, would have to go through notice 
and comment rulemaking. While CMS and other interested parties, such as 
MedPAC, have explored potential alternatives to the current home health 
wage index, no consensus has been achieved regarding a replacement 
system. Further, it seems some of these recommendations are more 
appropriate for Congress to consider. Therefore, we believe that in the 
absence of home health specific wage data, using the pre-floor, pre-
reclassified hospital wage data is appropriate and reasonable for home 
health payments. This position is longstanding and consistent with 
other Medicare payment systems (for example, SNF PPS, IRF PPS, and 
Hospice).
    Comment: Several commenters recommended that CMS adopt wage index 
policies for home health that are allowed under other Medicare payment 
areas such as IPPS and hospice. A few commenters recommended that CMS 
allow home health providers to utilize geographic reclassification and 
the rural floor. Another commenter recommended that CMS create a home 
health specific floor like the hospice floor. Other commenters 
recommended that CMS adopt, for home health, the low wage index policy 
finalized in the CY 2020 IPPS final rule. Finally, a commenter 
requested that CMS calculate non-hospital wage indexes using the post-
floor, post-reclassified hospital wage index.
    Response: We thank the commenters for their recommendations. 
However, we do not believe that any of these policies are applicable to 
the home health wage index. The reclassification provision at section 
1886(d)(10)(C)(i) of the Act states that the Board shall consider the 
application of any subsection (d) hospital requesting the Secretary 
change the hospital's geographic classification. The reclassification 
provision found in section 1886(d)(10) of the Act is specific to IPPS 
hospitals only. Section 4410(a) of the Balanced Budget Act of 1997 
(Pub. L. 105-33) provides that the area wage index applicable to any 
hospital that is located in an urban area of a state may not be less 
than the area wage index applicable to hospitals located in rural areas 
in that state. This is the rural floor provision and it is also 
specific only to IPPS hospitals. Additionally, the low wage index 
hospital policy increases the wage index for hospitals with a wage 
index value below the 25th percentile wage index value for a fiscal 
year by half the difference between the otherwise applicable final wage 
index value for a year for that hospital and the 25th percentile wage 
index value for that year across all hospitals. This policy is specific 
to IPPS hospitals and does not apply to home health agencies. Finally, 
the application of the hospice floor is specific to hospices and does 
not apply to HHAs. The hospice floor was developed through a negotiated 
rulemaking advisory committee, under the process established by the 
Negotiated Rulemaking Act of 1990 (Pub. L. 101- 648). Committee members 
included representatives of national hospice associations; rural, 
urban, large, and small hospices; multi-site hospices; consumer groups; 
and a government representative. The Committee reached consensus on a 
methodology that resulted in the hospice wage index. Because the 
reclassification provision, the hospital rural floor, and the hospital 
low wage policy each apply only to hospitals, and the hospice floor 
applies only to hospices, we continue to believe the use of the pre-
floor and pre-reclassified hospital wage index results

[[Page 77744]]

in the most appropriate adjustment to the labor portion of the home 
health payment rates.
    Comment: A commenter suggested that the HH PPS wage index should be 
based on the hospital wage index adjusted for population density. This 
commenter believes that in areas with lower population densities such 
as rural areas, travel costs are increased because of the time and 
mileage involved for home health personnel to travel between patients 
to provide services and that the current method of adjusting labor 
costs does not accurately account for the increased travel costs and 
lost productivity when serving lower population density areas. Another 
commenter recommended that CMS implement an out-migration adjustment 
for non-hospital providers. This commenter stated that due to the 
nature of their work, home health workers not only travel extensively 
to visit patients in their homes, but they also tend to live and work 
across a broad geographic area. The commenter believes this causes 
disparities between provider types because acute care hospitals have 
the option to increase their wage index if at least 10% of a county's 
hospital-employed residents commute to work in higher wage index areas 
and home health providers do not have this option.
    Response: We thank the commenters for their recommendations. 
However, currently there are no mechanisms in place that would allow 
population density or out migration adjustments in the home health wage 
index and we did not propose such changes in the CY 2024 HH PPS 
proposed rule.
    Comment: A few commenters recommended refinements to the 5-percent 
cap policy on wage index decreases finalized in the CY 2023 HH PPS 
final rule (87 FR 66853). A commenter recommended that CMS lower the 
cap threshold to 3 percent. This commenter believes that a 3-percent 
cap on wage index decreases would protect HHAs who are still 
experiencing negative consequences due to the COVID-19 pandemic, such 
as increased costs and loss of staff. Another commenter recommended 
that in addition to the 5-percent cap on wage index decreases, CMS 
should implement a 10-percent cap (2x the decrease cap) on the amount 
any geographic area's wage index can increase from one year to the 
next.
    Response: We thank the commenters for their recommendations; 
however, we did not propose changes to the 5-percent cap policy in the 
CY 2024 HH PPS proposed rule. We remind commenters that we stated in 
the CY 2023 HH PP final rule (87 FR 66852) that we believe that the 5-
percent cap on wage index decreases is an adequate safeguard against 
any significant payment reductions and that the 5-percent threshold 
effectively mitigates any significant decreases in an HHA's wage index 
for future calendar years, while still balancing the importance of 
ensuring that area wage index values accurately reflect relative 
differences in area wage levels. Additionally, we stated that the 
purpose of the wage index cap on wage index decreases is to support 
increased predictability about home health payments for providers, 
enabling them to more effectively budget and plan their operations. 
That is, we believe that a provider will be able to more effectively 
budget and plan when there is awareness regarding expected minimum 
level of home health payments in the upcoming calendar year. We did not 
propose to limit wage index increases because we do not believe such a 
policy would enable HHAs to more effectively budget and plan their 
operations.
    Comment: A commenter questioned whether the 2020 cost report data 
collected during the first year of the COVID-19 pandemic is accurate 
and if it adequately reflects current relative labor costs given the 
unique nature of that period. This commenter suggested that CMS 
validate the 2020 cost report wage data collected during the COVID-19 
pandemic to ensure it does not reflect aberrant trends.
    Response: The FY 2020 cost report data was reviewed and audited by 
the MACs and CMS did not identify any significant issues with the FY 
2020 wage data itself in terms of our audits of this data. Therefore, 
we continue to believe the FY 2020 wage data is the best available wage 
data to use for FY 2024. A full discussion on this process can be found 
in section III.C ``Verification of Worksheet S-3 Wage Data'' located in 
the FY 2024 IPPS final rule (87 FR 58961-58965).
    Comment: A few commenters expressed concern that the proposed 
revised labor-related shares would negatively impact the home health 
wage index and in turn home health payments. A commenter stated that 
the proposed wage index changes from CY 2023 to CY 2024, combined with 
the decrease in the labor-related share, results in substantial payment 
variances and a greater impact on home health providers than in past 
years.
    Response: As noted in the proposed rule, the decrease in the 
compensation cost weight of 1.2 percentage points is primarily 
attributable to a lower cost weight of direct patient care contract 
labor costs as reported in the Medicare cost report data. The decreased 
labor-related share is implemented in a budget neutral manner, which is 
consistent with the policies for implementing the annual recalibration 
of the case-mix weights and update of the home health wage index in a 
budget neutral manner.
    Final Decision: After considering the comments received in response 
to the proposed rule, and for the reasons discussed previously, we are 
finalizing as proposed our proposal to use the FY 2024 pre-floor, pre-
reclassified hospital wage index data as the basis for the CY 2024 HH 
PPS wage index. The final CY 2024 wage index is available on the CMS 
website at: https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.
(e) CY 2024 Home Health Payment Update
(1) Background
    The HH PPS has been in effect since October 1, 2000. As set forth 
in the July 3, 2000 final rule (65 FR 41128), the base unit of payment 
under the HH PPS was a national, standardized 60-day episode payment 
rate. As finalized in the CY 2019 HH PPS final rule with comment period 
(83 FR 56406), and as described in the CY 2020 HH PPS final rule with 
comment period (84 FR 60478), the unit of home health payment changed 
from a 60-day episode to a 30-day period effective for those 30-day 
periods beginning on or after January 1, 2020.
    As set forth in Sec.  484.220, we adjust the national, standardized 
prospective payment rates by a case-mix relative weight and a wage 
index value based on the site of service for the beneficiary. To 
provide appropriate adjustments to the proportion of the payment amount 
under the HH PPS to account for area wage differences, we apply the 
appropriate wage index value to the labor portion of the HH PPS rates. 
In the CY 2019 HH PPS final rule with comment period (83 FR 56435), we 
finalized rebasing the home health market basket to reflect 2016 
Medicare cost report data. We also finalized a revision to the labor-
related share to reflect the 2016-based home health market basket 
Compensation (Wages and Salaries plus Benefits) cost weight. We 
finalized that for CY 2019 and subsequent years, the labor-related 
share would be 76.1 percent and the non-labor related share would be 
23.9 percent. As discussed in section II.C.3 of this final rule, for CY 
2024, we are finalizing the proposal to rebase the home health market 
basket using 2021 Medicare cost

[[Page 77745]]

report data. We are also finalizing that the labor-related share based 
on the 2021-based home health market basket will be 74.9 percent and 
the non-labor-related share will be 25.1 percent. The following are the 
steps we take to compute the case-mix and wage-adjusted 30-day period 
payment amount for CY 2024:
     Multiply the national, standardized 30-day period rate by 
the patient's applicable case-mix weight.
     Divide the case-mix adjusted amount into a labor (74.9 
percent) and a non-labor portion (25.1 percent).
     Multiply the labor portion by the applicable wage index 
based on the site of service of the beneficiary.
     Add the wage-adjusted portion to the non-labor portion, 
yielding the case-mix and wage adjusted 30-day period payment amount, 
subject to any additional applicable adjustments.
    We provide annual updates of the HH PPS rate in accordance with 
section 1895(b)(3)(B) of the Act. Section 484.225 sets forth the 
specific annual percentage update methodology. In accordance with 
section 1895(b)(3)(B)(v) of the Act and Sec.  484.225(i), for an HHA 
that does not submit home health quality data, as specified by the 
Secretary, the unadjusted national prospective 30-day period rate is 
equal to the rate for the previous calendar year increased by the 
applicable home health payment update percentage, minus 2 percentage 
points. Any reduction of the percentage change would apply only to the 
calendar year involved and would not be considered in computing the 
prospective payment amount for a subsequent calendar year.
    The final claim that the HHA submits for payment determines the 
total payment amount for the period and whether we make an applicable 
adjustment to the 30-day case-mix and wage-adjusted payment amount. The 
end date of the 30-day period, as reported on the claim, determines 
which calendar year rates Medicare will use to pay the claim.
    We may adjust a 30-day case-mix and wage-adjusted payment based on 
the information submitted on the claim to reflect the following:
     A LUPA is provided on a per-visit basis as set forth in 
Sec. Sec.  484.205(d)(1) and 484.230.
     A partial payment adjustment as set forth in Sec. Sec.  
484.205(d)(2) and 484.235.
     An outlier payment as set forth in Sec. Sec.  
484.205(d)(3) and 484.240.
(2) CY 2024 National, Standardized 30-Day Period Payment Amount
    Section 1895(b)(3)(A)(i) of the Act requires that the standard 
prospective payment rate and other applicable amounts be standardized 
in a manner that eliminates the effects of variations in relative case-
mix and area wage adjustments among different home health agencies in a 
budget-neutral manner. To determine the CY 2024 national, standardized 
30-day period payment rate, we will continue our practice of using the 
most recent, complete utilization data at the time of rulemaking; that 
is, we are using CY 2022 claims data for CY 2024 payment rate updates. 
We apply a permanent behavioral adjustment factor, a case-mix weights 
recalibration budget neutrality factor, a wage index budget neutrality 
factor, a labor-related share budget neutrality factor and the home 
health payment update percentage to update the CY 2024 payment rate. As 
discussed in section II.C.1 of this final rule, we finalized a 
permanent behavior adjustment of -2.890 percent to ensure that payments 
under the PDGM do not exceed what payments would have been under the 
153-group payment system as required by law. The final permanent 
behavior adjustment factor is 0. 97110. As discussed previously, to 
ensure the changes to the PDGM case-mix weights are implemented in a 
budget neutral manner, we apply a case-mix weight budget neutrality 
factor to the CY 2024 national, standardized 30-day period payment 
rate. The final case-mix weight budget neutrality factor for CY 2024 is 
1.0124.
    Additionally, we apply a wage index budget neutrality factor to 
ensure that wage index updates and revisions are implemented in a 
budget neutral manner. To calculate the wage index budget neutrality 
factor, we first determine the payment rate needed for non-LUPA 30-day 
periods using the CY 2024 wage index, so those total payments are 
equivalent to the total payments for non-LUPA 30-day periods using the 
CY 2023 wage index and the CY 2023 national standardized 30-day period 
payment rate adjusted by the case-mix weights recalibration neutrality 
factor. Then, by dividing the payment rate for non-LUPA 30-day periods 
using the CY 2024 wage index with a 5-percent cap on wage index 
decreases by the payment rate for non-LUPA 30-day periods using the CY 
2023 wage index with a 5-percent cap on wage index decreases, we obtain 
a wage index budget neutrality factor of 1.0012. We then apply the wage 
index budget neutrality factor of 1.0012 to the 30-day period payment 
rate. After we apply the wage index budget neutrality factor, we also 
apply a labor-related share budget neutrality factor so that aggregate 
payments do not increase or decrease due to changes in the labor-
related share values. In order to calculate the labor-related share 
budget neutrality factor, we simulate total payments using CY 2022 home 
health utilization claims data with the CY 2024 HH PPS wage index and 
the CY 2024 labor-related share (labor-related share of 74.9 percent 
and non-labor-related share of 25.1 percent) and compare it to our 
simulation of total payments using the CY 2024 HH PPS wage index with 
the CY 2023 labor-related share (labor-related share of 76.1 percent 
and non-labor-related share of 23.9 percent). By dividing the base 
payment amount using the finalized labor-related share and CY 2024 wage 
index and payment rate by the base payment amount using the CY 2023 
labor-related share and CY 2024 wage index and payment rate, we obtain 
a labor-related share budget neutrality factor of 0.9998.
    Next, we update the 30-day period payment rate by the final CY 2024 
home health payment update percentage of 3.0 percent. The CY 2024 
national, standardized 30-day period payment rate is calculated in 
Table B24.

[[Page 77746]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.045

    The CY 2024 national, standardized 30-day period payment rate for 
an HHA that does not submit the required quality data is updated by the 
final CY 2024 home health payment update percentage of 1.0 percent (3.0 
percent minus 2 percentage points) and is shown in Table B25.
[GRAPHIC] [TIFF OMITTED] TR13NO23.046

(3) CY 2024 National Per-Visit Rates for 30-Day Periods of Care
    The national per-visit rates are used to pay LUPAs and are also 
used to compute imputed costs in outlier calculations. The per-visit 
rates are paid by type of visit or home health discipline. The six home 
health disciplines are as follows:
     Home health aide (HH aide).
     Medical Social Services (MSS).
     Occupational therapy (OT).
     Physical therapy (PT).
     Skilled nursing (SN).
     Speech-language pathology (SLP).
    To calculate the final CY 2024 national per-visit rates, we started 
with the CY 2023 national per-visit rates. Then we applied a wage index 
budget neutrality factor to ensure budget neutrality for LUPA per-visit 
payments. We calculated the wage index budget neutrality factor by 
simulating total payments for LUPA 30-day periods of care using the CY 
2024 wage index with a 5-percent cap on wage index decreases and 
comparing it to simulated total payments for LUPA 30-day periods of 
care using the CY 2023 wage index with 5-percent cap. By dividing the 
total payments for LUPA 30-day periods of care using the CY 2024 wage 
index by the total payments for LUPA 30-day periods of care using the 
CY 2023 wage index, we obtained a wage index budget neutrality factor 
of 1.0012. We apply the wage index budget neutrality factor to 
calculate the CY 2024 national per-visit rates. In order to calculate 
the labor-related share budget neutrality factor for the national per 
visit amounts, we simulate total payments for LUPA 30-day periods using 
CY 2022 home health utilization claims data with the CY 2024 HH PPS 
wage index and the CY 2024 labor-related share (labor-related share of 
74.9 percent and non-labor-related share of 25.1 percent) and compare 
it to our simulation of total payments for LUPA 30-day periods using 
the CY 2024 HH PPS wage index with the CY 2023 labor-related share 
(labor-related share of 76.1 percent and non-labor-related share of 
23.9 percent). By dividing the payment amounts for LUPA 30-day periods 
using the CY 2024 labor-related share and CY 2024 wage index and 
payment rate by the payment amounts for LUPA 30-day periods using the 
CY 2023 labor-related share and CY 2024 wage index and payment rate, we 
obtain a labor-related share budget neutrality factor of 0.9999.
    The LUPA per-visit rates are not calculated using case-mix weights. 
Therefore, no case-mix weight budget neutrality factor is needed to 
ensure budget neutrality for LUPA payments. Additionally, we are not 
applying the permanent adjustment to the per visit payment rates but 
only to the case-mix adjusted 30-day payment rate. Lastly, the per-
visit rates for each discipline are updated by the final CY 2024 home 
health payment update percentage of 3.0 percent. The national per-visit 
rates are adjusted by the wage index based on the site of service of 
the beneficiary. The per-visit payments for LUPAs are separate from the 
LUPA add-on payment amount, which is paid for episodes that occur as 
the only episode or initial episode in a sequence of adjacent episodes. 
The CY 2024 national per-visit rates for HHAs that submit the required 
quality data are updated by the finalized CY 2024 home health payment 
update percentage of 3.0 percent and are shown in Table B26.

[[Page 77747]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.047

    The CY 2024 per-visit payment rates for HHAs that do not submit the 
required quality data are updated by the CY 2024 home health payment 
update percentage of 3.0 percent minus 2 percentage points and are 
shown in Table B27.
[GRAPHIC] [TIFF OMITTED] TR13NO23.048

    We did not receive any comments on the CY 2024 30-day home health 
payment rates or the per-visit payment rates.
    Final Decision: We are finalizing the updates to the CY 2024 
national, standardized 30-day period payment rates and the CY 2024 
national per-visit payment amounts as proposed.
(4) LUPA Add-On Factors
    Prior to the implementation of the 30-day unit of payment, LUPA 
episodes were eligible for a LUPA add-on payment if the episode of care 
was the first or only episode in a sequence of adjacent episodes. As 
stated in the CY 2008 HH PPS final rule, the average visit lengths in 
these initial LUPAs are 16 to 18 percent higher than the average visit 
lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes that 
occur as the only episode or as an initial episode in a sequence of 
adjacent episodes are adjusted by applying an additional amount to the 
LUPA payment before adjusting for area wage differences. In the CY 2014 
HH PPS final rule (78 FR 72305), we changed the methodology for 
calculating the LUPA add-on amount by finalizing the use of three LUPA 
add-on factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. We 
multiply the per-visit payment amount for the first SN, PT, or SLP 
visit in LUPA episodes that occur as the only episode or an initial 
episode in a sequence of adjacent episodes by the appropriate factor to 
determine the LUPA add-on payment amount.
    In the CY 2019 HH PPS final rule with comment period (83 FR 56440), 
in addition to finalizing a 30-day unit of payment, we finalized our 
policy of continuing to multiply the per-visit payment amount for the 
first skilled nursing, physical therapy, or speech-language pathology 
visit in LUPA periods that occur as the only period of

[[Page 77748]]

care or the initial 30-day period of care in a sequence of adjacent 30-
day periods of care by the appropriate add-on factor (1.8451 for SN, 
1.6700 for PT, and 1.6266 for SLP) to determine the LUPA add-on payment 
amount for 30-day periods of care under the PDGM. For example, using 
the final CY 2024 per-visit payment rates for HHAs that submit the 
required quality data, for LUPA periods that occur as the only period 
or an initial period in a sequence of adjacent periods, if the first 
skilled visit is SN, the payment for that visit would be $310.66 
(1.8451 multiplied by $168.37), subject to area wage adjustment.
(5) Occupational Therapy LUPA Add-On Factor
    In order to implement Division CC, section 115, of CAA, 2021, in 
the CY 2022 HH PPS final rule (86 FR 62289) CMS finalized changes to 
regulations at Sec.  484.55(a)(2) and (b)(3) that allowed occupational 
therapists to conduct initial and comprehensive assessments for all 
Medicare beneficiaries under the home health benefit when the plan of 
care does not initially include skilled nursing care, but either PT or 
SLP (86 FR 62351). This change, led to us establishing a LUPA add-on 
factor for calculating the LUPA add-on payment amount for the first 
skilled occupational therapy (OT) visit in LUPA periods that occurs as 
the only period of care or the initial 30-day period of care in a 
sequence of adjacent 30-day periods of care.
    As stated in the CY 2022 HH PPS final rule with comment period (86 
FR 62289) since there was not sufficient data regarding the average 
excess of minutes for the first visit in LUPA periods when the initial 
and comprehensive assessments are conducted by occupational therapists, 
we finalized the use of the PT LUPA add-on factor of 1.6700 as a proxy. 
We also stated that we would use the PT LUPA add-on factor as a proxy 
until we have CY 2022 data to establish a more accurate OT add-on 
factor for the LUPA add-on payment amounts (86 FR 62289). At this time, 
we are analyzing the CY 2022 data and will continue to use the PT LUPA 
add-on factor for OT LUPAs and plan to propose a LUPA add-on factor 
specific to OT in future rulemaking.
(6) Payments for High-Cost Outliers Under the HH PPS
(a) Background
    Section 1895(b)(5) of the Act allows for the provision of an 
addition or adjustment to the home health payment amount otherwise made 
in the case of outliers because of unusual variations in the type or 
amount of medically necessary care. Under the HH PPS and the previous 
unit of payment (that is, 60-day episodes), outlier payments were made 
for 60-day episodes whose estimated costs exceed a threshold amount for 
each HHRG. The episode's estimated cost was established as the sum of 
the national wage-adjusted per visit payment amounts delivered during 
the episode. The outlier threshold for each case-mix group or partial 
payment adjustment defined as the 30-day day period payment or partial 
payment adjustment for that group plus a fixed-dollar loss (FDL) 
amount. For the purposes of the HH PPS, the FDL amount is calculated by 
multiplying the home health FDL ratio by a case's wage-adjusted 
national, standardized 60-day episode payment rate, which yields an FDL 
dollar amount for the case. The outlier threshold amount is the sum of 
the wage and case-mix adjusted PPS episode amount and wage-adjusted FDL 
amount. The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost that surpasses the wage-adjusted threshold. The 
proportion of additional costs over the outlier threshold amount paid 
as outlier payments is referred to as the loss-sharing ratio.
    As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 
70399), section 3131(b)(1) of the Affordable Care Act amended section 
1895(b)(3)(C) of the Act to require that the Secretary reduce the HH 
PPS payment rates such that aggregate HH PPS payments were reduced by 5 
percent. In addition, section 3131(b)(2) of the Affordable Care Act 
amended section 1895(b)(5) of the Act by redesignating the existing 
language as section 1895(b)(5)(A) of the Act and revised the language 
to state that the total amount of the additional payments or payment 
adjustments for outlier episodes could not exceed 2.5 percent of the 
estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of 
the Affordable Care Act also added section 1895(b)(5)(B) of the Act, 
which capped outlier payments as a percent of total payments for each 
HHA for each year at 10 percent.
    As such, beginning in CY 2011, we reduced payment rates by 5 
percent and targeted up to 2.5 percent of total estimated HH PPS 
payments to be paid as outliers. To do so, we first returned the 2.5 
percent held for the target CY 2010 outlier pool to the national, 
standardized 60-day episode rates, the national per visit rates, the 
LUPA add-on payment amount, and the NRS conversion factor for CY 2010. 
We then reduced the rates by 5 percent as required by section 
1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the 
Affordable Care Act. For CY 2011 and subsequent calendar years we 
targeted up to 2.5 percent of estimated total payments to be paid as 
outlier payments, and apply a 10-percent agency-level outlier cap.
    In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through 
43742 and 81 FR 76702), we described our concerns regarding patterns 
observed in home health outlier episodes. Specifically, we noted the 
methodology for calculating home health outlier payments may have 
created a financial incentive for providers to increase the number of 
visits during an episode of care in order to surpass the outlier 
threshold; and simultaneously created a disincentive for providers to 
treat medically complex beneficiaries who require fewer but longer 
visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR 
76702), we finalized changes to the methodology used to calculate 
outlier payments, using a cost-per-unit approach rather than a cost-
per-visit approach. This change in methodology allows for more accurate 
payment for outlier episodes, accounting for both the number of visits 
during an episode of care and the length of the visits provided. Using 
this approach, we now convert the national per-visit rates into per 15-
minute unit rates. These per 15-minute unit rates are used to calculate 
the estimated cost of an episode to determine whether the claim will 
receive an outlier payment and the amount of payment for an episode of 
care. In conjunction with our finalized policy to change to a cost-per-
unit approach to estimate episode costs and determine whether an 
outlier episode should receive outlier payments, in the CY 2017 HH PPS 
final rule we also finalized the implementation of a cap on the amount 
of time per day that would be counted toward the estimation of an 
episode's costs for outlier calculation purposes (81 FR 76725). 
Specifically, we limit the amount of time per day (summed across the 
six disciplines of care) to 8 hours (32 units) per day when estimating 
the cost of an episode for outlier calculation purposes.
    In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we 
did not plan to re-estimate the average minutes per visit by discipline 
every year. Additionally, the per unit rates used to estimate an 
episode's cost were updated by the home health update percentage each 
year, meaning we would start with the national per visit amounts for 
the same calendar year when calculating the

[[Page 77749]]

cost-per-unit used to determine the cost of an episode of care (81 FR 
76727). We will continue to monitor the visit length by discipline as 
more recent data becomes available and may propose to update the rates 
as needed in the future.
    In the CY 2019 HH PPS final rule with comment period (83 FR 56521), 
we finalized a policy to maintain the current methodology for payment 
of high-cost outliers upon implementation of PDGM beginning in CY 2020 
and calculated payment for high-cost outliers based upon 30-day period 
of care. Upon implementation of the PDGM and 30-day unit of payment, we 
finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020. 
Given that CY 2020 was the first year of the PDGM and the change to a 
30-day unit of payment, we finalized maintaining the same FDL ratio of 
0.56 in CY 2021 as we did not have sufficient CY 2020 data at the time 
of CY 2021 rulemaking to propose a change to the FDL ratio for CY 2021. 
In the CY 2022 HH PPS final rule with comment period (86 FR 62292), we 
estimated that outlier payments would be approximately 1.8 percent of 
total HH PPS final rule payments if we maintained an FDL of 0.56 in CY 
2022. Therefore, in order to pay up to, but no more than, 2.5 percent 
of total payments as outlier payments we finalized an FDL of 0.40 for 
CY 2022. In the CY 2023 HH PPS final rule (87 FR 66875), using CY 2021 
claims utilization data, we finalized an FDL of 0.35 in order to pay up 
to, but no more than, 2.5 percent of the total payment as outlier 
payments in CY 2023.
(b) Fixed-Dollar Loss (FDL) Ratio for CY 2024
    For a given level of outlier payments, there is a trade-off between 
the values selected for the FDL ratio and the loss-sharing ratio. A 
high FDL ratio reduces the number of periods that can receive outlier 
payments but makes it possible to select a higher loss-sharing ratio, 
and therefore, increase outlier payments for qualifying outlier 
periods. Alternatively, a lower FDL ratio means that more periods can 
qualify for outlier payments, but outlier payments per period must be 
lower.
    The FDL ratio and the loss-sharing ratio are selected so that the 
estimated total outlier payments do not exceed the 2.5 percent 
aggregate level (as required by section 1895(b)(5)(A) of the Act). 
Historically, we have used a value of 0.80 for the loss-sharing ratio, 
which, we believe, preserves incentives for agencies to attempt to 
provide care efficiently for outlier cases. With a loss-sharing ratio 
of 0.80, Medicare pays 80 percent of the additional estimated costs 
that exceed the outlier threshold amount. Using more complete CY 2022 
claims data (as of July 15, 2023) and given the statutory requirement 
that total outlier payments do not exceed 2.5 percent of the total 
payments estimated to be made under the HH PPS, we are finalizing an 
FDL ratio of 0.27 percent for CY 2024.
5. Disposable Negative Pressure Wound Therapy
(1) Background
    Negative pressure wound therapy (NPWT) is a medical procedure in 
which a vacuum dressing is used to enhance and promote healing in 
acute, chronic, and burn wounds. The therapy involves using a sealed 
wound dressing attached to a pump to create a negative pressure 
environment in the wound. Applying continued or intermittent vacuum 
pressure helps to increase blood flow to the area and draw out excess 
fluid from the wound. This promotes wound healing by preparing the 
wound bed for closure, reducing edema, promoting granulation tissue 
formation and perfusion, and removing exudate and infectious material. 
The wound type and the location of the wound determine whether the 
vacuum can either be applied continuously or intermittently. NPWT can 
be utilized for varying lengths of time, as indicated by the severity 
of the wound, from a few days, up to a span of several months.
    The therapy can be administered using the conventional NPWT system, 
classified as durable medical equipment (DME), or can be administered 
using a disposable device. A disposable NPWT (dNPWT) device is a 
single-use integrated system that consists of a non-manual vacuum pump, 
a receptacle for collecting exudate, and wound dressings. Unlike 
conventional NPWT systems classified as DME, dNPWT devices have preset 
continuous negative pressure, no intermittent setting, are pocket-sized 
and easily transportable, and are generally battery-operated with 
disposable batteries.
    In order for a beneficiary to receive dNPWT under the home health 
benefit, the beneficiary must qualify for the home health benefit in 
accordance with existing eligibility requirements. To be eligible for 
Medicare home health services, as set out in sections 1814(a) and 
1835(a) of the Act, a physician, nurse practitioner (NP), clinical 
nurse specialist (CNS), or physician assistant (PA) (that is, allowed 
practitioner) must certify that the Medicare beneficiary (patient) 
meets the following criteria:
     Is confined to the home.
     Needs skilled nursing care on an intermittent basis or 
physical therapy or speech-language pathology; or have a continuing 
need for occupational therapy.
     Is under the care of a physician or allowed practitioner.
     Receive services under a plan of care established and 
reviewed by a physician or allowed practitioner.
     Has had a face-to-face encounter related to the primary 
reason for home health care with a physician or allowed provider type 
within a required timeframe.
    Coverage for dNPWT is determined based upon a physician or allowed 
practitioner's order as well as patient preference. Treatment decisions 
as to whether to use a dNPWT system versus a conventional NPWT DME 
system are determined by the characteristics of the wound, as well as 
patient goals and preferences discussed with the ordering physician or 
allowed practitioner to best achieve wound healing.
(2) Current Payment for Negative Pressure Wound Therapy Using a 
Disposable Device
    Prior to CY 2017, a dNPWT system was considered a non-routine 
supply and thus payment for the disposable device was included in the 
episode payment amount under the previous home health payment system. 
However, section 504 of the CAA, 2016 (Pub. L. 114-113) amended both 
section 1834 of the Act (42 U.S.C. 1395m) and section 1861(m)(5) of the 
Act (42 U.S.C. 1395x(m)(5)), and required a separate payment for an 
applicable disposable device when furnished on or after January 1, 
2017, to an individual who receives home health services for which 
payment is made under the Medicare home health benefit. Therefore, in 
the CY 2017 HH PPS final rule (81 FR 76736), we finalized the 
implementation of several changes in payment for furnishing dNPWT for a 
patient under a home health plan of care beginning in CY 2017, and each 
subsequent year. These payment changes included the implementation of a 
separate payment amount for dNPWT that was set equal to the amount of 
the payment that would be made under the Medicare Hospital Outpatient 
Prospective Payment System (OPPS) using the CPT codes 97607 and 97608. 
This separate payment amount included furnishing the service as well as 
the dNPWT device. As a reminder, codes 97607 and 97608 are defined as 
follows:
     HCPCS 97607--Negative pressure wound therapy, (for 
example, vacuum assisted drainage collection), utilizing disposable, 
non-durable medical

[[Page 77750]]

equipment including provision of exudate management collection system, 
topical application(s), wound assessment, and instructions for ongoing 
care, per session; total wound(s) surface area less than or equal to 50 
square centimeters.
     HCPCS 97608--Negative pressure wound therapy, (for 
example, vacuum assisted drainage collection), utilizing disposable, 
non-durable medical equipment including provision of exudate management 
collection system, topical application(s), wound assessment, and 
instructions for ongoing care, per session; total wound(s) surface area 
greater than 50 square centimeters.
    We also finalized that for instances where the sole purpose of a 
home health visit is to furnish dNPWT, Medicare would not consider this 
a visit for purposes of determining full episode payments, LUPAs or 
other adjustments, under the HH PPS. Visits performed solely for the 
purposes of furnishing a new dNPWT device are not reported on the HH 
PPS claim (TOB 32x). Where a home health visit is exclusively for the 
purpose of furnishing dNPWT, the HHA submits only a TOB 34x. However, 
if the home health visit includes the provision of other home health 
services in addition to, and separate from, furnishing dNPWT, the HHA 
submits both a TOB 32x and TOB 34x--the TOB 32x for other home health 
services and the TOB 34x for furnishing NPWT using a disposable device. 
Payment for home health visits related to wound care, but not requiring 
the furnishing of an entirely new dNPWT device, are covered by the HH 
PPS 30-day period payment and must be billed using the home health 
claim.
(3) CAA, 2023
    Division FF, section 4136 of the CAA, 2023 (Pub. L. 117-328) amends 
section 1834 of the Act (42 U.S.C. 1395m) and mandates several 
amendments to the Medicare separate payment for dNPWT devices beginning 
in CY 2024. Section 4136(a) of the CAA, 2023 amends 1834(s)(3) of the 
Act by adding subparagraph (A) which outlines the calculation of the 
payment amounts for (i) years prior to CY 2024, (ii) CY 2024, (iii) CY 
2025; and each subsequent year. As discussed previously, for a year 
prior to CY 2024, the amount of the separate payment was set equal to 
the amount of the payment that would be made under the Medicare 
Hospital OPPS using the CPT codes 97607 and 97608 and included the 
professional service as well as the furnishing of the device. For CY 
2024, the CAA, 2023 requires that the separate payment amount for an 
applicable dNPWT device would be set equal to the supply price used to 
determine the relative value for the service under the Physician Fee 
Schedule (PFS) under section 1848 as of January 1, 2022 (CY 2022) 
updated by the specified adjustment described in subparagraph (B) for 
such year. For 2025 and each subsequent year, the CAA, 2023 requires 
that the separate payment amount will be set equal to the payment 
amount established for the device in the previous year, updated by the 
specified adjustment described in subparagraph (B) for such year.
    Division FF section 4136 of the CAA, 2023 adds a new subparagraph 
1834(s)(3)(B), which requires that the separate payment amount to be 
adjusted by the percent increase in the CPI-U for the 12-month period 
ending with June of the preceding year minus the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) for such year. 
Accordingly, this may result in a percentage being less than 0.0 for a 
year and may result in payment being less than such payment rates for 
the preceding year.
    Section 1834(s)(3)(C) of the Act, as added by Division FF, section 
4136 of the CAA, 2023, specifies that the separate payment amount for 
applicable devices furnished on or after January 1, 2024, would no 
longer include payment for nursing or therapy services described in 
section 1861(m) of the Act. Payment for such nursing or therapy 
services would now be made under the prospective payment system 
established under section 1895 of the Act, the HH PPS, and is no longer 
separately billable.
    Division FF, section 4136 of the CAA, 2023 also added a new 
paragraph 1834(s)(4) of the Act that mandates a change in claims 
processing for the separate payment amount for an applicable disposable 
device. Beginning in CY 2024 and each subsequent year, claims for the 
separate payment amount of an applicable dNPWT device would now be 
accepted and processed on claims submitted using the type of bill that 
is most commonly used by home health agencies to bill services under a 
home health plan of care (TOB 32X). That is, claims with a date of 
service on or after January 1, 2024 for an applicable dNPWT device will 
no longer be submitted on TOB 34X.
(4) Payment Policies for dNPWT Devices for CY 2024 and Subsequent Years
    For the purposes of paying for a dNPWT device for a patient under a 
Medicare home health plan of care, CMS proposed that the payment amount 
for CY 2024 would be equal to the supply price of the applicable 
disposable device under the Medicare PFS (as of January 1, 2022) 
updated by the specified adjustment as mandated by the CAA, 2023. The 
supply price of an applicable disposable device under the Medicare PFS 
for January 1, 2022 listed in the supporting documentation files for 
the CY 2022 PFS final rule (86 FR 64966) is $263.25. Therefore, the 
payment amount for CY 2024 will be set equal to the amount of $263.25 
updated by the percent increase in the CPI-U for the 12-month period 
ending in June of 2023 minus the productivity adjustment. The CPI-U for 
the 12-month period ending in June of 2023 is 3.0 percent and the 
corresponding productivity adjustment is 0.4 percent based on IHS 
Global Inc.'s third-quarter 2023 forecast of the CY 2024 productivity 
adjustment (which reflects the 10-year moving average of changes in 
annual economy-wide private nonfarm business TFP for the period ending 
June 30, 2023).\16\ Therefore, the final update percentage will be 2.6 
percent.
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    \16\ Note: This productivity adjustment is different from home 
health as the timeframe for the home health productivity adjustment 
is calculated using the 10-year moving average of changes in annual 
economy-wide private nonfarm business TFP for the period ending 
December 31, 2024.

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[[Page 77751]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.049

    We also proposed that the separate payment for CY 2025 and each 
subsequent year would be based on the established payment amount for 
the previous calendar year updated by the percentage increase in the 
CPI-U minus the productivity adjustment for the 12-month period ending 
in June of the previous year. The application of productivity 
adjustment may result in a net update that may be less than 0.0 for a 
year and may result in the separate payment amount under this 
subsection for an applicable device for a year being less than such 
separate payment amount for such device for the preceding year.
    In accordance with the changes made by the CAA, 2023, we proposed 
that claims reported for a dNPWT device would no longer be reported on 
TOB 34X. Instead, for dates of service beginning on or after January 1, 
2024, the HHA would report the Healthcare Common Procedure Coding 
System (HCPCS) code A9272 (for the device only) on the home health TOB 
32X. The code HCPCS A9272 is defined as a wound suction, disposable, 
includes dressing, all accessories and components, any type, each. We 
will provide education and develop materials outlining the new billing 
procedures for dNPWT under the home health benefit including MLN 
Matters[supreg] articles and manual guidance after publication of the 
CY 2024 HH PPS final rule.
    Finally, we proposed that the services related to the application 
of the device would be included in the HH PPS and would be excluded 
from the separate payment amount for the device. Only the home health 
services for the administration of the device would be geographically 
adjusted and the payment amount for HCPCS A9272 would not be subject to 
geographic adjustment.
    We solicited public comment on all aspects of the proposed payment 
policies for furnishing a dNPWT device as articulated in this section, 
as well as the corresponding proposed regulations text changes at Sec.  
409.50 and Sec.  484.202.
    The following is a summary of the public comments received 
regarding the new payment policies for dNPWT.
    Comment: Commenters were generally supportive of the proposals to 
codify the statutorily mandated changes to dNPWT for beneficiaries 
under a home health plan of care, stating that the new policies will 
promote clarity regarding these services and facilitate collaboration 
between providers. A few commenters also requested guidance materials 
as soon as possible to ensure that HHAs and vendors have ample time to 
make the necessary adjustments in their claim reporting processes.
    Response: We thank the commenters for their support. We will issue 
a Change Request (CR) outlining the new billing procedures for dNPWT 
under the home health benefit and provide educational materials, 
including MLN Matters[supreg] articles and manual guidance after 
publication of this final rule.
    Comment: A commenter requested clarification regarding which 
practitioners are authorized to order dNPWT. This commenter noted that 
in the preamble language CMS references the pre-CARES Act requirements 
that these functions are limited to a physician and wanted to ensure 
that nurse practitioners (NPs), clinical nurse specialists (CNSs) and 
physician assistants (PAs) are authorized to establish, review, and 
certify home health plans of care that include dNPWT, and that home 
health beneficiaries receiving dNPWT are authorized to be under the 
care of an NP, CNS, or PA.
    Response: We thank the commenter for their comment. The term 
``allowed practitioner'' was inadvertently omitted from the dNPWT 
preamble language. However, the regulations at parts 409, 424, and 484 
were amended to implement section 3708 of the CARES Act, which included 
defining a nurse practitioner (NP), a clinical nurse specialist (CNS), 
and a physician's assistant (PA) (as such qualifications are defined at 
Sec. Sec.  410.74 through 410.76) as ``allowed practitioners'' (85 FR 
27572). Allowed practitioners in addition to physicians, can certify 
and recertify beneficiaries for eligibility, order home health services 
(including dNPWT), and establish and review the plan of care.
    Comment: A commenter requested further clarification regarding the 
billing process for dNPWT. This commenter submitted several questions 
regarding how claims should be billed beginning in CY 2024 including, 
whether payment for the device would still occur under OPPS and 
continue to be captured on TOB 34X; whether CPT codes 97607 and 97608 
would continue to be utilized; whether the co-payment would still apply 
to the device; how visits would be captured on TOB 32X; if visits 
related to the application of the device are required to be identified 
as dNPWT visits; and whether wound care centers would be able to 
initially apply the dNPWT device.
    Response: In the CY 2024 HH PPS proposed rule, we clarified that 
HHAs will no longer submit claims on TOB 34X or utilize CPT codes 97607 
and 97608 for home health beneficiaries receiving dNPWT. Instead, when 
a home health beneficiary receives dNPWT, for dates of service 
beginning on or after January 1, 2024, the HHA will report the HCPCS 
code A9272 on TOB 32X for the device only. The deductible and 
coinsurance will still apply when the dNPWT device is billed using 
HCPCS code A9272. Claims for dNPWT sent on TOB 34X with HCPCS codes 
97607 or 97608 and claim through dates on or after January 1, 2024 will 
be returned to the provider. In addition, services related to the 
application of the device will be reported on TOB 32X and are included 
in the home health bundled payment. That is, visits for home health 
services, including visits for the application for dNPWT, would be 
reported as they currently are based on the discipline providing the 
service. Therefore, visits for services related to the application of 
the dNPWT device are excluded from the separate payment amount for the 
device. In situations where wound care centers initially apply the 
dNPWT device to beneficiaries who are then referred to

[[Page 77752]]

home health for the continuation of the treatment with dNPWT, the wound 
care center would apply the device and bill the appropriate CPT code 
(as the patient is not yet under a HH plan of care). However, if the 
patient is already under a home health plan of care and goes to the 
wound care center for application of the device, then the device should 
be billed by the HHA on the TOB 32X and the services would be 
considered home health services under the HH PPS.
    Final Decision: We are finalizing our proposal to codify the 
statutory requirements for dNPWT as proposed. Beginning January 1, 
2024, a separate payment for the disposable device will be made to an 
HHA for an individual who is under a home health plan of care using 
HCPCS code A9272. The CY 2024 payment amount for the device under a 
home health plan of care will be $270.09, which is equal to the supply 
price of an applicable disposable device under the Medicare PFS for 
January 1, 2022, which is $263.25 updated by the final update of 2.6 
percent. For 2025 and each subsequent year, the separate payment amount 
will be set equal to the payment amount established for the device in 
the previous year, updated by the percentage increase in the CPI-U 
minus the productivity adjustment for the 12-month period ending in 
June of the previous year. Claims reported for a dNPWT device will no 
longer be reported on TOB 34X. Instead, for dates of service beginning 
on or after January 1, 2024, the HHA would report the HCPCS code A9272 
(for the device only) on the home health TOB 32X. The services related 
to the application of the device will be included in the home health 
payment and will be excluded from the separate payment amount for the 
device. We note that only the home health services for the 
administration of the device will be geographically adjusted and the 
payment amount for HCPCS A9272 (for the device only) will not be 
subject to geographic adjustment. We will issue a CR and provide 
educational materials outlining the new billing procedures for dNPWT 
under the home health benefit including MLN Matters[supreg] articles 
and manual guidance after publication of the CY 2024 HH PPS final rule.

III. Home Health Quality Reporting Program (HH QRP)

A. Background and Statutory Authority

    The HH QRP is authorized by section 1895(b)(3)(B)(v) of the Act. 
Section 1895(b)(3)(B)(v)(II) of the Act requires that, for 2007 and 
subsequent years, each home health agency (HHA) submit to the Secretary 
in a form and manner, and at a time, specified by the Secretary, such 
data that the Secretary determines are appropriate for the measurement 
of health care quality. To the extent that an HHA does not submit data 
in accordance with this clause, the Secretary shall reduce the home 
health market basket percentage increase applicable to the HHA for such 
year by 2 percentage points. As provided at section 1895(b)(3)(B)(vi) 
of the Act, depending on the home health market basket percentage 
increase applicable for a particular year, as further reduced by the 
productivity adjustment (except in 2018 and 2020) described in section 
1886(b)(3)(B)(xi)(II) of the Act, the reduction of that increase by 2 
percentage points for failure to comply with the requirements of the HH 
QRP may result in the home health market basket percentage increase 
being less than 0.0 percent for a year, and may result in payment rates 
under the Home Health PPS for a year being less than payment rates for 
the preceding year. Section 1890A of the Act requires that the 
Secretary establish and follow a pre-rulemaking process, in 
coordination with the consensus-based entity (CBE) with a contract 
under section 1890 of the Act, to solicit input from certain groups 
regarding the selection of quality and efficiency measures for the HH 
QRP. The HH QRP regulations can be found at 42 CFR 484.245 and 484.250.
    In this final rule, we are adopting two new measures and removing 
one existing measure. Second, we are finalizing the removal of two 
OASIS items. Third, we are finalizing a requirement for public 
reporting of four measures in the HH QRP. Fourth, we are providing an 
update on our efforts to close the health equity gap. Fifth, we are 
codifying our 90 percent data submission threshold policy in the Code 
of Federal Regulations. Lastly, we discuss responses to our request for 
information on principles we could use to select and prioritize HH QRP 
quality measures in future years. These proposals are further discussed 
as follows.

B. General Considerations Used for the Selection of Quality Measures 
for the HH QRP

    For a detailed discussion of the considerations we historically use 
for measure selection for the HH QRP quality, resource use, and other 
measures, we refer readers to the CY 2016 HH PPS final rule (80 FR 
68695 through 68696). In the CY 2019 HH PPS final rule with comment 
period (83 FR 56548 through 56550), we finalized the factors we 
consider for removing previously adopted HH QRP measures.

C. Quality Measures Currently Adopted for the CY 2024 HH QRP

    The HH QRP currently includes 20 measures for the CY 2024 program 
year, as described in Table C1.

[[Page 77753]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.050


[[Page 77754]]



D. HH QRP Quality Measure Proposals Beginning With the CY 2025 HH QRP

1. Discharge Function Score Measure Beginning With the CY 2025 HH QRP
a. Background
    Eligibility for Medicare's home health benefit stipulates that 
beneficiaries must need part-time (fewer than eight hours per day) or 
intermittent skilled care for their medical conditions and be unable to 
leave their homes without considerable effort. Unlike skilled nursing 
facilities, a proceeding hospital stay is not required for 
beneficiaries to access the Medicare home health benefit.\17\ HH 
patients frequently have complex medical issues, including cardiac, 
circulatory and respiratory conditions, and between 30-40 percent of HH 
patients begin their episode of care with a high level of functional 
debility.\18\ Measuring functional status of HH patients can provide 
valuable information about an HHA's quality of care. A patient's 
functional status is associated with institutionalization,\19\ higher 
risk of falls and falls-related hip fracture and death,20 21 
greater risk of undernutrition,\22\ higher emergency department 
admissions,\23\ higher risk of readmissions following home 
care,24 25 and higher prevalence of hypertension and 
diabetes.\26\ Predictors of poorer recovery in function include greater 
age, complications after hospital discharge, and residence in a nursing 
home.\27\ Understanding factors associated with poorer functional 
recovery facilitates the ability to estimate expected functional 
outcome recovery for patients, based on their personal characteristics.
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    \17\ Medicare Payment Advisory Commission. (2022). March 2022 
report to the congress: Medicare payment policy. Washington, DC: 
Medicare Payment Advisory Commission.
    \18\ Medicare Payment Advisory Commission. (2022). March 2022 
report to the congress: Medicare payment policy. Washington, DC: 
Medicare Payment Advisory Commission.
    \19\ Hajek, A., Brettschneider, C., Lange, C., Posselt, T., 
Wiese, B., Steinmann, S., Weyerer, S., Werle, J., Pentzek, M., 
Fuchs, A., Stein, J., Luck, T., Bickel, H., M[ouml]sch, E., Wagner, 
M., Jessen, F., Maier, W., Scherer, M., Riedel-Heller, S.G., 
K[ouml]nig, H.H., & AgeCoDe Study Group. (2015). Longitudinal 
Predictors of Institutionalization in Old Age. PLoS One, 
10(12):e0144203.
    \20\ Akahane, M., Maeyashiki, A., Yoshihara, S., Tanaka, Y., & 
Imamura, T. (2016). Relationship between difficulties in daily 
activities and falling: loco-check as a self-assessment of fall 
risk. Interactive Journal of Medical Research, 5(2), e20.
    \21\ Zaslavsky, O., Zelber-Sagi, S., Gray, S.L., LaCroix, A.Z., 
Brunner, R.L., Wallace, R.B., . . . Woods, N.F. (2016). Comparison 
of Frailty Phenotypes for Prediction of Mortality, Incident Falls, 
and Hip Fracture in Older Women. Journal of the American Geriatrics 
Society, 64(9), 1858-1862.
    \22\ van der Pols-Vijlbrief, R., Wijnhoven, H.A.H., Bosmans, 
J.E., Twisk, J.W.R., & Visser, M. (2016). Targeting the underlying 
causes of undernutrition. Cost-effectiveness of a multifactorial 
personalized intervention in community-dwelling older adults: A 
randomized controlled trial. Clinical Nutrition (Edinburgh, 
Scotland).
    \23\ Hominick, K., McLeod, V., & Rockwood, K. (2016). 
Characteristics of older adults admitted to hospital versus those 
discharged home, in emergency department patients referred to 
internal medicine. Canadian Geriatrics Journal: CGJ, 19(1), 9-14.
    \24\ Knox, S., Downer, B., Haas, A., Middleton, A., & 
Ottenbacher, K.J. (2020). Function and caregiver support associated 
with readmissions during home health for individuals with dementia. 
Archives of Physical Medicine and Rehabilitation, 101(6), 1009-1016.
    \25\ Middleton, A. Downer, B., Haas, A., Knox, S., & 
Ottenbacher, K.J. (2019) Functional status ss associated with 30-day 
potentially preventable readmissions following home health care. 
Medical Care, 57(2):145-151.
    \26\ Halaweh, H., Willen, C., Grimby-Ekman, A., & Svantesson, U. 
(2015). Physical activity and health-related quality of life among 
community dwelling elderly. J Clin Med Res, 7(11), 845-52.
    \27\ C[oacute]rcoles-Jim[eacute]nez, M.P., Villada-Munera, A., 
Del Egido-Fernandez, M.A., Candel-Parra, E., Moreno-Moreno, M., 
Jimenez-Sanchez, M.D., & Pina-Martinez, A. (2015). Recovery of 
activities of daily living among older people one year after hip 
fracture. Clinical Nursing Research, 24(6), 604-623.
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    Home health care can positively impact functional outcomes. There 
is evidence the provision of home care services can lead to 
statistically significant improvements in function and successful 
discharge into the community.\28\ In stroke patients, home-based 
rehabilitation programs administered by home health clinicians 
significantly improved function.\29\ Home health services, delivered by 
a registered nurse positively impacted patient Quality of Life (QOL) 
and clinical outcomes, including significant improvement in dressing 
lower body and bathing activities of daily living, meal preparation, 
shopping, and housekeeping instrumental activities of daily living.\30\ 
In addition, a retrospective study, using data abstracted from the 
Minimum Data Set and OASIS, reported that nursing home admissions were 
delayed in the study population receiving home health services by an 
average of eight months \31\ and for a similar population, community 
dwelling adults receiving community-based services supporting aging in 
place, health and functional outcomes were enhanced, and improved 
cognition and lower rates of depression, function assistance, and 
incontinence were noted.\32\
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    \28\ Bowles, K.H., McDonald, M., Barron, Y., Kennedy, E., 
O'Connor, M., & Mikkelsen, M. (2021). Surviving COVID-19 after 
hospital discharge: symptom, functional, and adverse outcomes of 
home health recipients. Annals of Internal Medicine, 174(3), 316-
325.
    \29\ Asiri, F.Y., Marchetti, G.F., Ellis, J.L., Otis, L., 
Sparto, P.J., Watzlaf, V., & Whitney, S.L. (2014). Predictors of 
functional and gait outcomes for persons poststroke undergoing home-
based rehabilitation. Journal of Stroke and Cerebrovascular 
Diseases: The Official Journal of National Stroke Association, 
23(7), 1856-1864.
    \30\ C[oacute]rcoles-Jim[eacute]nez, M.P., Villada-Munera, A., 
Del Egido-Fernandez, M.A., Candel-Parra, E., Moreno-Moreno, M., 
Jimenez-Sanchez, M.D., & Pina-Martinez, A. (2015). Recovery of 
activities of daily living among older people one year after hip 
fracture. Clinical Nursing Research, 24(6), 604-623.
    \31\ Asiri, F.Y., Marchetti, G.F., Ellis, J.L., Otis, L., 
Sparto, P.J., Watzlaf, V., & Whitney, S.L. (2014). Predictors of 
functional and gait outcomes for persons poststroke undergoing home-
based rehabilitation. Journal of Stroke and Cerebrovascular 
Diseases: The Official Journal of National Stroke Association, 
23(7), 1856-1864.
    \32\ Han, S.J., Kim, H.K., Storfjell, J., & Kim, M.J. (2013). 
Clinical outcomes and quality of life of home health care patients. 
Asian Nursing Research, 7(2), 53-60.
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    To satisfy the requirement of the Improving Medicare Post-Acute 
Care Transformation (IMPACT) Act of 2014 (Pub. L. 113-185) to develop 
and implement standardized quality measures from five quality measure 
domains, including the domain of functional status, cognitive function, 
and changes in function and cognitive function, across the post-acute 
care (PAC) settings, CMS adopted the ``Application of Percent of Long-
Term Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan That Addresses Function'' (Application of 
Functional Assessment/Care Plan) measure in the CY 2018 HH PPS final 
rule (82 FR 51722 through 51727). This cross-setting process measure 
allowed for the standardization of functional assessments across 
assessment instruments and facilitated cross-setting data collection, 
quality measurement, and interoperable data exchange.
    However, performance on this measure across the PAC settings, 
including the range of HHAs, is so high and unvarying across most HH 
providers that the measure no longer offers meaningful distinctions in 
performance. Several measures addressing functional status are 
currently part of the PAC QRPs. None of the existing functional outcome 
measures are cross-setting in nature, in that they are either: (a) not 
implemented in all four settings (for instance, the ``Discharge 
Mobility and Self-Care Score'' measures are reported for SNFs and IRFs 
but not for LTCHs and HHAs); or (b) rely on functional status items not 
collected in all settings (for instance, the ``Discharge Mobility and 
Self-Care Score'' measures rely on items not collected in LTCHs). In 
contrast, a cross-setting functional outcome measure will include the 
HH setting. Moreover, the measure specifications will be aligned across 
settings, including the use of a common set of standardized functional 
assessment data elements, thereby

[[Page 77755]]

satisfying the requirements of the IMPACT Act.
Measure Importance
    Maintenance or improvement of physical function among older adults 
is increasingly an important focus of healthcare. Worldwide, close to 
20 percent of older adults living at home report needing some form of 
assistance with their ADLs, and in the US 29 percent of older adults 
report difficulties completing their activities of daily living 
(ADLs).\33\ Adults aged 65 years and older constitute the most rapidly 
growing population in the United States, and functional capacity in 
physical (non-psychological) domains has been shown to decline with 
age.\34\ Moreover, impaired functional capacity is associated with 
poorer quality of life and an increased risk of all-cause mortality, 
postoperative complications, and cognition, the latter of which can 
complicate the return of a patient to the community from post-acute 
care if the patient exhibits cognitive deficits.35 36 37 
Nonetheless, evidence suggests that physical functional abilities, 
including mobility and self-care, are modifiable predictors of patient 
outcomes across PAC settings, including functional recovery or decline 
after post-acute care,\38\ \39\ 40 41 42 rehospitalization 
rates,43 44 45 discharge to community,46 47 and 
falls.\48\
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    \33\ Chen, S., Jones, L.A., Jiang, S., Jin, H., Dong, D., Chen, 
X., . . . Zhu, A. (2022). Difficulty and help with activities of 
daily living among older adults living alone during the COVID-19 
pandemic: a multi-country population-based study. BMC geriatrics, 
22(1), 1-14.
    \34\ High KP, Zieman S, Gurwitz J, Hill C, Lai J, Robinson T, 
Schonberg M, Whitson H. Use of Functional Assessment to Define 
Therapeutic Goals and Treatment. J Am Geriatr Soc. 2019 
Sep;67(9):1782-1790. doi: 10.1111/jgs.15975. Epub 2019 May 13. PMID: 
31081938; PMCID: PMC6955596.
    \35\ Clouston SA, Brewster P, Kuh D, Richards M, Cooper R, Hardy 
R, Rubin MS, Hofer SM. The dynamic relationship between physical 
function and cognition in longitudinal aging cohorts. Epidemiol Rev. 
2013;35(1):33-50. doi: 10.1093/epirev/mxs004. Epub 2013 Jan 24. 
PMID: 23349427; PMCID: PMC3578448.
    \36\ Michael YL, Colditz GA, Coakley E, Kawachi I. Health 
Behaviors, Social Networks, and Healthy Aging: Cross- Sectional 
Evidence from the Nurses' Health Study. Qual Life Res. 1999 
Dec;8(8):711-22. doi: 10.1023/a:1008949428041. PMID: 10855345.
    \37\ High KP, Zieman S, Gurwitz J, Hill C, Lai J, Robinson T, 
Schonberg M, Whitson H. Use of Functional Assessment to Define 
Therapeutic Goals and Treatment. J Am Geriatr Soc. 2019 
Sep;67(9):1782-1790. doi: 10.1111/jgs.15975. Epub 2019 May 13. PMID: 
31081938; PMCID: PMC6955596.
    \38\ Deutsch A, Palmer L, Vaughan M, Schwartz C, McMullen T. 
Inpatient Rehabilitation Facility Patients' Functional Abilities and 
Validity Evaluation of the Standardized Self-Care and Mobility Data 
Elements. Arch Phys Med Rehabil. 2022 Feb 11:S0003-9993(22)00205-2. 
doi: 10.1016/j.apmr.2022.01.147. Epub ahead of print. PMID: 
35157893.
    \39\ Hong I, Goodwin JS, Reistetter TA, Kuo YF, Mallinson T, 
Karmarkar A, Lin YL, Ottenbacher KJ. Comparison of Functional Status 
Improvements Among Patients With Stroke Receiving Postacute Care in 
Inpatient Rehabilitation vs Skilled Nursing Facilities. JAMA Netw 
Open. 2019 Dec 2;2(12):e1916646. doi: 10.1001/
jamanetworkopen.2019.16646. PMID: 31800069; PMCID: PMC6902754.
    \40\ Alcusky M, Ulbricht CM, Lapane KL. Postacute Care Setting, 
Facility Characteristics, and Poststroke Outcomes: A Systematic 
Review. Arch Phys Med Rehabil. 2018;99(6):1124-1140.e9. doi: 
10.1016/j.apmr.2017.09.005. PMID: 28965738; PMCID: PMC5874162.
    \41\ Chu CH, Quan AML, McGilton KS. Depression and Functional 
Mobility Decline in Long Term Care Home Residents with Dementia: a 
Prospective Cohort Study. Can Geriatr J. 2021;24(4):325-331. 
doi:10.5770/cgj.24.511. PMID: 34912487; PMCID: PMC8629506.
    \42\ Lane NE, Stukel TA, Boyd CM, Wodchis WP. Long-Term Care 
Residents' Geriatric Syndromes at Admission and Disablement Over 
Time: An Observational Cohort Study. J Gerontol A Biol Sci Med Sci. 
2019;74(6):917-923. doi: 10.1093/gerona/gly151. PMID: 29955879; 
PMCID: PMC6521919.
    \43\ Li CY, Haas A, Pritchard KT, Karmarkar A, Kuo YF, Hreha K, 
Ottenbacher KJ. Functional Status Across Post-Acute Settings is 
Associated With 30-Day and 90-Day Hospital Readmissions. J Am Med 
Dir Assoc. 2021 Dec;22(12):2447-2453.e5. doi: 10.1016/
j.jamda.2021.07.039. Epub 2021 Aug 30. PMID: 34473961; PMCID: 
PMC8627458.
    \44\ Middleton A, Graham JE, Lin YL, Goodwin JS, Bettger JP, 
Deutsch A, Ottenbacher KJ. Motor and Cognitive Functional Status Are 
Associated with 30-day Unplanned Rehospitalization Following Post-
Acute Care in Medicare Fee-for-Service Beneficiaries. J Gen Intern 
Med. 2016 Dec;31(12):1427-1434. doi: 10.1007/s11606-016-3704-4. Epub 
2016 Jul 20. PMID: 27439979; PMCID: PMC5130938.
    \45\ Gustavson AM, Malone DJ, Boxer RS, Forster JE, Stevens-
Lapsley JE. Application of High-Intensity Functional Resistance 
Training in a Skilled Nursing Facility: An Implementation Study. 
Phys Ther. 2020;100(10):1746-1758. doi: 10.1093/ptj/pzaa126. PMID: 
32750132; PMCID: PMC7530575.
    \46\ Minor M, Jaywant A, Toglia J, Campo M, O'Dell MW. Discharge 
Rehabilitation Measures Predict Activity Limitations in Patients 
with Stroke Six Months after Inpatient Rehabilitation. Am J Phys Med 
Rehabil. 2021 Oct 20. doi: 10.1097/PHM.0000000000001908. Epub ahead 
of print. PMID: 34686630.
    \47\ Dubin R, Veith JM, Grippi MA, McPeake J, Harhay MO, 
Mikkelsen ME. Functional Outcomes, Goals, and Goal Attainment among 
Chronically Critically Ill Long-Term Acute Care Hospital Patients. 
Ann Am Thorac Soc. 2021;18(12):2041-2048. doi: 10.1513/
AnnalsATS.202011-1412OC. PMID: 33984248; PMCID: PMC8641806.
    \48\ Hoffman GJ, Liu H, Alexander NB, Tinetti M, Braun TM, Min 
LC. Posthospital Fall Injuries and 30-Day Readmissions in Adults 65 
Years and Older. JAMA Netw Open. 2019 May 3;2(5):e194276. doi: 
10.1001/jamanetworkopen.2019.4276. PMID: 31125100; PMCID: 
PMC6632136.
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    The implementation of interventions that improve patients' 
functional outcomes and reduce the risks of associated undesirable 
outcomes as a part of a patient-centered care plan is essential to 
maximizing functional improvement. For many people, the overall goals 
of HH care may include optimizing functional improvement, returning to 
a previous level of independence, maintaining functional abilities, or 
avoiding institutionalization. Studies have suggested that HH care has 
the potential to improve patients' functional abilities including the 
performance of ADLs at discharge through the provision of physical and 
occupational therapy services for community dwelling older adult 
patients with various diagnoses, including 
dementia.49 50 51 52 53 54 Assessing functional status as a 
health outcome in HH can thus provide valuable information in 
determining treatment decisions throughout the care continuum, the need 
for therapy service, and discharge planning,55 56 57 as well 
as

[[Page 77756]]

provide information to consumers about the effectiveness of the care 
delivered. Because evidence shows that older adults experience aging 
heterogeneously and require individualized and comprehensive health 
care, functional status can serve as a vital component in informing the 
provision of health care and thus indicate HH quality of 
care.58 59 60 61
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    \49\ Knox, S., Downer, B., Haas, A., & Ottenbacher, K.J. (2022). 
Home health utilization association with discharge to community for 
people with dementia. Alzheimer's & Dementia: Translational Research 
& Clinical Interventions, 8(1), e12341.
    \50\ Prvu Bettger, J., McCoy, L., Smith, E.E., Fonarow, G. C., 
Schwamm, L.H., & Peterson, E.D. (2015). Contemporary trends and 
predictors of postacute service use and routine discharge home after 
stroke. Journal of the American Heart Association, 4(2), e001038.
    \51\ Golding-Day M, Whitehead P, Radford K, Walker M. 
Interventions to reduce dependency in bathing in community dwelling 
older adults: a systematic review. Syst Rev. 2017 Oct 11;6(1):198. 
doi: 10.1186/s13643-017-0586-4. PMID: 29020974; PMCID: PMC5637353.
    \52\ Foster, E.R., Carson, L.G., Archer, J., & Hunter, E.G. 
(2021). Occupational therapy interventions for instrumental 
activities of daily living for adults with Parkinson's disease: A 
systematic review. The American Journal of Occupational Therapy, 
75(3).
    \53\ Anderson, W.L., & Wiener, J.M. (2015). The impact of 
assistive technologies on formal and informal home care. The 
Gerontologist, 55(3), 422-433.
    \54\ Knox, S., Downer, B., Haas, A., Middleton, A., & 
Ottenbacher, K.J. (2020). Function and caregiver support associated 
with readmissions during home health for individuals with dementia. 
Archives of physical medicine and rehabilitation, 101(6), 1009-1016.
    \55\ Dubin R, Veith JM, Grippi MA, McPeake J, Harhay MO, 
Mikkelsen ME. Functional Outcomes, Goals, and Goal Attainment among 
Chronically Critically Ill Long-Term Acute Care Hospital Patients. 
Ann Am Thorac Soc. 2021;18(12):2041-2048. doi:10.1513/
AnnalsATS.202011-1412OC. PMID: 33984248; PMCID: PMC8641806.
    \56\ Warren M, Knecht J, Verheijde J, Tompkins J. Association of 
AM-PAC ``6-Clicks'' Basic Mobility and Daily Activity Scores With 
Discharge Destination. Phys Ther. 2021 Apr 4;101(4): pzab043. doi: 
10.1093/ptj/pzab043. PMID: 33517463.
    \57\ Cogan AM, Weaver JA, McHarg M, Leland NE, Davidson L, 
Mallinson T. Association of Length of Stay, Recovery Rate, and 
Therapy Time per Day With Functional Outcomes After Hip Fracture 
Surgery. JAMA Netw Open. 2020 Jan 3;3(1):e1919672. doi: 10.1001/
jamanetworkopen.2019.19672. PMID: 31977059; PMCID: PMC6991278.
    \58\ Chase, J.-A.D., Huang, L., Russell, D., Hanlon, A., 
O'Connor, M., Robinson, K.M., & Bowles, K.H. (2018). Racial/ethnic 
disparities in disability outcomes among post-acute home care 
patients. Journal of aging and health, 30(9), 1406-1426.
    \59\ Fashaw-Walters, S.A., Rahman, M., Gee, G., Mor, V., White, 
M., & Thomas, K.S. (2022). Out Of Reach: Inequities In The Use Of 
High-Quality Home Health Agencies: Study examines inequities in the 
use of high-quality home health agencies. Health Affairs, 41(2), 
247-255.
    \60\ Criss MG, Wingood M, Staples WH, Southard V, Miller KL, 
Norris TL, Avers D, Ciolek CH, Lewis CB, Strunk ER. APTA Geriatrics' 
Guiding Principles for Best Practices in Geriatric Physical Therapy: 
An Executive Summary. J Geriatr Phys Ther. 2022 Apr-June;45(2):70-
75. doi: 10.1519/JPT.0000000000000342. PMID: 35384940.
    \61\ Cogan AM, Weaver JA, McHarg M, Leland NE, Davidson L, 
Mallinson T. Association of Length of Stay, Recovery Rate, and 
Therapy Time per Day With Functional Outcomes After Hip Fracture 
Surgery. JAMA Netw Open. 2020 Jan 3;3(1):e1919672. doi: 10.1001/
jamanetworkopen.2019.19672. PMID: 31977059; PMCID: PMC6991278.
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    We are finalizing the adoption of the Discharge Function Score (DC 
Function) measure \62\ in the HH QRP beginning with the CY 2025 HHQRP. 
This assessment-based outcome measure evaluates functional status by 
calculating the percentage of HH patients' quality episodes who meet or 
exceed an expected discharge function score. We are finalizing that 
this measure will replace the topped-out, cross-setting Application of 
Functional Assessment/Care Plan process measure. Like the cross-setting 
process measure it is replacing, the final measure is calculated using 
standardized patient assessment data from the current HH assessment 
tool.
---------------------------------------------------------------------------

    \62\ Discharge Function Score for Home Health Agencies (HHAs) 
Technical Report, which is available at https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.
---------------------------------------------------------------------------

    In addition to meeting the requirements of the Act, the DC Function 
measure supports current CMS priorities. Specifically, the measure 
aligns with the Streamline Quality Measurement domain in CMS's 
Meaningful Measures 2.0 framework \63\ in two ways. First, the final 
outcome measure will further CMS's objective to increase the proportion 
of outcome measures in the HH QRP by replacing the Application of 
Functional Assessment/Care Plan cross-setting process measure with an 
outcome measure (see Section III.2 of this final rule). Second, this 
measure adds no additional provider burden since it will be calculated 
using data from the OASIS that are already reported to the Medicare 
program for quality reporting purposes.
---------------------------------------------------------------------------

    \63\ https://www.cms.gov/medicare/meaningful-measures-framework/meaningful-measures-20-moving-measure-reduction-modernization, 
accessed February 1, 2023.
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    The final DC Function measure will also follow a calculation 
approach similar to the existing functional outcome measures. 
Specifically, the measure (1) considers two dimensions of function 
(that is, self-care and mobility activities) and (2) accounts for 
missing data by using statistical imputation to improve the validity of 
measure performance. The statistical imputation recodes missing 
functional status data to a likely value had the status been assessed, 
whereas the current imputation approach implemented in existing 
function outcome measures recodes missing data to the lowest functional 
status.
b. Measure Testing
    Measure testing was conducted on the DC Function measure to assess 
validity, reliability, and reportability, all of which informed 
stakeholder feedback and Technical Expert Panel (TEP) input (See the 
Stakeholder and Technical Expert Panel (TEP) Input section of this 
final rule). Validity was assessed for the measure performance, the 
risk adjustment model, face validity, and statistical imputation 
models. Validity testing of measure performance entailed determining 
Spearman's rank correlations between the final measure's performance 
and the performance of other publicly reported HH quality measures. 
Results indicated that the measure captures the most probable 
determination of actual outcomes based on the directionalities and 
strengths of correlation coefficients and are further detailed in Table 
C2.
[GRAPHIC] [TIFF OMITTED] TR13NO23.051

    Validity testing of the risk adjustment model showed good model 
discrimination, as the measure model has the predictive ability to 
distinguish patients with low expected functional capabilities from 
those with high expected functional capabilities.\64\ The ratios of 
observed-to-predicted discharge function score across eligible 
episodes, by deciles of expected functional capabilities, ranged from 
0.98 to 1.01. Both the Cross-Setting Discharge Function TEPs and 
patient-family feedback showed strong support for the face validity and 
importance of the final measure as an indicator of quality of care. 
Lastly, validity testing of the measure's statistical imputation models 
indicated that the models demonstrate good discrimination and produce 
more precise and accurate estimates of function scores for items with 
missing scores when compared to adopting the current imputation 
approach implemented in the SNF QRP functional outcome measures, 
specifically Change in Self-Care Score measure, Change in Mobility 
Score measure, Application of IRF Functional Outcome Measure: Discharge 
Self-Care Score for Medical Rehabilitation Patients (CBE ID #2635) 
(Discharge Self-Care Score) measure, and Application of IRF Functional 
Outcome Measure: Discharge Mobility Score for Medical Rehabilitation 
Patients (CBE ID #2636) (Discharge

[[Page 77757]]

Mobility Score) measure. The current imputation approach involves 
recoding ``Activity Not Attempted'' (ANA) codes to ``1'' or ``most 
dependent.''
---------------------------------------------------------------------------

    \64\ ``Expected functional capabilities'' is defined as the 
predicted discharge function score.
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    Reliability and reportability testing also yielded results that 
support the measure's scientific acceptability. Split-half testing 
revealed the final measure's excellent reliability, indicating an 
intraclass correlation coefficient value of 0.94. Reportability testing 
indicated good reportability (79 percent) of providers meeting the 
public reporting threshold of 20 eligible episodes. For additional 
measure testing details, we refer readers to the document titled 
Discharge Function Score for Home Health Agencies (HHAs) Technical 
Report, which is available at https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.
c. Competing and Related Measures
    Section 1899B(e)(2)(A) of the Act requires that, absent an 
exception under section 1899B(e)(2)(B) of the Act, measures specified 
under section 1899B of the Act be endorsed by the entity with a 
contract under section 1890(a). In the case of a specified area or 
medical topic determined appropriate by the Secretary for which a 
feasible and practical measure has not been endorsed, section 
1899B(e)(2)(B) permits the Secretary to specify a measure that is not 
so endorsed, as long as due consideration is given to measures that 
have been endorsed or adopted by a consensus organization identified by 
the Secretary.
    The final DC Function measure is not CBE-endorsed, so we considered 
whether there are other available measures that (1) assess both 
functional domains of self-care and mobility in HHAs and (2) satisfy 
the requirement of the Act to develop and implement standardized 
quality measures from the quality measure domain of functional status, 
cognitive function, and changes in function and cognitive function 
across the PAC settings. While the Application of Functional 
Assessment/Care Plan measure assesses both functional domains and 
satisfies the Act's requirement, this cross-setting process measure is 
not CBE-endorsed and the performance on this measure among HHAs is so 
high and unvarying across most providers that the measure does not 
offer meaningful distinctions in performance. Additionally, after 
review of the CBE's consensus-endorsed measures, we were unable to 
identify any CBE-endorsed measures for HHAs that meet the 
aforementioned requirements.
    Therefore, after consideration of other available measures, we find 
that the exception under section 1899B(e)(2)(B) of the Act applies and 
propose to adopt the DC Function measure beginning with the CY 2025 HH 
QRP. We intend to submit the final measure to the CBE for consideration 
of endorsement when feasible.
d. Interested Parties and Technical Expert Panel (TEP) Input
    In our development and specification of this measure, we employed a 
transparent process in which we sought input from stakeholders and 
national experts and engaged in a process that allowed for pre-
rulemaking input, in accordance with section 1890A of the Act. To meet 
this requirement, we provided the following opportunities for 
stakeholder input: a Patient and Family Engagement Listening Session, 
two TEPs, and public comments through a request for information (RFI).
    First, the measure development contractor convened a Patient and 
Family Engagement Listening Session, during which patients and 
caregivers provided views on the measure concept. Participants 
expressed support and emphasized the importance of measuring functional 
outcomes and found self-care and mobility to be critical aspects of 
care. Additionally, they expressed a strong interest in metrics 
assessing the number of patients discharged from particular agencies or 
facilities with improvements in self-care and mobility, and their views 
of self-care and mobility aligned with the functional domains captured 
by the final measure. All feedback was used to inform measure 
development efforts.
    The measure development contractor subsequently convened TEPs on 
July 14-15, 2021, and January 26-27, 2022, to obtain expert input on 
the development of DC Function measure for use in the HH QRP. The TEPs 
consisted of stakeholders with a diverse range of expertise, including 
HH and PAC subject matter knowledge, clinical expertise, patient and 
family perspectives, and measure development experience. The TEPs 
supported the final measure concept and provided substantive feedback 
regarding the measure's specifications and measure testing data. First, 
the TEP was asked whether they prefer a cross-setting measure that is 
modeled after the Inpatient Rehabilitation Facility (IRF) Functional 
Outcome Measure: Discharge Mobility Score for Medical Rehabilitation 
Patients (CBE ID #2636) (Discharge Mobility Score) and IRF Functional 
Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation 
Patients (CBE ID #2635) (Discharge Self-Care Score) measures, or one 
that is modeled after the IRF Functional Outcome Measure: Change in 
Mobility for Medical Rehabilitation Patients (CBE ID #2634) (Change in 
Mobility Score) and IRF Functional Outcome Measure: Change in Self-Care 
Score for Medical Rehabilitation Patients (CBE ID #2633) (Change in 
Self-Care Score). With the Discharge Mobility Score and Change in 
Mobility Score measures and the Discharge Self-Care Score and Change in 
Self-Care Score measures being both highly correlated and not appearing 
to measure unique concepts, the TEP favored the Discharge Mobility 
Score and Discharge Self-Care Score measures over the Change in 
Mobility Score and Change in Self-Care Score measures and recommended 
moving forward with the Discharge Mobility Score and Discharge Self-
Care Score measures for the cross-setting measure. Second, in deciding 
on the standardized functional assessment data elements to include in 
the cross-setting measure, the TEP recommended removing redundant data 
elements. Strong correlations between scores of functional items within 
the same functional domain suggested that certain items may be 
redundant in eliciting information about patient function and inclusion 
of these items could lead to overrepresentation of a particular 
functional area. Subsequently, our measure development contractor 
focused on the Discharge Mobility Score measure as a starting point for 
cross-setting development due to the greater number of cross-setting 
standardized functional assessment data elements for mobility while 
also identifying redundant functional items that could be removed from 
a cross-setting functional measure.
    Additionally, the TEP supported including the cross-setting self-
care items such that the cross-setting function measure captures both 
self-care and mobility. Panelists agreed that self-care items added 
value to the measure and are clinically important to function. Lastly, 
the TEP provided refinements to imputation strategies to more 
accurately represent function performance across all PAC settings, 
including the support of using statistical imputation over the current 
imputation approach implemented in existing functional outcome measures 
in the PAC QRPs. We considered all the TEP's recommendations for 
developing a cross-setting function measure and applied those 
recommendations where technically feasible and appropriate. Summaries 
of the TEP proceedings

[[Page 77758]]

titled Technical Expert Panel (TEP) for the Refinement of Long-Term 
Care Hospital (LTCH), Inpatient Rehabilitation Facility (IRF), Skilled 
Nursing Facility (SNF)/Nursing Facility (NF), and Home Health (HH) 
Function Measures Summary Report (July 2021 TEP) available at https://mms-test.battelle.org/sites/default/files/TEP-Summary-Report-PAC-Function.pdf and Technical Expert Panel (TEP) for Cross-Setting 
Function Measure Development Summary Report (January 2022 TEP) 
available at https://mms-test.battelle.org/sites/default/files/PAC-Function-TEP-Summary-Report-Jan2022-508.pdf.
e. Measure Application Partnership (MAP) Review
    Our pre-rulemaking process includes making publicly available a 
list of quality and efficiency measures, called the MUC List, that the 
Secretary is considering adopting through the Federal rulemaking 
process for use in Medicare programs. This allows multi-stakeholder 
groups to provide recommendations to the Secretary on the measures 
included on the list.
    We included the DC Function measure under the HH QRP in the 
publicly available MUC List for December 1, 2022,\65\ and the CBE 
received five comments from industry-connected interested parties on 
the 2022 MUC List. Three commenters were supportive of the measure and 
two were not. Among the commenters in support of the measure, one 
commenter stated that function scores are the most meaningful outcome 
measure in the HH setting, as they not only assess patient outcomes but 
also can be used for clinical improvement processes. Additionally, the 
commenter noted the measure's good reliability and validity and that 
the measure is feasible to implement. The second commenter supported 
the measure; however, the comments did not appear to be directly 
related to any aspect of the measure itself. The third commenter 
supported the measure without providing additional detailed comments.
---------------------------------------------------------------------------

    \65\ Centers for Medicare & Medicaid Services. Overview of the 
List of Measures Under Consideration for December 1, 2022. https://mmshub.cms.gov/sites/default/files/2022-MUC-List-Overview.pdf.
---------------------------------------------------------------------------

    Among the two commenters who did not support the DC Function 
measure, a commenter raised the following concerns: the ``gameability'' 
of the expected discharge score, the measure's complexity, and the 
difficulty of implementing a composite functional score. CMS was able 
to address these concerns during the MAP PAC/LTC Workgroup Meeting held 
on December 12, 2022. Specifically, CMS clarified that the expected 
discharge scores are not calculated using self-reported functional 
goals and are simply calculated by risk-adjusting the observed 
discharge scores (see the Quality Measure Calculation section III.C.1.e 
of this final rule). Therefore, CMS believes that these scores cannot 
be ``gamed'' by reporting less-ambitious functional goals. CMS also 
pointed out that the measure is highly usable as it is similar in 
design and complexity to existing function measures (for example, 
Discharge Mobility Score and Discharge Self-Care Score for IRF) and 
that the data elements used in this measure are already in use.
    The other commenter who did not support the DC Function measure 
raised the following concerns: its performance for stabilization 
patients; and its ability to account for patients that change payer 
during a HH episode. CMS was able to address the first concern during 
the MAP PAC/LTC Workgroup Meeting held on December 12, 2022. 
Specifically, CMS clarified that an episode will contribute to the 
numerator of DC Function if the observed discharge score meets or 
exceeds the expected discharge score, a value determined using clinical 
comorbidity and setting-specific parameters at the start or resumption 
of care. These parameters can and do predict no improvement among 
stabilization patients, that is, the expected discharge score can and 
does occasionally equal the observed admission score if clinical 
comorbidity and setting-specific parameters indicate no expected 
improvement in the risk adjustment model.
    The second concern was not raised during the MAP PAC/LTC Workgroup 
Meeting; however, we do not find any convincing evidence that it 
influences HHA-level performance for the majority of HHAs. Payer 
changes will only affect episodes ending between December 31 and March 
31. By comparing HHA-level performance calculated using the full 
calendar year versus using a dataset that excludes the dates with 
possibly affected episodes (January 1 through March 31 and December 
31), we assessed the degree to which this requirement influences 
performance. The Spearman correlation coefficient between the two 
scenarios is 0.97, and the changes in reliability and validity are 
smaller than one percentage point. The results imply that including or 
excluding affected episodes does not appear to influence HHA-level 
performance for the majority of HHAs. We will continue to monitor this 
concern in the future, and we will address it accordingly in the future 
if necessary.
    Shortly after, several CBE-convened MAP workgroups met virtually to 
provide input on the DC Function measure. First, the MAP Health Equity 
workgroup convened on December 6-7, 2022. The workgroup did not share 
any health equity concerns related to the implementation of the DC 
Function measure, and only asked for clarification regarding measure 
specifications from measure developers. The MAP Rural Health workgroup 
met on December 8-9, 2022, during which two members provided support 
for the DC Function measure and other workgroup members did not express 
rural health concerns regarding the measure. The MAP Post-Acute Care/
Long-Term Care (PAC-LTC) workgroup met virtually on December 12, 2022 
and provided input on the DC Function measure. The workgroup voted to 
support the staff recommendation of conditional support for rulemaking.
    In response to the MAP PAC/LTC Workgroup's preliminary 
recommendation, the CBE received one supportive comment and one non-
supportive comment regarding the DC Function measure. The former 
commenter supported the measure under the condition that it be reviewed 
and refined so that its implementation would support patient autonomy, 
and would result in care that would align with patients' personal 
functional goals. The latter commenter was concerned with the 
applicability of the measure to the different patient populations 
served by the various PAC settings. CMS clarified that the DC Function 
measure was not designed to compare function across PAC settings, and 
that this feature is not a requirement of the IMPACT Act.
    Finally, the MAP Coordinating Committee convened on January 24-25, 
2023. The CBE received no comments on the PAC/LTC workgroup's 
preliminary recommendation for conditional support of the DC Function 
measure. The MAP Coordinating Committee upheld the PAC/LTC workgroup's 
recommendation of conditional support for rulemaking with 20 votes in 
support and one against. We refer readers to the final MAP 
recommendations, titled 2022-2023 MAP Final Recommendations available 
at https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
f. Quality Measure Calculation
    The final outcome measure estimates the percentage of HH patients 
who meet

[[Page 77759]]

or exceed an expected discharge score during the reporting period. The 
final measure's numerator is the number of HH episodes with an observed 
discharge function score that is equal to or higher than the calculated 
expected discharge function score. The observed discharge function 
score is the sum of individual function items at discharge. The 
expected discharge function score is computed by risk adjusting the 
SOC/ROC observed discharge function score for each HH episode. Risk 
adjustment controls for patient characteristics such as SOC/ROC 
function score, age, and clinical conditions. The denominator is the 
total number of HH episodes in the measure target period (four rolling 
quarters) that do not meet the measure exclusion criteria. For 
additional details regarding the numerator, denominator, risk 
adjustment, and exclusion criteria, refer to the Discharge Function 
Score for Home Health Agencies (HHAs) Technical Report available at 
https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.
    The final measure implements a statistical imputation approach for 
handling ``missing'' standardized functional assessment data elements. 
The coding guidance for standardized functional assessment data 
elements allows for using ANA codes, resulting in ``missing'' 
information about a patient's functional ability on at least some 
items, at SOC/ROC and/or discharge, for a substantive portion of HH 
patients. Statistical imputation replaces these missing values with a 
variable based on the values of other, non-missing variables in the 
data and which are otherwise similar to the assessment with a missing 
value. In this case, statistical imputation allows missing values (for 
example, the ANA codes) to be replaced with any value from 1 to 6, 
based on a patient's clinical characteristics and codes assigned on 
other standardized functional assessment data element. The measure 
implements separate imputation models for each standardized functional 
assessment data element used in measure construction at SOC/ROC and 
discharge. Relative to the current simple imputation method, this 
statistical imputation approach increases precision and accuracy and 
reduces the bias in estimates of missing item scores. We refer readers 
to the Discharge Function Score for Home Health Agencies (HHAs) 
Technical Report available at https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf for measure 
specifications and additional details on measure testing, including the 
method for comparing the statistical imputation approach to the current 
simple imputation method.
    We solicited public comment on our proposal to adopt the Discharge 
Function Score measure. The following is a summary of the comments we 
received on our proposal to adopt the DC Function measure, beginning 
with the CY 2025 HH QRP, and our responses.
    Comment: Most commenters supported the adoption of the proposed 
measure, noting its improvement over the current functional process 
measure.
    Response: We thank commenters for their support of the adoption of 
the DC Function measure.
    Comment: A commenter supported the addition of the DC Function 
measure and urged CMS to consider using the measure to assess the 
adequacy of RN staffing.
    Response: CMS appreciates the support and will consider future uses 
for the measure, including evaluating the adequacy of RN staffing in 
home health.
    Comment: Some commenters believed the measure's imputation and 
risk-adjustment approach were complex and difficult to understand. A 
commenter supported the addition of the DC Function measure, though 
encouraged greater transparency on how the DC Function measure was 
calculated, and requested that HHAs have immediate access to expected 
score calculations. Another commenter suggested that CMS provide 
greater transparency on the ``expected'' discharge function score and/
or the imputation method. Two additional commenters opposed the 
adoption of the DC Function measure and expressed concern with the 
proposed imputation approach. A commenter noted that the measure could 
vary significantly from the other metrics currently being reported. 
Another commenter expressed concerns that publicly reported measures 
should be reflective of actual data gathered and calculated.
    Response: We thank the commenter for supporting the adoption of the 
DC Function measure, and we appreciate the concerns about transparency 
of the imputation calculation. We appreciate that statistical 
imputation adds additional steps to the measure's calculation; however, 
understanding the technical details of imputation and, separately, the 
construction of the expected scores, is not needed to correctly 
interpret the measure scores. For those who are interested in the 
technical details, the methodology and specifications are available in 
the Discharge Function Score for Home Health Agencies (HHAs) Technical 
Report.\66\ CMS anticipates baseline performance for CY 2023 will be 
shared in July 2024 as part of the HH VBP Model.
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    \66\ https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.
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    The imputation approach implemented in the proposed DC Function 
measure uses each patient's available functional and clinical 
information to estimate each ANA value had the item been completed. An 
alternative imputation method currently in place for similarly 
designed, CBE-endorsed measures under IRF QRP and SNF QRP imputes all 
ANA codes to 1 (dependent). Unlike DC Function, as proposed, this 
alternative uses no actual data to impute. Additionally, relative to 
this alternative, testing demonstrates that the statistical imputation 
approach used in the DC Function measure increases precision and 
accuracy and reduces bias in estimates of missing item values.
    Comment: Some commenters opposed to the adoption of the DC Function 
measure expressed concern that the measure only includes a subset of 
function items from the assessment instrument and is concerned that 
these items are not necessarily the best indicators of patient 
functional success when discharged; for example, functional abilities 
and goals that better reflect self-care included upper body dressing 
and lower body dressing.
    Response: We acknowledge that the cross-setting applicability was a 
motivating factor in determining function items captured in the 
proposed DC Function measure, and the ``upper body dressing'' and 
``lower body dressing'' function items were not available across 
settings. Nonetheless, the proposed DC Function measure does reflect 
the progress of a patient across both the mobility and selfcare 
domains. As stated in section III.D.1.b. of this final rule, the TEP 
supported the inclusion of both functional domains, since self-care 
items impact mobility items and are clinically relevant to function.
    Comment: A commenter opposed to the adoption of the DC Function 
measure expressed concern with the amount of compliance burden on HHA 
staff to become familiar with the new measure.
    Response: We disagree that the adoption of the proposed measure 
would result in additional burden or require additional training. We 
are not proposing changes to the number of

[[Page 77760]]

items required or the reporting frequency of the items reported in the 
OASIS in order to report this measure. In fact, this measure requires 
the same set of items that are already reported by HHAs in the OASIS. 
Additionally, we calculate this measure and provide HHAs with various 
resources to review and monitor their HHA performance on this measure, 
including provider preview reports. Therefore, HHAs are not required to 
update software to successfully report or monitor performance. 
Regarding the commenter's concerns about education, we do plan to 
provide educational resources to HHAs about the DC Function measure.
    Comment: A few commenters opposed to the adoption of the DC 
Function measure noted that the CBE is generally required to endorse 
the measure.
    Response: We direct readers to section III.D.1.b. of this final 
rule, where we discuss the topic of CBE endorsement in detail. Despite 
the current absence of CBE endorsement for this measure, we still 
believe it is important to adopt the DC Function measure into the HH 
QRP because, unlike the Discharge Self-Care Score and Discharge 
Mobility Score measures found in both IRF QRP and SNF QRP, the DC 
Function measure relies on functional status items collected in all PAC 
settings, satisfies the requirement of a cross-setting quality measure 
set forth in sections 1888(e)(6)(B)(i)(II) and 1899B(c)(1)(A) of the 
Act, and assesses both domains of function. We also acknowledge the 
importance of the CBE endorsement process and plan to submit the 
proposed measure for CBE endorsement in the future. We direct readers 
to section III.D.1.a. of this final rule and the technical report for 
detailed measures testing results demonstrating that the measure 
provides meaningful information which can be used to improve quality of 
care, and to the TEP report summaries 67 68 which detail TEP 
support for the proposed measure concept.
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    \67\ Technical Expert Panel (TEP) for the Refinement of Long-
Term Care Hospital (LTCH), Inpatient Rehabilitation Facility (IRF), 
Skilled Nursing Facility (SNF)/Nursing Facility (NF), and Home 
Health (HH) Function Measures Summary Report (July 2021 TEP). 
https://mms-test.battelle.org/sites/default/files/TEP-Summary-Report-PAC-Function.pdf.
    \68\ Technical Expert Panel (TEP) for Cross-Setting Function 
Measure Development Summary Report (January 2022 TEP). https://mmshub.cms.gov/sites/default/files/PAC-Function-TEP-Summary-Report-Jan2022-508.pdf.
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    Comment: A few commenters encouraged the incorporation of 
maintenance care into the measure. One broadly supportive commenter 
suggested CMS examine measure(s) that would better capture both 
maintenance and improvement in functional status. Another commenter 
opposed the adoption of the DC Function measure due to the belief that 
this measure encourages HHAs to favor patients with the potential for 
improvement at discharge over those in need of maintenance care. For 
this reason, the commenter recommended excluding beneficiaries who do 
not have improvement goals.
    Response: The DC Function measure does not solely reflect 
improvement of patients at discharge. The measure estimates the 
percentage of patients who meet, as well as exceed, an expected 
discharge function score. In other words, if a patient, based on their 
own demographic and clinical characteristics, is expected to maintain, 
as opposed to improve in, function, then they will still meet the 
numerator criteria for this measure. For many patients, the overall 
goals of HHA care may include optimizing functional improvement, 
returning to a previous level of independence, maintaining functional 
abilities, or avoiding institutionalization. For additional details 
regarding risk adjustment, please refer to the Discharge Function Score 
for Home Health Agencies (HHAs) Technical Report.\69\
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    \69\ https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.
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    Comment: A commenter urged CMS to consider alternative assessments 
that better incorporate cognition and communication into the measure 
calculation.
    Response: We agree that cognition and communication are critically 
important and related to the safety and independence of patients. 
Although not directly assessed for the purpose of measure calculation, 
this measure does indirectly capture an HHA's ability to impact a 
patient's cognition and communication to the extent that these factors 
are correlated to improvements in self-care and mobility. That said, we 
agree that communication and cognition are important to assess 
directly, and HHAs currently do so through completion of the Brief 
Interview for Mental Status (BIMS) and Confusion Assessment Method 
(CAM(copyright)) items in section C of the OASIS. Additionally, we 
regularly assess the measures in the HH QRP for measurement gaps, and 
we will use feedback technical experts and empirical analyses to 
determine how to measure communication and cognition going forward.
    Comment: A commenter expressed concern about the inconsistency of 
PAC providers' recording of functional assessment information, 
especially if the items are used for payment, where incentives may 
encourage providers to report codes that are advantageous for financial 
reasons. This commenter discouraged CMS reliance on OASIS-based 
measures of function for payment or quality measurement until their 
accuracy or integrity are improved.
    Response: CMS has processes in place to ensure reported patient 
data are accurate. The OASIS process has multiple regulatory 
requirements to ensure accuracy. Our regulations at Sec.  484.55 
require that (1) the assessment must be a comprehensive, accurate 
assessment of the patient's status and (2) the assessment must 
accurately reflect the patient's status. Because these requirements are 
CoPs, failure to comply could result in termination from the Medicare 
program.
    Comment: A commenter requested CMS provide more clarity on its 
imputation approach to recoding, specifically contrasting it with a 
Rasch analysis used in the unified PAC PPS prototype, to ensure 
transparency and clinical significance.
    Response: The Rasch analysis in the unified PAC PPS prototype 
produces a single value to which every single ANA is recoded for a 
given item across all patients and settings. By contrast, under the 
imputation approach for the DC Function measure, we estimate a 
different imputed value for each patient, based on their clinical 
comorbidities, their score on all other GG items, and setting. We 
believe our approach accounts for several likely effects: setting-
specific coding guidance and practice differences; function scores 
being correlated with clinical comorbidities; and functional scores for 
a given GG item being correlated with functional codes on other GG 
items, particularly on ``adjacent'' (similar) items. Therefore, we 
believe recoding ANAs based on each patient's specific clinical risk 
and using all available GG item scores/codes is a more valid approach. 
For more detailed measure specifications, we direct readers to the 
document titled Discharge Function Score for Home Health Agencies 
(HHAs) Technical Report.\70\
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    \70\ https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.

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[[Page 77761]]

    Comment: Eight commenters expressed concern that providers have not 
had enough time using the measure prior to use in a performance-based 
program like HH VBP.
    Response: We thank the commenters for their feedback. As stated in 
section III.D.1 of this final rule, the HH QRP is adopting this measure 
in CY 2025 HH QRP year with data collection for public reporting 
beginning with April 1, 2024 discharges. We are finalizing the adoption 
of this measure for the HH VBP Program beginning with the CY 2027 
payment year, with data collection beginning with January 1, 2025 
discharges. This timeline will enable HHAs to report the data for a 
nine months in the HH QRP before they are required to report data for 
the HH VBP Program. We believe that reporting this measure in the HH 
QRP for this time is sufficient time for providers to gain familiarity 
with the measure.
    We also note that many of the same commenters did not support the 
inclusion of this measure in both the HH QRP and HH VBP Program. We 
responded to those more general comments in section III.D.1. of this 
final rule. CMS anticipates baseline performance for CY 2023 will be 
shared in July 2024 as part of the HH VBP Model.
    Comment: A commenter supported the DC Function measure, which 
includes components for both self-care and mobility, but recommended 
CMS explore separating the measure into individual self-care and 
mobility function measures so that providers can better identify 
treatment goals.
    Response: The HH QRP currently utilizes several ``improvement in 
function'' measures that address individual functional activities in 
both the self-care and mobility domains. As evidenced in the Discharge 
Function Score for Home Health Agencies (HHAs) Technical Report,\71\ 
the Spearman rank correlation between the DC Function and these 
measures range from 0.23 to 0.31, indicating a modest positive 
correlation and suggesting that the measures address different aspects 
of quality related to function. These differences are by design. Unlike 
the ``improvement in function'' measures, which evaluate functional 
improvement, DC Function quantifies whether the patient met or exceeded 
functional expectations at end of care. Additionally, an HHA can 
improve DC Function, as a composite measure, by improving individual 
activities while maintaining other activities, while it can only 
improve the individual ``improvement in function'' measures by 
improving the specific activity being measured. In future years, CMS 
may consider developing new measures that quantify whether the patient 
met or exceeded expectations at the end of care for individual 
functions.
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    \71\ https://www.cms.gov/files/document/hh-discharge-function-score-measure-technical-report.pdf.
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    Comment: A few other commenters expressed concern regarding the 
guidance for the GG items will be confused with those for the M1800 
item set, which could lead to data fidelity concerns.
    Response: As with all other measures, we will routinely monitor 
this measure's performance, including the statistical imputation 
approach, to ensure that the measure remains valid and reliable. 
Finally, we would like to clarify that the adoption of this measure 
does not change how HHAs should complete the GG items. As stated in the 
OASIS-E Manual, the ANA codes should only be used after determining 
that the activity is not completed, and the performance code cannot be 
determined based on patient/caregiver report, collaboration with other 
agency staff, or assessment of similar activities. However, we 
acknowledge that there will be instances where an ANA code is the most 
appropriate response. We regularly review and update the manual as 
indicated. Additionally, if HHAs have questions related to the 
completion of these items, they can submit questions to the HH QRP Help 
Desk at [email protected].
    Comment: A commenter requested that CMS redesign DC Function so 
that is more equitable.
    Response: We recognize that social determinants of health may have 
an impact on functional outcomes. Testing indicates that adding social 
determinants of health, such as dual eligibility and race/ethnicity, 
does not substantively affect provider scores for this measure. 
However, we will continue to monitor the impact of the previous 
factors, as is feasible, on the measures and incorporate them in 
measure calculations, as needed, to ensure the measure remains valid 
and reliable.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to adopt the DC Function measure as an 
assessment-based outcome measure beginning with the CY 2025 HH QRP as 
proposed.
2. Removal of the ``Application of Percent of Long-Term Care Hospital 
Patients With an Admission and Discharge Functional Assessment and a 
Care Plan That Addresses Function'' Beginning With the CY 2025 HH QRP
    We are finalizing the removal of the ``Application of Percent of 
Long-Term Care Hospital Patients with an Admission and Discharge 
Functional Assessment and a Care Plan That Addresses Function'' 
(Application of Functional Assessment/Care Plan) measure from the HH 
QRP beginning with the CY 2025 HH QRP. Section 42 CFR 484.245(b)(3) of 
our regulations specifies eight factors we consider for measure removal 
from the HH QRP, and we believe this measure should be removed because 
it satisfies two of these factors.
    First, the Application of Functional Assessment/Care Plan measure 
meets the conditions for measure removal factor one: measure 
performance among HHAs is so high and unvarying that meaningful 
distinctions in improvements in performance can no longer be made.\72\ 
Second, this measure meets the conditions for measure removal factor 
six: there is an available measure that is more strongly associated 
with desired patient functional outcomes. We believe the DC function 
measure discussed previously better measures functional outcomes than 
the current Application of Functional Assessment/Care Plan measure.
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    \72\ For more information on the factors the Centers for 
Medicare & Medicaid Services (CMS) uses to base decisions for 
measure removal, we refer readers to the Code of Federal 
Regulations, Sec.  484.245(b)(3) https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-G/part-484/subpart-E/section-484.245.
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    In regards to removal factor one, the Application of Functional 
Assessment/Care Plan measure has become topped out, with average 
performance rates reaching nearly 100 percent over the past 3 years 
(ranging from 96-98 percent during calendar years (CYs) 2019-2021).\73\ 
For the 12-month period of third quarter of CY 2021, HHAs had an 
average score for this measure of 98 percent, with nearly 75 percent of 
HHAs scoring 100 percent. The proximity of these mean rates to the 
maximum score of 100 percent suggests a ceiling effect and a lack of 
variation that restricts distinction among HHAs.
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    \73\ CMS. Home Health Agency Data Archive, 2019-2021, Annual 
Files National Data. PDC, https://data.cms.gov/provider-data/archived-data/home-health-services.
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    In regards to measure removal factor six, the DC Function measure 
is more strongly associated with desired patient functional outcomes 
than the current

[[Page 77762]]

process measure, the Application of Functional Assessment/Care Plan 
measure. As described in section IIII.D.1.e of this final rule, the DC 
Function measure has the predictive ability to distinguish patients 
with low expected functional capabilities from those with high expected 
functional capabilities.\74\ We have been collecting standardized 
functional assessment elements across PAC settings since 2016 which has 
allowed for the development of the DC Function measure and meets the 
statutory requirements to submit standardized patient assessment data 
and other necessary data with respect to the domain of functional 
status, cognitive function, and changes in function and cognitive 
function. In light of this development, this process measure, the 
Application of Functional Assessment/Care Plan measure which measures 
only whether a functional assessment is completed and a functional goal 
is included in the care plan, is no longer necessary, and can be 
replaced with a measure that evaluates the HHA's outcome of care on a 
patient's function.
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    \74\ ``Expected functional capabilities'' is defined as the 
predicted discharge function score.
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    Because the Application of Functional Assessment/Care Plan measure 
meets measure removal factors one and six, we are finalizing to remove 
it from the HH QRP beginning with the CY 2025 HH QRP. We also proposed 
that public reporting of the Application of Functional Assessment/Care 
Plan measure will end by January 2025 or as soon as technically 
feasible when public reporting of the DC Function measure will begin 
(see section III.F.2. of this final rule).
    HHAs will no longer be required to report a Self-Care Discharge 
Goal (that is, GG0130, Column 2) or a Mobility Discharge Goals (that 
is, GG0170, Column 2) on the OASIS beginning with patients with SOC/ROC 
on January 1, 2025. We will remove the items for Self-Care Discharge 
Goals (that is, GG0130, Column 2) and Mobility Discharge Goals (that 
is, GG0170, Column 2) with the next release of the OASIS. Under our 
proposal, these items will not be required to meet HH QRP requirements 
beginning with the CY 2025 HH QRP.
    We solicited public comment on our proposal to remove the 
Application of Functional Assessment/Care Plan measure from the HH QRP 
beginning with the CY 2025 HH QRP. The following is a summary and 
responses to comments received for the removal of the Application of 
Functional Assessment/Care Plan measure.
    Comment: All commenters supported the removal of the measure 
Application of Long-Term Care Hospital Patients with an Admission and 
Discharge Functional Assessment and a Care Plan That Addresses 
Function. Some commenters noted that the measure no longer offers 
meaningful distinction between home health providers since performance 
is high and unvarying.
    Response: We thank commenters for their support of the removal of 
the Application of Functional Assessment/Care Plan measure.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to remove the Application of Functional 
Assessment/Care Plan measure from the HH QRP beginning with the CY 2025 
HH QRP.
3. COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date, 
Beginning With the CY 2025 HH QRP
a. Background
    COVID-19 has been and continues to be a major challenge for PAC 
facilities, including HHAs. The Secretary first declared COVID-19 a PHE 
on January 31, 2020. As of March 15, 2023, the U.S. has reported 
103,801,821 cumulative cases of COVID-19, and 1,121,512 total deaths 
due to COVID-19.\75\ Although all age groups are at risk of contracting 
COVID-19, older persons are at a significantly higher risk of mortality 
and severe disease following infection, with those over age 80 dying at 
five times the average rate.\76\ Older adults, in general, are prone to 
both acute and chronic infections owing to reduced immunity, and are a 
high-risk population.\77\ Adults age 65 and older comprise over 75% of 
total COVID-19 deaths despite representing 13.4% of reported cases.\78\ 
Restrictions on freedom of movement and physical distancing can lead to 
a disruption of essential care and support for older persons. Physical 
distancing measures that restrict visitors and group activities can 
negatively affect the physical and mental health and well-being of 
older persons, particularly those with cognitive decline or dementia, 
and who are highly care-dependent.\79\
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    \75\ Centers for Disease Control and Prevention. COVID Data 
Tracker. 2023, January 20. Last accessed March 23, 2023. https://covid.cdc.gov/covid-data-tracker/#cases_totalcases.
    \76\ United Nations. Policy Brief: The impact of COVID-19 on 
older persons. May 2020. https://unsdg.un.org/sites/default/files/2020-05/Policy-Brief-The-Impact-of-COVID-19-on-Older-Persons.pdf.
    \77\ Lekamwasam R, Lekamwasam S. Effects of COVID-19 pandemic on 
health and wellbeing of older people: a comprehensive review. Ann 
Geriatr Med Res. 2020;24(3):166-172. http://dx.doi.org/10.4235/agmr.20.0027. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7533189/.
    \78\ Centers for Disease Control and Prevention. Demographic 
trends of COVID-19 cases and deaths in the US reported to CDC. COVID 
Data Tracker. 2023, March 15. Last accessed March 23, 2023. https://covid.cdc.gov/covid-data-tracker/#demographics.
    \79\ United Nations. Policy Brief: The impact of COVID-19 on 
older persons. May 2020. https://unsdg.un.org/sites/default/files/2020-05/Policy-Brief-The-Impact-of-COVID-19-on-Older-Persons.pdf.
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    Since the development of the vaccines to combat COVID-19, studies 
have shown that being up to date on these vaccines continues to provide 
strong protection against severe disease, hospitalization, and death in 
adults, including during the predominance of Omicron BA.4 and BA.5 
variants.\80\ Initial studies showed the efficacy of FDA-approved 
COVID-19 vaccines in reducing the risk of severe outcomes caused by 
COVID-19. Further, residents at skilled nursing facilities (SNF) with 
high rates of staff testing for COVID-19 were less likely to be 
hospitalized or die due to COVID-19 than their counterparts in SNFs 
with low rates of staff testing. Prior to the emergence of the Delta 
variant of the virus, vaccine effectiveness against COVID-19-associated 
hospitalization among adults age 65 and older was 91% for those 
receiving a full mRNA vaccination (Pfizer-BioNTech or Moderna), and 84% 
for those receiving a viral vector vaccination (Janssen). Adults age 65 
and older who were fully vaccinated with an mRNA COVID-19 vaccine had a 
94% reduction in risk of COVID-19 hospitalization; those who were 
partially vaccinated had a 64% reduction in risk.\81\ Further, after 
the emergence of the Delta variant, vaccine effectiveness against 
COVID-19-associated hospitalization for adults who received the primary 
series of the vaccine was 76% among adults age 75 and older.\82\
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    \80\ Chalkias S, Harper C, Vrbicky K, et al. A bivalent omicron-
containing booster vaccine against COVID-19. N Engl J Med. 
2022;387(14):1279-1291. doi: 10.0156/NEJMoa2208343. https://www.nejm.org/doi/full/10.1056/NEJMoa2208343.
    \81\ Centers for Disease Control and Prevention. Press Release, 
April 28, 2021. Fully Vaccinated Adults 65 and Older are 94% Less 
Likely to Be Hospitalized with COVID-19. https://www.cdc.gov/media/releases/2021/p0428-vaccinated-adults-less-hospitalized.html.
    \82\ Vaccine effectiveness after the emergence of the Delta 
variant is based on data from CDC's VISION Network, which examined 
32,867 medical encounters from 187 hospitals and 221 emergency 
departments and urgent care clinics across nine states during June-
August 2021, beginning on the date the Delta variant accounted for 
over 50% of sequenced isolates in each medical facility's state 
(Grannis SJ, et al. MMWR Morb Mortal Wkly Rep. 2021;70(37):1291-
1293. doi: http://dx.doi.org/10.15585/mmwr.mm7037e2).
---------------------------------------------------------------------------

    More recently, since the emergence of the Omicron variants and 
availability of

[[Page 77763]]

booster doses, multiple studies have shown that while vaccine 
effectiveness against infection has waned, protection is higher among 
those receiving booster doses than among those only receiving the 
primary series.83 84 85 CDC data show that, among people age 
50 and older, those who have received both a primary vaccination series 
and booster shots have a lower risk of hospitalization and dying from 
COVID-19 than their non-vaccinated counterparts.\86\ Additionally, a 
second vaccine booster has been shown to be effective against severe 
outcomes related to COVID-19, such as hospitalization or death.\87\ 
Furthermore, more recent vaccination and booster doses can decrease the 
rate of COVID-19 transmission between individuals in close contact.\88\ 
Early evidence also demonstrates that the bivalent booster, 
specifically aimed to combat the prevalent BA.4/BA.5 Omicron 
subvariants, provokes a superior antibody response against Omicron than 
the initial COVID-19 vaccines, underscoring, the role of up-to-date 
vaccination protocols in effectively countering the spread of COVID-
19.\89\
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    \83\ Surie D, Bonnell L, Adams K, et al. Effectiveness of 
monovalent mRNA vaccines against COVID-19-associated hospitalization 
among immunocompetent adults during BA.1/BA.2 and BA.4/BA.5 
predominant periods of SARS-CoV-2 Omicron variant in the United 
States--IVY Network, 18 states, December 26, 2021-August 31, 2022. 
MMWR Morb Mortal Wkly Rep. 2022;71(42):1327-1334. http://dx.doi.org/10.15585/mmwr.mm7142a3.
    \84\ Andrews N, Stowe J, Kirsebom F, et al. Covid-19 vaccine 
effectiveness against the Omicron (B.1.1.529) variant. N Engl J Med. 
2022;386(16):1532-1546. https://www.nejm.org/doi/full/10.1056/NEJMoa2119451.
    \85\ Buchan SA, Chung H, Brown KA, et al. Estimated 
effectiveness of COVID-19 vaccines against Omicron or Delta 
symptomatic infection and severe outcomes. JAMA Netw Open. 
2022;5(9):e2232760. http://dx.doi.org/10.1001/jamanetworkopen.2022.32760. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2796615.
    \86\ Centers for Disease Control and Prevention. Daily update 
for the United States. COVID Data Tracker. 2023, January 20. Last 
accessed January 17, 2023. https://covid.cdc.gov/covid-data-tracker.
    \87\ Centers for Disease Control and Prevention. COVID-19 
vaccine effectiveness monthly update. COVID Data Tracker. March 23, 
2023. https://covid.cdc.gov/covid-data-tracker/#vaccine-effectiveness.
    \88\ Tan ST., Kwan AT, Rodriguez-Barraquer I, et al. 
Infectiousness of SARS-CoV-2 breakthrough infections and 
reinfections during the Omicron wave. Preprint at medRxiv:
    \89\ Chalkias S, Harper C, Vrbicky K, et al. A bivalent Omicron-
containing booster vaccine against COVID-19. N Engl J Med 
2022;387(14):1279-1291. doi: 10.0156/NEJMoa2208343. https://www.nejm.org/doi/full/10.1056/NEJMoa2208343.
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(1) Measure Importance
    Despite the availability and demonstrated effectiveness of COVID-19 
vaccinations, significant gaps continue to exist in vaccination 
rates.\90\ As of March 15, 2023, vaccination rates among people age 65 
and older are generally high for the primary vaccination series (94.3%) 
but lower for the first booster (73.6%) among those who received a 
primary series) and even lower for the second booster (59.9%) among 
those who received a first booster).\91\ Additionally, though the 
uptake in boosters among people age 65 and older has been much higher 
than among people of other ages, booster uptake still remains 
relatively low compared to primary vaccination among older adults.\92\ 
Variations are also present when examining vaccination rates by race, 
gender, and geographic location.\93\ For example, 66.2% of the Asian, 
non-Hispanic population have completed the primary series and 21.2% 
have received the bivalent booster dose, whereas 44.9% of the Black, 
non-Hispanic population have completed the primary series and only 8.9% 
have received the bivalent booster dose. Among Hispanic populations, 
57.1% of the population have completed the primary series, with 8.5% 
receiving the bivalent booster dose, while in White, non-Hispanic 
populations, 51.9% have completed the primary series and 16.2% have 
received the bivalent booster dose.\94\ Disparities have been found in 
vaccination rates between rural and urban areas, with lower vaccination 
rates found in rural areas.95 96 Data show that 55.1% of the 
population in rural areas have completed the primary vaccination 
series, as compared to 66.2% of the population in urban areas.\97\ 
Receipt of first booster doses was similar between urban (50.4%) and 
rural (49.7%) counties.\98\ Receipt of bivalent booster doses has been 
lower, with 16.9% of urban population having received the booster dose, 
and 10.9% of the rural population having received the booster dose.\99\
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    \90\ Centers for Disease Control and Prevention. COVID-19 
vaccinations in the United States. COVID Data Tracker. March 23, 
2023. https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-people-booster-percent-pop5.
    \91\ Centers for Disease Control and Prevention. COVID-19 
vaccination age and sex trends in the United States, national and 
jurisdictional. Last accessed March 24, 2023. Vaccination Trends.
    \92\ Freed M, Neuman T, Kates J, Cubanski J. Deaths among older 
adults due to COVID-19 jumped during the summer of 2022 before 
falling somewhat in September. Kaiser Family Foundation. October 6, 
2022. https://www.kff.org/coronavirus-covid-19/issue-brief/deaths-among-older-adults-due-to-covid-19-jumped-during-the-summer-of-2022-before-falling-somewhat-in-september/.
    \93\ Saelee R, Zell E, Murthy BP, et al. Disparities in COVID-19 
vaccination coverage between urban and rural counties--United 
States, December 14, 2020-January 31, 2022. MMWR Morb Mortal Wkly 
Rep. 2022;71:335-340. http://dx.doi.org/10.15585/mmwr.mm7109a2.
    \94\ Centers for Disease Control and Prevention. Trends in 
Demographic Characteristics of People Receiving COVID-19 
Vaccinations in the United States. COVID Data Tracker. 2023, January 
20. Last accessed March 23, 2023. https://covid.cdc.gov/covid-data-tracker/#vaccination-demographics-trends.
    \95\ Saelee R, Zell E, Murthy BP, et al. Disparities in COVID-19 
vaccination coverage between urban and rural counties--United 
States, December 14, 2020-January 31, 2022. MMWR Morb Mortal Wkly 
Rep. 2022;71:335-340. DOI: http://dx.doi.org/10.15585/mmwr.mm7109a2.
    \96\ Sun Y, Monnat SM. Rural-urban and within-rural differences 
in COVID-19 vaccination rates. J Rural Health. 2022;38(4):916-922. 
http://dx.doi.org/10.1111/jrh.12625. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8661570/.
    \97\ Centers for Disease Control and Prevention. Vaccination 
Equity. COVID Data Tracker; 2023, January 20. Last accessed January 
17, 2023. https://covid.cdc.gov/covid-data-tracker/#vaccination-equity.
    \98\ Saelee R, Zell E, Murthy BP, et al. Disparities in COVID-19 
vaccination coverage between urban and rural counties--United 
States, December 14, 2020-January 31, 2022. MMWR Morb Mortal Wkly 
Rep. 2022;71:335-340. http://dx.doi.org/10.15585/mmwr.mm7109a2.
    \99\ Centers for Disease Control and Prevention. Vaccination 
Equity. COVID Data Tracker; 2023, January 20. Last accessed January 
17, 2023. https://covid.cdc.gov/covid-data-tracker/#vaccination-equity.
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    We proposed to adopt the COVID-19 Vaccine: Percent of Patients/
Residents who are Up to Date (Patient/Resident COVID-19 Vaccine) 
measure for the HH QRP beginning with the CY 2025 HH QRP. This final 
measure has the potential to increase COVID-19 vaccination coverage of 
patients in HHAs. This final measure also has the potential to prevent 
the spread of the virus within the HHA patient population. Although 
this population receives services within their own homes, they can 
transfer the virus to their caretakers and home healthcare workers, who 
could then potentially infect other home health patients. The COVID-19 
Vaccine measure will also support the goal of the CMS Meaningful 
Measure Initiative 2.0 to ``Empower consumers to make good health care 
choices through patient-directed quality measures and public 
transparency objectives.'' The Patient/Resident COVID-19 Vaccine 
measure will be reported on Care Compare an interactive web tool that 
assists individuals by providing information on quality of care. For 
more information on Care Compare, we refer readers to our website at: 
https://www.medicare.gov/care-compare/. This will provide patients, 
including those who are at high risk for developing serious 
complications from COVID-19, and their caregivers, with valuable 
information they can consider when choosing a HHA. The Patient/Resident

[[Page 77764]]

COVID-19 vaccine measure will also facilitate patient care and care 
coordination during the hospital discharge planning process. For 
example, a discharging hospital, in collaboration with the patient and 
family, could use this measure to coordinate care and ensure patient 
preferences are considered in the discharge plan. Additionally, the 
Patient/Resident COVID-19 Vaccine measure will be an indirect measure 
of HHA action. Since the patient's COVID-19 vaccination status will be 
reported at discharge from the HHA, if a patient is not up to date with 
their COVID-19 vaccination per applicable CDC guidance at the time they 
are admitted, the HHA has the opportunity to educate the patient and 
provide information on why they should become up to date with their 
COVID-19 vaccination. HHAs may also choose to administer the vaccine to 
the patient prior to their discharge from the HHA or coordinate a 
follow up visit for the patient to obtain the vaccine at their 
physician's office or local pharmacy.
(2) Item Testing
    Item testing was conducted for the Patient/Resident COVID-19 
Vaccine measure using patient scenarios and cognitive interviews to 
assess HHA providers' comprehension of the item and the associated 
guidance. The patient scenarios were developed in collaboration with a 
team of clinical experts and represented the most common scenarios HHA 
staff encounter. The results of the item testing supported its 
reliability, and provided information to improve the item itself, as 
well as the accompanying guidance.
b. Competing and Related Measures
    Section 1899B(e)(2)(A) of the Act requires that, absent an 
exception under section 1899B(e)(2)(B) of the Act, each measure 
specified under section 1899B of the Act be endorsed by the entity with 
a contract under section 1890(a) of the Act. In the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a feasible and practical measure has not been endorsed, section 
1899B(e)(2)(B) of the Act permits the Secretary to specify a measure 
that is not so endorsed, as long as due consideration is given to the 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
    The Patient/Resident COVID-19 Vaccine measure is not consensus-
based entity (CBE) endorsed. After review of other CBE endorsed 
measures, we were unable to identify any CBE endorsed measures for HHAs 
focused on capturing COVID-19 vaccination coverage of HHA patients and 
found no related measures in the HH QRP addressing COVID-19 
vaccination. There have been COVID-19 Vaccination Coverage among 
Healthcare Personnel (HCP) measures adopted by the Skilled Nursing 
Facility (SNF) QRP, the Inpatient Rehabilitation Facility (QRP) and the 
Long-term Care Hospital (LTCH) QRP that captures the percentage of HCPs 
who receive a complete COVID-19 vaccination course. HHAs do not 
currently report patient/resident or HCP COVID-19 vaccination data.
    Therefore, after consideration of other available measures that 
assess COVID-19 vaccination rates, we believe the exception under 
section 1899B(e)(2)(B) of the Act applies. We intend to submit the 
measure for CBE endorsement when feasible.
c. Interested Parties and Technical Expert Panel (TEP) Input
    In the development and specification of this measure, a transparent 
process was employed to seek input from interested parties and national 
experts and engage in a process that allows for pre-rulemaking input in 
accordance with section 1890A of the Act. First, the measure 
development contractor convened a focus group of patient and family/
caregiver advocates (PFAs) to solicit input. The PFAs believe a measure 
capturing raw vaccination rate, irrespective of HHA action, will be 
most helpful in patient and family/caregiver decision-making. Next, TEP 
meetings were held on November 19, 2021 and December 15, 2021 to 
solicit feedback on the development of Patient/Resident COVID-19 
vaccination measures and assessment items for the PAC settings. The TEP 
panelists voiced their support for PAC Patient/Resident COVID-19 
vaccination measures and agreed that developing a measure to report the 
rate of vaccination in an HHA setting without denominator exclusions 
was an important goal. All recommendations from the TEP were taken into 
consideration and applied appropriately where technically feasible and 
appropriate. A summary of the TEP proceedings titled Technical Expert 
Panel (TEP) for the Development of Long-Term Care Hospital (LTCH), 
Inpatient Rehabilitation Facility (IRF), Skilled Nursing Facility 
(SNF)/Nursing Facility (NF), and Home Health (HH) COVID-19 Vaccination-
Related Items and Measures Summary Report is available on the CMS 
Measures Management System (MMS) Hub. at https://mmshub.cms.gov/sites/default/files/COVID19-Patient-Level-Vaccination-TEP-Summary-Report-NovDec2021.pdf.
d. Measures Applications Partnership Review
    The pre-rulemaking process includes making publicly available a 
list of quality and efficiency measures, called the Measures Under 
Consideration (MUC) List that the Secretary is considering adopting, 
through Federal rulemaking process, for use in Medicare programs. This 
allows interested parties to provide recommendations to the Secretary 
on the measures included on the list. The Patient/Resident COVID-19 
Vaccine measure was included on the publicly available 2022 MUC List 
for the HH QRP.\100\ Shortly after, several CBE-convened MAP workgroups 
met virtually to provide input on the measure. First, the MAP Health 
Equity advisory group convened on December 6, 2022. One MAP member 
noted that the percentage of true contraindications for the COVID-19 
vaccine is low, and the lack of exclusions on the measure makes sense 
to avoid varying interpretations of valid contraindications.\101\ 
Similarly, the MAP Rural Health advisory group met on December 8, 2022 
and publicly stated that the measure is important for rural 
communities.\102\
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    \100\ CMS Measures Management System (MMS). Measure 
Implementation: Pre-rulemaking MUC Lists and MAP reports. Last 
accessed March 23, 2023 https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
    \101\ National Quality Forum MAP Health Equity Advisory Group 
Materials. Meeting Summary--MUC Review Meeting. Last accessed March 
23, 2023. https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=97943.
    \102\ National Quality Forum MAP Rural Health Advisory Group 
Materials. Meeting Summary--MUC Review Meeting. Last accessed March 
23, 2023. https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=97964.
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    Prior to convening the MAP PAC/LTC workgroup, the CBE received 
seven comments by industry interested parties during the measure's MAP 
pre-rulemaking process. Interested parties were mostly supportive of 
the measure and recognized that it is important that patients be 
vaccinated against COVID-19, and that measurement and reporting is one 
important method to help healthcare organizations assess their 
performance in achieving high rates of ``up-to-date'' vaccination. One 
interested party noted that patient engagement is critical at this 
stage of the pandemic because best available information indicates 
COVID-19 variants will continue to require additional boosters to avert 
case surges. Another interested party noted the benefit of less-
specific criteria for

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inclusion in the numerator and denominator of the Patient/Resident 
COVID-19 Vaccine measure, which will provide flexibility for the 
measure to remain relevant to current circumstances. Other interested 
parties raised concerns about the measure not including measuring the 
HHA's action in the numerator and excluding patient refusals from the 
denominator, and noted that there could be unintended consequences to 
patient access to care should the measure be adopted.
    Subsequently, the MAP Post-Acute Care/Long-Term Care (PAC/LTC) 
workgroup met on December 12, 2022. The voting workgroup members noted 
the importance of reporting patients' vaccination status but raised 
concerns that (1) the proposed Patient/Resident COVID-19 Vaccine 
measure does not account for patient refusals or those who are unable 
to respond, and (2) the difficulty of implementing ``up to date.'' CMS 
clarified during the MAP PAC/LTC workgroup meeting that the proposed 
Patient/Resident COVID-19 Vaccine measure does not have exclusions for 
patient refusals because the proposed measure was intended to report 
raw rates of vaccination and this information is important for consumer 
choice. Additionally, CMS believes that PAC providers, including HHAs, 
are in a unique position to leverage their care processes to increase 
vaccination coverage in their settings to protect patients and prevent 
negative outcomes. CMS also clarified that the measure defines ``up to 
date'' in a manner that provides flexibility to reflect future changes 
in CDC guidance. However, the MAP PAC/LTC workgroup reached a 60 
percent majority on the vote of ``Do not support for rulemaking'' for 
this measure.\103\
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    \103\ National Quality Forum MAP Post-Acute Care/Long Term Care 
Workgroup Materials. Meeting Summary--MUC Review Meeting. Last 
accessed March 23, 2023. https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=97960.
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    The MAP received 10 comments by interested parties in response to 
the MAP PAC/LTC workgroup recommendations. Interested parties generally 
understood the importance of COVID-19 vaccinations in preventing the 
spread of COVID-19 infections. However, a majority of commenters did 
not recommend the inclusion of this measure for the HH QRP and raised 
several concerns. Specifically, several commenters were concerned about 
vaccine hesitancy, HHAs' inability to influence measure results based 
on factors outside of their control. Commenters also noted that the 
proposed Patient/Resident COVID-19 Vaccine measure has not been fully 
tested, and encouraged CMS to monitor the measure for unintended 
consequences and ensure that the measure has meaningful results. A 
commenter was in support of the proposed Patient/Resident COVID-19 
Vaccine measure and provided recommendations for CMS to consider. 
Including an exclusion for medical contraindications and submitting the 
measure for CBE endorsement.
    Finally, the MAP Coordinating Committee convened on January 24, 
2023, and raised concerns which were previously discussed in the PAC/
LTC workgroup, such as potential for selection bias based on the 
patient's vaccination status. CMS noted that this measure does not have 
exclusions for patient refusals, since this is a process measure 
intended to report raw rates of vaccination, and is not intended to be 
an HHA action measure. CMS acknowledged that a measure accounting for 
variables (such as HHA actions to vaccinate patients) could be 
important, but CMS is focused on a measure which will provide and 
publicly report vaccination rates for consumers given the importance of 
this information to patients and their caregivers.
    The MAP Coordinating Committee recommended three changes to make 
the Patient/Resident COVID-19 Vaccine measure acceptable to the 
Committee: (i) reconsider exclusions for medical contraindications, 
(ii) complete reliability and validity measure testing, and (iii) seek 
CBE endorsement. The MAP Coordinating Committee ultimately reached 
majority on its voted recommendation of `Do not support with potential 
for mitigation.' We refer readers to the final MAP recommendations, 
titled 2022-2023 MAP Final Recommendations \104\ and the MAP Final 
Report.\105\ Despite the Coordinating Committee's vote, we believe it 
is still important to propose the Patient/Resident COVID-19 Vaccine 
measure for the HH QRP. As we stated in section III.C.3.e of this final 
rule, we did not include exclusions for medical contraindications 
because the PFAs we met with told us that a measure capturing raw 
vaccination rate, irrespective of any medical contraindications, will 
be most helpful in patient and family/caregiver decision-making. We do 
plan to conduct reliability and validity measure testing once we have 
collected enough data and intend to submit the measure to the CBE for 
consideration of endorsement when feasible.
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    \104\ 2022-2023 MAP Final Recommendations, can be found at 
https://www.qualityforum.org/map/.
    \105\ The Final MAP Report is available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=98102.
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e. Quality Measure Calculation
    The proposed Patient/Resident COVID-19 Vaccine measure is an 
assessment-based process measure that reports the percent of home 
health patients that are up to date on their COVID-19 vaccinations per 
CDC's latest guidance.\106\ This measure has no exclusions and is not 
risk adjusted.
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    \106\ The definition of ``up to date'' may change based on CDC's 
latest guidelines and can be found on the CDC web page, ``Stay Up to 
Date with COVID-19 Vaccines Including Boosters,'' at https://www.cdc.gov/coronavirus/2019-ncov/vaccines/stay-up-to-date.html 
(updated March 2, 2023).
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    The numerator for this measure will be the total number of home 
health patients that are up to date with the COVID-19 vaccine during 
the reporting period. The denominator for the measure will be the total 
number of home health quality episodes with an End of Care OASIS 
(Discharge, Transfer or Death at Home) during the reporting period.
    The data source for the final Patient/Resident COVID-19 Vaccine 
measure is the OASIS assessment instrument for home health patients. 
For more information about the final data submission requirements, we 
refer readers to section III.E.2 of this final rule. For additional 
technical information about this proposed measure, we refer readers to 
the draft measure specifications document titled Patient-Resident-
COVID-Vaccine-Draft-Specs.pdf available at: https://www.cms.gov/files/document/patient-covid-vaccine-measure-hh-qrp-specifications.pdf.
    We solicited public comments on our proposal to adopt the COVID-19 
Vaccine: Percent of Patients/Residents Who Are Up to Date measure 
beginning with the CY 2025 HH QRP. The following is a summary of the 
comments we received on our proposal to adopt the COVID-19 Vaccine: 
Percent of Patients/Residents Who Are Up to Date measure and responses 
to comments.
    Comment: Commenters who supported the Patient/Resident COVID-19 
vaccine QM noted the continued risk of infection, particularly among 
older adults, and demonstrated effectiveness of the vaccine were cited 
as the main reasons for supporting this CMS proposal. Additionally, 
respondents stated that public reporting of this data will be 
beneficial to patients and caregivers when making decisions about 
choosing an HHA since this would help to incentivize agencies to 
provide

[[Page 77766]]

quality education on vaccination to beneficiaries.
    Response: We thank the commenters for their support and agree that 
the Patient/Resident COVID-19 Vaccine measure would provide patients 
and caregivers, including those who are at high risk for developing 
serious complications from COVID-19, with valuable information they can 
consider when choosing an HHA.
    Comment: Some commenters opposed the COVID-19 resident/patient 
measure because it does not have exclusions, specifically for those who 
have religious exemptions, for medical contraindications, and for 
refusals.
    Response: As we stated in section III.3.e of this CY 2024 HH PPS 
final rule, we did not include exclusions for medical contraindications 
because feedback from a patient and family focus group that provided 
feedback on the measure emphasized that a measure capturing raw 
vaccination rate, irrespective of any medical contraindications, would 
be most helpful in patient and family/caregiver decision-making. Based 
on this feedback, we believe excluding patients/residents with 
contraindications from the measure would distort the intent of the 
measure of providing raw COVID-19 patient vaccination rates, while 
making the information more difficult for residents/caregivers to 
interpret, and hence did not include any exclusions.
    Comment: Some commenters opposed the measure because of burden 
concerns. The inclusion of another data element in OASIS and 
documentation of compliance with the continually changing definition of 
``up to date'' were described as likely to cause undue burden to 
agencies.
    Response: CMS believes HHAs should be assessing whether patients 
are up to date with COVID-19 vaccination as a part of their routine 
care and infection control processes, and during our item testing, we 
heard from HHAs that they are routinely inquiring about COVID-19 
vaccination status at start of care. To ensure appropriate coding of 
the assessment item, HHAs would be able to use a range of sources of 
information to obtain a patient's vaccination status, such as patient 
interviews, medical records, proxy response, and vaccination cards 
provided by the patient or their caregivers. As with any assessment 
item in the OASIS, we will also publish coding guidance and 
instructions to further support HHAs in collection of these data.
    Comment: Some commenters raised the issue that the measure has not 
been tested for validity and reliability, nor was it supported by a 
consensus-based entity was also frequently cited as a reason for 
opposing its inclusion.
    Response: CMS acknowledges that we have not yet tested the measure 
for reliability and validity, we have tested the item proposed for the 
OASIS to capture data for this measure and its feasibility and 
appropriateness. Since a COVID-19 vaccination item does not yet exist 
within the OASIS, we developed clinical vignettes to test item-level 
reliability of a draft Patient/Resident COVID-19 Vaccine measure. The 
clinical vignettes were a proxy for patient records with the most 
common and challenging cases HHAs would encounter, similar to the 
approach that we use to train HHAs on all new assessment items, and the 
results demonstrated strong agreement. We have not completed validity 
testing for this QM since the data element is not yet on OASIS. 
However, this QM is modeled after other vaccination items and quality 
measures used in PAC settings. We intend to complete reliability and 
validity testing for this specific Patient/Resident COVID-19 Vaccine 
measure once the COVID-19 vaccination item has been added to the OASIS 
and we have collected sufficient data. Additionally, we solicited 
feedback from our TEP on the proposed assessment item and its 
feasibility. No concerns were raised by the TEP regarding obtaining the 
information that would be required to complete the new COVID-19 
vaccination item.
    Comment: Some commenters did not support adoption of this measure 
in light of the Administration's announcement of the end of the COVID-
19 PHE on May 11, 2023. Tracking vaccination status was described by 
some commenters as no longer relevant based on the end of the PHE and 
the vaccine mandate.
    Response: Despite the announcement of the end of the COVID-19 PHE, 
many people continue to be affected by COVID-19, particularly seniors, 
the immunocompromised, and people with disabilities. As mentioned in 
the End of COVID-19 Public Health Emergency Fact Sheet,\107\ our 
response to the spread of SARS-CoV-2, the virus that causes COVID-19, 
remains a public health priority. Even beyond the end of the COVID-19 
PHE, we will continue to work to protect Americans from the virus and 
its worst impacts by supporting access to COVID-19 vaccines, 
treatments, and tests, including for people without health insurance. 
Given the continued impacts of COVID-19, we believe it is important to 
promote resident vaccination and education, which this measure aims to 
achieve. Accordingly, we are aligning our approach with those for other 
infectious diseases, such as influenza, by encouraging ongoing COVID-19 
vaccination.\108\ Further, published coding guidance will indicate how 
to code the item taking into account CDC guidelines, and HHAs could 
access the CDC website at any time to find the definition of up to 
date. Lastly, this measure as proposed for the HH QRP is not associated 
with the PHE declaration, or the Conditions of Participation. This 
measure is being proposed to address our priority to empower consumers 
to make informed health care choices through resident-directed quality 
measures and public transparency, as with previous vaccination 
measures.
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    \107\ Fact Sheet: End of the COVID-19 Public Health Emergency. 
U.S. Department of Health and Human Services. May 9, 2023. https://www.hhs.gov/about/news/2023/05/09/fact-sheet-end-of-the-covid-19-public-health-emergency.html.
    \108\ Medicare and Medicaid Programs; Policy and Regulatory 
Changes to the Omnibus COVID-19 Health Care Staff Vaccination 
Requirements; Additional Policy and Regulatory Changes to the 
Requirements for Long-Term Care (LTC) Facilities and Intermediate 
Care Facilities for Individuals With Intellectual Disabilities 
(ICFs-IID) To Provide COVID-19 Vaccine Education and Offer 
Vaccinations to Residents, Clients, and Staff; Policy and Regulatory 
Changes to the Long Term Care Facility COVID-19 Testing 
Requirements.
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    Comment: Commenters also suggested that information on COVID-19 
vaccination status was already tracked by other healthcare agencies, 
and believe this measure and item constituted an unnecessary 
duplication of effort.
    Response: We believe that COVID-19 vaccination for high-risk 
populations, such as those receiving HH care, is of paramount 
importance. This is particularly important for HH patients, who tend to 
be older and thus more vulnerable to serious complications from COVID-
19. Therefore, if a patient is not vaccinated at start of care, the HHA 
has the opportunity to continue to educate the patient and provide 
information on why they should receive the vaccine, irrespective of 
whether the patient has received prior education.
    Comment: A few commenters argued that the measure itself is not 
actually a reflection of an agency's quality, and that just asking a 
person if they are up to date on their vaccination does not improve 
vaccination uptake, infection control, nor does it provide context for 
their answers or meaningful data for quality of care or outcomes.
    Response: We believe the COVID-19 vaccination is a beneficial 
addition to the other vaccination measure in the HH QRP. We believe it 
is an indirect measure of provider action since HHAs have the 
opportunity to encourage, as

[[Page 77767]]

well as coordinate, vaccinations among patients. This is particularly 
important for HH patients, who tend to be older and thus more 
vulnerable to serious complications from COVID-19. CDC data show that, 
among people age 50 and older, those who have received both a primary 
vaccination series and booster doses have a lower risk of 
hospitalization and dying from COVID-19 than their non-vaccinated 
counterparts.\109\ Additionally, a second vaccine booster dose has been 
shown to reduce risk of severe outcomes related to COVID-19, such as 
hospitalization or death, for older patients. The number of patients 
who have been vaccinated in a HHA does not impact a HHA's ability to 
successfully report the measure to comply with the requirements of the 
HH QRP. Finally, we appreciate the commitment of HHAs and HHA efforts 
at ensuring patients are educated and encouraged to become and remain 
up to date with their COVID-19 vaccinations.
---------------------------------------------------------------------------

    \109\ Centers for Disease Control and Prevention. Rates of 
laboratory-confirmed COVID-19 hospitalizations by vaccination 
status. COVID Data Tracker. 2023, February 9. Last accessed March 
22, 2023. https://covid.cdc.gov/covid-data-tracker/#covidnet-hospitalizations-vaccination.
---------------------------------------------------------------------------

    Comment: Multiple commenters described that despite efforts to 
educate and encourage patients to stay up to date on their vaccines, 
many still decline to take them. Therefore, home health agencies cannot 
control patient decisions around vaccination and many PAC settings 
cannot deliver the vaccines themselves even if patients wanted them. 
Therefore, the ability to affect the measure was perceived as being out 
of a HH agency's control and more appropriate for primary care.
    Response: We acknowledge that individual residents have a choice 
regarding whether to receive a COVID-19 vaccine or booster dose(s), but 
patients and their caregivers also have choices about selecting PAC 
providers, and it is our role to empower them with the information they 
need to make an informed decision by publicly reporting the data we 
receive from HHAs on this measure. We understand that despite a HHA's 
best efforts, there may be instances where a patient may choose not to 
receive a primary or booster dose of the COVID-19 vaccine. However, we 
want to remind HHAs that this measure does not mandate patients be up 
to date with their COVID-19 vaccine. We are unaware of any access 
issues to COVID-19 vaccines or vaccine production delays. This measure 
does not require HHAs to administer the vaccine themselves. They could 
arrange for the patient to obtain the vaccine via a primary care 
provider or work with community pharmacies.
    Comment: Some commenters suggested that in order to make the 
measure more appropriate for the home health environment, CMS should 
focus on promotion of the vaccine rather than whether or not patients 
were up to date. This could include a count of the number of documented 
encounters agency staff had with a patient and/or their family 
concerning the COVID-19 vaccine or promoting and/or offering the COVID-
19 vaccine as the metric.
    Response: We thank commenters for alternate measure suggestions. We 
believe the measure as currently specified provides the most 
appropriate information for the public.
    Comment: Some commenters also asked CMS to consider how the measure 
may lead to bias. Commenters suggested that home health agencies 
serving patient populations that have demonstrated higher vaccine 
uptake would have an advantage over home health providers who serve 
populations with vaccine hesitancy, and this could also potentially 
lead to providers avoiding the care of patients who are not up to date 
or do not want the COVID vaccine.
    Response: We do not anticipate issues with patient access to HH 
care if this measure is adopted. Use or adoption of other vaccination 
measures in PAC settings have not previously impacted access to care. 
We believe HHAs consider patient care of paramount importance and will 
not refuse care to patients based on their vaccination status. We also 
believe HHAs should use clinical judgement to determine if a patient is 
eligible to receive the vaccination. We intend to monitor closely 
whether any proposed change to the HH QRP has unintended consequences 
on access to care. Should we find any unintended consequences, we will 
take appropriate steps to address these issues in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing our proposal to adopt the Patient/Resident COVID-19 Vaccine 
measure as an assessment-based measure beginning with the CY 2025 HH 
QRP as proposed.

E. Form, Manner, and Timing of Data Submission Under the HH QRP

1. Final Schedule for Data Submission of the Discharge Function Score 
Measure Beginning With the CY 2025 HH QRP
    As discussed in section III.C.1. of the final rule, we proposed to 
adopt the Discharge Function Score quality measure beginning with the 
CY 2025 HH QRP. The measure first public reported in January 2025 will 
be based on data reported on the OASIS assessment beginning with 
patients discharged between April 1, 2024 and March 31, 2024 for the CY 
2025 HH QRP. Because the Discharge Function Score quality measure is 
calculated based on data that are currently submitted to the Medicare 
program, there will be no additional information collection required 
from HHAs.
    We solicited public comments on this proposal to utilize OASIS 
assessment data for the Discharge Function Score quality measure 
beginning with assessment data from patients discharged between April 
1, 2024 and March 31, 2024 for the CY 2025 HH QRP. We received no 
comments addressing this proposal. Therefore, after consideration of 
the public comments we received, we are finalizing our proposal to 
utilize already collected data to report the Discharge Function measure 
beginning in CY 2025.
2. Final Schedule for Data Submission of the COVID-19 Vaccine: Percent 
of Patients/Residents Who Are Up to Date Beginning With the CY 2026 HH 
QRP
    As discussed in section III.C.3 of the final rule, we are proposed 
to adopt the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up 
to Date quality measure beginning with the CY 2025HH QRP. If finalized 
as proposed, HHAs will be required to report these OASIS assessment 
data beginning with patients discharged between January 1, 2025 and 
March 31, 2025 for the CY 2025 HH QRP.
    If finalized as proposed, we will revise the OASIS in order for 
HHAs to submit data pursuant to this finalized policy. A new item will 
be added to the current item set to collect information on whether a 
patient is up to date with their COVID-19 vaccine at the time of 
discharge from the HHA. A draft of the new item is available in the 
COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date 
Draft Measure Specifications at https://www.cms.gov/files/document/patient-covid-vaccine-measure-hh-qrp-specifications.pdf.
    We solicited public comments on this proposal to require HHAs to 
report OASIS assessment data for the COVID-19 Vaccine: Percent of 
Patients/Residents Who Are Up to Date quality measure. HHAs will be 
required to submit data beginning with patients discharged between 
January 1, 2025 and March 31, 2025 for public reporting of this QM in 
the CY 2026 HH QRP. The

[[Page 77768]]

following is a summary of the comments we received on our proposal to 
report OASIS assessment data for the COVID-19 Vaccine for Patients 
measure and our response to the comments.
    Comment: Some commenters raised burden concerns related to the 
COVID-19 vaccine for patients data element. The inclusion of another 
data element in OASIS and documentation of compliance with the 
continually changing definition of ``up to date'' were described as 
likely to cause undue burden to agencies.
    Response: CMS believes HHAs should be assessing whether patients 
are up to date with COVID-19 vaccination as a part of their routine 
care and infection control processes, and during our item testing, we 
heard from HHAs that they are routinely inquiring about COVID-19 
vaccination status at start of care. To ensure appropriate coding of 
the assessment item, HHAs would be able to use a range of sources of 
information to obtain a patient's vaccination status, such as patient 
interviews, medical records, proxy response, and vaccination cards 
provided by the resident or their caregivers. As with any assessment 
item in the OASIS, we will also publish coding guidance and 
instructions to further support HHAs in collection of these data.
    After consideration of the public comments we received, we are 
finalizing our proposal to require HHAs to report OASIS assessment data 
for the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to 
Date quality measure.
3. Data Elements Finalized for Removal From OASIS-E
    CMS plans to remove two OASIS items, the M0110--Episode Timing and 
M2200--Therapy Need effective January 1, 2025. These items are no 
longer used in the calculation of quality measures already adopted in 
the HH QRP, nor are they being used currently for previously 
established purposes unrelated to the HH QRP, including payment, 
survey, the HH VBP Model or care planning.
    CMS finalizes the removal of items from OASIS-E from the specific 
time points during a home health episode as outlined in Table C3.
[GRAPHIC] [TIFF OMITTED] TR13NO23.052

    For a discussion in the reduction in burden associated with the 
removal of these items, see section IX of this final rule.
    We requested public comment on our proposal to remove the M0110--
Episode Timing and M2200--Therapy Need items from OASIS-E, effective 
January 1, 2025. The following summarizes comments received on this 
proposal and our response.
    Comment: Commenters unanimously supported the removal of the 
M0110--Episode Timing data element.
    Response: CMS appreciates support for the removal of this data 
element.
    Comment: Most commenters supported the removal of the M2200--
Therapy Need data element.
    Response: CMS appreciates support for the removal of this data 
element.
    Comment: Some commenters opposed removal of the M2200--Therapy 
Needs data element out of concern that it would limit CMS' ability to 
evaluate a patient's therapy need.
    Response: CMS appreciates the concern from commenters regarding 
CMS's ability to evaluate patient's therapy needs. With a broad set of 
new and current data elements on the OASIS-E assessment tool, CMS has 
improved the ability of providers to assess functional status and 
therapy needs that allows for the removal of the M2200-Therapy Need 
data element.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the M0110--Episode Timing and M2200--
Therapy Need items from OASIS-E, effective January 1, 2025 as proposed.

F. Policies Regarding Public Display of Measure Data for the HH QRP

1. Background
    Section 1899B(g)(1) of the Act requires, in part, that the 
Secretary provide for public reporting of PAC provider performance, 
including HHAs, on quality measures under section 1899B(c)(1) of the 
Act, including by establishing procedures for making available to the 
public information regarding the performance of individual PAC 
providers with respect to such measures. Section 1899B(g)(2) requires, 
in part, that CMS give HHAs opportunity to review and submit 
corrections to the data and information to be made public under section 
1899B(g)(1) prior to such data being made public. Section 1899B(g)(3) 
of the Act requires that such procedures provide that the data and 
information with respect to a measure and PAC provider is made publicly 
available beginning not later than 2 years after the applicable 
specified application date applicable to such measure and provider. 
Measure data are currently publicly displayed on the Care Compare 
website, an interactive web tool that assists individuals by providing 
information on quality of care. For more information on Care Compare, 
we refer readers to our website at: https://www.medicare.gov/care-compare/.
2. Public Reporting of the Cross-Setting Functional Discharge Measure 
Beginning With the CY 2025 HH QRP
    We are finalizing our policy to begin publicly displaying data for 
the DC Function measure beginning with the January 2025 refresh of Care 
Compare,

[[Page 77769]]

or as soon as technically feasible in a subsequent refresh, using data 
collected from April 1, 2023 through March 31, 2024 (Quarter 2 2023 
through Quarter 1 2024). If finalized as proposed, an HHAs DC Function 
score will be displayed based on four quarters of data. Provider 
preview reports will be distributed in October 2024, or as soon as 
technically feasible. Thereafter, an HHA's DC Function score will be 
publicly displayed based on four quarters of data and updated 
quarterly. To ensure the statistical reliability of the data, we are 
finalizing that we will not publicly report an HHAs performance on the 
measure if the HHA had fewer than 20 eligible cases in any quarter. 
HHAs that have fewer than 20 eligible cases will be distinguished with 
a footnote that notes that the number of cases/patient stays is too 
small to report.
    We solicited public comments on this proposal to publicly report 
the Discharge Function Score quality measure beginning with CY 2025 HH 
QRP. The following is a summary of the comments we received on our 
proposal to publicly report the Discharge Function measure and our 
responses to the comments.
    Comment: Many commenters supported public reporting of the DC 
Function measure.
    Response: We thank the commenters for their support to publicly 
report the proposed measure.
    Comment: Some commenters supported public reporting of the DC 
Function measure but suggested a longer delay in reporting than the 
timeframe discussed in the proposed rule.
    Response: CMS appreciates the feedback received related to the time 
frame for public reporting. Since this measure will be derived from 
assessment data already available on the OASIS, results will be 
available to providers in 2024 and the Discharge Function measure will 
be able to be reported in CY2025. This will afford providers the time 
to review their measure results, CMS sufficient time to provide 
additional provider education, and replacement of the Application of 
Functional Assessment/Care Plan with the Discharge Function measure in 
addressing quality of care related to functional status more 
comprehensively.
    After consideration of the public comments we received, we are 
finalizing our proposal to publicly report the Discharge Function 
measure beginning in CY2025.
3. Public Reporting of the Transfer of Health Information to the 
Patient Post-Acute Care and Transfer of Health Information to the 
Provider Post-Acute Care Measures Beginning With the CY 2025 HH QRP
    We are finalizing our decision to begin publicly displaying data 
for the measures: (1) Transfer of Health (TOH) Information to the 
Provider--Post-Acute Care (PAC) Measure (TOH-Provider); and (2) 
Transfer of Health (TOH) Information to the Patient--Post-Acute Care 
(PAC) Measure (TOH-Patient). We will begin displaying data with the 
January 2025 Care Compare refresh or as soon as technically feasible. 
We adopted these measures in the calendar year (CY) 2020 HH Prospective 
Payment System (PPS) final rule (84 FR 60478). In response to the 
COVID-19 public health emergency (PHE), we released an interim final 
rule (85 FR 27595 through 27597) which delayed the compliance date for 
the collection and reporting of the TOH-Provider and TOH-Patient 
measures. The compliance date for the collection and reporting of the 
TOH-Provider and TOH-Patient measures was revised to January 1, 2023 in 
the calendar year (CY) 2022 Home Health PPS Rate Update final rule (86 
FR 62386 through 62390). Data collection for these two assessment-based 
measures began with patients with SOC/ROCs and discharged on or after 
January 1, 2023.
    We proposed to publicly display data for these two assessment-based 
measures based on four rolling quarters, initially using discharges 
from April 1, 2023 through March 31, 2024 (Quarter 2 2023 through 
Quarter 1 2024), and to begin publicly reporting these measures with 
the January 2025 refresh of Care Compare, or as soon as technically 
feasible in a subsequent refresh. To ensure the statistical reliability 
of the data, we proposed that we will not publicly report an HHA's 
performance on the measure if the HHA had fewer than 20 eligible cases 
in any quarter. HHAs that have fewer than 20 eligible cases will be 
distinguished with a footnote that notes that the number of quality 
episodes is too small to report.
    We invited public comment on our proposal for the public display of 
the (1) Transfer of Health (TOH) Information to the Provider--Post-
Acute Care (PAC) Measure (TOH-Provider) and (2) Transfer of Health 
(TOH) Information to the Patient--Post-Acute Care (PAC) Measure (TOH-
Patient) assessment-based measures. The following is a summary of the 
comments received:
    Comment: Most commenters support the public reporting of the 
Transfer of Health (TOH) Information to the Provider--Post-Acute Care 
(PAC) Measure (TOH-Provider) and Transfer of Health (TOH) Information 
to the Patient--Post-Acute Care (PAC) Measure (TOH-Patient) assessment-
based measures.
    Response: CMS thanks commenters for the support of this proposal.
    Comment: A few commenters suggested delaying by a few years the 
public reporting of the TOH measures to afford more time for review of 
data output or to incorporate further changes to the measures.
    Response: Providers will have the opportunity to review their TOH 
scores via provider reports in 2023 in advance of public reporting. 
Consistent with the implementation of these measures in other PAC 
settings, we began providing provider education in 2022. Additionally, 
our helpdesks have been responding to provider questions about these 
measures since data collection began for TOH data elements in January 
2023. We believe the TOH measures have addressed substantive public 
feedback that resulted in the creation of separate patient and provider 
measures.
    After consideration of the public comments we received, we are 
finalizing our proposal to publicly report the Transfer of Health (TOH) 
Information to the Provider--Post-Acute Care (PAC) Measure (TOH-
Provider) and Transfer of Health (TOH) Information to the Patient--
Post-Acute Care (PAC) Measure (TOH-Patient) assessment-based measures, 
as proposed beginning with the January 2025 Care Compare refresh or as 
soon as technically feasible after.
4. Public Quarterly Reporting of the COVID-19 Vaccine: Percent of 
Patients/Residents Who Are Up to Date Beginning With the CY 2026 HH QRP
    We are finalizing our policy to begin publicly displaying quarterly 
data for the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up 
to Date measure beginning with the January 2026 refresh of Care Compare 
or as soon as technically feasible after using data collected for Q1 
2025 (January 1, 2025 through March 31, 2025). As noted previously, we 
are displaying the measure, ``Patient/Resident level COVID-19 Vaccine 
percent of patients who are up to date'' based on one quarter of data. 
Provider preview reports will be distributed in October 2025, or as 
soon as technically feasible. Thereafter, the percent of HHA patients 
who are up to date with their COVID-19 vaccinations will be publicly 
displayed based on one quarter of data per report and updated with new 
data quarterly. To ensure the statistical

[[Page 77770]]

reliability of the data, we proposed that we will not publicly report 
an HHAs performance on the measure if the HHA had fewer than 20 
eligible cases in any quarter. HHAs that have fewer than 20 eligible 
cases will be distinguished with a footnote that notes that the number 
of quality episodes is too small to report.
    We sought public comment on the proposal for the public display of 
the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date 
measure beginning with the January 2026 refresh of Care Compare, or as 
soon as technically feasible after. The following summarizes comments 
received on this proposal and our response.
    Comment: Some commenters supported publicly reporting the COVID-19 
measure for the benefit the measure information would provide to the 
public.
    Response: CMS thanks the commenters for their support of this 
proposal.
    Comment: Some commenters suggested that without CBE endorsement and 
measure testing, public reporting should be delayed. Others suggested 
reporting the results of patient COVID-19 vaccination status without 
characterizing the result as a quality measure.
    Response: CMS has a long history of reporting vaccination measures 
to support improvement of care and outcomes in healthcare settings. CMS 
believe the public reporting of the COVID-19 patient vaccination 
measure will be consistent with prior vaccination QMs and addresses an 
important, ongoing health concern.
    After consideration of the public comments we received, we are 
finalizing our proposal to publicly report the COVID-19 Vaccine: 
Percent of Patients/Residents Who Are Up to Date measure as proposed 
beginning with the January 2026 refresh of Care Compare, or as soon as 
technically feasible after.

G. Health Equity Update

1. Background
    In the CY 2023 Home Health Payment Rate Update final rule (87 FR 
66866), we included a Request for Information (RFI) on several 
questions related to a proposed health equity measure concept. CMS 
defines health equity as ``the attainment of the highest level of 
health for all people, where everyone has a fair and just opportunity 
to attain their optimal health regardless of race, ethnicity, 
disability, sexual orientation, gender identity, socioeconomic status, 
geography, preferred language, or other factors that affect access to 
care and health outcomes.'' \110\ CMS is working to advance health 
equity by designing, implementing, and operationalizing policies and 
programs that support health for all the people served by our programs 
and models, eliminating avoidable differences in health outcomes 
experienced by people who are disadvantaged or underserved, and 
providing the care and support that our beneficiaries need to thrive. 
CMS's goals outlined in the CMS Framework for Health Equity 2022-2023 
\111\ are in line with Executive Order 13985, on Advancing Racial 
Equity and Support for Underserved Communities Through the Federal 
Government (January 25, 2021).\112\ The goals included in the CMS 
Framework for Health Equity include: strengthening CMS's infrastructure 
for assessment, creating synergies across the health care system to 
drive structural change, and identifying and working to eliminate 
barriers to CMS-supported benefits, services, and coverage. These goals 
also support suggested policies outlined in the Executive Order 14095, 
on Increasing Access to High-Quality Care and Supporting Caregivers 
(April 18, 2023), that seeks to address improvement in the provision of 
long-term care and support the caregivers who support patient 
care.\113\
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    \110\ Centers for Medicare and Medicaid Services. Available at 
https://www.cms.gov/pillar/health-equity. Accessed February 1, 2023.
    \111\ https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
    \112\ Executive Order 13985, on ``Advancing Racial Equity and 
Support for Underserved Communities Through the Federal 
Government,'' can be found at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    \113\ The Executive Order14095 on Increasing Access to High-
Quality Care and Supporting Caregivers can be found at: https://www.whitehouse.gov/briefing-room/presidential-actions/2023/04/18/executive-order-on-increasing-access-to-high-quality-care-and-supporting-caregivers/.
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    In addition to the CMS Framework for Health Equity, CMS seeks to 
``advance health equity and whole-person care'' as one of eight goals 
comprising the CMS National Quality Strategy (NQS).\114\ The NQS 
identifies a wide range of potential quality levers that can support 
our advancement of equity, including: (1) establishing a standardized 
approach for patient-reported data and stratification; (2) employing 
quality and value-based programs to publicly report and incentivize the 
closing of equity gaps; and, (3) developing equity-focused performance 
metrics, regulations, oversight strategies, and quality improvement 
initiatives. The NQS also acknowledges the contribution of structural 
racism and other systemic injustices to the persistent disparities that 
underlie our healthcare system.
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    \114\ Centers for Medicare & Medicaid Services. What is the CMS 
Quality Strategy? Available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
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    Racial disparities in health, in particular, are estimated to cost 
the U.S. an estimated $93 billion in excess medical costs and $42 
billion in lost productivity per year, in addition to economic losses 
due to premature deaths.\115\ Racial and ethnic diversity has increased 
over recent decades in the United States and territories. An increase 
in the percentage of people who self-identify as two or more races in 
US Census Bureau data accounts for most of the increase in diversity, 
rising from 2.9 percent to 10.2 percent between 2010 and 2020.\116\ 
Social determinants of health, including social, economic, 
environmental, and community conditions, may have a stronger influence 
on the population's health and well-being than services delivered by 
practitioners and healthcare delivery organizations.\117\
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    \115\ Ani Turner, The Business Case for Racial Equity, A 
Strategy for Growth, W.K. Kellogg Foundation and Altarum, April 
2018.
    \116\ 2022 National Healthcare Quality and Disparities Report, 
page 15. Content last reviewed November 2022. Agency for Healthcare 
Research and Quality, Rockville, MD. https://www.ahrq.gov/research/findings/nhqrdr/nhqdr22/index.html.
    \117\ 2022 National Healthcare Quality and Disparities Report. 
Content last reviewed November 2022, page 2. Agency for Healthcare 
Research and Quality, Rockville, MD. https://www.ahrq.gov/research/findings/nhqrdr/nhqdr22/index.html.
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    Measure stratification helps identify disparities by calculating 
quality measure outcomes separately for different beneficiary 
subpopulations. By looking at measure results for different populations 
separately, CMS and providers can see how care outcomes may differ 
between certain patient populations in a way that will not be apparent 
from an overall score (that is, a score averaged over all 
beneficiaries). This helps CMS to better fulfill their health equity 
goals. For example, certain quality measures related to oral healthcare 
outcomes for children, when stratified by race, ethnicity, and income, 
show how important health disparities have been narrowed, because 
outcomes for children in the lowest income households and for Black and 
Hispanic children improved faster than outcomes for children in the 
highest income households or for White children.\118\

[[Page 77771]]

These differences in outcomes will not be apparent without 
stratification.
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    \118\ 2022 National Healthcare Quality and Disparities Report, 
page 6. Content last reviewed November 2022. Agency for Healthcare 
Research and Quality, Rockville, MD. https://www.ahrq.gov/research/findings/nhqrdr/nhqdr22/index.html.
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    Additionally, the RFI solicited public comments on a potential 
health equity structural composite measure. We refer readers to the CY 
2023 Home Health Payment Rate Update final rule (87 FR 66866) for a 
summary of the public comments and suggestions received in response to 
the health equity RFI.
    We took these comments into account, and we continue to work to 
develop policies, quality measures, and measurement strategies on this 
important topic. After considering public comments, CMS decided to 
convene a health equity technical expert panel to provide additional 
input to inform the development of health equity quality measures. The 
work of this technical expert panel is described in detail in the 
following section.
2. Home Health and Hospice Health Equity Technical Expert Panel
    To support new health equity measure development, the Home Health 
and Hospice Health Equity Technical Expert Panel (Home Health & Hospice 
HE TEP) was convened by a CMS contractor in Fall 2022. The Home Health 
& Hospice HE TEP comprised health equity experts from hospice and home 
health settings, specializing in quality assurance, patient advocacy, 
clinical work, and measure development. The TEP was charged with 
providing input on a potential cross-setting health equity structural 
composite measure concept as set forth in the CY 2023 Home Health 
Payment Rate Update final rule noted previously as part of an RFI 
related to the HH QRP Health Equity Initiative. In specific, the TEP 
assessed the face validity and feasibility of the potential structural 
measure. The TEP also provided input on possible confidential feedback 
report options to be used for monitoring health equity. TEP members 
also had the opportunity to provide ideas for additional health equity 
measure concepts or approaches to addressing health equity in hospice 
and home health settings. A summary of the Home Health and Hospice HE 
TEP meetings and proposed TEP recommendations are available at https://mmshub.cms.gov/sites/default/files/HomeHealth-Hospice-Health-Equity-TEP-Report-508c.pdf .
3. Anticipated Future Health Equity Activities
    CMS is committed to developing approaches to meaningfully 
incorporate the advancement of health equity into the HH QRP. We are 
considering health equity measures used in other settings like those in 
acute care that further health equity in post-acute care. We realize 
that the social determinants of health data items in post-acute care 
under the IMPACT Act of 2014 differ from the SDOH data items in the 
acute care health equity quality measures. We could consider a future 
health equity measure like screening for social needs and intervention. 
With 30 to 55 percent of health outcomes attributed to SDOH,\119\ a 
measure capturing and addressing SDOH could encourage providers to 
identify specific needs and connect patients with the community 
resources necessary to overcome social barriers to their wellness. We 
could specify it using the SDOH data items that we currently collect as 
standardized patient assessment data on the OASIS. These SDOH data 
items assess health literacy, social isolation, transportation 
problems, preferred language (including need or want of an 
interpreter), race, and ethnicity. These SDOH data items differ from 
data elements considered as screening items in the acute care settings, 
which are housing instability, food instability, transportation needs, 
utility difficulties, and interpersonal safety. This means that we 
might consider in the future adding the SDOH data items used by acute 
care providers into the HH QRP as we develop future health equity 
quality measures under our HH QRP statutory authority. This supports 
our desire to align quality measures across CMS consistent with the CMS 
path forward for advancing health equity solutions.\120\ Consistent 
with ``The Path Forward: Improving Data to Advance Health Equity 
Solutions'' (CMS OMH, November 2022) we also see value in aligning SDOH 
data items across all care settings and to the United States Core Data 
for Interoperability (USCDI) where applicable and appropriate. The 
USCDI is a standardized set of health data classes and constituent data 
elements for nationwide, interoperable health information exchange, 
including data elements and associated vocabulary standards to support 
computerized, interoperable use of SDOH data.\121\
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    \119\ World Health Organization (WHO). (n.d.). Social 
Determinants of Health. https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1, accessed February 1, 2023.
    \120\ https://www.nejm.org/doi/full/10.1056/NEJMp2215539, 
February 1, 2023.
    \121\ https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi.
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    As we move this important work forward, we will continue to take 
input from interested parties. As of this publication, the Initial 
Proposals for Updating OMB's Race and Ethnicity Statistical Standards, 
(88 FR 5375), has collected public comment. Additionally, the Office of 
the National Coordinator for Health IT (ONC) welcomes submissions 
proposing additional data classes and data elements via the USCDI ONC 
New Data Element and Class (ONDEC) submission system for future 
versions of the USCDI.\122\ In addition, while some of the anticipated 
health equity efforts will proceed through the rulemaking process, 
other activities may be pursued through subregulatory channels, such as 
Open-Door Forums (ODF), Medicare Learning Network (MLN), and public 
summary reports such as TEP reports or information gathering reports 
(IGR).
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    \122\ https://www.healthit.gov/isa/ONDEC.
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    Although we did not directly solicit feedback to our update, we did 
receive some public comments, which we summarize as follows.
    Comment: Commenters supported evaluating the potential for future 
health equity measures. A commenter encouraged CMS to utilize nurses to 
their fullest extent in terms of drawing from their experience and 
expertise. Another suggested that CMS capture information about family 
caregiver status, support offered to the caregiver(s), and caregiver 
experience of care provided to the patient as part of the health equity 
initiative. Lastly, another commenter suggested that CMS require health 
equity strategies in the Conditions of Participation for Home Health 
Agencies and other Medicare and Medicaid participating providers, 
particularly health equity accreditation to encourage greater adoption 
of health equity strategies.
    Response: We thank all the commenters for responding to our update 
on this important CMS priority. We will continue to prioritize our 
efforts to advance health equity by designing, implementing, and 
operationalizing policies and programs that support health for all 
people served by our programs.

H. Finalizing Codification of the HH QRP Data Completion Thresholds

1. Compliance
    Section 1895(b)(3)(B)(v)(I) of the Act requires that, for the CY 
2007 payment determination and subsequent years, each HHA submit to the 
Secretary quality data specified by the Secretary in a form and manner, 
and at a time, specified by the Secretary. As required in accordance 
with subclause (II) for such a year, for any HHA that does not submit 
data in accordance with section 1895(b)(3)(B)(v)(I) of the Act with 
respect to a given calendar year will result in the reduction of the 
annual

[[Page 77772]]

home health market basket percentage increase otherwise applicable to 
an HHA for that calendar year by 2 percentage points. In the CY 2016 HH 
PPS final rule (80 FR 68703 through 68705), we finalized a proposal to 
define the quantity of OASIS assessments each HHA must submit to meet 
the pay-for reporting requirement. We finalized a proposal that 
increased the reporting threshold for HHAs over three years, starting 
with the CY 2017 reporting period. HHAs were required to score at least 
70 percent on the Quality Assessment Only (QAO) metric of pay-for-
reporting performance requirement for CY 2017 (reporting period July 1, 
2015 to June 30, 2016), 80 percent for CY 2018 (reporting period July 
1, 2016 to June 30, 2017) and 90 percent for CY 2019 (reporting period 
July 1, 2017 to June 30, 2018) or be subject to a 2 percentage point 
reduction to the home health market basket update for that reporting 
period. In the 2018 HH PPS final rule (82 FR 51737 through 51738), we 
finalized a policy to apply the 90 percent threshold requirements 
established in the CY 2016 HH PPS rule to the submission of 
standardized patient assessment data beginning with the CY 2019 HH QRP.
2. Proposal To Codify HH QRP Data Completion Thresholds
    In the CY 2024 proposed rule (88 FR 43654), we proposed to codify 
these already-finalized data completeness thresholds at Sec.  
484.245(b)(2)(ii)(A) for measures data collected using the OASIS (88 FR 
43737-38). Under this section, we proposed to codify our requirement 
that HHAs must meet or exceed a data submission threshold set at 90 
percent of all required OASIS and submit the data through the CMS 
designated data submission systems. This threshold would apply to 
required quality measures data and standardized patient assessment data 
adopted into the HH QRP. We also proposed to codify our policy at Sec.  
484.245(b)(2)(ii)(B) that a HHA must meet or exceed this threshold to 
avoid receiving a 2-percentage point reduction to its annual payment 
update for a given CY as codified at Sec.  484.225(b).
    We sought public comment on our proposal to codify in regulations 
text the HH QRP data completion thresholds at Sec.  
484.245(b)(2)(ii)(A) for measures and standardized patient assessment 
elements collected using the OASIS and compliance threshold to avoid 
receiving 2 percentage point reduction as described under Sec.  
484.245(b)(2)(ii)(B). A summary of comments received and CMS response 
to public comments is as follows.
    Comment: Most commenters who addressed this proposal supported 
codification of this regulatory text.
    Response: We thank commenters for their support of this important 
policy.
    Comment: Some commenters supported the goal of codifying the 
proposed regulatory text with some suggested changes. These commenters 
suggested the removal of language ``. . . within 30-days of the 
beneficiary's admission or discharge . . .'' since there are more 
factors than a strict 30-day deadline in the application of submission 
requirements during the calculation of quality assessments only (QAO) 
compliance.
    Response: CMS reviewed the comments that suggest a revision to the 
proposed regulatory text and is in agreement with suggested change. We 
believe that this change will be beneficial to our data collection 
activities because it addresses the overall submission requirements for 
OASIS data collection that assesses overall HHA compliance for each 
submission year, irrespective of the kinds of assessments submitted for 
that given year. CMS is concerned with not only the SOC/ROC and 
discharge assessments, but assessments collected at other timepoints.
    After consideration of the public comments we received, we are 
finalizing our proposal to codify in regulations text the HH QRP data 
completion thresholds with the suggested replacement of text. CMS 
supports the suggested replacement of the timeframe language while 
codifying the following language: ``A home health agency must meet or 
exceed the data submission threshold for each submission year (July 1-
June 30) set at 90 percent of all required OASIS or successor 
instrument records and submitted through the CMS designated data 
submission systems''.

I. Principles for Selecting and Prioritizing HH QRP Quality Measures 
and Concepts Under Consideration for Future Years: Request for 
Information (RFI)

1. Background
    CMS has established a National Quality Strategy \123\ for its 
quality programs which support a resilient, high-value health care 
system promoting quality outcomes, safety, equity and accessibility for 
all individuals. The CMS National Quality Strategy is foundational for 
contributing to improvements in health care, enhancing patient 
outcomes, and informing consumer choice. To advance these goals, CMS 
leaders from across the Agency have come together to move towards a 
building-block approach to streamline quality measures across CMS 
quality programs for the adult and pediatric populations. This 
``Universal Foundation'' \124\ of quality measures will focus provider 
attention, reduce burden, identify disparities in care, prioritize 
development of interoperable, digital quality measures, allow for 
cross-comparisons across programs, and help identify measurement gaps. 
The development and implementation of the Preliminary Adult and 
Pediatric Universal Foundation Measures will promote the best, safest, 
and most equitable care for individuals as we all come together on 
these critical quality areas.
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    \123\ Schreiber M, Richards A, Moody-Williams J, Fleisher L. The 
CMS National Quality Strategy: a person-centered approach to 
improving quality. Centers for Medicare and Medicaid Services. June 
6, 2022. Available at: https://www.cms.gov/blog/cms-national-quality-strategy-person-centered-approach-improving-quality. Opens 
in new tab.
    \124\ Jacobs D, Schreiber M, Seshamani M, Tsai D, Fowler E, 
Fleisher L. Aligning Quality Measures across CMS--The Universal 
Foundation. N Engl J Med 2023; 338:776-779. DOI: 10.1056/
NEJMp2215539.
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    In alignment with the CMS National Quality Strategy, the HH QRP 
endeavors to move towards a more parsimonious set of measures while 
continually improving the quality of health care for beneficiaries. In 
the CY 2024 proposed rule, we requested information on existing gaps in 
HH QRP measures and solicited public comment on either fully developed 
HH measures, fully developed measures in other programs that may be 
appropriate for the HH QRP, and measurement concepts that could be 
developed into HH QRP measures, to fill these measurement gaps (88 FR 
43738-40). While we will not be responding to specific comments 
submitted in response to this RFI in the CY2024 HH PPS final rule, we 
have summarized the comments received, and intend to use this input to 
inform future policies.
    This RFI consisted of four sections. The first section was a 
background. The second section discussed a general framework or set of 
principles that CMS utilizes to identify future HH QRP measures. The 
third section drew from an environmental scan conducted to identify HH 
QRP measurement gaps, and measures or measure concepts that could be 
used to fill these gaps. This section solicited public comment on (a) 
the set of principles for selecting measures for the HH QRP, (b) 
identified measurement gaps, and (c) measures that are available for 
immediate use, or that may be adapted or developed for use in the HH 
QRP. For a detailed

[[Page 77773]]

presentation of the RFI, see the CY2024 NPRM (88 FR 43738-40). CMS 
sought input on data available to develop measures, approaches for data 
collection, perceived challenges, or barriers, and approaches for 
addressing challenges. We received several comments in response to this 
RFI, which are summarized later in this section.
2. Comments on Principles for Selecting and Prioritizing QRP Measures
    In general, commenters supported the CMS principles and criteria 
for selecting and prioritizing measures. A commenter shared a concern 
that the proposed principle of ``provider responses to payment'' raises 
concerns due to the ambiguity of the term ``unwanted responses.'' Many 
commenters advocated for the addition of stakeholder engagement (for 
example, technical expert panels, and review and analysis of 
beneficiary and family input) as a guiding principle. A suggestion was 
made to include a guiding principle related to discontinuing metrics 
without continually adding more metrics given the burden the constant 
addition of metrics places on agencies. Another suggestion was to add 
the principle of Timeliness and Clarity of CMS data, described as 
promoting increased availability and frequency of data with lesser time 
lag, and clarity around the reportability and feedback of data to and 
from CMS and in compliance with QRP. A respondent advocated for 
incorporating ``objectivity'' as a principle, described as prioritizing 
claims-based measures over provider reported measures in order to 
mitigate measure manipulation and another respondent advocated 
incorporation of a guiding principle that only measures for which data 
elements are clearly defined, valid, and well standardized be 
prioritized for the HH QRP measure set.
3. Comments on HH QRP Measurement Gaps
a. Cognitive Function and Behavioral and Mental Health
    While commenters agreed that there may be gaps related to cognitive 
function and behavioral and mental health, most were opposed to these 
being an area of further exploration in measure development in home 
health. They did not see the benefit or feasibility of developing 
performance measures around cognition or behavioral and mental health 
due to the limited ability to affect these disorders in the home health 
setting. Some suggested that if CMS would like to examine how to better 
align the behavioral health clinical grouping with the needs of 
patients, this could be an area for future consideration for CMMI or 
another entity looking at how to better serve older adults with 
cognitive and/or behavioral or mental health needs. One gap that was 
identified and recommended for future exploration in relation to 
cognitive function was the need for HHAs to better identify mild 
cognitive impairment. Although the OASIS requires a combination of the 
BIMS, CAM, and PHQ-9 to identify cognitive status, one respondent noted 
that these assessments are not sufficient to identify mild and mild to 
moderate cognitive impairment which were described as being crucial to 
intervening in functional decline for home health patients.
    Overall there was significant opposition to the implementation of a 
measure related to cognitive function and/or behavioral health. 
Commenters stated that such measures would not make sense as 
performance measure domains in home health care due to limited time, 
resources, and expertise to provide interventions that would directly 
impact a patient's cognition, behavioral and/or mental health. They 
suggested that the focus in HH is to stabilize cognitive function and/
or behavioral health--especially during the limited period the 
beneficiary is receiving home health services. While some commenters 
stated that the Brief Interview for Mental Status (BIMS) and Confusion 
Assessment Method (CAM(copyright)) measures already collected were 
sufficient, others objected to their use for quality measurement noting 
that a patient's BIMS score is not expected to improve with treatment. 
Respondents also suggested that CMS pause adding additional metrics 
until there are more data to determine whether they are effective. They 
noted that if CMS has decided that BIMS and/or CAM are not effective, 
they should be exchanged with new metrics, as opposed to adding 
additional metrics on top of CAM and BIMS.
b. Chronic Conditions
    Commenters expressed overall support for exploring gaps and 
performance measures related to chronic illness in the home health 
setting, but emphasized these should focus on maintenance or 
stabilization of chronic conditions rather than improvement. 
Performance measures aimed at stabilizing chronic conditions and 
measuring appropriate interventions for those patients that are 
expected to decline were suggested to be a better reflection of quality 
home health care than focusing solely on improvement in conditions and 
activities, and hospitalization rates. There was also support for 
continuing to include these more comprehensively within the case mix 
weight, rather than adding additional metrics and further exploration 
of measures that assess quality of life for the beneficiary and the 
family caregiver in relation to chronic illness.
    Commenters supported CMS's effort to align quality measures across 
care settings through the Universal Foundation and strongly support CMS 
focusing efforts on developing performance measures around chronic 
conditions. Commenters stated that although current measures are 
directed at managing chronic illnesses, many are physician focused. The 
commenters suggested CMS needs to develop performance measures that 
address chronic illness in the home health setting. They suggested that 
CMS needs to develop performance measures that recognize progressive 
chronic conditions for which measures of maintenance and/or 
stabilization are a more accurate reflection of quality home health 
care. Commenters also suggested that CMS should measure the effect of 
appropriate interventions for those patients that are expected to 
decline. There was also support for a stratification approach for 
quality measurement for patients with chronic illnesses and complex 
needs.
c. Pain Management
    Commenters supported further exploration of gaps in measurement 
related to pain management in home health, particularly the assessment 
of pain and its effect on sleep, therapy activities, and day-to-day 
activities and function. Pain assessment and management were described 
as critically important in the home health environment, and there was a 
call to explore how to better incorporate therapy services in pain 
assessment, intervention, and quality measurement in the home health 
setting. While commenters expressed support for further exploration of 
gaps related to pain, they also described confusion based on the prior 
CMS decision to remove this domain as a performance measure in home 
health due to the opioid crisis, and the need for CMS to send a 
consistent message to providers if new measurements were developed. For 
pain, standardized assessments were recommended as the best metric to 
evaluate, including the standardized pain scale 0-10, Wong-Baker, and 
PAINAD. Commenters emphasized the need to have options, as not every 
patient fits into one specific scale. They

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also encouraged CMS to recognize that some patients, even those with 
substance use disorder, may be appropriately taking opioids or other 
pain medications and that should be factored into their plan of care. 
They also encouraged CMS to identify tools that can address the 
inequities in pain assessment and treatment, specifically among African 
Americans.
d. Other Measure Gaps
    Additional gaps for further exploration identified by respondents 
included identifying and addressing social risk for patients, support 
for caregivers and caregiver status, and assessment, treatment and 
referral for patients with chronic obstructive pulmonary disease. A 
commenter also identified the need to better explore improvement of 
delivery and responses to patient satisfaction surveys in home health 
in order to improve understanding of patient experiences. Commenters 
supported adding measures to the HH QRP that would identify social risk 
factors and specifically incorporating financial needs into social risk 
factor assessment. One suggestion for measuring this in the home health 
setting was adding ``needs navigation'' services as a requirement to 
the HH QRP with a measure that confirms whether these services have 
been offered or delivered. The Social Need Screening and Intervention 
HEDIS measure was also recommended for home health because it is 
designed to collect social needs data from multiple sources in addition 
to the EMR. There was also support for aligning social risk factor/
social needs measures with the Gravity Project's work to standardize 
interoperable social needs data. Commenters also suggested a number of 
existing measures to consider for incorporation into the HHQRP program. 
A commenter recommended the addition of Caregiver Status to the list of 
standardized patient assessment data required for reporting by HHAs and 
other PAC providers. Another identified three measurements that if 
added to the HH QRP would improve the care of COPD patients in the home 
health setting and after discharge: Referral to Smoking Cessation 
Counseling or Program, Referral to Pulmonary Rehabilitation Clinic, and 
COPD GOLD Strategy treatment for HH patients. Additional suggested 
measures for CMS consideration included Advance care planning (ACP), 
the Depression Screening and Follow-Up for Adolescents and Adults 
(DSF), and person-centered care outcome (PCO) measures. Commenters also 
suggested incorporating measures more appropriate for patients at the 
end of life in home health: the new patient-reported quality measure 
``Felt Heard and Understood'' (already endorsed by the CBE), a measure 
on referral or access to palliative care and a measurement of timely 
and appropriate referral to hospice.
e. Data Available To Develop Measures
    Related to equity, commenters suggested that CMS minimize 
additional administrative burdens while striving to gather meaningful 
equity-related information. This could entail leveraging data that CMS 
already collects from claims. Commenters suggested that health outcome 
measures may need to include some form of adjustment for the relative 
amount and quality of resources available in different localities to 
care for different patient populations. Additional suggestions for 
addressing equity included: providing clarity around the definition of 
health equity; identifying validated measures of equity and determining 
feasibility for assessment at the HH level; incorporating equity as a 
case mix indicator and provider resources for management of health 
equity challenges with reimbursement; providing cost appropriate 
interventions from HH clinicians to achieve outcomes in a HH length of 
stay; and providing evidence-based data about interventions that can 
affect equity and outcomes.
f. Challenges With Current HH QRP Measures
    Overall, commenters focused on voicing their opposition to the CMS' 
emphasis on reducing hospitalizations and keeping patients in the 
community as the gold standard for quality performance in the home 
health setting. This was described as a longstanding frustration for 
HHAs and a disincentive to care for patients with complex health needs, 
contributing to some HHAs avoiding servicing patients with complex 
needs. Opposition was justified by highlighting the growing number of 
medically complex patients coming from community rather than post-acute 
care referrals, and recognition that home health agencies have limited 
ability to prevent hospitalizations with many complex patient 
populations/patient conditions. For patients with complex and/or 
chronic care needs, measures that address delays in transfers to higher 
levels of care may be a better reflection of quality home health care 
and transfers to the hospital or a skilled nursing facility may 
ultimately be an appropriate discharge disposition. A stratification 
approach for quality measurement for patients with chronic illnesses 
and complex needs was also described as an appropriate alternative.
    Response: We appreciate the input provided by commenters. While we 
will not be responding to specific comments submitted in response to 
this RFI in this final rule, we intend to use this input to inform our 
future measure development efforts.

IV. Changes to the Expanded Home Health Value-Based Purchasing (HHVBP) 
Model

A. Background

    As authorized by section 1115A of the Act and proposed in the CY 
2016 HH PPS final rule (80 FR 68624), the Center for Medicare and 
Medicaid Innovation (Innovation Center) implemented the Home Health 
Value-Based Purchasing (HHVBP) Model (``original Model'') in nine 
states on January 1, 2016. The design of the original HHVBP Model 
leveraged the successes and lessons learned from other CMS value-based 
purchasing programs and demonstrations to shift from volume-based 
payments to a model designed to promote the delivery of higher quality 
care to Medicare beneficiaries. The specific goals of the original 
HHVBP Model were to--
     Provide higher incentives for better quality care with 
greater efficiency.
     Study new potential quality and efficiency measures for 
appropriateness in the home health setting; and,
     Enhance the current public reporting process.
    The original HHVBP Model resulted in an average 4.6 percent 
improvement in HHAs' total performance scores (TPS) and an average 
annual savings of $141 million to Medicare without evidence of adverse 
risks.\125\ The evaluation of the original Model also found reductions 
in unplanned acute care hospitalizations and skilled nursing facility 
(SNF) stays, resulting in reductions in inpatient and SNF spending. The 
U.S. Secretary of Health and Human Services determined that expansion 
of the original HHVBP Model will further reduce Medicare spending and 
improve the quality of care and the CMS Chief Actuary certified that 
expansion of the HHVBP Model will produce Medicare savings if expanded 
to all states.\126\
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    \125\ https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt.
    \126\ https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf.
---------------------------------------------------------------------------

    On January 8, 2021, CMS announced the certification of the HHVBP 
Model for expansion nationwide, as well as the

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intent to expand the Model through notice and comment rulemaking.\127\
---------------------------------------------------------------------------

    \127\ https://www.cms.gov/newsroom/press-releases/cms-takes-action-improve-home-health-care-seniors-announces-intent-expand-home-health-value-based.
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    In the CY 2022 HH PPS final rule (86 FR 62292 through 62336) and 
codified at 42 CFR part 484 subpart F, we proposed the decision to 
expand the HHVBP Model to all Medicare certified HHAs in the 50 States, 
territories, and District of Columbia beginning January 1, 2022. CY 
2022 was a pre-implementation year. During CY 2022, CMS provided HHAs 
with resources and training, to allow HHAs time to prepare and learn 
about the expectations and requirements of the expanded HHVBP Model 
without risk to payments. We proposed that the expanded Model will 
generally use benchmarks, achievement thresholds, and improvement 
thresholds based on CY 2019 data to assess achievement or improvement 
of HHA performance on applicable quality measures and that HHAs will 
compete nationally in their applicable size cohort, smaller-volume HHAs 
or larger-volume HHAs, as defined by the number of complete unique 
beneficiary episodes for each HHA in the year prior to the performance 
year. All HHAs certified to participate in the Medicare program prior 
to January 1, 2022, will be required to participate and will be 
eligible to receive an annual Total Performance Score based on their CY 
2023 performance.
    We proposed the quality measure set for the expanded Model, as well 
as policies related to the removal, modification, and suspension of 
applicable measures, and the addition of new measures and the form, 
manner, and timing of the OASIS-based, Home Health Consumer Assessment 
of Healthcare Providers and Systems (HHCAHPS) survey-based, and claims-
based measures submission in the applicable measure set beginning in CY 
2022 and subsequent years. We also proposed an appeals process, an 
extraordinary circumstances exception policy, and public reporting of 
annual performance data under the expanded Model.
    Additionally, in the CY 2022 HH PPS final rule (86 FR 62312), we 
summarized and responded to comments received on the challenges unique 
to value-based purchasing frameworks in terms of health equity and ways 
in which we could incorporate health equity goals into the expanded 
HHVBP Model. Comments received were related to the use of stabilization 
measures to promote access to care for individuals with chronic illness 
or limited ability to improve; collection of patient level demographic 
information for existing measures; and stratification of outcome 
measures by various patient populations to determine how they are 
affected by social determinants of health (SDOH).
    In the CY 2023 HH PPS final rule (87 FR 66869 through 66876), we 
proposed our policy to replace the term baseline year with the terms 
HHA baseline year and Model baseline year, and to change the calendar 
years associated with each of those baseline years. Specifically, we 
changed the HHA baseline year for the CY 2023 performance year from 
2021 to 2022 for ``new'' HHAs with CMS certification numbers (CCNs) 
with effective dates prior 2022, and the Model baseline year from CY 
2019 to CY 2022 starting in CY 2023. Additionally, we summarized the 
comments received on future approaches to health equity (HE) in the 
expanded HHVBP Model. Comments received were related to the support of 
addressing health equity, potential unintended consequences, thorough 
consideration and testing of potential HE measures, data collection 
and, applying HE data to the expanded Model's cohorts and risk 
adjustment models.
    In the CY 2024 HH PPS proposed rule (87 FR 43740 through 43752), we 
proposed codification of the HHVBP measure removal factors at Sec.  
484.380; to remove five and add three quality measures to the 
applicable measure set, revise weights of the individual measures 
within the OASIS-based measure category and within the claims-based 
measure category and, an updated Model baseline year (from CY 2022 to 
CY 2023) starting in the CY 2025; and, an amendment to the appeals 
process such that reconsideration decisions may be reviewed by the 
Administrator with conforming regulation text changes at Sec.  
484.375(b)(5). We included an update to the RFI, Future Approaches to 
Health Equity in the Expanded HHVBP Model, that was published in the CY 
2023 HH PPS rule. We also included a reminder that we will begin public 
reporting HHVBP performance data on or after December 1, 2024.
    We received public comments related to these provisions from 50 
commenters. Commenters included groups representing HHAs, home health 
and hospice associations, hospital associations, professional 
associations, hospitals, and medical centers. The remaining comments 
were from individual practitioners and private citizens. A summary of 
the major issues and our responses follow:

B. Proposed Changes to the Applicable Measure Set

    We proposed to make changes to the applicable measure set. First, 
we proposed to codify the HHVBP measure removal factors effective in CY 
2024. Second, we proposed to remove five measures from the current 
applicable measure set and add three measures starting in CY 2025. 
Third, due to the net change in the number of measures proposed, we 
proposed to adjust the weights for the measures in the OASIS-based and 
claims-based measure categories starting in CY 2025. Lastly, we 
proposed to update the Model baseline year for all measures starting in 
CY 2025.
    Comment: Some comments agreed with all proposed updates to the 
expanded Model. Some commenters requested that we not make any updates 
to the expanded Model at this time stating it was too soon, and that we 
should wait to make proposals after HHAs have seen data on the proposed 
measures. A commenter suggested that before any measure replacement is 
adopted, CMS conduct a detailed comparison of the measure that would be 
removed and the measure that would be adopted as a replacement to 
ensure the replacement measure provides at least the scope and 
granularity of information as the measure being replaced, especially in 
the case where the measure domain of the proposal would be affected 
(such as when a claims-based measure is proposed to replace an OASIS-
based measure).
    Response: For the Expanded HHVBP Model, CMS refines the measure set 
and selects quality measures with consideration to the domains of the 
CMS Quality Strategy that map to the six National Quality Strategy 
(NQS) priority areas: (1) Clinical quality of care; (2) Care 
coordination; (3) Population/community health; (4) Efficiency and cost 
reduction; (5) Safety; and (6) Patient and caregiver-centered 
experience. CMS also prioritizes alignment of the measure set with the 
HH QRP. Additionally, CMS considers feedback from a Technical Expert 
Panel (TEP) and stakeholders when considering refinements to the 
measure set. There are eight specific factors that CMS considers for 
measure removal, which were detailed in the CY 2022 HH PPS final rule 
and are being codified through this final rule. Further, prior to 
removing a measure and adopting a replacement, CMS compares the 
measures to ensure that the replacement measure is an improvement as 
compared to the measure being replaced. CMS assesses the type of

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information covered by the measure as well as the level of detail. This 
involves review of the specifications and analysis of the measure 
performance and trends. As finalized in the CY 2022 HH PPS rule (86 FR 
62315), CMS exercised its waiver authority under section 1115A of the 
Act to waive certain requirements of the pre-rulemaking process for the 
selection of quality and efficiency measures as necessary to test the 
expanded HHVBP Model. In particular, CMS waived the requirements 
outlined in section 1890A(a)(1) and (3) through (6) of the Act. Per 
section 1890(a)(2) of the Act, which is not waived, CMS makes 
information on the measures considered for selection publicly 
available. Specifically, this means that, through notice and comment 
rulemaking we propose any measures considered for selection, receive 
public comments in response, and then finalize the measures in a final 
rule. The names of any measures added to the expanded HHVBP Model are 
posted on the CMS website by December 1.
    Additionally, the adjustments to the applicable measure set 
included in this rule are in response to requests from the HHA industry 
through public comments on the CY 2022 HH PPS proposed rule and 
questions submitted during HHVBP-specific learning events. The comments 
applicable to individual proposals are summarized and responded in the 
relevant sections as follows.
1. Codification of the HHVBP Measure Removal Factors
    In the CY 2022 HH PPS final rule (86 FR 62312), we stated that 
removal of an expanded HHVBP Model measure will take place through 
notice and comment rulemaking. In that same final rule (86 FR 62311 
through 62312), we adopted eight measure removal factors that we 
consider when determining whether to remove measures from the expanded 
HHVBP Model's applicable measure set:
     Factor 1. Measure performance among HHAs is so high and 
unvarying that meaningful distinctions in improvements in performance 
can no longer be made (that is, topped out).
     Factor 2. Performance or improvement on a measure does not 
result in better patient outcomes.
     Factor 3. A measure does not align with current clinical 
guidelines or practice.
     Factor 4. A more broadly applicable measure (across 
settings, populations, or conditions) for the particular topic is 
available.
     Factor 5. A measure that is more proximal in time to 
desired patient outcomes for the particular topic is available.
     Factor 6. A measure that is more strongly associated with 
desired patient outcomes for the particular topic is available.
     Factor 7. Collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm.
     Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    To be consistent with the HH QRP and other quality reporting 
programs (that is SNF QRP, IRF QRP, and LTCH QRP) we will finalize to 
codify the eight HHVBP measure removal factors for the expanded Model 
at Sec.  484.380.
    We invited public comments on this proposal. We did not receive 
comments specific to the codification of the Measure Removal Factors. 
Therefore, we are finalizing this provision without modification.
2. Changes to the Applicable Measure Set
a. Background
    In the CY 2022 HH PPS final rule (86 FR 66308 through 66310), we 
proposed the applicable measure set effective in the CY 2022 pre-
implementation year and subsequent years, which includes five OASIS-
based measures, two claims-based measures, and five HHCAHPS Survey-
based measures (see Table D1). Details of these measures were included 
in Tables 26 and 27 of the CY 2022 HH PPS proposed rule (86 FR 35923 
through 35926).
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    In that same final rule (86 FR 62310 through 62313), we stated 
that, during the expanded Model, we will address any needed adjustments 
or modifications to the applicable measure set. This process involves 
notice and comment rulemaking for removing or adding measures and for 
adopting changes to measures that we consider to substantially change 
the nature of the measure. We also post the names of any measures added 
to the expanded Model proposed through the rulemaking process on the 
CMS website by the December 1 after publication of the applicable final 
rule. Examples of changes that we might consider to be substantive will 
be those in which the changes are so significant that the measure is no 
longer the same measure, or when a standard of performance assessed by 
a measure becomes more stringent, such as changes in acceptable timing 
of medication, procedure/process, test administration, or expansion of 
the measure to a new setting. If an update to a measure is necessary in 
a manner that we consider to not substantially change the nature of the 
measure, we will use a sub-regulatory process to incorporate those 
updates to the measure specifications that apply to the program. 
Specifically,

[[Page 77777]]

we will revise the information that is posted on the CMS website so 
that it clearly identifies the updates and provides links to where 
additional information on where the updates can be found.
    We have determined that five of the measures proposed in the CY 
2022 HH PPS final rule require further consideration. Specifically, we 
proposed to remove the following measures from the applicable measure 
set: (1) OASIS-based Discharged to Community (DTC); (2) OASIS-based 
Total Normalized Composite Change in Self-Care (TNC Self-Care); (3) 
OASIS-based Total Normalized Composite Change in Mobility (TNC 
Mobility); (4) claims-based Acute Care Hospitalization During the First 
60 Days of Home Health Use (ACH); and (5) claims-based Emergency 
Department Use without Hospitalization During the First 60 Days of Home 
Health (ED Use).
    We proposed to replace these five measures with three measures (see 
Table D2). Specifically, we proposed to add the following measures: (1) 
the claims-based Discharge to Community-Post Acute Care (DTC-PAC) 
Measure for Home Health Agencies; (2) the OASIS-based Discharge 
Function Score (DC Function) measure; and (3) the claims-based Home 
Health Within-Stay Potentially Preventable Hospitalization (PPH) 
measure. The claims-based DTC-PAC measure will replace the OASIS-based 
DTC measure. The OASIS-based DC Function measure will replace the two 
OASIS-based TNC measures (Self-Care and Mobility). The claims-based PPH 
measure will replace the claims-based ACH and ED Use measures.
    We proposed to make these changes to the applicable measure set 
beginning with the CY 2025 performance year and subsequent performance 
years. The proposed changes will align the measures used in the 
expanded HHVBP Model with the measures in the HH QRP and publicly 
reported on the Care Compare website. This alignment will support 
comparisons of provider quality and streamline home health providers' 
data capture and reporting processes. Table D2 summarizes the proposed 
applicable measure set that will be effective for the CY 2025 
performance year (CY 2027 payment year).
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
b. Changes to the Applicable Measure Set
    We proposed to make all changes to the applicable measure set 
discussed in this rule beginning with the CY 2025 performance year, 
thus all changes will affect the same payment year beginning with the 
CY 2027 payment year.
(1) Proposal To Replace the OASIS-based DTC Measure With the Claims-
Based DTC-PAC Measure Beginning CY 2025
    We proposed to replace the current OASIS-based DTC measure with the 
claims-based DTC-PAC measure. The claims-based DTC-PAC measure assesses 
successful discharge to the community from an HHA, with successful 
discharge to the community including no unplanned re-hospitalizations 
and no death in the 31 days following discharge. This measure was 
adopted as part of the Home Health Quality Reporting Program (HH QRP) 
in the CY 2017 HH PPS final rule (81 FR 76765 through 76770). Details 
about the measure can be found in the CY 2017 HH PPS final rule (81 FR 
76765 through 76770) and the CY 2018 HH PPS final rule (84 FR 60564 
through 60566). One difference between the current OASIS-based DTC 
measure and the proposed claims-based DTC-PAC measure is the time 
period of the measure. The proposed claims-based DTC-PAC measure uses 
two years of claims data, whereas the current OASIS-based DTC measure 
uses one year of OASIS data. Furthermore, the claims-based DTC-PAC 
measure is aligned across PAC settings in terms of risk-adjustment, 
exclusions, numerator, and measure intent, whereas the OASIS-based DTC 
measure is not aligned. Therefore, making the replacement is in 
accordance with Measure Removal Factor 4: A more broadly applicable 
measure (across settings, populations, or conditions) for the 
particular topic is available.
    Additionally, the replacement will further align the expanded HHVBP 
Model applicable measure set with the HH QRP measures. The HH QRP added 
the claims-based DTC measure in 2017 and stopped publicly reporting the 
OASIS-based DTC measure in 2017. The proposed use of the claims-based 
DTC-PAC measure has additional benefits as compared to the current 
OASIS-based DTC measure in that it assesses broader outcomes by 
assessing post-discharge hospitalization and mortality. Specifically, 
it first examines whether a patient was discharged to the community 
from the PAC setting. For patients discharged to the community, this 
measure examines whether they remained alive in the community without 
an unplanned admission to an acute care hospital or LTCH in the 31-day 
post- discharge observation window following discharge to the 
community.
(2) Proposal To Jointly Replace the OASIS-Based TNC Self-Care and TNC 
Mobility Measures With the OASIS-Based Discharge Function Score Measure 
Beginning CY 2025
    We proposed to jointly replace the TNC Self-Care and TNC Mobility 
measures with the DC Function measure. We adopted the TNC Self-Care and 
TNC Mobility measures in the CY 2019 HH PPS final rule (83 FR 56529 
through 56535) for use in the original Model beginning with performance 
year 4 (CY 2019). The TNC measures, which are composite measures, 
replaced three individual measures (Improvement in Bathing, Improvement 
in Bed Transferring, and Improvement in Ambulation-Locomotion). For 
these composite measures, HHA performance on the three mobility OASIS-
items are included in the TNC measures. The TNC measures also include 
six additional activities of daily living (ADL) measures to create a 
more comprehensive assessment of HHA performance across a broader range 
of patient ADL outcomes. The TNC measures report the magnitude of 
patient change (either improvement, no change, or decline) across six 
self-care and three mobility patient functional activities. This 
methodology accounts for changes to the scores on individual OASIS 
items while also considering that not all patients are able to improve 
on all aspects of each composite measure. The DC Function measure 
determines how successful each HHA is at achieving an expected level of 
functional ability for its patients at discharge. An expectation for 
discharge function score is built for each HHA episode by accounting 
for patient characteristics that impact their functional status. The 
final DC Function measure for a given HHA is the proportion of that 
HHA's episodes where a patient's observed discharge score meets or 
exceeds their expected discharge score. Functional status is measured 
through Section GG of OASIS assessments, which are cross-setting items. 
Section GG evaluates a patient's capacity to perform daily activities 
related to three self-care (GG0130) activities and eight mobility 
(GG0170) activities.
    The DC Function measure has been proposed for adoption in all PAC 
settings. We included the proposed DC Function measure on the 2022 
Measure Under Consideration (MUC) list for the Inpatient Rehabilitation 
Facility QRP, Home Health QRP, Long Term Care Hospital QRP, SNF QRP, 
and SNF VBP.\128\ It is proposed for the Skilled Nursing Facility (SNF) 
Value-Based Purchasing program in the FY 2024 SNF PPS proposed rule and 
in this CY 2024 HH PPS proposed rule for adoption in the HH QRP 
beginning CY 2025; details about the measure can be found in section 
III.D. of the proposed rule. We proposed adopting the measure for the 
expanded HHVBP Model on the same timeline as the HH QRP (CY 2025) given 
that the GG items used in the measure have gone through extensive 
testing, and the measure has received conditional support for 
rulemaking as part of the most recent Measure Applications Partnership 
(MAP) process. While the DC Function measure is not yet implemented in 
the HH QRP or other PAC programs, the OASIS data elements used to 
calculate this measure have been collected since 2019. As such, we 
believe HHAs have had sufficient time to ensure successful reporting of 
the data elements needed for this measure.
---------------------------------------------------------------------------

    \128\ See CMS, Measures Under Consideration List for 2022 (Dec. 
1, 2022), available at https://mmshub.cms.gov/sites/default/files/2022-MUC-List.xlsx.
---------------------------------------------------------------------------

    Replacement of the TNC measures with the DC Function measure will 
further align the expanded HHVBP Model measure set with the HH QRP 
measures, as well as with other PAC settings. For these reasons, this 
replacement is in accordance with Measure Removal Factor 4. 
Additionally, the DC Function measure addresses self-care and mobility 
through a single measure rather than two measures, thereby streamlining 
the calculation and reporting of measure results.
(3) Proposal To Jointly Replace the Acute Care Hospitalization During 
the First 60 Days of Home Health Measure and Emergency Department Use 
Without Hospitalization During the First 60 Days of Home Health Measure 
With the Home Health Within Stay Potentially Preventable 
Hospitalization (PPH) Measure Beginning CY 2025
    We proposed to jointly replace the Acute Care Hospitalization 
During the First 60 Days of Home Health Measure (``ACH'' measure) and 
Emergency Department Use Without Hospitalization During the First 60 
Days of Home Health Measure (``ED Use'' measure) with the Home Health 
Within Stay Potentially Preventable

[[Page 77781]]

Hospitalization (PPH) Measure. The current specifications for the PPH 
measure are available on the CMS website at https://www.cms.gov/files/document/hh-qrp-specificationspotentiallypreventablehospitalizations.pdf.
    The CY 2022 HH PPS final rule (86 FR 62340 through 62345) proposed 
the joint replacement of the ACH measure and ED Use measure with the 
PPH measure in the HH QRP beginning CY 2023. This replacement under the 
HH QRP was made under Measure Removal Factor 6: A measure that is more 
strongly associated with desired patient outcomes for the particular 
topic is available. Additional details of the reason for replacement 
are found in the CY 2022 HH PPS final rule (86 FR 62340 through 62345). 
Because these measures have been proposed to be jointly replaced with 
the PPH measure in the HH QRP beginning CY 2023, we are proposing to 
remove them from the expanded HHVBP Model.
    In the CY 2022 HH PPS proposed rule (86 FR 35929), we requested 
comments on whether we should align the expanded HHVBP Model with the 
proposed changes for the HH QRP by proposing to remove the same two 
measures (``ACH'' and ``ED Use'' measures) from the expanded Model in a 
future year. As summarized in the CY 2022 HH PPS final rule (86 FR 
62312), the feedback was generally supportive, recommending that the 
expanded HHVBP Model's applicable measure set align with the HH QRP 
measures. Replacing ACH and ED Use with PPH will further align the 
expanded Model's applicable measure set with the HH QRP measures.
    We proposed no changes to the five HHCAHPS Survey-based measures 
used for the expanded HHVBP Model.
    We invited public comments on these proposals.
    Comment: Several commenters supported the changes to the applicable 
measure set, some stating their belief that measures should be 
harmonized with those in HH QRP and other VBP programs as well as other 
CMS initiatives creating efficiencies for HHAs' performance improvement 
strategies. A commenter expressed their support for reducing the total 
number of measures in the Model. Another commenter stated that the 
Discharge Function measure (when viewed in combination with the DTC-PAC 
measure) shows a more balanced reflection of a patient's return to 
function in the home setting and successful care transitions from Post 
Acute Services to independence in the home environment.
    Response: We appreciate this supportive feedback.
    Comment: A few commentors commented that it was too soon to make 
changes to the applicable measure set, given that HHAs have invested a 
significant amount of effort to improve their performance on the 
original set of measures and are not prepared to begin shifting to 
accommodate a new set of applicable measures, and that changes will 
require software updates that are costly and time-consuming.
    Response: The policy updates included in this rule are effective in 
CY 2025. This means HHAs new to the expanded Model will have had three 
years to improve performance on the applicable measures proposed in the 
CY 2022 HH PPS final rule. And, those HHAs located in the nine states 
that competed in the original Model have had five years to improve 
performance on those same measures. By including the new measure set in 
the 2024 rulemaking cycle, HHAs have more than a year to prepare. And, 
we believe we have given sufficient notice so that software updates can 
be made timely.
    Comment: Most commenters were supportive of the replacement of the 
OASIS-based DTC measure with the claims-based DTC-PAC measure. A 
commenter stated their belief that the claims-based version is a better 
measure of their patients' discharge to community rates.
    Response: We appreciate these commenters' understanding of the 
value of the DTC-PAC measure and the supportive feedback.
    Comment: A commenter expressed their concern that the DTC-PAC 
measure will penalize HHAs for patients with progressive disease states 
and for outcomes that are beyond the control of the HHA.
    Response: Since the introduction of this measure into the HH QRP, 
we have not seen evidence to corroborate these concerns.
    Comment: Most comments related to concerns about adoption of the DC 
Function measure in the expanded HHVBP Model were also submitted 
regarding the HH QRP. Mutual concerns are related to the imputation 
approach and methodology, validity of measure testing, lack of 
Consensus-Based Entity (CBE) endorsement, timing and broad approach for 
implementation, and applicability for maintenance patients. As stated 
in the proposed rule, final achievement thresholds and benchmarks will 
be provided in the July 2024 Interim Performance Report (IPR). To help 
provide feedback to HHAs on the applicable measure set effective in CY 
2025, we plan to make the most current HHA-specific performance data 
for the applicable measures available to each HHA in iQIES. We intend 
for this to include current performance relative to other HHAs 
nationally as soon as administratively possible and before the start of 
the CY 2025 performance year and again before the IPR scheduled for 
July 2025.
    Comment: The majority of commenters were supportive of replacing 
the ACH and ED Use measures with the PPH measure stating their belief 
that this measure reflects that not all hospitalizations or ED visits 
that occur while a patient is receiving home health services can be 
mitigated or prevented; the measure more accurately reflects the 
efforts that HHAs undertake to prevent hospitalizations without 
penalizing them for taking on more acutely ill patients; and is more 
likely to reflect whether HHAs are providing proper management and care 
as well as clear discharge instructions and referrals, allowing CMS to 
better assess quality of care for the purposes of the expanded HHVBP 
Model.
    Response: We appreciate these commenters' understanding of the 
value of the PPH measure and the supportive feedback.
    Comment: A commenter expressed concern that the PPH measure does 
not effectively gauge readmissions and does not truly mirror the 
quality of care of an HHA without providing reasons for their concern. 
Another commenter recommended a delay in the inclusion of this measure 
into the expanded Model until CMS can provide additional transparency 
with data around coding practices of inpatient providers.
    Response: Since the introduction of this measure into the HH QRP, 
we have not seen evidence to corroborate these concerns. Additionally, 
as indicated in the CY 2022 HH PPS final rule (86 FR 62343), the 
process of developing the measure specifications included performing 
analyses on Medicare claims data to identify the most frequent 
diagnoses associated with admissions among home health beneficiaries.
    After consideration of the public comments received, we are 
finalizing these provisions without modification.
3. Measure Categories
    As shown in Table D3, the expanded Model utilizes established 
measure categories that represent the data sources including OASIS-
based, claims-based, and HHCAHPS Survey-based. Although measures in the 
original Model have been added, removed, or substituted in the past, 
the measure category weights have remained constant, maintaining the 
weighting

[[Page 77782]]

proportions of 35 percent, 35 percent, and 30 percent for OASIS-based, 
claims-based and HHCAHPS Survey-based measures for the larger-volume 
cohort, respectively. For HHAs in the smaller-volume cohort, the 
weighting proportions of the OASIS-based and claims-based measures are 
50 percent and 50 percent, respectively. Weights for individual 
measures within these categories have changed in the past due to 
changes to the applicable measure set (for example, replacing three 
individual OASIS-based measures with the two TNC measures) and to 
encourage improvement in the claims-based measures. With the proposed 
changes to the applicable measures in the proposed rule, the number of 
measures within the OASIS-based measure category will change. Table D3 
illustrates the change in the measure set including the removal of the 
OASIS-based DTC measure, the replacement of the two OASIS-based TNC 
change measures to the OASIS-based DC Function measure, and the 
replacement of the claims-based Acute Hospitalization Measure and 
claims-based ED Use Measure for the claims-based PPH measure. Despite 
the changes to the applicable measure set, we intend to maintain the 
existing measure categories and their relative weights. For example, 
for the larger-volume cohort, the claims-based measures will continue 
to have a total weight of 35 percent. The relatively higher weight 
given to the claims-based measures reflects our belief in the 
importance of those measures relative to OASIS-based measures, which 
use self-reported data and that the incentive to reduce hospital 
utilization is maintained. We continually monitor the effects of 
weighting and will propose changes if we determine there is a need 
through future rulemaking.
[GRAPHIC] [TIFF OMITTED] TR13NO23.056

4. Weighting and Redistribution of Weights Within the Measure 
Categories
a. Background
    As proposed in the CY 2022 HH PPS final rule (86 FR 62240), the 
expanded HHVBP Model uses the same policies regarding the weighting of 
measures and the redistribution of weights when measures or measure 
categories are missing as under the original Model (83 FR 56536).
    As previously discussed in section IV.B.2.b of the proposed rule, 
to align with quality measures used in the HH QRP, CMS proposed to 
replace the OASIS-based DTC measure with the claims-based DTC measure, 
jointly replace the claims-based ACH and ED Use measures with the 
claims-based PPH measure, and jointly replace the OASIS-based TNC 
Change in Mobility and TNC Change in Self-Care measures with the OASIS-
based DC Function measure in CY 2025 and subsequent performance years. 
Due to these changes to the applicable measure set and the data 
sources, CMS proposed changes in weights and redistribution of weights 
within the measure categories accordingly.
b. Quality Measure Weights Within Measure Categories
    Along with the proposed revisions to the current measure set, we 
proposed to revise the weights of the individual measures within the 
OASIS-based measure category and within the claims-based measure 
category. Currently, the OASIS-based, claims-based, and HHCAHPS Survey-
based measures

[[Page 77783]]

contribute 35 percent, 35 percent, and 30 percent, respectively, to the 
Total Performance Score (TPS) for HHAs in the larger-volume cohort. For 
HHAs in the smaller-volume cohort, the OASIS-based and claims-based 
measures both contribute 50 percent to the TPS. The weights of the 
measure categories, when one category is missing, are based on the 
relative weight of each category for which measures are available. For 
example, if an HHA is missing the HHCAHPS Survey-based measure 
category, the remaining two measure categories (OASIS-based and claims-
based) each have a weight of 50 percent. Table 28 in the CY 2022 HH PPS 
final rule (86 FR 62323 through 62324) presents the current weights for 
measures and measure categories under various reporting scenarios.
    Table D4 shows the measure weights by quality measure in the 
expanded HHVBP Model currently in place and proposed for CY 2025 and 
subsequent performance years for HHAs in the larger-volume and smaller-
volume cohort, respectively.
    As discussed in section IV.B.3 of the proposed rule, for HHAs in 
the larger-volume cohort, we are keeping the measure category weights 
unchanged at 35 percent, 35 percent, and 30 percent for OASIS-based, 
claims-based, and HHCAHPS Survey-based measure categories, 
respectively. Similarly, for HHAs in the smaller-volume cohort, we are 
keeping the measure category weights unchanged at 50 percent and 50 
percent for OASIS-based and claims-based measure categories, 
respectively. By keeping these measure category weights unchanged, the 
number of individual measures in each measure category will affect the 
magnitude of the individual measure weights. As proposed, changes to 
the applicable measure set will decrease the OASIS-based measures from 
five measures to three, while the number of individual measures for the 
claims-based measures and HHCAHPS Survey-based measures will remain 
unchanged. Given these proposals, the individual measure weights within 
the OASIS-based measure category will be higher than those under the 
current applicable OASIS-based measure category. The subsequent 
sections discuss in more detail the proposed measure weight 
redistributions for each measure category.
(1) Proposal To Redistribute Weights Within the OASIS-Based Measure 
Category
    Because we proposed to replace the two TNC measures jointly with 
the DC Function measure, we proposed that the sum of the TNC measure 
weights be given to the DC Function measure. This will maintain the 
same relative weight for functional measures. Due to the proposed 
removal of the OASIS-based DTC measure, we also proposed to distribute 
the weight for that measure across the remaining three OASIS-based 
measures. In addition, we proposed to maintain a relatively small 
weight for Improvement in Dyspnea compared to the other measures in the 
applicable measure set. Under the current measure set, Improvement in 
Dyspnea is weighted at 5.833 for larger-volume HHAs and 8.333 for 
smaller-volume HHAs. Similarly, under the proposed applicable measure 
set, Improvement in Dyspnea will be weighted at 6.000 for the larger-
volume cohort and 8.571 for the smaller-volume cohort. This approach 
aims to encourage improvement in quality of care, while reducing its 
importance relative to other quality measures that encourage both 
improvement and maintenance of quality care for all home health 
patients. These proposed changes will be effective in CY 2025. Table D4 
describes the proposed measure weight redistributions for all measure 
categories by larger-volume and smaller-volume cohort, respectively. In 
addition to increasing the individual measure weight for Improvement in 
Dyspnea to 6.000, CMS proposed to increase the individual measure 
weight for Improvement in Management of Oral Medications to 9.000 and 
to assign the individual measure weight for DC Function to 20.000 for 
HHAs in the larger-volume cohort. These changes maintain the overall 
weight of the OASIS-based measures at 35 percent for the larger-volume 
cohort and 50 percent for the smaller-volume cohort.

[[Page 77784]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.057

(2) Proposal To Redistribute Weights Within the Claims-Based Measure 
Category
    Because we proposed to remove the ACH and ED Use measures, we 
proposed to allot an individual measure weight of 26.000 to the final 
PPH measure. The redistribution to the PPH measure is intended to give 
this measure approximately the same combined weight as the ACH and ED 
Use measures had previously. In addition, CMS proposed to allot an 
individual measure weight of 9.000 to the claims-based DTC-PAC measure 
for the larger-volume cohort. The slight increase in weight for the 
claims-based DTC-PAC measure maintains the same overall weight of 
35.000 for claims-based measures for the larger-volume cohort. Table D4 
lists the corresponding individual claims-based measure weight 
redistributions applicable to HHAs in the smaller-volume cohort.
(3) Weights Within the HHCAHPS-Based Measure Category
    Given there were no changes proposed to the measures within the 
HHCAHPS Survey-based measure category, we proposed to keep the 
individual measure weights for measures in this measure category 
unchanged. Specifically, each HHCAHPS Survey-based measure will 
continue to have an individual measure weight of 6.000 for HHAs in the 
larger-volume cohort. Given that HHAs in the smaller-volume cohort are 
not assessed based on their HHCAHPS Survey-based measure performance, 
the individual measure weight is set to zero (0.000) for the smaller-
volume cohort (see Table D4).
    We invited public comments on these proposals.
    Comment: A few commenters provided feedback related to the 
redistribution of weights for individual measures within the OASIS-
based measure category. A commenter stated that the weight of the DC 
Function measure was too high. Another commenter expressed concern that 
the weight of the DC Function measure is more than the combined weight 
of the two TNC measures it is replacing.
    Response: With the reduction in the number of total measures in the 
program and in the OASIS category, and the decision to maintain the 
weights of each category, it was necessary to increase weight in either 
some or all the measures in the OASIS category. When redistributing the 
weights among the remaining measures in the OASIS category, we selected 
a weight for the DC Function measure that is slightly higher than the 
current combined weight of the TNC measures. We selected this weight 
because of our belief that function is critical for beneficiaries to 
safely remain in their home. Further, the measure's robust risk 
adjustment methodology that captures the different functional potential 
of all home health patients and the imputation methodology that 
mitigates missing data challenges and limits gaming makes it an 
important quality measure that should have the weight that it has in 
the expanded Model. As with all our measures, we will monitor and 
evaluate the impact of the weighting of the DC Function measure.
    Comment: A few commenters stated that the redistribution of weights 
for the DTC-PAC and PPH measures are too heavy and will promote 
``cherry-picking.'' They believe the PPH measure targets patients with 
at least one potentially preventable hospitalization observation stay 
during a home health episode, and is challenging for patients with 
complex needs, who have chronic

[[Page 77785]]

conditions that are subject to exacerbation. Another commenter suggests 
that the weight of the DTC-PAC measure seems extreme for patients that 
are often at a stage in disease progress but are not ready to elect the 
Medicare Hospice Benefit.
    Response: Although the total number of measures have been reduced 
overall, there has not been any reduction in the weight or the number 
of measures in the claims category. The PPH measure may be considered 
as an improvement of the ACH measure because it includes those 
conditions that are preventable, and we kept its weight very close to 
the original Model. Evaluation of the ACH readmission measure showed 
better quality results and did not identify any access issues. We 
decided to maintain the weight of the PPH measure to encourage further 
improvement in reducing hospitalizations that are potentially 
preventable. We believe our proposed weighting will encourage increased 
focus on quality of care and on accountability for areas of significant 
Medicare spending, which includes hospitalizations. The DTC-PAC measure 
excludes patients discharged to home or facility-based hospice care. 
Thus, discharges to hospice are not considered discharges to community, 
but rather are excluded from the measure calculation. We wish to also 
note that including 31-day post-discharge mortality outcomes is 
intended to identify successful discharges to community, and to avoid 
the potential unintended consequence of inappropriate community 
discharges that bypass hospice care. As with all our measures, we will 
monitor and evaluate the impact of the weighting of the PPH measure.
    Comment: Another commenter believes that the weighting of the PPH 
measure (26%) is disproportionately weighted higher than other 
important measures and devalues the patient's functional improvement 
and ability to remain at home long term; and the next-highest measure 
weighting is the new DC Function measure (20%). A commenter recommend 
that CMS change the weighting of PPH measure to 20% and the weighting 
of the DTC-PAC measure to 15%. While the PPH measure looks at a single 
outcome, the DC Function measure (when considered in combination with 
the DTC-PAC measure) provides a more balanced reflection of a patient's 
return to function in the home setting and successful care transitions 
from PAC services to independence in the home environment. Accordingly, 
this commenter recommends that CMS reduce the weighting of the claims-
based PPH measure to 20% and the increase the weighting of the DTC-PAC 
measure to 15%.
    Response: We agree that the DC Function and DTC-PAC measures are 
important measures. As discussed in this section, while we proposed to 
weight these two measures lower than the PPH measure, as the commenter 
noted, the DC Function measure is the next heaviest weighted measure, 
followed by DTC-PAC measure (which has the same weighting as 
Improvement in Management of Oral Medications). As previously noted, we 
selected the weight for PPH to encourage further improvement in 
reducing hospitalizations that are potentially preventable and place 
increased focus on accountability for areas of significant Medicare 
spending. We believe the proposed reweighting balances our interest in 
encouraging focus on reducing hospitalizations as well as on other 
quality improvement efforts, such as achieving an expected level of 
functional ability for patients at discharge and successful discharge 
to the community from an HHA. As with all our measures, we will monitor 
and evaluate the impact of the weighting of the DC Function measure. 
Regarding the commenter's suggestion to reweight the PPH measure to 20 
percent and the DTC-PAC measure to 15 percent, for introduction of 
these measures into HHVBP, we are proposing weights for these two 
measures that are close to the weights for the current claims-based 
measures. We will continue to evaluate these measures and will be 
convening a TEP and will solicit their input on weighting.
    Comment: Some commenters believed that the proposed reweighting may 
disincentivize some HHAs from serving vulnerable populations that are 
at risk for hospitalizations. A commenter stated that the proposed 
reweighting may incentivize hospital stays.
    Response: Although the total number of measures have been reduced 
overall, requiring some reweighting of measures to occur, there has not 
been any reduction in the weight of the claims-based measure category 
or the number of measures in the claims-based measure category and only 
a minute change to the PPH measure. We believe that the selected 
weighting will encourage HHAs to further enhance their service 
structures to appropriately address the needs of Medicare beneficiaries 
of all types by using quality improvement processes that support the 
expanded Model's quality measures, including processes intended to 
reduce hospitalizations. We do not believe that the proposed weighting 
of the measures will discourage HHAs from serving vulnerable 
populations or incentivize further hospital stays. Rather, we believe 
that weighting the measures to increase the emphasis on the PPH measure 
will encourage HHAs to increase the coordination with other providers 
and suppliers such as physicians and inpatient facilities (hospitals 
and post-acute care (PAC) facilities) in order to reduce ED visits and 
hospital admissions as was determined in the evaluation of the HHVBP 
model. We note that the claims-based PPH measure is included in the HH 
QRP and reflects goals consistent with other CMS initiatives that focus 
on reducing avoidable hospital admissions, such as the Hospital 
Readmissions Reduction Program. We expect the proposed increase in the 
weight of the PPH measure to incentivize avoiding hospital stays, not 
additional hospitalizations. We also do not expect that the weighting 
will cause HHAs to implement policies that do not serve vulnerable 
populations at risk of hospitalization, but will instead encourage care 
coordination between HHAs and other health care providers to avoid 
hospitalizations, which may result in improved care for all 
beneficiaries, including vulnerable populations.
    Comment: Although we did not propose changes to the weights for the 
measure categories, a few comments expressed concerns about the weights 
of the measure categories as described previously. MedPAC believes the 
weights for the OASIS-based measure category are too heavy given their 
concerns about the accuracy of OASIS data. One national association 
stated that some of their members believe the weight assigned to 
HHCAHPS measure category is too high claiming that the types of 
beneficiaries their members serve--lower socioeconomic status, more 
complex, often dual eligible status--are less likely to complete the 
HHCAHPS survey. They request that CMS look at how to account for 
discrepancies in HHCAHPS response rates based on the population served 
in the expanded HHVBP Model.
    Response: We will add the weighting of measure categories to the 
agenda for the TEP planned for November of this year and share these 
comments with the HHVBP Technical Expert Panel (TEP) and we will 
monitor to determine if the measures will impact beneficiaries of lower 
socioeconomic status.
    We received no comments concerning individual measure weights for 
the HHCAHPS-based measure category.

[[Page 77786]]

    After consideration of the public comments received, we are 
finalizing these provisions without modification.
(4) Alternatives Considered
    Several measure weighting alternatives were considered prior to 
choosing the previously discussed proposals. Tables D5 describes these 
alternative options for HHAs in the larger-volume cohort, including 
weights proportional to the weights for the initial measure set (Option 
1), maintaining measure category weights consistent with current 
measure set weights and equal within-category weights (Option 2), using 
equal measure category weights and maintaining within-category weight 
proportions (Option 3), using equal measure category weights and equal 
within-category weights (Option 4), and having equal weights for all 
measures (Option 5). We also considered these options for the smaller-
volume cohort and came to the same conclusions. Therefore, we only 
provided a table with measure weighting alternatives for the larger-
volume cohort.
[GRAPHIC] [TIFF OMITTED] TR13NO23.058

    Of these alternatives, Option 1 is most consistent with the final 
weights and most consistent with the weights used for the current 
measure set; however, it fails to apply the minimal weight possible for 
Improvement in Dyspnea. Similarly, Options 2-4 do not reduce the weight 
for Improvement in Dyspnea and deviate more substantially than Option 1 
from the current weighting scheme. By attributing equal weight to all 
measures in the proposed measure set, Option 5 satisfies the minimal 
weight criterion for Improvement in Dyspnea; however, it does so at the 
expense of applying the same weight, which is inconsistent with 
previous decisions about apply differential weighting to measures to 
incentivize HHAs to act on improving measures with higher weights in 
the applicable measure set as outlined in the CY 2022 HH PPS final rule 
(86 FR 62322).
5. Updates to the Model Baseline Year
a. Background
    In the CY 2022 HH PPS final rule, we proposed that the first Model 
baseline year for the expanded HHVBP Model will be CY 2019 (January 1, 
2019 through December 31, 2019), the first performance year will be CY 
2023, and the first payment year will be CY 2025 (86 FR 62294 through 
62300). We decided on CY 2019 as the Model baseline year, as opposed to 
CY 2020 or CY 2021, due to the potentially de-stabilizing effects of 
the public health emergency (PHE) on the CY 2020 data and because it 
was the most recent full year of data available prior to CY 2020. The 
performance year and payment year were proposed after originally 
proposing CY 2022 to be the first performance year and CY 2024 to be 
the first payment year. We decided to delay implementation by 1 year to 
allow additional time for HHAs to prepare and learn about the expanded 
Model, thus CY 2022 was defined as the pre-implementation year. In the 
CY 2023 HH PPS final rule, we changed the Model baseline year to CY 
2022 (87 FR 66869 through 66874). We decided to use more recent data 
from the CY 2022 time period because it is more likely to be aligned 
with performance years' data under the expanded Model, and provide a 
more appropriate baseline for assessing HHA improvement for all 
measures under the expanded Model as compared to both the pre-PHE CY 
2019 data, as previously proposed for existing HHAs, and the CY 2021 
data, as previously proposed for new HHAs certified between January 1, 
2019 and December 31, 2020.
    Additionally, in the CY 2022 HH PPS final rule (86 FR 62308 through 
62309),

[[Page 77787]]

we proposed the current measure set, as indicated in Table 25 of that 
final rule. The removal and replacement of measures from the current 
measure set necessitates an updated implementation and data reporting 
timeline, which will be applied to all applicable measures so that the 
Model baseline year is consistent across measures.
b. Proposal To Update the Model Baseline Year
    Beginning with performance year CY 2025, we proposed to update the 
Model baseline year to CY 2023 for all applicable measures in the 
proposed measure set, including those measures included in the current 
measure set. The one exception is the new claims-based DTC-PAC measure, 
which uses two years of data. As such, the Model baseline year for the 
claims-based DTC-PAC measure will be CY 2022 and CY 2023 for the 2-year 
performance year spanning CY 2024 and CY 2025. For performance years CY 
2023 and CY 2024, the Model baseline year will continue to be CY 2022. 
Table D6 lists the data periods for each measure and respective Model 
baseline, performance year, and payment years.
[GRAPHIC] [TIFF OMITTED] TR13NO23.059

    If we finalize our proposal to use CY 2023 for the Model baseline 
year, we will provide HHAs with the final achievement thresholds and 
benchmarks in the July 2024 Interim Performance Report (IPR). For all 
measures but the claims-based DTC-PAC measure, this timeline allows for 
one year of performance between the first performance year and the 
proposed updated Model baseline year. Because the claims-based DTC-PAC 
measure is a two-year measure, there will be no gap between the 
proposed updated Model baseline year and the first performance year, 
which will be consistent with the rollout of the original HHVBP Model, 
in which benchmarks and achievement thresholds using CY 2015 data were 
made available to HHAs during the summer of the first performance year 
(CY 2016).
    Furthermore, because the claims-based DTC-PAC measure is a 2-year 
measure, there will be an overlap in how discharge to community is 
measured for the expanded Model. Specifically, CY 2024 performance will 
be based on the current measure set, which includes the OASIS-based DTC 
measure. For the OASIS-based DTC measure, CY 2024 performance will be 
compared to baseline year CY 2022. CY 2025 performance will be based on 
the proposed measure set, which includes the claims-based DTC-PAC 
measure and thus replaces the OASIS-based DTC measure. Because the DTC-
PAC measure is a two-year measure, CY 2025 performance for the claims-
based DTC-PAC measure will be calculated based on two years of 
performance data (CY 2024/2025) and compared to two years of baseline 
year data (CY 2022/2023). Thus, for both the OASIS-based DTC measure 
and the claims-based DTC-PAC measure, CY 2022 data will be used to 
calculate performance in a Model baseline year, and CY 2024 data will 
be used to calculate performance in a performance year. Beyond CY 2025, 
data for calculating DTC-PAC performance will continue to overlap. For 
example, CY 2026 DTC-PAC (claims-based) performance will be based on 
data from CY 2025/2026, which overlaps by one year with the CY 2025 
DTC-PAC (claims-based) performance year data. See Table D7. The DTC-PAC 
measure was designed as a 2-year measure to optimize reliability. In 
addition, each performance year will consist of 1 year of performance 
data that does not overlap with the prior performance year data, which 
provides sufficient opportunity to capture quality improvement over 
time. Finally, the DTC-PAC (claims-based) will provide a smoother 
performance trend over time compared to 1-year measures by reflecting 
performance across a longer reporting period.

[[Page 77788]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.060

c. Alternatives Considered
    We considered several alternative timelines for updating the Model 
baseline year. First, we considered leaving the baseline year at CY 
2022 for those measures on the previously proposed measure set. We 
opted against this alternative because it uses less recent data and 
makes it more difficult for HHAs to track which achievement thresholds 
and benchmarks are based on which years of baseline data.
    Second, because of the time between the Model baseline year and the 
performance year, we considered delaying the implementation of the 
claims-based DTC-PAC measure by one year. Under this scenario, the 
measure's baseline year will remain CY 2022/2023, but the measure's 
first performance year will be CY 2025/2026. The first payment year 
that uses the claims-based DTC-PAC measure will then be CY 2028. As 
such, CY 2025 will be a transition year in between the current 
applicable measure set and the proposed applicable measure set. During 
this transition year, the OASIS-based DTC measure could be retained 
through CY 2025 or removed. Retaining the OASIS-based DTC measure 
during the transition year will ensure that the concept of being 
discharged to the community will be reflected in all performance and 
payment years, while removing it before the transition year will better 
align with the removal of the other measures as proposed. Because we 
view the concept of being discharged to the community as an important 
aspect of home health quality, we favor retaining the OASIS-based DTC 
measure during the transition year over removing it, assuming we delay 
implementation of the claims-based DTC measure. We rejected delayed 
implementation, however, because it temporarily increases the 
complexity of the expanded Model and requires that the Model uses the 
legacy OASIS-based DTC measure for another year, despite its removal 
from the HH QRP.
    Third, we considered delaying implementation of the OASIS-based DC 
Function measure, which is proposed for CY 2025 implementation in the 
HH QRP as indicated in section III.D.1. of the proposed rule. Although 
a delay will allow more time to evaluate the measure's performance 
prior to HHVBP implementation, data utilized in this measure have been 
a part of the HH QRP's OASIS assessment tool since CY 2019. We prefer 
the proposed timeline for the OASIS-based DC Function measure because 
it expedites alignment with the HH QRP, SNF VBP, and the other PAC 
programs and the timing corresponds with the proposed removal and 
replacement of other measures in the Model.
    Lastly, we considered delaying implementation for all replacement 
measures, such that their Model baseline years will end on December 31, 
2023, and their first performance years will end on December 31, 2026 
(CY 2026 for the OASIS-based DC Function and claims-based PPH measures 
and CY 2025/2026 for the claims-based DTC-PAC measure). Under this 
alternative, the first payment year to use the proposed applicable 
measure set will be CY 2028. We favor the proposed timeline because we 
prefer aligning more closely with the HH QRP measure set as early as 
possible.
    We invited public comments on this proposal.
    Comment: Many commenters requested that we not change the Model 
baseline year, claiming it ``moves the goal post'' negating the quality 
improvement efforts they have made in preparation for the expanded 
Model. Another commenter believe that moving the baseline penalizes 
HHAs that took the initiative to improve quality and rewards those HHAs 
that have not started improving performance since the start of the 
expanded HHVBP Model. A couple of commenters expressed concern that 
baseline data will not be available until October 2024.
    Response: We believe that updating the Model baseline in 2025 
serves several purposes: (1) it measures an HHA's improvement based on 
recent changes in performance using the most current data available, 
(2) it establishes a baseline year that it is the same for the existing 
measures as for the newly adopted measures, and (3) it supports 
continuous quality improvement. We appreciate the comments regarding 
the consideration of HHAs' efforts to improve quality. However, to add 
new measures to HHVBP, we must establish a Model baseline year for 
these measures. We believe that it is beneficial to align the Model 
baseline year for the existing measures with the new measures, 
particularly given that the new measures contribute heavily to the HHA 
performance scores. Maintaining different Model baseline years could 
cause more burden and confusion, compared to updating the Model 
baseline year for all measures at the same time. The expanded HHVBP 
Model performance scoring methodology rewards progress in raising 
quality scores not only through improvement points, but also through 
achievement points. Under the expanded Model, achievement is 
prioritized relative to improvement. As we stated in the CY 2023 HH PPS 
final rule (87 FR 66874), quality improvement efforts undertaken by 
HHAs that show impact on performance year quality scores may be 
recognized through achievement points, regardless of when those efforts 
were initiated. For example, an HHA that has improved their overall 
quality will potentially get more achievement points attributed to 
their TPS than from improvement points and would potentially result in 
the same payment adjustment if we had not changed the baseline. As 
stated in the proposed rule, final achievement thresholds and 
benchmarks will be provided in the July 2024 Interim Performance Report 
(IPR). To help provide feedback to HHAs on the applicable measure set 
effective in CY 2025, we plan to make the most current HHA-specific 
performance data for the applicable measures available to each HHA in 
iQIES. We intend for this to include current performance relative to 
other HHAs nationally as soon as

[[Page 77789]]

administratively possible and before the start of the CY 2025 
performance year and again before the first IPR scheduled for July 
2025.
    After consideration of the public comments received, we are 
finalizing the provisions without modification.
6. Future Topics for Measure Considerations
    We will take into consideration opportunities for further alignment 
with measures in the HH QRP and publicly reported on Home Health Care 
Compare because alignment will facilitate comparative assessments of 
provider quality and streamline home health providers' data capture and 
reporting processes. If we consider adding new measures that require 
data that is not already collected through existing quality measure 
data reporting systems, we will propose that option in future 
rulemaking while being mindful of provider burden.
    To further the goals of the CMS National Quality Strategy, CMS 
leaders from across the Agency have come together to move towards a 
building-block approach to streamline quality measures across CMS 
quality programs for the adult and pediatric populations. This 
``Universal Foundation'' \129\ of quality measures will focus provider 
attention, reduce burden, identify disparities in care, prioritize 
development of interoperable, digital quality measures, allow for 
cross-comparisons across programs, and help identify measurement gaps. 
The development and implementation of the Preliminary Adult and 
Pediatric Universal Foundation Measures will promote the best, safest, 
and most equitable care for individuals as we all come together on 
these critical quality areas. As CMS moves forward with the Universal 
Foundation, we will be working to identify foundational measures in 
other specific settings and populations to support further measure 
alignment across CMS programs as applicable.
---------------------------------------------------------------------------

    \129\ Jacobs, D.B., Schreiber, M., Seshamani, M., Tsai, D., 
Fowler, E., & Fleisher, L.A. (2023). Aligning quality measures 
across CMS--the universal foundation. New England Journal of 
Medicine, 388(9), 776-779. https://www.nejm.org/doi/full/10.1056/NEJMp2215539.
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    In recognition of persistent health disparities and the importance 
of closing the health equity gap, we will consider future modifications 
that promote health equity and ways in which we could incorporate 
health equity goals into the Model. Any changes will be proposed in 
future notice and comment rulemaking.
    While we did not make any specific proposals here, we invited 
interested parties to suggest future measures and the value they may 
provide to the expanded HHVBP Model.
    Comment: We received one suggestion for a measure to be included in 
the Model, the Medicare Spending Per Beneficiary measure.
    Response: We appreciate this suggestion and will share it with the 
HHVBP TEP as future measures for consideration is an agenda item for 
the TEP planned for November of this year.

C. Proposed Changes to the Appeals Process

1. Background
    As codified at Sec.  484.375, the appeals process under the 
expanded HHVBP Model allows HHAs to submit recalculation requests for 
the interim performance reports and the Annual Total Performance Score 
(TPS) and Payment Adjustment Report (Annual Performance Report or APR). 
Under this process, an HHA may also make a reconsideration request if 
it disagrees with the results of a recalculation request for the APR. 
We refer the reader to the CY 2022 HH PPS final rule (86 FR 62331 
through 62332) for details of the appeals process. We also proposed (86 
FR 62329) that we will make available the Final APR after all 
reconsideration requests are processed and no later than 30 calendar 
days before the payment adjustment takes effect annually, both for 
those HHAs that requested a reconsideration and all other competing 
HHAs.
2. Proposed Revisions
    We proposed revisions to the policy at Sec.  484.375(b)(5) to 
acknowledge the ability of the CMS Administrator to review 
reconsideration decisions, and to change the time for filing a request 
for reconsideration. In particular, we proposed to amend Sec.  
484.375(b)(5) to specify that an HHA may request Administrator review 
of a reconsideration decision within 7 days from CMS' notification to 
the HHA contact of the outcome of the reconsideration request. We 
proposed to amend Sec.  484.375(b)(5) to state that the CMS 
reconsideration official issues a written decision that is final and 
binding 7 calendar days after the decision unless the CMS Administrator 
renders a final determination reversing or modifying the 
reconsideration decision. And, that an HHA may request within 7 
calendar days of the decision that the CMS Administrator review the 
reconsideration decision. The CMS Administrator may decline to review 
the reconsideration decision, render a final determination, or choose 
to take no action on the request for administrative review. 
Reconsideration decisions are considered final if the CMS Administrator 
declines an HHA's request for review or if the CMS Administrator does 
not take any action on the HHA's request for review within 14 days.
    This proposed change will ensure that accountability for the 
decisions of CMS is vested in a principal officer and brings the 
reconsideration review process to a more similar posture as other CMS 
appeals entities that provide Administrator review. This revision also 
ensures that HHAs are aware that administrative review is available to 
those HHAs who wish to seek additional review of a reconsideration 
decision.
    We invited public comment on this proposal.
    Comment: In addition to support of the added step to the HHVBP 
appeals process, a commenter asked that we give HHAs more time to make 
the final request. Another commenter suggested that we notify them why 
an appeal is not moving forward.
    Response: To accommodate the time needed to process all 
reconsideration requests, issue final reports, notify HHAs of their 
payment adjustment percentages for the upcoming calendar year 30 days 
before the start of that year, and submit payment adjustment 
percentages to the MACs, we cannot extend the period of time to make a 
final request. We thank you and appreciate the suggestion to notify an 
HHA of why an appeal is not moving forward. We believe that providing 
the Administrator's rationale for declining review would be burdensome. 
However, we will monitor the issue and consider it for future 
rulemaking if appropriate.
    After consideration of the public comments received, we are 
finalizing the proposed provisions without modification.

D. Public Reporting Reminder

    In the CY 2022 HH PPS final rule (86 FR 62332 through 62333), we 
proposed that we will publicly report the following information for the 
expanded HHVBP Model:
     Applicable measure benchmarks and achievement thresholds 
for each small- and large-volume cohort.
     For each HHA that qualified for a payment adjustment based 
on the data for the applicable performance year--
     Applicable measure results and improvement thresholds;
     The HHA's Total Performance Score (TPS);

[[Page 77790]]

     The HHA's TPS Percentile Ranking; and
     The HHA's payment adjustment for a given year.
    In that same rule, we stated that we anticipate this information 
will be made available to the public on a CMS website on or after 
December 1, 2024, the date by which we will intend to complete the CY 
2023 Annual Report appeals process and issuance of the Final Annual 
Report to each competing HHA. For each year thereafter, we anticipate 
following the same approximate timeline for publicly reporting the 
payment adjustment for the upcoming calendar year. This policy is 
codified at Sec.  484.355(c). We did not propose any changes to this 
policy. This simply serves as a reminder of our existing policy.
    We did not receive comments on this reminder.

E. Health Equity Update

1. Background
    In the Calendar Year 2023 Home Health Prospective Payment System 
Proposed Rule (CMS-1766-P), we included a Request for Information (RFI) 
on a future approach to health equity in the expanded HHVBP Model. We 
define health equity as ``the attainment of the highest level of health 
for all people, where everyone has a fair and just opportunity to 
attain their optimal health regardless of race, ethnicity, disability, 
sexual orientation, gender identity, socioeconomic status, geography, 
preferred language, or other factors that affect access to care and 
health outcomes.'' \130\ We are working to advance health equity by 
designing, implementing, and operationalizing policies and programs 
that support health for all the people served by our programs and 
models, eliminating avoidable differences in health outcomes 
experienced by people who are disadvantaged or underserved, and 
providing the care and support that our enrollees need to thrive. Our 
goals outlined in the CMS Framework for Health Equity 2022-2032 \131\ 
are in line with Executive Order 13985, ``Advancing Racial Equity and 
Support for Underserved Communities Through the Federal Government.'' 
\132\ The goals included in the CMS Framework for Health Equity serve 
to further advance health equity, expand coverage, and improve health 
outcomes for the more than 170 million individuals supported by our 
programs, and sets a foundation and priorities for our work including: 
strengthening our infrastructure for assessment, creating synergies 
across the health care system to drive structural change, and 
identifying and working to eliminate barriers to CMS-supported 
benefits, services, and coverage.
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    \130\ Centers for Medicare and Medicaid Services. Available at 
https://www.cms.gov/pillar/health-equity. Accessed February 1, 2023.
    \131\ https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
    \132\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
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    In addition to the CMS Framework for Health Equity, CMS seeks to 
``advance health equity and whole-person care'' as one of eight goals 
comprising the CMS National Quality Strategy (NQS).\133\ The NQS 
identifies a wide range of potential quality levers that can support 
our advancement of equity, including: (1) establishing a standardized 
approach for patient-reported data and stratification; (2) employing 
quality and value-based programs to address closing equity gaps; and, 
(3) developing equity-focused data collection, analysis, regulations, 
and quality improvement initiatives.
---------------------------------------------------------------------------

    \133\ Centers for Medicare & Medicaid Services. What is the CMS 
Quality Strategy? Available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
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    A goal of this NQS is to address persistent disparities that 
underly our healthcare system. Racial disparities, in particular, are 
estimated to cost the U.S. $93 billion in excess medical costs and $42 
billion in lost productivity per year, in addition to economic losses 
due to premature deaths.\134\ At the same time, racial and ethnic 
diversity has increased in recent years, with an increase in the 
percentage of people who identify as two or more races accounting for 
most of the change, rising from 2.9 percent to 10.2 percent between 
2010 and 2020.\135\ Therefore, we need to consider ways to reduce 
disparities, achieve equity, and support our diverse beneficiary 
population through the way we measure quality and display the data.
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    \134\ Ani Turner, The Business Case for Racial Equity, A 
Strategy for Growth, W.K. Kellogg Foundation and Altarum, April 
2018.
    \135\ 2022 National Healthcare Quality and Disparities Report. 
Content last reviewed November 2022. Agency for Healthcare Research 
and Quality, Rockville, MD, https://www.ahrq.gov/research/findings/nhqrdr/nhqdr22/index.html.
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    We solicited public comments via the previously discussed RFI on 
policy changes that we should consider on the topic of health equity. 
We specifically requested input on whether we should explore 
incorporating adjustments into the expanded HHVBP Model to reflect the 
varied patient populations that HHAs serve around the country and tie 
equity-focused outcomes to the payment adjustments we make based on HHA 
performance under the Model. We refer readers to the CY 2023 HH PPS 
final rule (87 FR 66876), for a summary of the public comments and 
suggestions we received in response to the health equity RFI. We will 
take these comments into account as we continue to work to develop 
policies and quality measures on this important topic.
2. Anticipated Future State
    We are committed to developing approaches to meaningfully 
incorporate the advancement of health equity into the expanded HHVBP 
Model. As we move this important work forward, we will continue to take 
input from interested parties. We also note that there are proposals 
being made to implement a health equity adjustment in the Hospital 
Inpatient Quality Reporting Program and the SNF Value-Based Purchasing 
Program. At this time, however, we will give HHAs time to learn the 
requirements of the expanded Model, gather at least two years of 
performance data, and study effects of the expanded Model on health 
equity outcomes before incorporating any potential changes to the 
expanded Model regarding health equity.
    Comment: Several commenters expressed their support of the approach 
described in this update, particularly the plan to gather two years of 
performance data prior to adding a HE adjustment. However, a commenter 
strongly encouraged CMS to continue to pursue ways to incentivize the 
achievement of health equity in the expanded HHVBP Model without delay 
as they believe that the learning process related to the Model can 
occur simultaneously with CMS actively continuing efforts to further 
health equity. A commenter encouraged CMS to create a standardization 
of social determinants for health data collection and analysis. Another 
commenter expressed concerns that those HHAs that accept complex 
patients that have significant issues associated with SDH may have 
poorer outcomes and may exclude patients that will negatively impact 
their payments. This same commenter asked that we consider a more 
efficient way to gather information related to health equity.
    Response: We appreciate these comments and will share them with the 
HHVBP TEP as the incorporation of health equity is an agenda item for 
the TEP planned for November of this year.

[[Page 77791]]

V. Medicare Home Intravenous Immune Globulin (IVIG) Items and Services

A. General Background

1. Statutory Background
    Division FF, section 4134(a) of the CAA, 2023 added coverage and 
payment of items and services related to administration of IVIG in a 
patient's home of a patient with a diagnosed primary immune deficiency 
disease furnished on or after January 1, 2024, by amending the existing 
IVIG benefit category at section 1861(s)(2)(Z) of the Act. In addition, 
section 4134(b) of Division FF of the CAA, 2023 amended section 1842(o) 
of the Act by adding a new paragraph (8) that established the payment 
for IVIG administration items and services. Under the CAA, 2023 
provision, payment for these IVIG administration items and services is 
required to be a bundled payment, made to a supplier for all items and 
services related to administration of IVIG furnished in the home during 
a calendar day separate from the payment for the IVIG product.
2. Overview
    Primary immune deficiency diseases (PIDD) are conditions triggered 
by genetic defects that cause a lack of and/or impairment in antibody 
function, resulting in the body's immune system not being able to 
function in a normal way. Immune globulin (Ig) therapy is used to 
temporarily replace some of the antibodies (that is, immunoglobulins) 
that are missing or not functioning properly in people with PIDD.\136\ 
The goal of Ig therapy is to use Ig obtained from normal donor plasma 
to maintain a sufficient level of antibodies in the blood of 
individuals with PIDD to fight off bacteria and viruses. Ig is 
formulated for both intravenous and subcutaneous administration (SCIg). 
Clinicians can prescribe either product to the beneficiary with PIDD 
according to clinical need and preference, and beneficiaries can switch 
between intravenous and subcutaneous administration of Ig.
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    \136\ Perez EE, Orange JS, Bonilla F, et al. (2017) Update on 
the use of immunoglobulin in human disease: A review of evidence; 
Journal Allergy Clin Immunol. 139(3S): S1-S46.
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3. Legislative Summary
    Section 642 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Pub. L. 108-173) amended section 1861 of the 
Act to provide Medicare Part B coverage of the IVIG product for the 
treatment of PIDD in the home, but not the items and services involved 
with administration.
    Section 101 of the Medicare IVIG Access and Strengthening Medicare 
and Repaying Taxpayers Act of 2012 (Medicare IVIG Access Act) (Pub. L. 
112-242) mandated the establishment, implementation, and evaluation of 
a 3-year Medicare Intravenous Immune Globulin (IVIG) Demonstration 
Project (the Demonstration) under Part B of title XVIII of the Act. The 
Demonstration was implemented to evaluate the benefits of providing 
coverage and payment for items and services needed for the home 
administration of IVIG for the treatment of PIDD, and to determine if 
it would improve access to home IVIG therapy for patients with PIDD. 
The Medicare IVIG Access Act mandated that Medicare would establish a 
per visit payment amount for the items and services necessary for the 
home administration of IVIG therapy for beneficiaries with specific 
PIDD diagnoses. The Demonstration did not include Medicare payment for 
the IVIG product which continues to be paid under Part B in accordance 
with section 1842(o) and 1847(A) of the Act. The Demonstration covered 
and paid a per visit payment amount for the items and services needed 
for the administration of IVIG in the home. Items may include infusion 
set and tubing, and services include nursing services to complete an 
infusion of IVIG lasting on average three to five hours.\137\
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    \137\ Updated Interim Report to Congress: Evaluation of the 
Medicare Patient Intravenous Immunoglobulin Demonstration Project, 
2022: https://innovation.cms.gov/data-and-reports/2022/ivig-updatedintrtc.
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    On September 28, 2017, Congress passed the Disaster Tax Relief and 
Airport and Airway Extension Act of 2017 (Pub. L. 115-63). Section 302 
of Public Law 115-63 extended the Demonstration through December 31, 
2020.
    Division CC, section 104, of the Consolidated Appropriations Act, 
2021 (CAA, 2021) (Pub. L. 116-260), further extended the Demonstration 
for another 3 years through December 31, 2023.
    Division FF, section 4134 of the CAA, 2023 (CAA, 2023) (Pub. L. 
117-328) mandated that CMS establish permanent coverage and payment for 
items and services related to administration of IVIG in a patient's 
home of a patient with PIDD. The permanent home IVIG items and services 
payment is effective for home IVIG administration furnished on or after 
January 1, 2024. Payment for these items and services is required to be 
a separate bundled payment made to a supplier for all administration 
items and services furnished in the home during a calendar day. The 
statute provides that payment amount may be based on the amount 
established under the Demonstration. The standard Part B coinsurance 
and the Part B deductible is required to apply. In addition, that 
statute states that the separate bundled payment for these IVIG 
administration items and services does not apply for individuals 
receiving services under the Medicare home health benefit. The CAA, 
2023 provision clarifies that a supplier who furnishes these services 
meet the requirements of a supplier of medical equipment and supplies.
4. Demonstration Overview
    Under the Demonstration, which will end on December 31, 2023, 
Medicare provides a bundled payment under Part B, that is separate from 
the IVIG product, for items and services that are necessary to 
administer IVIG in the home to enrolled beneficiaries who are not 
otherwise homebound and receiving services under the home health 
benefit. The Demonstration only applies to situations where the 
beneficiary requires IVIG for the treatment of certain PIDD diagnoses 
or was receiving SCIg to treat PIDD and wishes to switch to IVIG.
    Services covered under the Demonstration are required to be 
provided and billed by specialty pharmacies enrolled as durable medical 
equipment (DME) suppliers, that provide the Medicare Part B-covered Ig. 
The covered items and services under the Demonstration are paid as a 
single bundle and are subject to coinsurance and deductible in the same 
manner as other Part B services. HHAs are not eligible to bill for 
services covered under the Demonstration but can bill for services 
related to the administration of IVIG if the patient is receiving 
services under a home health episode of care, in which case the home 
health payment covers the items and services.
    In order to participate in the Demonstration, beneficiaries must 
meet the following requirements:
     Be eligible to have the IVIG paid for at home under Part B 
FFS.
     Have a diagnosis of PIDD.
     Not be enrolled in a Medicare Advantage plan.
     Cannot be in a home health episode of care on the date of 
service (in such circumstances, the home health payment covers the 
items and services).
     Must receive the service in their home or a setting that 
is ``home like''.
    To participate in the Demonstration, the beneficiary must submit an 
application, signed by their physician.
    DME suppliers billing for the items and services covered under the

[[Page 77792]]

Demonstration must meet the following requirements:
     Meet all Medicare, as well as other national, state, and 
local standards and regulations applicable to the provision of services 
related to home infusion of IVIG.
     Be enrolled and current with the National Supplier 
Clearinghouse.
     Be able to bill the DME Medicare Administrative 
Contractors (MACs).
    CMS implemented a bundled per visit payment amount under the 
Demonstration, statutorily required to be based on the national per 
visit low-utilization payment adjustment (LUPA) for skilled nursing 
services used under the Medicare HH PPS established under section 1895 
of the Act. The payment amount is subject to coinsurance and 
deductible.
    For billing under the Demonstration, CMS established a ``Q'' code 
for services, supplies, and accessories used in the home under the IVIG 
Demonstration:
     Q2052--(Long Description)--Services, supplies, and 
accessories used in the home under Medicare Intravenous immune globulin 
(IVIG) Demonstration.
     Q2052--(Short Description)--IVIG demo, services/supplies.
    The code is used for the IVIG Demonstration only. Suppliers must 
bill Q2052 as a separate claim line on the same claim for the IVIG 
drug.

B. Scope of Expanded IVIG Benefit

    As discussed previously, Division FF, section 4134 of the CAA, 2023 
added coverage of items and services related to the administration of 
IVIG in a patient's home to the existing IVIG benefit category at 
section 1861(s)(2)(Z) of the Act, effective January 1, 2024. Currently, 
IVIG is covered in the home under Part B if all of the following 
criteria are met:
     It is an approved pooled plasma derivative for the 
treatment of primary immune deficiency disease.
     The patient has a diagnosis of primary immune deficiency 
disease.
     The IVIG is administered in the home.
     The treating practitioner has determined that 
administration of the IVIG in the patient's home is medically 
appropriate.
    Therefore, as section 4134(a)(1) of the CAA, 2023 adds the items 
and services (furnished on or after January 1, 2024) related to the 
administration of IVIG to the benefit category defined under section 
1861(s)(2)(Z) of the Act (the Social Security Act provision requiring 
coverage of the IVIG product in the home), the same beneficiary 
eligibility requirements for the IVIG product would apply for the IVIG 
administration items and services described in section V.A.4. of this 
final rule. Subpart B of Part 410 of the regulations set out the 
medical and other health services requirements under Part B. The 
regulations at Sec.  410.10 identify the services that are subject to 
the conditions and limitations specified in this subpart. Section 
410.10(y) includes intravenous immune globulin administered in the home 
for the treatment of primary immune deficiency diseases. Section 410.12 
outlines general basic conditions and limitations for coverage of 
medical and other health services under Part B, as identified in 
section 410.10. Section 410.12(a) includes the conditions that must be 
met in order for these services to be covered, and include the 
following:
     When the services must be furnished. The services must be 
furnished while the individual is in a period of entitlement.
     By whom the services must be furnished. The services must 
be furnished by a facility or other entity as specified in Sec. Sec.  
410.14 through 410.69.
     Physician certification and recertification requirements. 
If the services are subject to physician certification requirements, 
they must be certified as being medically necessary, and as meeting 
other applicable requirements, in accordance with subpart B of part 
424.
    As the definition of IVIG at section 1861(zz) of the Act now 
includes the items and services necessary to administer IVIG in the 
home, we proposed to add the term ``items and services'' to the 
regulation at Sec.  410.10(y). Furthermore, sub-regulatory guidance 
documents (that is, IVIG LCD (33610) \138\ and IVIG Policy Article 
(A52509) \139\) provide direction on coding and coverage for the IVIG 
product at home. Through the Local Coverage Determination (LCD) for 
Intravenous Immune Globulin (L33610),\140\ the Durable Medical 
Equipment Medicare administrative contractors (DME MACs) specify the 
Healthcare Common Procedure Coding System (HCPCS) codes for which IVIG 
derivatives are covered under this benefit. Therefore, a beneficiary 
must be receiving one of the IVIG derivatives specified under the LCD 
for IVIG in order to qualify to receive the items and services covered 
under section 1861(s)(2)(Z) of the Act. Furthermore, for any item 
(including IVIG) to be covered by Medicare, it must (1) be eligible for 
a defined Medicare benefit category, (2) be reasonable and necessary 
for the diagnosis or treatment of illness or injury or to improve the 
functioning of a malformed body member, and (3) meet all other 
applicable Medicare statutory and regulatory requirements. Guidance for 
the LCD for IVIG \141\ identifies the ICD-10-CM codes that support 
medical necessity for the provision of IVIG in the home. These 
diagnosis codes are listed in Table E1.
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    \138\ https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=33610.
    \139\ https://www.cms.gov/medicare-coverage-database/view/article.aspx?articleId=52509.
    \140\ Local Coverage Determination (LCD): IVIG (L33610) https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=33610&ContrId=389.
    \141\ https://www.cms.gov/medicare-coverage-database/view/article.aspx?articleId=52509.
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BILLING CODE 4120-01-P

[[Page 77793]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.061

BILLING CODE 4120-01-C
    In accordance with this guidance, a beneficiary must be diagnosed 
with one of the primary immune deficiencies identified by the ICD-10-CM 
codes, set out in Table E1 and as updated in subregulatory guidance to 
qualify to receive the items and services covered under section 
1861(s)(2)(Z) of the Act. This guidance is revised as needed by the DME 
MACs to reflect updated and changed ICD-10-CM codes. And finally, in 
order to qualify to receive IVIG in the home, section 1861(zz) of the 
Act requires that a treating practitioner must have determined that 
administration of the IVIG in the patient's home is medically 
appropriate. Accordingly, we will update this guidance pursuant to the 
CAA, 2023 to reflect the expansion of the benefit to the items and 
services related to the administration of IVIG at home. Leveraging the 
existing regulations and sub-regulatory guidance will maintain one set 
of standards across the entire IVIG benefit (that is, for the product 
and for the related items and services). This will result in seamless 
implementation from the existing IVIG Demonstration, thereby ensuring 
immediate access for beneficiaries requiring such items and services. 
We solicited comments on our proposal to add ``items and services'' to 
the regulation at Sec.  410.10(y).
    Comment: We received seven comments on the implementation of the 
home IVIG items and services payment. Overall, commenters were 
supportive of CMS's proposed regulations to implement the home IVIG 
items and services payment in a manner that seamlessly carries out the 
law as enacted. Commenters agreed that ``home infusion offers better 
access to infused therapies for beneficiaries living in rural areas and 
with disabilities, while improving clinical outcomes.'' Another 
commenter reiterated the benefits of home IVIG administration discussed 
in the 2022 IVIG Demonstration Report to the Congress, stating 
advantages such as better access to IVIG, decrease in transportation 
barriers, higher rates of compliance, and reduced risk of infection.
    Response: We appreciate commenters support of the proposals in this 
rule.
    Final Decision: We are finalizing the amendment to the regulation 
at Sec.  410.10(y) to add ``items and services'' as proposed.
1. Items and Services Related to the Home Administration of IVIG
    Section 101(c) of the Medicare IVIG Access Act established coverage 
for items and services needed for the in-home administration of IVIG 
for the treatment of primary immunodeficiencies under a Medicare 
demonstration program. We stated in the CY 2024 HH PPS proposed rule 
(88 FR 43754) that we interpret section 4134 of the CAA, 2023 to make 
permanent coverage of the same items and services under the existing 
IVIG Demonstration to ensure continuous and comprehensive coverage for 
beneficiaries who choose to receive home IVIG therapy. Under the 
Demonstration, the bundled payment for the items and services necessary 
to administer the drug intravenously in the home includes the infusion 
set and tubing, and nursing services to complete an infusion of IVIG 
lasting on average three to five hours.\142\ Although ``items

[[Page 77794]]

and services'' are not explicitly defined under section 4134 of the 
CAA, 2023, we believe the items and services covered under the 
Demonstration are inherently the same items and services that would be 
covered under the payment added to the benefit category at section 
1861(s)(2)(Z) of the Act. While we did not enumerate a list of services 
that must be included in the separate bundled payment, we stated in the 
proposed rule that we anticipate that the nursing services would 
include such professional services as IVIG administration, assessment 
and site care, and education. Moreover, it would be up the provider to 
determine the services and supplies that would be appropriate and 
necessary to administer the IVIG for each individual. This may or may 
not include the use of a pump. Because IVIG does not have to be 
administered through a pump (although it can be), external infusion 
pumps are not covered under the DME benefit for the administration of 
IVIG. An external infusion pump is only covered under the DME benefit 
if the infusion pump is necessary to safely administer the drug. The 
Local Coverage Determination (LCD) for External Infusion Pumps identify 
the drugs and biologicals that the DME Medicare Administrative 
Contractors (MACs) have determined require the use of such pumps and 
cannot be administered via a disposable elastomeric pump or the gravity 
drip method.\143\ As such, under the IVIG Demonstration, coverage 
cannot extend to the DME pump, and therefore would not be covered 
separately under the home IVIG items and services payment.
---------------------------------------------------------------------------

    \142\ Updated Interim Report to Congress: Evaluation of the 
Medicare Patient Intravenous Immunoglobulin Demonstration Project, 
August 2022 found at: https://innovation.cms.gov/data-and-reports/2022/ivig-updatedintrtc.
    \143\ https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=33794.
---------------------------------------------------------------------------

    We invited comments on any additional interpretations of items and 
services that may be considered under the scope of the home IVIG 
benefit. We did not receive any comments suggesting coverage of 
additional items and services under this payment. Therefore we expect 
that suppliers will furnish the same items and services under the 
permanent benefit, as provided under the Demonstration. We remind 
commenters that the IVIG product is covered under a separate payment.
2. Home IVIG Items and Services and the Relationship to/Interaction 
With Home Health and Home Infusion Therapy Services
    Prior to enactment of the CAA, 2023, IVIG administration items and 
services were explicitly excluded from coverage under the Part B IVIG 
benefit. However, if a beneficiary was considered homebound and 
qualified for the home health benefit, the items and services needed to 
administer IVIG in the home could be covered as home health services. 
Section 4134(b) of the CAA, 2023 excludes the IVIG items and services 
bundled payment in the case of an individual receiving home health 
services under section 1895 of the Act. Therefore, a beneficiary does 
not have to be considered confined to the home (that is, homebound) in 
order to be eligible for the home IVIG benefit; however, homebound 
beneficiaries requiring items and services related to the 
administration of home IVIG, and who are receiving services under a 
home health plan of care, may continue to receive services related to 
the administration of home IVIG as covered home health services. As 
such, in the case that a beneficiary is receiving home health services 
under the home health benefit, the home health agency could continue to 
bill for these items and services under the home health benefit and the 
drug would be continued to be paid under Part B. A separate payment for 
the IVIG items and services under the IVIG benefit would be prohibited.
    With regard to the home infusion therapy (HIT) services benefit, 
Medicare payment for home infusion therapy services is for services 
furnished in coordination with the furnishing of intravenous and 
subcutaneous infusion drugs and biologicals specified on the DME LCD 
for External Infusion Pumps (L33794),\144\ with the exception of 
insulin pump systems and certain drugs and biologicals on a self-
administered drug exclusion list. In order for the drugs and 
biologicals to be covered under the Part B DME benefit they must 
require infusion through an external infusion pump. If the drug or 
biological can be infused through a disposable pump or by a gravity 
drip, it does not meet this criterion. IVIG does not require an 
external infusion pump for administration purposes and therefore, is 
explicitly excluded from the DME LCD for External Infusion Pumps. 
However, subcutaneous immunoglobulin (SCIg) is covered under the DME 
LCD for External Infusion Pumps, and items and services for 
administration in the home are covered under the HIT services benefit. 
While a DME supplier and a HIT supplier (or a DME supplier also 
enrolled as a HIT supplier) could not furnish services related to the 
administration of immunoglobulin (either IVIG or SCIg) to the same 
beneficiary on the same day, a beneficiary could potentially receive 
services under both benefits for services related to the infusion of 
different drugs. For example, a DME supplier also accredited and 
enrolled as a HIT supplier, could furnish HIT services to a beneficiary 
receiving intravenous acyclovir as well as IVIG, and bill both the IVIG 
and the HIT services benefits on the same date of service. We also 
recognize that a beneficiary may, on occasion, switch from receiving 
immunoglobulin subcutaneously to intravenously and vice versa, and as 
such, utilize both the HIT services and the IVIG benefits within the 
same month.
---------------------------------------------------------------------------

    \144\ Local Coverage Determination (LCD): External Infusion 
Pumps (L33794) https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=33794.
---------------------------------------------------------------------------

    We invited comments on how typical it is for a patient to alternate 
between receiving IVIG and SCIg and the frequency with which it may 
occur. The following is a summary of the comments received and our 
responses.
    Comment: Commenters representing people with primary 
immunodeficiency diseases, provided several reasons why patients may 
alternate between IVIG and SCIg. They explained that the route of 
administration affects the types of adverse reactions for patients 
receiving Ig therapy. They stated that IVIG may have more systemic 
adverse events such as headaches and nausea, whereas, SCIg may have 
more local reactions related to self-infusions. Other reasons for 
switching may be related to age, dexterity, and other physical 
abilities, as well as comfort level, convenience, or physician 
recommendation.
    Response: We appreciate this explanation and will consider these 
comments as we move forward with implementation to ensure that the 
benefit meets the needs of beneficiaries impacted by primary 
immunodeficiency diseases.
    Comment: A few commenters had questions and comments pertaining to 
the delivery of these services by HHAs. Commenters stated that 
furnishing IVIG in the home would be overly burdensome on HHAs who may 
already be challenged by staffing shortages or who may not be 
``equipped to infuse the product, for example, being unable to secure 
experienced infusion nurses.'' Other commenters questioned whether the 
beneficiary could receive IVIG as an outpatient under Part B (that is, 
at the physician's office or infusion center), stating the beneficiary 
would have to switch to another agency or a home infusion therapy 
supplier if their HHA does not have staff who are able to administer 
the product.
    Response: To clarify: these IVIG administration services can only 
be

[[Page 77795]]

billed by a DME supplier. If an HHA does not have staff able to furnish 
these services, they are not required to do so. However, the items and 
services related to the administration of IVIG in the home, and as 
identified on the home health plan of care, would be included in the 
payment for the 30-day home health period payment. As such, HHAs must 
provide home health items and services included on the plan of care 
either directly or under arrangement and must bill and be paid under 
the HH PPS for such covered home health services. Thus, if an HHA is 
unable to furnish the items and services related to the administration 
of IVIG (as indicated in the plan of care) in the home, they are 
responsible for arranging these services (including arranging for 
services in an outpatient facility) and are required to bill these 
services as home health services under the HH PPS.
    We note that this aligns with current practice as it applies 
payment under the IVIG demonstration and Medicare home health coverage 
and payment. Under the IVIG demonstration program, beneficiaries who 
are receiving care under the Medicare home health benefit are not 
eligible to have covered services separately paid for under the 
Demonstration as these services have always been covered under the 
Medicare home health benefit.
    Therefore, we believe concerns about access to care for non-
homebound beneficiaries and additional burden on HHAs are misplaced, as 
this permanent policy is simply an extension of current practice under 
the Demonstration.
    Comment: A few commenters provided feedback related to the home 
infusion therapy services benefit, specifically regarding changing the 
definition of ``infusion drug administration calendar day,'' and 
bundling the Part B disposable supplies with the home infusion therapy 
services.
    Response: We remind commenters that the home infusion therapy 
services benefit is a separate benefit from the home IVIG items and 
services benefit, and as such, comments related to payment for home 
infusion therapy services are out of the scope of this final rule.

C. IVIG Administration Items and Services Payment

    As discussed previously, section 101 of the Medicare IVIG Access 
Act established the authority for a Demonstration providing payment for 
items and services needed for the in-home administration of IVIG. We 
stated in the CY 2024 HH PPS proposed rule that we believe the 
provisions established under that law serve as the basis for the 
conditions for payment with respect to the requirements that must be 
met for Medicare payment to be made to suppliers for the items and 
services covered under section 1861(s)(2)(Z) of the Act.
1. Home IVIG Administration Items and Services Supplier Type
    Section 4134(b) of the CAA, 2023 amends section 1842(o) of the Act 
by adding a new paragraph (8) that establishes a separate bundled 
payment to the supplier for all items and services related to the 
administration of such intravenous immune globulin, described in 
section 1861(s)(2)(Z) of the Act to such individual in the patient's 
home during a calendar day. Section 4134(c) of the CAA, 2023 amends 
section 1834(j)(5) of the Act, which are a requirement for suppliers of 
medical equipment and supplies, by adding a new subparagraph (E), 
clarifying with respect to payment, that items and services related to 
the administration of intravenous immune globulin furnished on or after 
January 1, 2024, as described in section 1861(zz) of the Act, are 
included in the definition of medical equipment and supplies. This 
means that suppliers that furnish IVIG administration items and 
services must meet the existing DMEPOS supplier requirement for payment 
purposes under this benefit. Suppliers of IVIG administration items and 
services must enroll as a DMEPOS supplier and comply with the Medicare 
program's DMEPOS supplier standards (found at 42 CFR 424.57(c)) and 
DMEPOS quality standards to become accredited for furnishing medical 
equipment and supplies. Further, in order to receive payment for home 
IVIG items and services, the supplier must also meet the requirements 
under subpart A of part 424--Conditions for Medicare Payment. The 
DMEPOS supplier may subcontract with a provider in order to meet the 
professional services identified in section V.B.1. of this final rule. 
All professionals who furnish services directly, under an individual 
contract, or under arrangements with a DMEPOS supplier to furnish 
services related to the administration of IVIG in the home, must be 
legally authorized (licensed, certified, or registered) in accordance 
with applicable Federal, State, and local laws, and must act only 
within the scope of their State license or State certification, or 
registration. A supplier may not contract with any entity that is 
currently excluded from the Medicare program, any State health care 
programs or from any other federal procurement or non-procurement 
programs. We did not receive any comments on the supplier type who may 
furnish home IVIG items and services.
2. Home IVIG Administration
    Section 1861(s)(2)(Z) of the Act defines benefit coverage of 
intravenous immune globulin for the treatment of primary immune 
deficiency diseases in the home. Under the IVIG Demonstration, 
beneficiaries are eligible to participate if they receive IVIG services 
in ``their home or a setting that is `home like' \145\.'' Section 
410.12(b) identifies the supplier types who can furnish the services 
identified at Sec.  410.10. Section 410.38 provides the conditions for 
payment for DME suppliers and identifies the institutions that may not 
qualify as the patient's home. As such, the home administration of IVIG 
items and services must be furnished in the patient's home, defined as 
a place of residence used as the home of an individual, including an 
institution that is used as a home. An institution that is used as a 
home may not be a hospital, CAH, or SNF as defined in Sec.  410.38(b). 
We did not receive any comments on our definition of ``home.''
---------------------------------------------------------------------------

    \145\ Intravenous Immune Globulin Demonstration MLN Fact Sheet: 
https://www.cms.gov/files/document/mln3191598-intravenous-immune-globulin-demonstration.pdf.
---------------------------------------------------------------------------

D. Home IVIG Items and Services Payment Rate

1. Payment Amount for Home IVIG Items and Services for CY 2024
    Section 1842(o) of the Act provides the authority for the 
development of a separate bundled payment for Medicare-covered items 
and services related to the administration of intravenous immune 
globulin to an individual in the patient's home during a calendar day, 
in an amount that the Secretary determines to be appropriate. This 
payment may be based on the payment established pursuant to section 
101(d) of the Medicare IVIG Access Act. Section 4134(d) of the CAA, 
2023, amends section 1833(a)(1) of the Act to provide that, with 
respect to items and services related to the administration of IVIG 
furnished on or after January 1, 2024, as described in section 1861(zz) 
of the Act, the amounts paid shall be the lesser of the 80 percent of 
the actual charge or the payment amount established under section 
1842(o)(8).
    In accordance with section 101(d) of the Medicare IVIG Access Act, 
the Secretary established a per visit payment amount for the items and 
services needed for the in-home administration of IVIG based on the

[[Page 77796]]

national per visit low-utilization payment amount (LUPA) under the 
prospective payment system for home health services established under 
section 1895 of the Act. Per the Demonstration, the bundled payment 
amount for services needed for the home administration of IVIG includes 
infusion services provided by a skilled nurse. Therefore, the bundled 
payment is based on the LUPA amount for skilled nursing, based on an 
average 4-hour infusion. The initial payment rate for the first year of 
the Demonstration, was based on the full skilled nursing LUPA for the 
first 90 minutes of the infusion and 50 percent of the LUPA for each 
hour thereafter for an additional 3 hours. Thereafter, the payment rate 
is annually updated based on the nursing LUPA rate for such year. The 
service is subject to coinsurance and deductibles like other Part B 
services.
    As stated in section V.B.1. of the CY 2024 HH PPS proposed rule, we 
believe that payment under section 1861(s)(2)(Z) of the Act covers the 
same items and services covered under the IVIG Demonstration. Likewise, 
we also agreed that the professional services needed to safely 
administer IVIG in the home would be services furnished by a registered 
nurse. Therefore, we stated that we believe setting the CY 2024 payment 
rate for the home IVIG items and services under section 1861(s)(2)(Z) 
of the Act, based on the CY 2023 payment amount established under the 
Demonstration ($408.23) is appropriate. However, although the 
Demonstration used the LUPA rate, which is annually adjusted by the 
wage index budget neutrality factor, as well as the home health payment 
rate update percentage, we stated that we believe it is appropriate to 
propose to update the CY 2023 IVIG services Demonstration rate by only 
the CY 2024 home health payment rate update percentage (proposed 2.7%) 
and not include the wage index budget neutrality factor, as the IVIG 
items and services payment rate is not statutorily required to be 
geographically wage adjusted. Therefore, we proposed that the home IVIG 
items and services payment rate for CY 2024 would be $408.23 * 1.027 = 
$419.25.
    Further, although section 1842(o) of the Act states that payment is 
for the items and services furnished to an individual in the patient's 
home during a calendar day, we stated that we believe that, as the 
statute aligns the payment amount with such amount determined under the 
Demonstration, the best reading of ``calendar day'' is ``per visit.'' 
Additionally, we stated that we would expect a supplier to furnish only 
one visit per calendar day.
    We proposed to establish a new Subpart R under the regulations at 
42 CFR part 414 to incorporate payment provisions for the 
implementation of the IVIG items and services payment in accordance 
with section 1842(o) of the Act for home IVIG items and services 
furnished on or after January 1, 2024. We proposed at Sec.  
414.1700(a), that a single payment amount is made for items and 
services furnished by a DMEPOS supplier per visit. We proposed at Sec.  
414.1700(b), to set the initial payment amount equivalent to the CY 
2023 ``Services, Supplies, and Accessories Used in the Home under the 
Medicare IVIG Demonstration'' payment amount, updated by the proposed 
CY 2024 home health update percentage of 2.7 percent.\146\
---------------------------------------------------------------------------

    \146\ The final home health update percentage is 3.0.
---------------------------------------------------------------------------

    We solicited comments on these payment proposals, including the 
proposed CY 2024 payment rate. The following is a summary of the 
comments received and our responses.
    Comment: A commenter agreed with the approach CMS has taken to 
calculate the payment in accordance with the approach taken in the 
Demonstration. This commenter stated appreciation for recognizing that 
a registered nurse should be delivering this care.
    Response: We thank the commenter for their support of the payment 
approach.
    Comment: Two commenters stated that CMS should reevaluate the LUPA-
based rate calculation to ensure reimbursement is commensurate with the 
extensive services required to provide equitable access to IVIG 
treatments in the home, including for those beneficiaries residing in 
rural areas. A commenter stated that the proposed LUPA-based rate 
calculation may undervalue significant services and resources involved 
in the provision of home-based IVIG therapy. Another commenter 
suggested that CMS raise the rate to reflect five hours of the LUPA 
rate, rather than the initial four hours established under the Medicare 
IVIG Access Act.
    Response: The Demonstration payment rate was initially set in 
accordance with the national per-visit LUPA amount under the HH PPS, as 
directed by section 101(d) of the Medicare IVIG Access Act. CMS tied 
payment to the LUPA amount for skilled nursing because payment is for 
infusion services furnished by a skilled nurse. As payment under the 
permanent benefit is for these same services, we believe setting the CY 
2024 payment rate for the home IVIG items and services under section 
1861(s)(2)(Z) of the Act, based on the CY 2023 payment amount 
established under the Demonstration is appropriate. However, while the 
demonstration continued to use the LUPA rate to annually update this 
payment amount, we proposed to update the CY 2023 IVIG services 
Demonstration rate by only the CY 2024 home health payment rate update 
percentage and not include the wage index budget neutrality factor, 
which is included in the LUPA update. The commenter does not state what 
other services beyond skilled nursing are involved in the provision of 
home-based IVIG therapy; however, we remind the commenter that this 
payment is strictly for the items and services needed to administer the 
IVIG in the patient's home. The IVIG product is covered under separate 
statutory authority. Regarding the suggestion to raise the payment rate 
to reflect five hours of the full LUPA rate for skilled nursing, a 
review of the Updated Interim Report to Congress: Evaluation of the 
Medicare Patient Intravenous Immunoglobulin Demonstration Project \147\ 
shows that physicians' offices average 3.14 hours of infusion time and 
hospital outpatient facilities average 3.09 hours infusion time. As 
such, we continue to believe that the initial calculation methodology 
established under the Demonstration program is sufficient to continue 
under the permanent benefit.
---------------------------------------------------------------------------

    \147\ https://innovation.cms.gov/data-and-reports/2022/ivig-updatedintrtc.
---------------------------------------------------------------------------

    Comment: A commenter agreed with our approach to not apply a 
geographic wage adjustment to the permanent IVIG item and services 
payment.
    Response: We thank the commenter for their support.
    Final Decision: We are finalizing our proposal to update the CY 
2024 home IVIG items and services payment rate by the CY 2024 home 
health payment rate update. The final home health update is 3.0 
percent. The CY 2024 home IVIG items and services payment rate for CY 
2024 is $408.23 * 1.030 = $420.48.
(a) Annual Payment Update
    As discussed previously, the IVIG Demonstration used the nursing 
LUPA rate, which is annually adjusted by the wage index budget 
neutrality factor, as well as the home health update percentage, as the 
payment rate for such year of services. In the CY 2024 HH PPS proposed 
rule we stated that, because the IVIG services payment is not 
geographically wage adjusted, we believe it is more appropriate to

[[Page 77797]]

annually adjust the IVIG items and services payment rate only by the 
home health payment update percentage. As such we proposed at Sec.  
414.1700(c), beginning in 2025, the per-visit payment amount from the 
prior year will be annually increased by the home health update 
percentage for the current calendar year. We solicited comments on the 
use of the home health update percentage to annually update the IVIG 
items and services payment beyond CY 2024.
    Comment: A commenter supported the proposal to annually update the 
IVIG items and services payment for CY 2025 and subsequent calendar 
years by the home health update percentage.
    Response: We thank the commenter for their support.
    Final Decision: We are finalizing our proposal to update the CY 
2025 home IVIG items and services payment rate and subsequent years, by 
the home health payment rate update for such year.

E. Billing Procedures for Home IVIG Items and Services

    In order to ensure a smooth transition for DME suppliers to bill 
for the items and services related to the home administration of IVIG, 
we will use the existing Q-code (Q2052) under the Demonstration, with a 
new descriptor (``Services, Supplies, and Accessories used in the Home 
for the Administration of Intravenous Immune Globulin (ivig)'') in 
order to bill for items and services under Medicare FFS. The Q-code 
will continue to be billed separately from, or on the same claim as, 
the J-code for the IVIG product and will be processed through the DME 
MACs. The Q-code should be billed as a separate claim line on the same 
claim for the same place of service as the J-code for the IVIG. In 
cases where the IVIG product is mailed or delivered to the patient 
prior to administration, the date of service for the administration of 
the IVIG (the Q-code) may be no more than 30 calendar days after the 
date of service on the IVIG product claim line. No more than one Q-code 
should be billed per claim line per date of service.
    If a provider is billing for multiple administrations of IVIG on a 
single claim, then the supplier will bill the Q-code for each date of 
service on a separate claim line, which will be payable per visit (that 
is, each time the IVIG is administered). There may be situations in 
which multiple units of IVIG are shipped to the patient and billed on a 
single ``J'' code claim line followed by more than one Q-code 
administration claim line, each with the date of service on which the 
IVIG was administered. However, only one Q-code shall be paid per 
infusion date of service. To implement the requirements for this 
separate bundled payment under section 1861(s)(2)(Z) of the Act, we 
will issue a Change Request (CR) prior to implementation of this 
payment, including the Q-code needed for billing, outlining the 
requirements for the claims processing changes needed to implement this 
payment.

VI. Hospice Informal Dispute Resolution and Special Focus Program

A. Background and Statutory Authority

    Division CC, section 407 of the Consolidated Appropriations Act 
(CAA), 2021, amended Part A of Title XVIII of the Act to add a new 
section 1822, and amended sections 1864(a) and 1865(b) of the Act, 
establishing new hospice program survey and enforcement requirements, 
required public reporting of survey information, and a new hospice 
hotline.
    The provisions in the CAA, 2021, direct the Secretary to create a 
Special Focus Program (SFP) for poor-performing hospice programs, give 
authority for imposing enforcement remedies for noncompliant hospice 
programs, and require the development and implementation of a range of 
remedies as well as procedures for appealing determinations regarding 
these remedies. These enforcement remedies can be imposed instead of, 
or in addition to, termination of the hospice programs' participation 
in the Medicare program. The remedies include civil money penalties 
(CMP), directed in-service training, directed plan of correction, 
suspension of all or part of payments, and appointment of temporary 
management to oversee operations.
    In the CY 2022 HH PPS final rule (86 FR 62240), we addressed 
provisions related to hospice survey enforcement and other activities 
described in the rule. A summary of the finalized CAA, 2021 provisions 
regarding hospice survey and enforcement can be found in the CY 2022 HH 
PPS final rule (86 FR 62243), available at https://www.govinfo.gov/content/pkg/FR-2021-11-09/pdf/2021-23993.pdf. We finalized all the CAA, 
2021 provisions related to hospice survey and enforcement in CY 2022 
rulemaking except for the SFP. As outlined in the CY 2022 HH PPS final 
rule, we stated that we will consider public comments we received and 
seek additional collaboration with stakeholders to further develop a 
revised proposal and methodology for the SFP.
    In the FY 2023 Hospice Wage Index and Payment Rate Update and 
Hospice Quality Reporting Requirements final rule (87 FR 4566) (Hospice 
rule), we affirmed our intention to initiate a hospice Technical Expert 
Panel (TEP) to provide input on the structure and methodology of the 
SFP. Public comments received in response to the FY 2023 Hospice rule 
generally supported CMS's efforts to establish an SFP and to convene a 
TEP as part of the SFP development. A 30-day call for nominations was 
held July 14 through August 14, 2022, and nine TEP members were 
selected, representing a diverse range of experience and expertise 
related to hospice care and quality. A CMS contractor convened a TEP in 
October and November 2022, which provided feedback and considerations 
on the preliminary SFP concepts, including developing a methodology to 
identify hospice poor-performers, criteria for completing the SFP and 
for termination from Medicare when a hospice cannot complete the SFP, 
and public reporting. Details from the TEP meetings, including their 
recommendations, are available in the TEP summary report \148\ on the 
CMS website at https://www.cms.gov/medicare/quality-safety-oversight-certification-compliance/hospice-special-focus-program.
---------------------------------------------------------------------------

    \148\ 2022 Technical Expert Panel and Stakeholder Listening 
Sessions: Hospice Special Focus Program Summary Report (April 28, 
2023).
---------------------------------------------------------------------------

B. Proposed Regulatory Provisions

1. Overview
    We proposed in Subpart M--Survey and Certification of Hospice 
Programs, to add new definitions of ``Hospice Special Focus Program,'' 
``IDR,'' ``SFP status,'' and ``SFP survey'' at Sec.  488.1105. We also 
proposed a hospice informal dispute resolution process at Sec.  
488.1130 to provide hospice programs an informal opportunity to resolve 
disputes related to condition-level survey findings for those hospice 
programs that are seeking recertification from the State survey agency 
(SA), CMS, or reaccreditation from the Medicare-approved accrediting 
organization (AO) for continued participation in Medicare. Informal 
dispute resolution would also be offered to hospice programs following 
a complaint or validation survey and those in the SFP. We proposed the 
specific details on the hospice SFP at Sec.  488.1135, which includes 
the criteria for selection and completion of the SFP, hospice 
termination from Medicare, and public reporting of the SFP. We proposed 
that the hospice SFP would commence as of

[[Page 77798]]

the effective date of the rule, and we anticipated selecting SFP 
hospices in CY 2024. We also proposed to periodically review the 
effectiveness of the methodology and the algorithm.
    We received 58 comments on the Hospice IDR and SFP proposals. 
Overall, a majority of commenters agreed with the intent and purpose of 
the IDR process and SFP. However, commenters had concerns about the 
data sources and individual measures chosen for the SFP algorithm, as 
well as concerns about various steps of the algorithm. Commenters also 
inquired about the various aspects of the SFP program, including 
selection criteria, graduation and termination criteria, technical 
assistance, and public reporting. Other commenters expressed support 
for the program as proposed but requested additional details regarding 
certain aspects of the SFP, such as how the algorithm will be monitored 
and how hospices will be selected for the SFP.
2. Proposed Definitions (Sec.  488.1105)
    We proposed to add four new definitions to Sec.  488.1105, that 
would define the hospice SFP, IDR, SFP status, and SFP survey. The 
proposed definitions are as follows:
     Hospice Special Focus Program (SFP) means a 
program conducted by CMS to identify hospices as poor performers, based 
on defined quality indicators, in which CMS selects hospices for 
increased oversight to ensure that they meet Medicare requirements. 
Selected hospices either successfully complete the SFP program or are 
terminated from the Medicare program.
     IDR stands for informal dispute resolution.
     SFP status means the status of a hospice 
provider in the SFP with respect to the provider's progress in the SFP, 
which is indicated by one of the following status levels: Level 1--in 
progress; Level 2--completed successfully; or Level 3--terminated from 
the Medicare program.
     SFP survey refers to a standard survey as 
defined in this section and is performed after a hospice is selected 
for the SFP and is conducted every 6 months, up to 3 occurrences.
    We did not receive comments on the proposed definitions, and we are 
finalizing them as proposed. (See 42 CFR 488.1105.)
3. Informal Dispute Resolution (Sec.  488.1130)
    We proposed at new Sec.  488.1130 to make an Informal Dispute 
Resolution (IDR) process available to hospice programs to address 
disputes related to condition-level survey findings following a hospice 
program's receipt of the official survey Statement of Deficiencies and 
Plan of Correction, Form CMS-2567. The proposed IDR for hospices would 
be similar to the process already in existence for home health 
agencies. The IDR process for hospice programs, like that of HHAs, is 
for condition-level survey findings which may be the impetus for an 
enforcement action. Standard-level findings alone do not trigger an 
enforcement action and are not accompanied by appeal and hearing 
rights. The proposed IDR process would provide hospice programs an 
informal opportunity to resolve disputes regarding survey findings for 
those hospice programs seeking recertification from the SA, CMS, or 
reaccreditation from the AO for continued participation in Medicare. 
Additionally, the proposed IDR may be initiated for programs under SA 
monitoring (either through a complaint investigation or validation 
survey) and those in the proposed SFP. For hospice programs deemed 
through a CMS-approved AO, the AO would receive the IDR request from 
their deemed hospice program, following the same process and 
coordinating with CMS regarding any enforcement actions. In accordance 
with 42 CFR 488.5(a)(4), AOs must have a comparable survey process to 
the SAs. For deemed hospice programs, the AO communicates any 
condition-level findings to the applicable CMS Location. If a deemed 
hospice fails to meet the Medicare requirements or shows continued 
condition-level noncompliance, deemed status is generally removed and 
compliance oversight is placed under the SA. The purpose of the 
proposed IDR process would be to provide an opportunity to settle 
disagreements at the earliest stage, prior to a formal hearing, and to 
conserve time and money resources potentially spent by the hospice, the 
SA, and CMS. The proposed IDR process may not be used to refute an 
enforcement action or selection into the SFP. Additionally, we proposed 
that failure of CMS, or the State or the AO, as appropriate, to 
complete IDR must not delay the effective date of any enforcement 
action.
    When survey findings indicate a condition-level deficiency (or 
deficiencies), the hospice program would be notified in writing of its 
opportunity to request an IDR for those deficiencies. This notice would 
be provided to the hospice program when the CMS-2567 Statement of 
Deficiencies and Plan of Correction is issued to the hospice. We 
proposed that the hospice's request for IDR must be submitted in 
writing (electronically or hard copy), include the specific survey 
findings that are disputed, and be submitted within the same 10 
calendar days allowable for submitting an acceptable plan of 
correction.
    The proposed IDR provision balances the need for hospice programs 
to avoid unnecessary disputes and protracted litigation using the most 
rapid mechanism for correcting deficiencies and aligning with the 
interests of hospice patients/caregivers. IDR is meant to be an 
informal process whereby the provider has an opportunity to address the 
surveyor's findings, either by disputing them or providing additional 
information.
    We proposed that if any survey findings are revised or removed by 
the State or CMS based on IDR, and if CMS accepts the IDR results, the 
CMS-2567 would be revised accordingly. If CMS accepts the IDR results 
and the revised Form CMS-2567, then CMS would adjust any enforcement 
actions imposed solely due to those cited and revised deficiencies. If 
the survey findings are upheld by CMS or the state following IDR, the 
Form CMS-2567 would not be revised based on the IDR and there would not 
be adjustments to the enforcement actions.
    Comment: Many commenters supported the establishment of an IDR 
process for hospices.
    Response: We thank the commenters for their support of the IDR 
process for hospices.
    Comment: A commenter suggested that CMS consider including language 
that promotes avoidance of the IDR process when findings surpass a 
certain level of seriousness.
    Response: We thank the commenters for their suggestion but are not 
accepting it. Immediate jeopardy findings are cited at the condition-
level on the Form CMS-2567. As with HHAs, hospice providers may dispute 
condition-level findings during IDR since such findings may be the 
impetus for an alternative sanction or termination. This would give the 
hospice provider an opportunity to present evidence in support of its 
position prior to imposition of a remedy or termination. However, a 
hospice's initiation of the IDR process will not postpone or otherwise 
delay the effective date of any enforcement action, especially if there 
was an immediate jeopardy finding. Additionally, the IDR process does 
not guarantee a finding will be overturned and may even convince 
hospices that, because there is ample support for the survey findings,

[[Page 77799]]

it would be unwise to pursue litigation. Further, if any findings are 
revised or removed based on IDR, the official Statement of Deficiencies 
is revised accordingly and any enforcement actions imposed as a result 
of those revised or removed deficiencies are adjusted accordingly. CMS 
will publish guidance on the IDR process and address limitations for 
the use of IDR for hospices following the rule's finalization.
    Comment: A commenter questioned whether a more formal process 
involving an independent third party may be needed to ensure impartial 
assessment and resolution of the concerns raised through the IDR 
process.
    Response: We are not aware of any concerns with the HHA IDR process 
since its inception in 2014. Therefore, we anticipate the IDR process 
for hospices will also be effective, based on its similarity to the HHA 
IDR process.
    Comment: Several commenters recommended that CMS publish guidance 
on timeframes in the hospice IDR process. The commenters recommended as 
a reasonable timeframe for the IDR process to be completed to be 14 
days and 30 calendar days from the date the dispute is filed.
    Response: Following the rule's finalization, CMS will publish 
guidance for the hospice IDR process, similar to the guidance 
established for the HHA IDR. We will include timeframes for the process 
and for completing the IDR as expeditiously as possible.
    Comment: A commenter recommended that CMS develop a process to 
track providers utilizing the IDR process and the final resolutions, 
and that CMS ensure the final IDR resolution, if changed from the 
initial findings in the CMS-2567, is reflected in a revised CMS-2567 
and posted to the tracking process.
    Response: The national surveyor database (iQIES) tracks the IDR 
process. If findings are changed due to IDR, a revised CMS-2567 is sent 
to the provider and updated in the national database.
    Comment: Some commenters stated that they believed that the IDR 
should be available to hospices to refute SFP selection. Also, 
commenters noted that the first hospices selected for SFP would not 
have had the benefit of the IDR. Some commenters had concerns on the 
applicability of the IDR process as it relates to survey and 
substantiated complaint data used to choose providers for the SFP. 
Commenters also stated that the IDR outcome should be considered a part 
of the data used prior to making a final choice on hospice selection 
into the SFP.
    Additionally, commenters encouraged CMS to standardize the survey 
process, enhance data interpretation accuracy and consistency, and not 
count condition-level deficiencies that are being disputed in the IDR 
process in the SFP algorithm. Commenters also noted that if CMS 
implements the SFP as proposed, the IDR process will not be available 
for deficiencies already cited until 2024.
    Response: The IDR process provides an opportunity for a hospice 
provider to dispute any active condition-level findings upon receipt of 
survey findings. The SFP algorithm utilizes survey data from the 
finalized survey reports (CMS-2567), which are not pending IDR or 
subject to disputes.
    Final Decision: After considering the public comments, CMS is 
finalizing the hospice IDR as proposed. (See 42 CFR 488.1130.)
4. Special Focus Program (Sec.  488.1135)
    Section 1822(b) of the Act requires the Secretary to conduct a 
Special Focus Program for hospice programs that the Secretary has 
identified as having substantially failed to meet applicable 
requirements of the Act. We proposed at Sec.  488.1135 a hospice SFP to 
address issues that place hospice beneficiaries at risk for poor 
quality of care through increased oversight. We proposed that specific 
criteria would be used to determine whether a hospice program 
participates in the SFP as outlined in the proposed rule. We also 
proposed the hospice SFP would commence as per the effective date of 
this final rule when published, and we anticipate selecting SFP 
hospices starting in CY 2024. We proposed to periodically review the 
effectiveness of the methodology and the algorithm and make adjustments 
through rulemaking as necessary.
a. Proposed Hospice Special Focus Program Algorithm
    In establishing the proposed Hospice SFP, we examined the Special 
Focus Facility program for nursing homes and its methodology for 
facility selection. Although the proposed methodology for the hospice 
program SFP is similar in certain facets, the proposed SFP methodology 
is tailored specifically to this setting and to the data that is 
available to evaluate hospice performance.
    We proposed to identify a subset of 10 percent of hospice programs 
based on the highest aggregate scores determined by the algorithm. The 
hospices selected for the SFP from the 10 percent would be determined 
by CMS.
    To identify ``poor performance,'' we have identified several 
indicators, namely, survey reports with Condition-Level Deficiencies 
(CLDs) and complaints with substantiated allegations, and CMS Medicare 
data sources from the Hospice Quality Reporting Program (HQRP) 
(Medicare claims and Consumer Assessment of Healthcare Providers and 
Systems (CAHPS[supreg]) Hospice Survey). These indicators, which can be 
used to identify potential poor performance, have been integrated into 
the proposed SFP algorithm to assist in identifying potential hospice 
providers for the SFP.
    As discussed previously, we proposed to use multiple data sources 
to provide a comprehensive view of the quality of care provided at the 
identified hospices. The compilation of these data sources illustrates 
areas of concern--validated/identified issues based on in-person/on-
site review of a hospice to meet Medicare requirements; caregiver and 
public complaints about hospices not providing quality of care or not 
meeting Medicare requirements; and quality measures that inform the 
public of whether a hospice is providing expected care processes or 
outcomes. We believe these are indicators of poor quality hospice care. 
The final SFP algorithm is designed as an initial step in identifying 
poor quality indicators.
b. Proposed Use of Medicare Data Sources To Identify Poor Performing 
Hospices
    To identify hospices with poor quality indicators, we proposed 
using the most recent complete Medicare hospice data from two data 
sources: (1) hospice surveys; and (2) Medicare HQRP. Each source 
represents distinct dimensions of hospice care that we have identified 
as related to a hospice's performance or practices. From these data 
sources, we proposed to use multiple indicators of hospice care 
delivery to identify poor performing hospices (see Table 1). Hospices 
would be identified for potential SFP enrollment if they (1) have data 
from any of the aforementioned data sources; (2) are listed as an 
active provider (that is, have billed at least one claim to Medicare 
FFS in the last 12 months); and (3) operate in the United States, 
including the District of Columbia and U.S. territories. Each data 
source and the quality indicators are discussed further later in this 
preamble. Based on these proposed criteria, in CY 2019 through CY 2021 
analytic file, 5,943 hospices out of 6,093 active hospice providers 
(97.5 percent) would be eligible for participation in the SFP.

[[Page 77800]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.062

(1) Hospice Survey Data
(a) Quality-of-Care Condition-Level Deficiencies (CLDs)
    Hospices are surveyed for compliance with hospice program 
requirements prior to becoming certified as a hospice provider in 
Medicare (initial certification survey) and then at least once every 36 
months (standard survey for recertification (Sec.  418.1110)), with 
roughly one-third of all hospices being surveyed each year. A post-
survey revisit or follow-up survey may also occur to determine if the 
hospice corrected cited deficiencies and are in substantial compliance 
with all requirements. Hospice survey data (initial certification, 
standard recertification, and follow-up) is collected on the 
Certification And Survey Provider Enhanced Reports (CASPER) system. CMS 
will be posting publicly available hospice survey finding information 
to the Quality, Certification and Oversight Report (QCOR) website in CY 
2023. For information related to the hospice survey process, we 
encourage the public to review the CMS State Operations Manual (SOM), 
Appendix M (Internet-Only Manual, Publication 100-07).
    A CLD is cited on a survey when a hospice is found to be 
noncompliant with all or part of a condition of participation (CoP), 
which is one of the health and safety requirements all hospices are 
required to meet to participate in Medicare. As discussed in the QSOG 
memo (QSO-23-08-Hospice) issued on January 27, 2023, a significant 
change in the hospice survey protocol was made to provide an enhanced 
approach to investigating the quality-of-care provided to hospice 
patients. While each of the 23 CoPs continues to have equal weight in 
the final certification and enforcement decision, special attention is 
directed to those CoPs directly impacting patient care for purposes of 
the proposed SFP. Consistent with this enhanced survey process, we have 
identified 11 CoPs that directly contribute to the quality of care 
delivered to patients, their caregivers, and families, and believe that 
a cited CLD on any one of them may indicate a hospice is providing poor 
quality-of-care. Therefore, we proposed to include the 11 quality-of-
care CLDs (noted in Table F2) as data indicators in the SFP algorithm. 
The SFP algorithm would focus on quality-of-care CLDs because they are 
based on observable quality concerns seen and reported by hospice 
surveyors to identify hospices that provide poor quality-of-care to 
hospice patients. Additionally, we did not propose to include all 23 
hospice CoPs because we did not want to dilute the methodology's 
ability to identify quality concerns. However, in the proposed rule we 
noted that we may explore incorporating other CoPs into the 
methodology, and we solicited comments on an alternative approach that 
would incorporate other CoPs in the calculation for the SFP algorithm.
[GRAPHIC] [TIFF OMITTED] TR13NO23.063

    We proposed to count the total number of quality-of-care CLDs from 
the previous 3 consecutive years of data. Our analysis of data from CY 
2019 through 2021 found that very few hospices are not present in the 
survey data, and that the overwhelming majority of hospices (88.3 
percent of all proposed SFP-eligible hospices or 5,248 out of 5,943) 
had no quality-of-care CLDs cited over these 3 years. Of the 5,943 
hospices identified that will be SFP-eligible under the CY 2019-2021 
data, 5.7 percent (that is, 341 hospices) are not present in the survey 
data. This means that each of those 341 hospices has not yet received 
its standard survey or their survey results had not been

[[Page 77801]]

recorded as of the time the data was accessed for analysis from the 
CASPER system and/or had no recorded substantiated complaint in the 
iQIES). Considering public comments received on the CY 2022 HH PPS 
final rule (86 FR 62240) and the SFP TEP feedback, stakeholders 
expressed concern about inter-surveyor reliability and state-to-state 
variability in survey policy as potential drawbacks of including survey 
data as part of the SFP program methodology. However, the TEP also 
acknowledged the importance and value of survey data that identifies 
whether a hospice complies with Medicare requirements to support basic 
care quality. Furthermore, the TEP supported using the total count of 
quality-of-care CLDs to indicate significant noncompliance with 
multiple CoPs. To address the inter-surveyor reliability and 
variability concerns, we have implemented improvements to surveyor 
training guidelines to increase surveyor standardization between SAs 
and AOs. Based on our efforts to improve surveyor training, and 
considering the TEP and stakeholder concerns, we proposed to count the 
total number of quality-of-care CLDs from the last 3 consecutive years 
of data.
(b) Substantiated Complaints
    In addition to quality-of-care CLDs, we proposed to include the 
total number of substantiated complaints received against a hospice in 
the last 3 consecutive years of data before the release of the SFP 
selection list. Complaints against a hospice may be filed with the SA 
or Beneficiary and Family Centered Care Quality Improvement 
Organization at any time by a patient and/or caregiver(s) and hospice 
staff members (see generally SOM Chapter 5, Complaint Procedures). Once 
a complaint is filed with the SA, the SA can conduct an unannounced 
complaint investigation survey to substantiate or refute the 
allegations. If the allegation is found to be substantiated or 
confirmed, the SA informs the hospice and submits the findings to 
iQIES. A post-survey revisit or follow-up survey may also occur to 
determine if the hospice has made corrections and is in compliance with 
all requirements. A hospice may have many complaints filed against 
them, but not all complaints may be substantiated upon SA review. The 
results of the review of complaints are submitted to the iQIES system, 
which is not publicly available. Like quality-of-care CLDs, most 
hospices in our analysis currently have no substantiated complaints in 
the identified 3-year period. Our CY 2019-2021 survey data analysis 
found that currently 81.8 percent of hospice programs (that is, 4,860 
of the 5,943 SFP-eligible hospices) have had no substantiated 
complaints over the past 3 years. As noted previously, there are 5.7 
percent of eligible hospices that have no survey data, or in other 
words, there is missingness in the survey data for those hospices. 
Unlike quality-of-care CLDs, where missingness is likely due to the 
absence of a recent survey, the absence of substantiated complaints 
from this data is likely because the hospice program has no 
substantiated complaints.
(2) Hospice Quality Reporting Program (HQRP) Data
    In addition to survey data, we proposed to use quality measures 
from the HQRP to capture hospice care processes and beneficiary/
caregiver care experiences. The HQRP includes data submitted by 
hospices via the Hospice Item Set (HIS), Medicare hospice claims, and 
the CAHPS Hospice Surveys. All Medicare-certified hospices must comply 
with these reporting requirements or face penalties for a failure to 
report, although some hospices may be exempt from reporting certain 
measures.\149\ This ensures that most hospices have these data 
available for use in the SFP algorithm. These quality measure data are 
publicly available in the Provider Data Catalog (PDC) at https://data.cms.gov/provider-data/topics/hospice-care and Care Compare at 
https://www.medicare.gov/care-compare/?providerType=Hospice. A 
description of current HQRP measures and public reporting dates is 
available online. We proposed to include five publicly reported HQRP 
measures to identify poor performing hospices. The proposed measures 
are as follows:
---------------------------------------------------------------------------

    \149\ Information on the reporting requirements and Annual 
Payment Update payment penalties for the failure to report can be 
found on the HQRP Overview website or section 1814(i) of the Act.

 Medicare claims-based measure:--Hospice Care Index (HCI) 
Overall Score
 CAHPS Hospice Survey Data measures:
    ++ Help for Pain and Symptoms
    ++ Getting Timely Help
    ++ Willingness to Recommend this Hospice
    ++ Overall Rating of this Hospice
(a) Hospice Care Index (HCI)
    We proposed including the HCI overall score based on eight quarters 
of Medicare claims data. The HCI captures multiple aspects of care 
delivery across ten indicators that comprise a composite HCI overall 
score, with hospices earning a point for each indicator met (range: 0-
10 such that a lower score indicates lower quality of care). The 
proposed HCI overall score indicates hospice care quality between 
admission and discharge (HCI Technical Report and 86 FR 42528). 
Moreover, the HCI score is based on Medicare claims data, which provide 
direct evidence of care delivery decisions at a hospice that is readily 
available for all hospices. For public reporting, hospices with less 
than 20 claims over the eight quarters are excluded from reporting the 
measure. The HCI measure would also be suppressed if any 1 of the 10 
indicators is not reported for any reason as each indicator is a key 
component of the measure and all ten are necessary to derive the HCI 
score. Additional details of the HCI, such as the quality measure 
specifications, individual indicator information, data period, and 
exclusion criteria, are available in the HQRP Quality Measure (QM) 
User's Manual posted on the HQRP Current Measures web page. The SFP TEP 
and previous public comments generally supported the inclusion of HCI 
data in the preliminary methodology because the HCI captures a robust 
majority of hospices participating in Medicare and covers key aspects 
of the hospice care continuum. Our analysis of FYs 2019 to 2021 
(excluding January through June 2020) HCI data found that 78.3 percent 
of hospice programs (that is, 4,656 of the 5,943 SFP-eligible hospices) 
had a publicly reported HCI score. The overwhelming majority of those 
hospices receive an HCI score of 8 or more out of 10--4,007 (86.1 
percent) of the 4,656 SFP eligible hospices with a publicly reported 
HCI score.
(b) CAHPS Hospice Survey
    To represent decedent/caregiver experience of hospice care, and in 
consideration of TEP and stakeholder perspectives, we proposed using 
four measures from the CAHPS Hospice Survey: (1) help for pain and 
symptoms; (2) getting timely help; (3) willingness to recommend the 
hospice; and (4) overall rating of the hospice. CAHPS Hospice Survey 
measure scores are calculated across eight rolling quarters for all 
hospices with at least 30 completed surveys. Some hospices do not 
participate in CAHPS as new hospices are exempt from reporting CAHPS 
measures for the calendar year in which they receive their CMS 
Certification Number (CCN), and hospices can apply for a CAHPS 
exemption if they serve fewer than 50 survey--eligible decedents/
caregivers in a given calendar year. The CAHPS Hospice measures are

[[Page 77802]]

publicly available from the Provider CAHPS Hospice Survey Data file on 
the Hospice PDC. Additional details are in the QM User's Manual on the 
HQRP Current Measures web page and the CAHPS Hospice Survey website at 
https://www.hospicecahpssurvey.org/. These CAHPS Hospice Survey measure 
scores are also publicly reported on the Care Compare website at 
https://www.medicare.gov/care-compare/?providerType=Hospice. As 
discussed in the SFP TEP report, TEP and other stakeholders agreed that 
the algorithm is strengthened by including the four CAHPS Hospice 
Survey measures as they reflect caregiver-reported experiences in key 
areas of hospice quality not reflected in claims or inspection surveys.
    From the CAHPS Hospice Survey data, we proposed to use adjusted 
bottom-box scores of the four measures described previously to create a 
CAHPS Hospice Survey Index. As described in the CMS document, 
``Calculating CAHPS[supreg] Hospice Survey Top-, Middle-, and Bottom-
Box Scores,'' that summarizes the steps we use to calculate CAHPS 
Hospice Survey measure scores, ``bottom-box'' scores are calculated for 
each respondent as ``100'' if the respondent selected the least 
positive response categories for that question and ``0'' if the 
respondent selected a different response category; survey respondents 
who do not answer a question are not included in the scoring of that 
question. In the CAHPS Hospice Survey, different questions have 
different response scales, so the bottom-box responses vary across the 
survey. For example, for questions with response options of ``Yes, 
definitely,'' ``Yes, somewhat,'' and ``No,'' the bottom-box response is 
``No''; for questions with response options of ``Never,'' 
``Sometimes,'' ``Usually,'' and ``Always,'' where ``Always'' indicates 
the most positive response, the bottom-box responses are both ``Never'' 
and ``Sometimes''; Person-level bottom-box scores for each question are 
then adjusted for mode of survey administration and case-mix to produce 
hospice-level bottom-box scores. Bottom-box scores for a particular 
question can be interpreted as the percentage of respondents who 
selected the least positive response category(ies) after adjusting for 
mode of survey administration and differences in the mix of decedent/
caregiver characteristics across hospices. Composite measure scores, 
such as those for Help for Pain and Symptoms and Getting Timely Help, 
are formed by taking the average of fully adjusted hospice-level 
question scores within the composite. We proposed using bottom-box 
scores for the SFP, because they quantify reported problematic care 
experiences. To create the CAHPS Hospice Survey Index, we proposed to 
calculate a single score for each hospice by taking a weighted sum of 
the bottom-box scores for the four CAHPS measures, as described later 
in this section. Specifically, we proposed that the two measures that 
represent overall assessments of hospice care (that is, Willingness to 
Recommend this Hospice and Overall Rating of this Hospice) each be 
given a weight of 0.5 as these measures assess similar concepts. We 
proposed to weight the other two measures, Help for Pain and Symptoms 
and Getting Timely Help, at 1.0 each to reflect that these measures 
assess distinct aspects of care.
    To illustrate, not including usually applied adjustments to the 
data for case mix and mode of survey administration, if Hospice A 
received a bottom-box score of 100 on the Overall Rating of this 
Hospice, that means that all the survey respondents responded to the 
question and gave the hospice an overall rating of zero to six, the 
least positive possible responses (middle-box options: 7-8; top-box 
option: 9-10). The hospice could then receive, a bottom-box score of 0 
on the Help for Pain and Symptoms measure, meaning none of the survey 
respondents selected the least positive responses on any of the 
questions that make up this measure. If Hospice A also received a 
bottom-box score of 12 on the Willingness to Recommend this Hospice and 
a bottom-box score of 4.5 on the Getting Timely Help measure, meaning 
that approximately 12 percent and 4.5 percent of respondents, 
respectively, selected the bottom-box scores, then Hospice A's total 
CAHPS Hospice Survey Index will be 60.5, calculated as follows: ((100 + 
12) * 0.5) + (0 + 4.5) = 60.5. The maximum value for the CAHPS Hospice 
Survey Index would be 300 points. For this index, a lower number of 
points would indicate a higher quality score.
    Our analysis of CYs 2019 to 2021 (excluding January through June 
2020) CAHPS Hospice Survey data found that 49.3 percent of eligible 
hospice programs (2,929 of the 5,943 SFP-eligible hospices) report the 
four CAHPS Hospice Survey measures. Compared to the other three 
indicators (quality-of-care CLDs, substantiated complaints, and HCI), 
the scores from the four CAHPS measures are more dispersed around their 
average value. The average CAHPS Hospice Survey Index value for these 
four measures combined is 24, with an overall range of 2 to 83 from the 
SFP-eligible hospices (lower scores indicate better performance; total 
possible range: 0-300). The distribution of these values is roughly 
symmetric and centered on an average such that the likelihood of 
observing a value different from the average value becomes smaller the 
further away the value is from the average.
c. Final Data Source Preparation
    We proposed to compile the data for the algorithm indicators 
(quality-of-care CLDs, substantiated complaints, HCI, the four CAHPS 
Hospice measures) and remove hospices not eligible for SFP to create a 
single score for every hospice. A Medicare-certified hospice program 
would be included in the algorithm if it--(1) is an active provider 
that has billed at least one claim to Medicare FFS in the last 12 
months as captured in iQIES; and (2) has data for at least one 
algorithm indicator.
    For the HCI and CAHPS data, we proposed to pull the latest HCI and 
CAHPS data from the Hospice PDC. For example, we would use data from 
November 2023 to identify the pool of hospices eligible to be in the 
SFP on or after January 1, 2024.
(1) Survey Data and HCI
    For the survey data, we proposed the following steps to prepare 
data for the algorithm:
     Step One: We would pull 3 consecutive years of survey data 
preceding the release of the SFP selection list, including data for all 
relevant hospice survey types (initial certification, standard, 
complaint, and follow-up surveys). For identifying the pool of hospices 
eligible to be in the SFP on or after January 1, 2024, we would use 
2020-2023 survey data.
     Step Two: From the survey data in Step One, we would count 
the total number of quality-of-care CLDs for each hospice in the data 
file. Quality-of-care CLDs can be found in any hospice survey (initial 
certification, standard, complaint, follow-up). They are denoted within 
a survey under specific citation codes (Table F2).
     Step Three: From the data file in Step One, we would count 
the total number of substantiated complaints for each hospice in the 
data file. Substantiated complaints can be found in complaint and 
follow-up hospice surveys.
    Our initial analysis found that the proposed SFP-eligible hospices 
may have missing indicators from the survey data (quality-of-care CLDs, 
substantiated complaints) and/or HCI. To address the algorithm's 
missing data for these indicators, we proposed standardizing

[[Page 77803]]

each indicator for quality-of-care CLDs, substantiated complaints, and 
HCI. When the data for each indicator is standardized, it is rescaled 
to have a mean of zero and a standard deviation of one. We proposed 
that hospices missing any of these three indicators would be assigned a 
value of zero for that indicator after standardization (see section 
VI.B.4.d. of this final rule).
(2) CAHPS[supreg] Hospice Survey Data
    As discussed previously, CAHPS Hospice Survey data are not 
available for hospices that are exempt from participating due to size 
or newness, or for hospices for which there are fewer than 30 completed 
surveys over an eight-quarter reporting period. Since these hospices 
may differ systematically from hospices that do have publicly reported 
CAHPS Hospice Survey data, we do not believe it is appropriate to 
assign hospices the average value of the CAHPS Hospice Survey Index if 
they are missing these data. After standardizing the CAHPS Hospice 
Survey measures (using the same process for survey data and HCI in 
sections VI.B.4. and VI.B.4.d. of this final rule), we proposed 
addressing missing CAHPS Hospice Survey data by averaging the total 
number of data indicators used to derive the score. The score for 
hospices with missing CAHPS Hospice Survey data would be based solely 
on all other indicators (CLDs, complaints, and HCI), and the score for 
hospices with available CAHPS Hospice Survey data includes the CAHPS 
Hospice Survey Index in addition to the other indicators (see section 
VI.B.4.d.(2) of this final rule).
d. Proposed Data Source Standardization
    We proposed standardizing each indicator (that is, quality-of-care 
CLDs, substantiated complaints, HCI, and the CAHPS Hospice Survey 
Index) to compare indicators equally despite each data source's 
different units of measurement. For example, both quality-of-care CLDs 
and substantiated complaints are continuous variables that have no 
ceiling to how many quality-of-care CLDs or substantiated complaints a 
single hospice can receive. In contrast, a hospice can only receive a 
maximum value of 10 from the HCI quality measure. Therefore, if we do 
not rescale HCI, we will be deemphasizing the importance of HCI for the 
SFP as a relevant dimension of care quality because the range of 
possible values for HCI is much smaller than the range of possible 
values for quality-of-care CLDs and substantiated complaints. By 
standardizing the data as proposed, we can understand how different the 
indicator is for a single hospice compared to the indicator from the 
average hospice and shift the unit to a magnitude of difference from 
the average across all indicators to compare the data source indicators 
under a shared measurement unit.
    As a simplified example to illustrate the importance of 
standardization, Hospice A has one quality-of-care CLD and an HCI score 
of 3. These two numbers' absolute differences are two (3 HCI - 1 
quality-of-care CLD = 2). However, examining the absolute difference in 
these numbers does not indicate that Hospice A delivers poor care 
quality. To better explain how these two indicators relate to one 
another and quality, we look at the likelihood that Hospice A will 
receive one quality-of-care CLD and the likelihood that it will receive 
an HCI score of 3. To determine this likelihood, we proposed comparing 
these numbers to the respective averages of all other hospices for the 
indicators. The average number of quality-of-care CLDs for hospices is 
a little less than 0.5. Most hospices have zero quality-of-care CLDs. 
While a quality-of-care CLD of one is larger than the average (0.5), 
the magnitude of difference between the one quality-of-care CLD in 
Hospice A and the 0.5 quality-of-care CLDs for the average hospice is 
not very large. When considering HCI, the average HCI score for all 
hospices is 8.9 (a higher HCI score indicates better performance on the 
measure). An HCI score of three is a large difference from the average 
of 8.9, and as a result, it is unlikely that a hospice will receive 
this kind of score if it was an average HCI performer. The likelihood 
of observing a value different from the average is the type of 
information we proposed to include to determine poor performers. By 
standardizing the indicators, we shift our interpretation from what 
value they received to an estimation of how likely they are to receive 
the value if they were an average hospice. This approach would improve 
the algorithm's ability to identify those hospice programs with the 
most unlikely values across our four indicators and those that are the 
poorest performers across indicators compared to all other active 
hospices in the SFP analytic file.
    The previous fictitious example illustrates how indicators are 
standardized. We proposed to adopt the most common standardization 
method, which would be applied to each of the indicators for a specific 
hospice (hospice indicators). For each indicator, this would be done by 
taking the indicator's observed value for the hospice and subtracting 
that indicator's average value for all hospices. We would then divide 
this number (the difference) by the standard deviation, a common 
measure of data variance, to tell us how clustered data are around the 
average (see the following equation).
[GRAPHIC] [TIFF OMITTED] TR13NO23.064

    As a function of this proposed approach, all indicators are 
centered with a mean of zero and a standard deviation of one. The 
transformed indicator would represent how many standard deviations 
better or worse than average a hospice's observed value is. The 
standardized scores under this proposed approach are additive, and 
their sum represents how many standard deviations above or below 
average the hospice is across all indicators.
(1) Proposed Weighting of the Standardized Values
    The proposed standardization discussed earlier allows an 
indicator's data to be compared to another standardized indicator. 
Therefore, we would be comparing how different the observed value is 
from the average value to make all indicators mathematically equal. We 
proposed to weight each indicator by multiplying an indicator by a 
constant value to account for their relative importance in the 
methodology.
    As part of our consideration for determining the weights for each 
indicator, the TEP and stakeholder listening sessions offered 
considerations related to weighting the data sources. In discussing the 
weighting of substantiated complaints, quality-of-care CLDs, and HCI, 
the TEP and stakeholders agreed that they represent relevant dimensions 
of care quality but did not raise concerns or discuss whether one of 
these indicators was more or less indicative of care quality

[[Page 77804]]

relative to another. However, the TEP and stakeholders emphasized the 
importance of patient and caregiver perspectives represented by the 
CAHPS measures, noting they are the most integral dimension of hospice 
care quality. As discussed in the SFP TEP report on page 15, ``some TEP 
members argued that the valuable perspectives of families and 
caregivers on the CAHPS Hospice Survey justified weighting it more than 
other data sources.'' Based on the feedback from the TEP and 
stakeholder listening sessions, we proposed to weight the CAHPS Hospice 
Survey Index by twice that of the other measures (that is, multiply the 
standardized value CAHPS Hospice Survey Index by two).
(2) Proposed Approach for Missing CAHPS Data
    In three of the four indicators used in the algorithm, data exhibit 
an exceptional amount of concentration around the average value for the 
indicator. We proposed replacing missing values in quality-of-care 
CLDs, substantiated complaints, and HCI with the average value for each 
of those indicators for an individual hospice to assign a score to that 
hospice (see the discussion of standardization in this section of the 
final rule). In other words, we proposed to assign hospices missing any 
of these three indicators a value of zero for that indicator after 
standardization, which is equivalent to the average value.
    The CAHPS Hospice Survey Index is distinct from these other three 
indicators for several reasons warranting separate treatment for its 
missingness. First, the CAHPS Hospice Survey Index does not exhibit the 
same high concentration around the average value as the other measures. 
This means that there is more variability in the CAHPS Hospice Survey 
Index than in the other indicators. As a result of this increased 
variability, it is less likely that missing values would be close to 
the average value if they were observable. Second, more hospices are 
missing CAHPS Hospice Survey data than are missing data for other 
indicators in the algorithm. In our review of the CY 2019-2021 analytic 
file (excluding January 1-June 30, 2020), there is CAHPS Hospice Survey 
data for only about 49 percent of all SFP-eligible hospices. Due to 
reporting exemptions for small and/or newer hospices, those missing 
values are disproportionately from that cohort of providers. Because of 
this trend, it is difficult to draw any conclusions about the missing 
values given that there are no data from small hospices by which we can 
compare if the smaller/newer hospice CAHPS average is similar to those 
for which we have observed data. Third, hospices with fewer than 50 
distinct beneficiaries can file for an exemption from reporting CAHPS. 
If we replace missing CAHPS Hospice Survey measure values with the 
average value, poor performing small hospices could benefit from being 
small by opting into being treated as an average hospice by becoming 
exempt from reporting their poor CAHPS Hospice Survey measure values. 
While this action is highly unlikely, the ability of small hospices to 
request an exemption is a consideration; however, we do not believe the 
proposed algorithm creates incentives for providers to either request 
an exemption or withhold CAHPS Hospice Survey reporting altogether. For 
these reasons, we proposed a different treatment for CAHPS Hospice 
Survey missingness. Instead of replacing missing CAHPS Hospice Survey 
measure scores with the average values for those measures, we proposed 
to run hospices with data for CAHPS Hospice Survey measures through a 
version of the algorithm that considers the CAHPS Hospice Survey Index, 
and for those hospices that do not have CAHPS Hospice Survey data, 
through a version of the algorithm that does not consider the CAHPS 
Hospice Survey Index. To make the two resulting scores comparable, we 
then average the scores based on the total number of indicators used to 
calculate the score. We believe this approach mitigates concerns 
regarding a potential incentive to request an exemption or withhold 
CAHPS Hospice Survey data.
    For the hospices without CAHPS Hospice Survey data, we proposed to 
divide their scores by three because their score was calculated from 
three indicators: quality-of-care CLDs, substantiated complaints, and 
HCI. For the hospices with CAHPS Hospice Survey data, we proposed to 
divide their scores by five because the weight on the CAHPS Hospice 
Survey Index means it is mathematically counted twice, so the 
indicators will be quality-of-care CLDs, substantiated complaints, HCI, 
and the CAHPS Hospice Survey Index, which is counted twice due to the 
weight of two on the indicator. This approach to handling missing CAHPS 
data is beneficial because it does not make assumptions about the 
values for missing CAHPS data.
     With CAHPS Hospice Survey Index:
    [GRAPHIC] [TIFF OMITTED] TR13NO23.065
    
     Without CAHPS Hospice Survey Index:
    [GRAPHIC] [TIFF OMITTED] TR13NO23.066
    
(3) Example Results
    To illustrate how the proposed algorithm would behave, we discuss 
later in this section how two example hospices' (Hospice A's and 
Hospice B's) algorithm scores would be produced based on their 
indicator values. As discussed previously, the methodology will be one 
step in determining whether a hospice is selected for the SFP.
    Hospice A is a large hospice, serving 500 beneficiaries on average 
over the last 3 years. Over the past 3 years, they received zero 
quality-of-care CLDs, two substantiated complaints, and an HCI score of 
nine. At the same time, their CAHPS Hospice Survey Index measure is 
44.5, which is larger than the average value of 28, which may indicate 
a quality concern. When we standardize these values to examine how 
different they are from the average hospice, we find that their 
quality-of-care CLD standardized value is zero, their substantiated 
complaint standardized value is 0.6, their HCI is 0.1, and their CAHPS 
Hospice Survey Index is 2.4. As we suspected, three of their indicators

[[Page 77805]]

are closely in line with the average hospice. Only their CAHPS Hospice 
Survey Index of 2.4 tells us that their bottom-box scores for the four 
quality measures is 2.4 standard deviations away from the average 
hospice. We would then include these four indicators in the algorithm: 
0 + 0.6-0.1 + (2*2.4) = 5.3. As explained previously, for hospices with 
CAHPS data, we would divide their scores by five, and since Hospice A 
has a CAHPS Hospice Survey Index, the final value would be divided by 
five. Hospital A's final algorithm score is: 5.3/5 = 1.06. We then take 
this score and compare it to all other scores generated from all 
hospices and put them in order from highest to lowest, and we find that 
Hospice A ranks at 331. Because of the algorithm's emphasis on CAHPS, 
Hospice A's poor CAHPS Hospice Survey Index would make it more likely 
to be identified as a candidate, but because Hospice A performed well 
on the other three indicators, it would be less likely to be selected 
as a SFP participant compared to other hospices.
    Hospice B is a mid-sized hospice serving an average of 120 distinct 
beneficiaries over the past 3 years. It has not reported CAHPS Hospice 
Survey data across the four measures. They received 42 substantiated 
complaints, 15 quality-of-care CLDs, and an HCI of 10. The number of 
substantiated complaints and quality-of-care CLDs are quite high even 
though they have achieved all 10 indicators of HCI. After we 
standardize, Hospice B's quality-of-care CLD value is 9.2, its 
complaint rate is 16.4, and its HCI is 0.9. We would calculate Hospice 
B's score in the following way: 9.2 + 16.4-0.9 = 24.7. As explained 
previously, for hospices without CAHPS[supreg] data, we would divide 
their scores by three, and since Hospice B does not have a CAHPS 
Hospice Survey Index, this final value would be divided by three: 24.7/
3 = 8.2. When comparing this score of 8.2 to all other hospices, we 
find that Hospice B has the highest algorithm score among all hospices, 
indicating it has the poorest quality indicator outcomes. Even though 
its HCI score is high and we do not know its CAHPS value, Hospice B's 
high substantiated complaint rate and high number of quality-of-care 
CLDs would make it more likely to be selected for the SFP.
    Comment: Commenters expressed various concerns over the use of 
CAHPS[supreg] Hospice Survey measures and the CAHPS Hospice Survey 
Index as an appropriate indicator in the proposed SFP algorithm, while 
also acknowledging the importance of including caregiver voices in the 
algorithm. Many commenters noted that slightly more than half of 
hospices do not have publicly available CAHPS data and wondered if not 
having CAHPS data would make a hospice less likely to be placed in the 
SFP. Commenters also identified a possible unanticipated consequence of 
using CAHPS data that weighting the CAHPS Index more heavily in the 
algorithm may create an undesirable incentive for hospices to not 
report CAHPS data or to try and influence caregiver responses. A 
commenter proposed penalizing hospices that do not report CAHPS Hospice 
survey data by assuming that their CAHPS Index input would fall in the 
bottom percentile of this measure. Some commenters expressed concern 
about the reliability and ``subjectivity'' of the CAHPS Hospice Survey 
data or expressed a preference for claims-based measures, such as the 
HCI, over survey-based measures. Several commenters also expressed 
concern that the use of CAHPS may disproportionately impact providers 
serving underserved communities, as those providers often have poorer 
CAHPS scores.
    Response: We appreciate the commenters' concerns regarding the 
strengths, limitations, and potential drawbacks of the CAHPS Index.
    We acknowledge commenters' concern that the inclusion of CAHPS 
Hospice Survey data may seem inconsistent with the original purpose of 
the CAHPS Hospice Survey, but we maintain that this survey data as 
publicly reported quality measures in the HQRP is appropriate to 
include for the SFP. The CAHPS Hospice Survey was developed to provide 
information to patients and caregivers to help them select a hospice 
program, to aid hospices in quality improvement, and to provide CMS 
with information for monitoring hospice performance.\150\ The use of 
CAHPS data for the SFP aligns with these foundational goals, as it 
monitors hospice performance and publicly reports the list of poor 
performing hospices to aid in patient and caregiver decision-making. 
While CMS recognizes that the number of providers not reporting the 
data is a limitation of the CAHPS Hospice Survey data, the CAHPS data 
nonetheless represent an essential component to identifying provider-
level issues in care delivery that will be addressed by participation 
in the SFP.
---------------------------------------------------------------------------

    \150\ CAHPS Hospice Survey. (2022). CAHPS Hospice Survey Fact 
Sheet. https://www.hospicecahpssurvey.org/globalassets/hospice-cahps4/home-page/cahps_hospice_survey_fact_sheet_january-2022.pdf.
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    The proposed rule included two versions of the algorithm. The first 
version calculated scores for hospices that do have publicly reported 
CAHPS Hospice Survey Data. The second version calculated scores for 
hospice providers that do not have publicly reported CAHPS Hospice 
Survey data. This approach produced comparable scores that consider the 
CAHPS data when it is available without speculating about what the 
missing values of CAHPS might be for those 51 percent of providers that 
do not currently report CAHPS Hospice Survey data.
    The TEP and stakeholder listening sessions emphasized the 
importance of the caregiver perspective. As was presented to 
stakeholders, each algorithm input is intended to capture an integral 
concept of poor care delivery. When questioned for feedback, all TEP 
members strongly believed CAHPS Hospice Survey data were critical to 
include in the SFP algorithm, and some even believe that the valuable 
perspectives of family and caregivers justified weighting it more 
heavily compared to the other algorithm inputs. It was further 
mentioned that not only was the caregiver perspective very important, 
but that it would capture aspects of quality that are not found in the 
inspection survey or claims-based data. These opinions were expressed 
again after presenting the TEP with potential data issues such as the 
high amount of missing provider-level CAHPS Hospice Survey data. As a 
result of this stakeholder emphasis, CMS proposed to weight the CAHPS 
Hospice Survey Index as twice that of other inputs, so that it accounts 
for 40 percent of the proposed algorithm score among providers with 
CAHPS Hospice Survey data.
    Initial analyses demonstrated that this approach does not 
significantly help or hurt providers with or without CAHPS Hospice 
Survey data. In examining the algorithm scores described in the 
proposed rule, there was not a statistically significant difference in 
the share of providers with and without CAHPS Hospice Survey data that 
were deemed eligible for SFP selection (that is, those that fell in the 
bottom 10 percent). Among the 2,929 hospices that reported CAHPS 
Hospice survey data, 293 (10 percent) were in the bottom 10 percent. 
While among the 3,014 hospices that did not report CAHPS Hospice Survey 
data, 302 (10 percent) fell in the bottom 10 percent. This is 
consistent with expectations, as there is no evidence suggesting that 
providers that report CAHPS Hospice Survey data deliver significantly 
better or worse care than those that do not report. To put it another 
way, these initial results demonstrate that there is no incentive

[[Page 77806]]

for providers to withhold reporting their CAHPS values as there is no 
intrinsic benefit to doing so within the structure of the algorithm--
providers that need SFP intervention are just as likely to be 
identified when they have CAHPS data as when they do not have CAHPS 
data. As a result, CMS believes the best course moving forward is 
through the algorithm as proposed. We remain open to continued 
discussions with interested parties and will make potential refinements 
in the future to these policies, as determined necessary.
    We believe that this evidence should further ease the concerns 
expressed by commenters regarding providers choosing not to report 
CAHPS Hospice Survey data. As described previously, the proposed 
approach provides no incentive for providers to opt out of reporting 
because it is unlikely that suppressing CAHPS data would help providers 
avoid SFP eligibility. Among providers that did not have publicly 
reported CAHPS Hospice Survey data in August 2023 data, nearly 98 
percent did not meet the requirements to report data due to being a low 
volume or a new hospice. Additionally, if the required quality data in 
the HQRP is not reported by each designated submission deadline, 
beginning in FY 2024, the hospice will be subject to a payment 
reduction of 4 percentage points from its annual payment update (APU) 
to deter against non-reporting (86 FR 42528). CMS will monitor the 
rates of exemption and non-reporting of CAHPS Hospice Survey data and 
evaluate whether changes to the algorithm are necessary for future 
rulemaking should these rates drastically increase.
    CMS also appreciates commenters' concerns that providers may seek 
to influence caregiver survey responses if CAHPS Hospice Survey data 
are used to help identify poor performing hospices. The CAHPS Hospice 
Survey contains guidelines governing how providers are permitted to 
communicate about the survey with patients and caregivers, preventing 
them from unfairly influencing how caregivers respond.\151\ If 
providers wish to encourage caregivers to complete the survey, they are 
required to encourage all caregivers to do so. Providers are not 
allowed to attempt to influence CAHPS responses in any way, including 
asking the questions before the survey is administered, offering 
benefits for favorable responses, offering incentives for completing 
the survey, or contacting caregivers directly regarding survey 
responses.
---------------------------------------------------------------------------

    \151\ Centers for Medicare and Medicaid Services. (2022). CAHPS 
Hospice Survey Quality Assurance Guidelines, Version 9.0. https://www.hospicecahpssurvey.org/globalassets/hospice-cahps4/quality-assurance-guidelines/cahps-hospice-survey-quality-assurance-guideline-v9.0-september-2022.pdf.
---------------------------------------------------------------------------

    CMS does not believe it would be beneficial to penalize hospices 
that do not report CAHPS Hospice Survey data by assigning them a score 
from the bottom percentile. The vast majority of providers that do not 
report CAHPS Hospice Survey data do not report because of size (that 
is, fewer than 50 survey-eligible patient/family caregiver pairs during 
the reference year) or newness. Providers should not be punished for 
their size or newness. Still, as noted earlier, CMS will monitor the 
number of non-exempt providers that choose not to submit CAHPS Hospice 
Survey data and evaluate whether changes to the algorithm are necessary 
for future rulemaking if the numbers of such hospices grow 
significantly. Additionally, as noted earlier, if a non-exempt hospice 
provider chooses not to submit data, the provider will be subject to a 
payment reduction of 4 percentage points from their APU (beginning in 
FY 2024) as another deterrent against non-reporting (86 FR 42528).
    With respect to commenters' concerns about the reliability of CAHPS 
Hospice Survey data, presently, there is no empirical evidence to 
suggest that the CAHPS Hospice Survey data are statistically 
unreliable. The CAHPS Hospice Survey was developed to produce 
standardized information about patient and caregiver experiences of 
care that allows for meaningful comparison across hospices.\152\ An 
analysis of CAHPS Hospice Survey based on the data reported by 2,500 
hospice providers participating in the survey's national implementation 
found the CAHPS measures to be both valid and reliable.\153\ The HQRP 
public reporting requirements are designed to ensure that each CAHPS 
component measure is a reliable indicator of hospice quality in that 
domain. We seek to include CAHPS Hospice Survey data in addition to the 
claims-based HCI because the two data sources measure different aspects 
of hospice quality and complement each other.
---------------------------------------------------------------------------

    \152\ Centers for Medicare and Medicaid Services. (2022). CAHPS 
Hospice Survey Quality Assurance Guidelines, Version 9.0. https://www.hospicecahpssurvey.org/globalassets/hospice-cahps4/quality-assurance-guidelines/cahps-hospice-survey-quality-assurance-guideline-v9.0-september-2022.pdf.
    \153\ Rebecca Anhang Price, Brian Stucky, Layla Parast, Marc N. 
Elliott, Ann Haas, Melissa Bradley, and Joan M. Teno. Development of 
Valid and Reliable Measures of Patient and Family Experiences of 
Hospice Care for Public Reporting. Journal of Palliative Medicine. 
Jul 2018.924-932. http://doi.org/10.1089/jpm.2017.0594.
---------------------------------------------------------------------------

    We appreciate commenters' concerns that the way CAHPS Hospice 
Survey data are collected might systematically disadvantage providers 
that provide care to historically underserved populations. This type of 
potential disadvantage could occur if the CAHPS Hospice Survey design 
or data collection process systematically scored providers serving 
underserved populations worse than providers of the same quality that 
deliver care to populations that are not underserved. This exact 
concern has been investigated in the scholarly literature on the CAHPS 
Hospice Survey and there is presently no evidence to demonstrate that 
such a bias exists.\154\
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    \154\ Davlyatov, G., He, M., Orewa, G., Qu, H., & Weech-
Maldonado, R. (2023). Are Hospice Google Ratings Correlated With 
Patient Experience Scores? Evidence from a National Hospice Study. 
The American Journal of Hospice & Palliative Care, 
10499091231160186. https://doi.org/10.1177/10499091231160186.
---------------------------------------------------------------------------

    One study examined the effects of caregiver and decedent 
characteristics on CAHPS Hospice Survey scores to determine if there is 
a need to adjust the reported scores by these characteristics to better 
measure caregivers' experiences.\155\ The authors aimed to identify 
patient and caregiver characteristics of the populations that different 
providers serve and how those factors were related to CAHPS Hospice 
Survey responses in ways that may not reflect underlying differences in 
quality of care. The authors analyzed 915,442 patients across 2,513 
providers between April 2015 and March 2016 and estimated the 
association between decedent and caregiver characteristics and the 
response percentile of the caregiver's CAHPS Hospice Survey. Decedent 
characteristics included age at death, gender, race/ethnicity, 
education, payer for hospice care, primary diagnosis, final setting of 
care, and length of final episode of hospice care. Caregiver 
characteristics included age, education, gender, language spoken at 
home, language of survey completion, and relationship to the decedent. 
The results of this analysis found that the payer for hospice care, 
caregiver education, and survey language/language spoken at home were 
the characteristics that were most associated with CAHPS Hospice survey 
scores and the authors recommended adjusting provider-level CAHPS 
results for these

[[Page 77807]]

factors. There was not strong evidence that other adjustments were 
required. All of the authors' recommended case mix adjustments are 
currently incorporated in the CAHPS Hospice Survey data 
reporting.156 157 These adjusted data are used in the 
proposed SFP algorithm.
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    \155\ Parast, L., Haas, A., Tolpadi, A., Elliott, M.N., Teno, 
J., Zaslavsky, A.M., & Price, R.A. (2018). Effects of Caregiver and 
Decedent Characteristics on CAHPS Hospice Survey Scores. Journal of 
Pain and Symptom Management, 56(4), 519-529. https://doi.org/10.1016/j.jpainsymman.2018.07.014.
    \156\ Hospice CAHPS Survey. Calculating CAHPS[supreg] Hospice 
Survey Top-, Middle-, and Bottom-Box Scores. https://www.hospicecahpssurvey.org/globalassets/hospice-cahps4/public-reporting/scoring-and-analysis/cc-previous-documents/pr-calculations/steps-for-scoring-cahps-hospice-survey-measures-for-website-2018q3-final.pdf.
    \157\ CAHPS Hospice Survey. (2020). Updates to the Case-Mix 
Adjustment Approach for Publicly Reported CAHPS[supreg] Hospice 
Survey Results. https://www.hospicecahpssurvey.org/globalassets/hospice-cahps4/public-reporting/scoring-and-analysis/cc-previous-documents/pr-calculations/updates-to-cahps-hospice-survey-cma-over-time_march-2020.pdf.
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    A second study compared CAHPS Hospice Survey responses of 
caregivers for Black, Hispanic, and white patients.\158\ This study 
compared the experiences of Black patients and Hispanic patients to 
white patients who received care from the same hospice providers. The 
authors found that, on average, the CAHPS Hospice Survey scores that 
providers received from caregivers of Black and Hispanic patients were 
better than white patients. However, the average CAHPS Hospice Survey 
scores were lower for providers who cared for more Black patients and 
Hispanic patients, which suggests that these populations receive 
hospice care from poorer quality providers. Together, these findings 
serve as evidence against bias in the methodology of the CAHPS Hospice 
Survey and support the conclusion that lower CAHPS Hospice Survey 
scores for providers caring for underserved populations may be 
reflective of lower quality care delivery.
---------------------------------------------------------------------------

    \158\ Price, R.A., Parast, L., Haas, A., Teno, J.M., & Elliott, 
M.N. (2017). Black And Hispanic Patients Receive Hospice Care 
Similar To That Of White Patients When In The Same Hospices. Health 
Affairs (Project Hope), 36(7), 1283-1290. https://doi.org/10.1377/hlthaff.2017.0151.
---------------------------------------------------------------------------

    A third study found that there is a strong association between 
CAHPS Hospice Survey scores and the Google Ratings of hospice 
providers.\159\ This may suggest that both CAHPS Hospice Survey data 
and Google Ratings measure similar aspects of caregiver experience, 
which in turn increases confidence about the reliability of the CAHPS 
Hospice Survey data. The authors further found that providers located 
in areas with higher racial and ethnic minority populations had both 
worse CAHPS Hospice Survey scores and lower Google Ratings, which 
further supports the conclusion that lower CAHPS Hospice Survey scores 
for these providers are reflective of concerning care quality rather 
than bias in the CAHPS Hospice Survey process.
---------------------------------------------------------------------------

    \159\ Davlyatov, G., He, M., Orewa, G., Qu, H., & Weech-
Maldonado, R. (2023). Are Hospice Google Ratings Correlated With 
Patient Experience Scores? Evidence from a National Hospice Study. 
The American Journal of Hospice & Palliative Care, 
10499091231160186. https://doi.org/10.1177/10499091231160186.
---------------------------------------------------------------------------

    The evidence generated by these studies leads us to conclude that 
providers that receive a poor algorithm score are delivering a level of 
care that warrants further attention. The intention of this process is 
to improve care delivery across all hospice providers, including within 
those providers that serve historically underserved populations.
    Final Decision: After considering public comments, CMS is 
finalizing the inclusion of CAHPS Hospice Survey data in the SFP 
algorithm as proposed, which includes using the BBVs of four CAHPS 
Hospice Survey measures to create the Hospice CAHPS Index, 
standardizing the CAHPS Index, double weighting the CAHPS Index in the 
algorithm, and using two versions of the algorithm to address missing 
CAHPS Hospice Survey data (See 42 CFR 488.1135(b).) We remain open to 
continued discussions with interested parties and will make potential 
refinements in the future to these policies, as determined necessary.
    Comment: Many commenters expressed appreciation for the inclusion 
of a claims-based measure in the SFP algorithm but noted concerns about 
the number of hospices that did not have publicly reported HCI data and 
whether missing HCI data would make a hospice less likely to be a 
candidate for the SFP. Commenters also expressed concerns with the 
methodological choice to assign hospices with missing HCI scores a 
value equal to the overall mean of hospices reporting HCI scores. 
Specifically, commenters were concerned that assigning a mean value 
could result in poor performing hospices receiving a higher HCI score 
than they might if they had a publicly reported HCI score. Some 
commenters also voiced a concern that a hospice, in order to avoid SFP 
placement, may choose not to report HCI if, for example, they had a 
poor score.
    Response: We appreciate the comments regarding the HCI; as 
correctly noted by commenters, approximately 21 percent of hospices did 
not have a publicly reported HCI score.\160\ Hospice providers that do 
not have HCI scores are likely to be small (fewer than 20 discharges 
over 2 years), new (insufficient data to observe 20 discharges), or 
both. Of the 1,287 hospices without publicly reported HCI scores, 1,209 
(94 percent) had fewer than 11 discharges per year.
---------------------------------------------------------------------------

    \160\ From August 2022 Hospice Public Refresh, which contains 
data from 04/01/2019-12/31/2019; 07/01/2020-9/30/2021 (excludes 
first two quarters of 2020).
---------------------------------------------------------------------------

    In conducting preliminary analyses, hospice providers that did not 
have a publicly reported HCI score were significantly less likely to be 
identified in the candidate list of the SFP. This suggests that the 
algorithm may be limited in its ability to identify poor performing 
hospices with under 20 discharges over two years. For hospices without 
publicly reported HCI scores, their algorithm scores are most related 
to their performance on the condition-level deficiency and 
substantiated complaint inputs because providers without an HCI score 
are typically too small to have publicly reported CAHPS data. Providers 
that have persistently discharged fewer than 20 patients every two 
years would continue to be assigned the average HCI in future years and 
be assessed primarily by their number of substantiated complaints and 
condition-level deficiencies. New hospice providers will presumably 
have publicly reported HCI scores in future years of data. We 
acknowledge the potential limitations of HCI data, but the benefits of 
using the HCI score, including that it is based on claims data, that it 
captures care processes occurring at a hospice, and that it has no 
additional data reporting burden, outweigh the concerns. Alternative 
approaches to including claims data may be considered in future 
rulemaking.
    As noted in the proposed rule, when hospice providers do not have a 
publicly reported HCI score, they are assigned an HCI score equal to 
the mean (average) score among providers reporting an HCI score. The 
way missingness in HCI is generated and the distribution of publicly 
reported HCI scores motivated the decision to assign the mean value. In 
the publicly reported HCI data, provider-level missingness occurs in 
one of two ways. First, if the hospice provider is new then it is 
automatically granted an exemption and does not generate an HCI score. 
Second, if the provider has less than 11 claims, then its HCI score is 
not reported to protect the anonymity of its beneficiaries. Unlike 
other HQRP measures, the HCI score is a claims-based measure, and 
providers cannot avoid reporting it. As a result, missingness is driven 
by factors that we presently assess are not related to the quality-of-
care delivery. Among providers with available data, the average HCI 
score was nine out of a

[[Page 77808]]

maximum (best) value of ten. Roughly 90 percent of hospices had an HCI 
score of seven or higher. Due to the idiosyncratic generation of 
missingness in the HCI data and the high clustering around the mean for 
those with HCI data, we conclude that, absent other information, it is 
reasonable to assume that a non-reporting hospice's HCI score would be 
close to the average HCI score. This approach also avoids unduly 
punishing or rewarding small and/or new providers in the algorithm just 
for being small or new. As noted in the proposed rule, HCI scores are 
standardized in the algorithm to allow compatibility with other inputs. 
Therefore, providers receive positive values reflecting how much their 
HCI score is higher than the mean, or negative values reflecting how 
much their HCI score is lower than the mean.
    Calculation of the HCI score is automatic and based only on claims 
data. Hospice providers of sufficient size that participate in the HQRP 
cannot opt out of having a publicly reported HCI score, meaning there 
is no risk of providers choosing not to report this measure. 
Additionally, as noted previously, if the required quality data in the 
HQRP is not reported by each designated submission deadline, the 
hospice will be subject to a payment reduction of 4 percentage points 
from its APU (beginning in FY2024) to deter against non-reporting (86 
FR 42528).
    Final Decision: After considering public comments, we are 
finalizing without modification the inclusion of the HCI score, the 
standardization of the HCI score, and how missing HCI scores are 
handled in the SFP algorithm, specifically by replacing a hospice's 
missing score with zero after standardization which is equivalent to 
replacing it with the average value. (See 42 CFR 488.1135(b).) We 
remain open to continued discussions with interested parties and will 
make potential refinements in the future to these policies, as 
determined necessary.
    Comment: Many commenters believe that both survey data measures, 
condition-level deficiencies (CLDs) and complaints should be scaled in 
the algorithm based on the size of a hospice (for example, per 100 
beneficiaries). There were also concerns about the backlog in 
accreditation survey completion largely due to the COVID-19 Public 
Health Emergency (PHE). Commenters also questioned the accuracy of 
survey data given possible issues of duplicated CLDs or substantiated 
complaints, along with issues related to staffing shortages and 
surveyor training at both state agencies and accrediting organizations. 
Commenters offered the following suggestions on how to better include 
survey data in the SFP algorithm: by using surveys older than 36-months 
to reduce the number of hospices with missing survey data and including 
two additional types of CLDs in the algorithm.
    Response: We appreciate the comments regarding the survey data 
measures. In testing the proposed algorithm, we determined that there 
was not a linear relationship between the number of CLDs identified in 
hospice surveys and the average number of beneficiaries that a CLD 
provider served each year. Using CLDs and complaints as a rate per 100 
beneficiaries, for example, relies on the assumption that there is an 
identifiable linear relationship between those two indicators and the 
number of beneficiaries a hospice serves. For example, such an 
assumption would suggest that two providers of the same quality would 
have different numbers of CLDs based solely on the number of 
beneficiaries they serve. Providers of all sizes have the same 
opportunity to have a CLD cited in that any CLD can be cited on a 
provider's accreditation or standard inspection survey, in which all 
providers must participate, with the majority of providers regardless 
of size having no CLD citations over the last 3 years. While we agree 
that large hospices have more opportunities to receive complaints than 
small hospices because they serve more patients, this does not change 
the opportunity for substantiation (that is, a complaint cannot be 
substantiated if the surveyor does not find evidence that supports the 
complaint). This is why we are counting substantiated complaint surveys 
because, as the TEP indicated, these complaints have been reviewed and 
confirmed with an on-site survey. Additionally, we will also continue 
to monitor the relationship between CLDs, complaints, and size, but the 
current evidence does not suggest that CLD citations increase as 
providers take on more beneficiaries.
    CMS appreciates commenters' concerns about the timeliness and 
quality of survey data. The COVID-19 PHE has led to a backlog of 
routine surveys, but this backlog is anticipated to clear over the next 
year as state survey agencies (SAs) and accreditation organizations 
(AOs) prioritize surveys of hospices that have not had a survey in 36 
months. In the proposed SFP algorithm, providers that did not have 
available survey data were assigned the mean number of CLDs and 
substantiated complaints for purposes of algorithm scoring. There is no 
significant association between missing survey data and the probability 
of being a candidate for the SFP.
    As noted by many commenters, CMS has implemented improvements to 
surveyor training guidelines via a revised SOM, Appendix M. CMS 
continually monitors surveyor training to ensure it is up to date with 
regulations and requirements. A revised SOM Appendix M and Surveyor 
Basic Training for hospice programs has been fully implemented as of 
May 2023. All AO and SA surveyors were required to take the updated 
surveyor training (see 42 CFR 488.1115(a)). CMS has an active process 
for identifying and remedying inconsistencies. We are currently working 
on developing surveyor skills review (SSR) trainings to test surveyor 
competency.
    Some commenters also had a concern that complaints may be ``double 
counted'' if a complainant submitted to both a state agency and 
accreditation organization. There is a possibility that a substantiated 
complaint might be counted twice as part of the calculation if a 
specific complaint is investigated by both the SA and AO on separate 
dates. We will monitor the data to determine the incidence of such an 
occurrence and evaluate whether changes to the algorithm are necessary 
for future rulemaking.
    We thank commenters for the suggestions on additional ways to 
incorporate survey data into the SFP algorithm. While using surveys 
that are more than 36 months old would have the potential to reduce the 
number of hospices with missing survey data, this would also introduce 
concerns that the algorithm is using outdated information when 
assessing hospice quality. Therefore, only the most recent standard 
survey will be included in the SFP algorithm. Regarding the suggestion 
to include CLDs related to two additional Conditions of Participation: 
Sec.  418.106--Drugs and Biologicals, Medical Supplies, and Equipment, 
and Sec.  418.100--Organization and Administration of Services, we will 
consider these suggestions for future iterations of the algorithm 
pending additional analyses.
    Comment: Commenters who used publicly available data to assess the 
distribution of complaints and CLDs stated they could not replicate our 
analysis of these distributions.
    Response: The SFP algorithm methodology will assist with 
approximating scores but will not be fully replicable due to variations 
in timeframes of data updates or acquisition.

[[Page 77809]]

    Final Decision: After considering public comments, we are 
finalizing the inclusion of unscaled CLDs and unscaled substantiated 
complaints from 3 consecutive years of data, the standardization of 
both inputs, and replacing a hospice's missing CLDs or substantiated 
complaints with zero after standardization which is equivalent to 
replacing it with the average value in the SFP algorithm as proposed. 
(See 42 CFR 488.1135(b).) We remain open to continued discussions with 
interested parties and will make potential refinements in the future to 
these policies, as determined necessary.
    Comment: Some commenters expressed concern that due to the lack of 
HCI and CAHPS data for a large number of providers, many hospices would 
be excluded from the SFP algorithm.
    Response: As mentioned in the proposed rule, the proposed algorithm 
methodology captures a vast majority of hospices (97.6 percent of all 
active hospice providers) as a hospice is included if they have any one 
of the indicators and meet the other inclusion criteria (that is, are 
active and located in the United States, including territories).
    Comment: Many commenters requested additional information on how 
CMS would monitor and review the SFP program as it is implemented. A 
commenter also worried that CMS risks penalizing hospice providers that 
provide high-quality care if all providers received high scores in the 
algorithm.
    Response: We plan to monitor the algorithm inputs for changes to 
the measures, including the addition or removal of measures, that would 
affect the results of the SFP algorithm. This will include continued 
monitoring of providers that opt-out of reporting quality measures, 
input metrics exhibiting signs of ``topping out'', large swings in 
input summary statistics and distributions, input outliers, and 
provider recidivism. The proposed hospice SFP intends to improve 
overall provider performance in those providers that are delivering 
poor care to beneficiaries. The hospice SFP is not intended to 
arbitrarily enroll providers that perform well. As part of our 
continued monitoring, CMS will evaluate how potential SFP providers 
will be differentiated from providers that do not need additional 
attention. As the proposed SFP improves care delivery across providers, 
CMS may consider changing components of the program such as the number 
of SFP eligible providers or the number of SFP participants if 
warranted.
    Comment: Many commenters expressed confusion around why the 
algorithm, as described in the proposed rule, differed in many ways 
from the algorithm presented to the TEP, as noted in the SFP TEP 
Report.\161\
---------------------------------------------------------------------------

    \161\ Abt Associates. (2022). 2022 Technical Expert Panel and 
Stakeholder Listening Sessions: Hospice Special Focus Program 
Summary Report. https://www.cms.gov/files/document/2022-technical-expert-panel-tep-and-stakeholder-listening-sessions-hospice-special-focus-program.pdf.
---------------------------------------------------------------------------

    Response: The purpose of convening the SFP TEP was to seek ideas 
and input from a diverse group of hospice experts through thoughtful 
discussion on all aspects of the SFP, including the algorithm. Feedback 
provided by the SFP TEP, along with feedback received from additional 
stakeholder listening sessions, helped to inform CMS' development of 
the proposed SFP methodology and other criteria. Based on that 
feedback, CMS made decisions regarding the final specifications to the 
proposed SFP to ensure the best use of the available data.
    Final Decision: After considering public comments received, we are 
finalizing the use of Medicare data sources (Hospice Survey Data and 
HQRP data), the approach to preparing the data, data source 
standardization, addressing missing CAHPS and HCI data, and data source 
weights for the SFP algorithm as proposed. (See 42 CFR 488.1135(b).) We 
remain open to continued discussions with interested parties and will 
make potential refinements in the future to these policies, as 
determined necessary.
e. Proposed Selection Criteria
    Based on public comment in the CY 2022 HH PPS final rule and 
recommendations from the SFP TEP and other stakeholders, we proposed a 
SFP selection process that utilizes a no-stratification approach. In 
addition, we considered the input of the SFP TEP and stakeholders, who 
expressed that the selection approach should identify the poorest 
performing hospices, regardless of characteristics, such as size or 
location, and therefore favored an approach with no stratification by 
state or otherwise.
    We proposed at Sec.  488.1135(b) that hospices with AO deemed 
status that are placed in the SFP would not retain deemed status and 
would be placed under CMS or, as needed, SA oversight jurisdiction 
until completion of the SFP or termination.
    We proposed that the number of hospices selected to participate in 
the SFP would be determined in the first quarter of each calendar year. 
The claims-based quality measure data used in the algorithm is not 
available until November of each calendar year. This data is needed to 
run the algorithm, which is used to establish the aggregate score from 
which SFP participants are selected. As an SFP selectee, a hospice 
would not be removed from the SFP until they either meet the criteria 
for graduation or are terminated from the Medicare program.
    Comment: Several commenters questioned how CMS will use discretion 
to select hospice programs for the SFP from a list of 10 percent of 
highest scoring hospices.
    Response: We will select the poorest performing hospices, from the 
10 percent selectee list based on the finalized SFP algorithm score, in 
sequential value. As the focus of the SFP is to encourage improvement 
through increased oversight, not on hospices already on an enforcement 
path, hospices under an active enforcement action, for which they are 
already on a 6-month termination track or subject to other remedies, 
would not be considered for selection into the SFP for that designated 
period.
    Comment: A commenter questioned if CMS would examine the 300 
hospices cited in the OIG report \162\ specifically for consideration 
for the SFP.
---------------------------------------------------------------------------

    \162\ Hospice Deficiencies Pose Risks to Medicare Beneficiaries. 
https://oig.hhs.gov/oei/reports/oei-02-17-00020.pdf?utm_source=summary-page&utm_medium=web&utm_campaign=OEI-02-17-00020-PDF.
---------------------------------------------------------------------------

    Response: We will utilize the finalized algorithm to select 
hospices for SFP enrollment.
    Comment: Several commenters urged CMS to provide a preview period 
of data or delay implementation of the SFP.
    Response: We finalized most CAA, 2021 hospice provisions in the 
CY2022 Home Health Prospective Payment System Rate Update, effective 
January 1, 2022, except for the SFP. SFP implementation was delayed at 
that time to allow stakeholder feedback in its development. The SFP is 
the final CAA provision to be implemented, and we believe further delay 
would likely impact patient and family health and safety. Hospices are 
aware of their status for each element used in the algorithm and had 
opportunities to preview these elements prior to the use in the 
algorithm. We will continuously assess the finalized algorithm's 
effectiveness and the program's overall impact.
    Comment: A commenter suggested CMS develop an outline of 
expectations for providers who are selected for the SFP. They suggest 
this outline should include surveys every six months, the provision of 
technical assistance, the role of enforcement remedies, and the SFP 
completion requirements. Additionally, the SFP should allow

[[Page 77810]]

struggling providers to partner with CMS to better understand the 
hospice regulations and their implementation.
    Response: CMS will send a letter to hospice programs selected for 
the SFP, which will detail steps about completion the SFP. Hospice 
programs selected for the SFP would receive a survey every 6 months 
that follows the usual survey procedures, including plans of correction 
and revisits if needed. A deemed hospice program selected for the SFP 
would have its deemed status removed while in the SFP and would be 
placed under CMS oversight (for example, CMS or SA surveys) until the 
hospice completes the SFP.
    While CMS is not providing direct technical assistance, we will 
ensure that SFP hospices are aware of the various resources and tools 
available to assist them in improving quality.
    Comment: A commenter stated that CMS may wish to consider the size 
of the provider in some cases; for example, if a large provider caring 
for many beneficiaries scores in the 10 percent of all providers with 
the poorest performance on the algorithm, prioritizing the inclusion of 
the large provider in the SFP may have the potential to improve care 
for many beneficiaries. The commenter also noted, at the same time, 
small providers should not be exempt from selection for the SFP just 
because of their size if the care they furnish raises significant 
quality concerns.
    Response: We appreciate the commenters suggestions. However, as 
discussed previously, all hospices will be ranked by their scores and 
selected for SFP participation. The number of selected hospices, 
annually, will be based on program resources.
    Comment: A commenter questioned if a third party will carry out the 
hospice SFP activity and how CMS will evaluate the program and measure 
success.
    Response: CMS continues to consider the TEP's recommendation to use 
a third party, but regardless of whether CMS uses a third party for the 
initial implementation of the SFP, we will continue to consider whether 
that is the most effective approach to operating the SFP. We will 
maintain the ultimate responsibility for the implementation and 
evaluation of the SFP. We will monitor the finalized algorithm's 
effectiveness at selecting hospices and the SFP's overall impact and 
evaluate whether changes to the algorithm are necessary.
    Final Decision: After considering public comments, we are 
finalizing the SFP selection criteria as proposed. (See 42 CFR 
488.1135(b)). We remain open to continued discussions with interested 
parties and will make potential refinements in the future to these 
policies, as determined necessary.
f. Proposed Survey and Enforcement Criteria
    As indicated in section 1822(b)(2) of the Act, once in the SFP, a 
hospice must be surveyed ``not less than once every 6 months.'' Based 
on the TEP discussion, TEP members agreed with the 6-month 
recertification survey frequency for hospices in the SFP, and we 
proposed this frequency at proposed Sec.  488.1135(c). Additionally, 
SFP hospices would be subject to one or more remedies specified in 
Sec.  488.1220, and progressive enforcement remedies, as appropriate, 
at the discretion of CMS and consistent with 42 CFR part 488, subpart 
N. When CMS chooses to apply one or more remedies specified in Sec.  
488.1220, the remedies would be applied on the basis of noncompliance 
with one or more conditions of participation and may be based on 
failure to correct previous deficiency findings as evidenced by repeat 
condition-level deficiencies. The enforcement remedies could be imposed 
for an SFP hospice with condition-level deficiencies on a SFP survey or 
complaint survey while in the program. Furthermore, if subsequent 
surveys also result in the citation of a condition-level deficiency or 
deficiencies for an SFP hospice, the enforcement remedies imposed could 
be of increasing severity. Increasing severity could mean a higher CMP 
than was imposed for the earlier noncompliance or increasing from one 
remedy to more than one remedy being imposed. CMS would use its 
discretion on a case-by-case basis to determine what remedies are most 
appropriate given the survey results, and the hospice may be subject to 
remedies of increasing severity.
    Comment: Some commenters expressed concerns about variability 
between surveyors and among states that may occur when varying 
disciplines are represented on survey teams. Several commenters stated 
that these discrepancies can lead to variances in survey findings.
    Response: All SA and AO surveyors must successfully complete CMS 
Basic Hospice Surveyor Training and any additional training as 
specified by CMS regardless of profession or discipline. All active SA 
and AO surveyors have completed this training, updated in early 2023, 
to ensure consistent skills and knowledge. We encourage informing the 
applicable CMS Location for any specific concerns about surveyor 
variability.
    Comment: A commenter stated that there is a lack of consistent 
staffing across SAs and AOs, which could have the inadvertent effect of 
delaying the timely surveying of hospice providers as is prescribed in 
the proposed rule, thereby making it more difficult for a provider to 
graduate from the SFP.
    Response: We will provide oversight to ensure adherence to survey 
processes and schedules.
    Comment: A commenter questioned how CMS will ensure that SAs comply 
with the survey timeframes required for the SFP and how this will be 
enforced. Additionally, the commenter questioned if hospice SFP 
providers will have a mechanism to report if they have not received 
their required surveys within the 18-month timeframe.
    Response: We continue to consider the TEP's recommendation to use a 
third party. Whether or not CMS uses a third party for the initial 
implementation of the SFP, we will identify the most effective and 
efficient approach to operating the SFP.
    We will provide oversight to ensure adherence to survey processes 
and schedules. We will provide a letter to hospices selected for the 
SFP outlining the process and designating a single point of contact 
regarding any questions or concerns, including those regarding SFP 
survey schedule timeliness.
    Comment: Several commenters urged CMS to consider technical 
assistance (TA) for hospices in the SFP to support their performance 
improvement. Commenters pointed to discussions in the CY22 HH PPS final 
rule and the TEP recommendations report, where technical assistance was 
discussed. The commenters noted that the TEP report strongly 
recommended that TA be mandatory for hospices that are part of the SFP 
and that a list of approved TA providers, which should include state 
and national hospice associations, should be made available. A 
commenter noted that technical assistance was not mentioned in the 
proposed rule but rather there was an exclusive focus on enforcement 
remedies.
    Response: We appreciate the commenters' suggestions and note that 
we already provide educational materials that address the regulations 
and survey process, which are free to providers. These materials 
include, but are not limited to, the CMS Hospice Basic Surveyor 
Training available to surveyors and providers on the Quality, Safety 
and Education Portal (QSEP) and four provider-specific quality-in-focus 
(QIF) hospice trainings on the QSEP public access page. As the hospice 
SFP progresses, CMS will continue to assess the need for additional 
educational

[[Page 77811]]

opportunities/materials for all hospices. Additionally, hospice 
programs can secure TA and private consulting services that are 
separate from the SFP.
    Final Decision: After considering public comments, we are 
finalizing the SFP survey and enforcement criteria as proposed. (See 42 
CFR 488.1135(d).)
g. Proposed SFP Completion Criteria
    The TEP generally agreed that to complete and graduate from the 
SFP, SFP hospices should have no CLDs cited for two consecutive 6-month 
recertification surveys in an 18-month timeframe. TEP members also 
suggested that SFP hospices should have no substantiated complaints and 
less than a defined number of standard-level deficiencies (SLDs) on two 
consecutive 6-month recertification surveys within the 18-month 
timeframe to complete the SFP. TEP members recommended a stepwise 
completion process, with SFP hospices preliminarily graduating after 
completing two consecutive 6-month recertification surveys within the 
18-month timeframe in accordance with all proposed completion 
requirements at Sec.  488.1135(d). We considered the TEP's 
recommendations. However, we proposed that SFP hospices have no CLDs 
for any two SFP surveys in an 18-month period. Therefore, we proposed 
at new Sec.  488.1135(d) that a hospice will have completed the SFP if 
it has, in an 18-month timeframe, no CLDs cited or IJ's for any two 6-
month SFP surveys, and has no pending complaint survey triaged at an 
immediate jeopardy or condition-level, or has returned to substantial 
compliance with all requirements. If there are complaint investigations 
or a 36-month recertification survey for a hospice while in the SFP, 
the SFP timeline may extend beyond the 18-month timeframe. The official 
completion date would be the date of the CMS notice letter informing 
the hospice of its removal from the SFP. After completing the SFP, 
hospice programs would receive a 1-year post SFP survey and then would 
start a new standard 36-month survey cycle.
    Comment: A commenter suggested CMS should take action to ensure 
providers who graduate from the SFP are removed in a manner consistent 
with the proposed timeframe.
    Response: Hospices are released from the SFP upon CMS notification 
of program completion based on the completion criteria at proposed 
Sec.  488.1135(d). We will publish updates on the CMS SFP web page as 
expeditiously as possible as hospices complete the SFP.
    Comment: A commenter questioned how CMS will ensure that SAs comply 
with the survey timeframes required for the SFP and how this will be 
enforced. Additionally, the commenter questioned if hospice SFP 
providers will have a mechanism to report if they have not received 
their required surveys within the 18-month timeframe.
    Response: We will provide oversight to ensure adherence to survey 
processes and schedules. We will provide a letter to hospices selected 
for the SFP outlining the process and designating a single point of 
contact regarding any questions or concerns, including those regarding 
SFP survey schedule timeliness.
    Final Decision: After considering public comments, we are 
finalizing the SFP completion criteria as proposed. (See 42 CFR 
488.1135(d).)
h. Proposed Termination Criteria
    We proposed that a hospice in the SFP that fails any two SFP 
surveys, by having any CLDs on the surveys, in an 18-month period, or 
pending complaint investigations triaged at IJ or condition-level, 
would be considered for termination from the Medicare program as 
proposed at new Sec.  488.1135(e). This criterion would apply to all 
hospices, regardless of geographical location, and reflects some TEP 
recommendations. CMS would issue the termination notice letter to the 
hospice program in accordance with 42 CFR 489.53. Depending on the 
deficiencies that brought a hospice into the SFP, CMS recognizes that a 
provider may need a reasonable period to achieve substantial 
compliance. But, if the hospice is not able to achieve substantial 
compliance for surveys conducted during the SFP, they would be 
considered for termination from the Medicare program. Those providers 
that are unable to resolve the deficiencies that brought them into the 
SFP and cannot meet the completion criteria of having no CLDs cited for 
any two SFP surveys during an 18-month period, would be placed on a 
termination track. If a hospice in the SFP has an IJ-level deficiency 
cited during a survey, CMS would follow the requirements at Sec.  
488.1225.
    Comment: A commenter noted that potential termination in the 
Medicare program is so severe that some hospices may rather incur a 4 
percent payment penalty than risk having to shut down the hospice if 
terminated from the Medicare program and questioned if CMS considered 
how the proposed the SFP might incentivize hospices to withhold data 
rather than face the penalty of termination.
    Response: We appreciate the comments and will monitor hospice data 
submission to see if it appears that the SFP has a significant impact 
on hospice data submission, and evaluate whether changes to the 
algorithm are necessary.
    Final Decision: After considering public comments, we are 
finalizing the SFP termination criteria as proposed. (See 42 CFR 
488.1135(e).)
i. Public Reporting of SFP Information
    Public reporting of the proposed SFP includes making accessible 
both general information about the SFP program and hospices selected 
for SFP. Section 1822(a)(2)(B) of the Act requires hospice survey 
findings to be ``prominent, easily accessible, readily understandable, 
and searchable for the general public and allows for timely updates.''
    We proposed in new Sec.  488.1135(f) to publicly report, at least 
on an annual basis, the hospice programs selected for the SFP under 
proposed Sec.  488.1135(b). This information would be posted on a CMS 
public-facing website at https://www.cms.gov/medicare/quality-safety-oversight-certification-compliance/hospice-special-focus-program, or a 
successor website. Specifically, we proposed that the website include, 
at a minimum, general information, program guidance, a subset 
consisting of 10 percent of hospice programs based on the highest 
aggregate scores determined by the algorithm, and SFP selections from 
the 10 percent subset as determined by CMS, and SFP status as proposed 
in the definitions at Sec.  488.1105.
    Comment: Some commenters noted that CMS may be exceeding its 
authority in posting both the bottom 10 percent list and the SFP 
participant list because the statute does not suggest that both lists 
should be displayed. However, other commenters supported the 
publication of both lists and believe it would be important information 
to consumers. There were also comments expressing concern about how 
often the SFP information would be updated and whether a hospice should 
still be included in publicly reported SFP lists even after their 
completion of the program.
    Response: CMS appreciates the comments regarding public reporting 
of the SFP. As stated in the proposed rule, we intend to publish the 
list of SFP participants (those selected for the program) along with 
the list containing the 10 percent of hospices with the highest (worst) 
algorithm scores from which the SFP participants were chosen. We do not 
believe we are exceeding our authority in posting the

[[Page 77812]]

10 percent of hospices with the highest (worst) algorithm scores 
because the statute states that survey reports, enforcement actions, 
and any other information determined appropriate by the Secretary shall 
be published on a CMS public website in a manner that is prominent, 
easily accessible, readily understandable, and searchable. We agree 
with commenters that this information can serve as a useful tool for 
consumers looking for hospice care and is similar to information posted 
publicly for the nursing home Special Focus Facility (SFF) program. The 
SFF program also posts information about nursing homes that have been 
terminated from the Medicare program as well as those that have 
graduated from the SFF program as key resources for consumers and other 
interested parties. We intend to follow a process similar to that of 
the SFF in order to ensure that analogous information is available for 
the hospice SFP. The list will be reported annually beginning at 
program implementation. As the program continues, we will publish 
periodic updates as hospices complete the program.
    Final Decision: After considering public comments, we are 
finalizing the public reporting guidelines regarding SFP status as 
proposed. (See 42 CFR 488.1135(f)).

VII. Changes Regarding Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies (DMEPOS)

A. Medicare Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies (DMEPOS) Fee Schedule Adjustments

1. Background
a. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Competitive Bidding Program
    Section 1847(a) of the Act, as amended by section 302(b)(1) of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Pub. L. 108-173, December 8, 2003), mandates the Medicare Durable 
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) 
Competitive Bidding Program (CBP) for contract award purposes to 
furnish certain competitively priced DMEPOS items and services subject 
to the CBP--
     Off-the-shelf (OTS) orthotics, for which payment would 
otherwise be made under section 1834(h) of the Act;
     Enteral nutrients, equipment, and supplies described in 
section 1842(s)(2)(D) of the Act; and
     Certain DME and medical supplies, which are covered items 
(as defined in section 1834(a)(13) of the Act) for which payment would 
otherwise be made under section 1834(a) of the Act.
    For a list of product categories included in the DMEPOS CBP, please 
refer to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid/Round-2021/PCs. Areas in which the CBP are not 
implemented are known as non-competitive bidding areas (non-CBAs). We 
use the term ``former CBAs'' to refer to the areas that were formerly 
CBAs prior to a gap in the CBP, to distinguish those areas from ``non-
CBAs.'' More information on why there was a gap in the CBP from January 
1, 2019, through December 31, 2020, can be found in the November 14, 
2018 final rule titled ``Medicare Program; End-Stage Renal Disease 
Prospective Payment System, Payment for Renal Dialysis Services 
Furnished to Individuals With Acute Kidney Injury, End-Stage Renal 
Disease Quality Incentive Program, Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding 
Program (CBP) and Fee Schedule Amounts, and Technical Amendments To 
Correct Existing Regulations Related to the CBP for Certain DMEPOS,'' 
(83 FR 56922).
b. Fee Schedule Adjustment Methodology for Non-CBAs
    Section 1834(a)(1)(F)(ii) of the Act requires the Secretary to use 
information on the payment determined under the Medicare DMEPOS CBP to 
adjust the fee schedule amounts for DME items and services furnished in 
all non-CBAs on or after January 1, 2016. Section 1834(a)(1)(F)(iii) of 
the Act requires the Secretary to continue to make these adjustments as 
additional covered items are phased in under the CBP or information is 
updated as new CBP contracts are awarded. Similarly, sections 
1842(s)(3)(B) and 1834(h)(1)(H)(ii) of the Act authorize the Secretary 
to use payment information from the DMEPOS CBP to adjust the fee 
schedule amounts for enteral nutrition and OTS orthotics, respectively, 
furnished in all non-CBAs. Section 1834(a)(1)(G) of the Act requires 
the Secretary to specify the methodology to be used in making these fee 
schedule adjustments by regulation, and to consider, among other 
factors, the costs of items and services in non-CBAs (where the 
adjustments would be applied) compared to the single payment amounts 
for such items and services in the CBAs.
    The methodologies set forth in Sec.  414.210(g) account for 
regional variations in prices, including for rural and non-contiguous 
areas of the United States. In accordance with Sec.  414.210(g)(1), 
regional adjustments to fee schedule amounts for each state in the 
contiguous United States and the District of Columbia, are determined 
based on the definition of region in Sec.  414.202, which refers to 
geographic areas defined by the Bureau of Economic Analysis (BEA) in 
the Department of Commerce for economic analysis purposes (79 FR 
66226). Under Sec.  414.210(g)(1)(i) through (iv), adjusted fee 
schedule amounts for areas within the contiguous United States are 
determined based on regional prices limited by a national ceiling of 
110 percent of the regional average price and a floor of 90 percent of 
the regional average price (79 FR 66225). Under Sec.  414.210(g)(1)(v), 
adjusted fee schedule amounts for rural areas are based on 110 percent 
of the national average of regional prices. Under Sec.  414.210(g)(2), 
fee schedule amounts for non-contiguous areas are adjusted based on the 
higher of the average of the single payment amounts for CBAs in non-
contiguous areas in the United States, or the national ceiling amount.
    Under existing rules, ZIP codes for rural, non-rural, and non-
contiguous areas are used to establish geographic areas that are then 
used to define non-CBAs for the purposes of the DMEPOS fee schedule 
adjustments. A rural area is defined in Sec.  414.202 as a geographic 
area represented by a postal ZIP code, if at least 50 percent of the 
total geographic area of the area included in the ZIP code is estimated 
to be outside any Metropolitan Statistical Area (79 FR 66228). A rural 
area also includes a geographic area represented by a postal ZIP code 
that is a low population density area excluded from a CBA in accordance 
with section 1847(a)(3)(A) of the Act at the time the rules in Sec.  
414.210(g) are applied. Non-contiguous areas refer to areas outside the 
contiguous United States--that is, areas such as Alaska, Guam, and 
Hawaii (81 FR 77936).
    Section 3712 of the of the CARES Act (Pub. L. 116-136, as enacted 
on March 27, 2020) revised the fee schedule amounts for certain DME and 
enteral nutrients, supplies, and equipment furnished in non-CBAs 
through the duration of the emergency period described in section 
1135(g)(1)(B) of the Act. Specifically, this emergency period is the 
Public Health Emergency (PHE) for COVID-19, including renewals of the 
PHE.
    Section 3712(a) of the CARES Act directed the Secretary to 
implement Sec.  414.210(g)(9)(iii) (or any successor regulation), to 
apply the transition rule described in such section to all

[[Page 77813]]

applicable items and services as planned through December 31, 2020, and 
through the duration of the emergency period described in section 
1135(g)(1)(B) of the Act, if longer. Therefore, section 3712(a) of the 
CARES Act continued our policy at Sec.  414.210(g)(9)(iii) of paying 
for DMEPOS items and services furnished in rural and non-contiguous 
non-CBAs based on a 50/50 blend of adjusted and unadjusted fee schedule 
amounts through December 31, 2020, or through the duration of the 
emergency period, whichever is longer. This fee schedule adjustment in 
rural and non-contiguous areas results in fee schedule amounts that are 
approximately 66 percent higher than the fully adjusted fee schedule 
amounts previously paid for DMEPOS items and services furnished in non-
rural areas in the contiguous United States.
    Section 3712(b) of the CARES Act directed the Secretary to increase 
the fee schedule amounts for DMEPOS items and services furnished in 
non-CBAs other than rural and non-contiguous non-CBAs through the 
duration of the COVID-19 PHE (the emergency period described in section 
1135(g)(1)(B) of the Act). Beginning March 6, 2020, the payment rates 
for DME and enteral nutrients, supplies, and equipment furnished in 
these areas was based on 75 percent of the adjusted fee schedule amount 
and 25 percent of the historic, unadjusted fee schedule amount until 
the end of the emergency period, which results in higher payment rates 
as compared to the fully adjusted fee schedule amounts under Sec.  
414.210(g)(9)(iv). This increased payments so that they are 
approximately 33 percent higher than the payments at the fully adjusted 
fee schedule amounts.
    In the May 8, 2020, interim final rule with comment period (IFC) 
(85 FR 27550) titled ``Medicare and Medicaid Programs, Basic Health 
Program, and Exchanges; Additional Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency and Delay of Certain 
Reporting Requirements for the Skilled Nursing Facility Quality 
Reporting Program'' (hereinafter referred to as the ``May 2020 COVID-19 
IFC''), conforming changes were made to Sec.  414.210(g)(9), consistent 
with section 3712(a) and (b) of the CARES Act.
    The final rule entitled, ``Medicare Program; Durable Medical 
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Policy Issues, 
and Level II of the Healthcare Common Procedure Coding System (HCPCS); 
DME Interim Pricing in the CARES Act; Durable Medical Equipment Fee 
Schedule Adjustments To Resume the Transitional 50/50 Blended Rates To 
Provide Relief in Rural Areas and Non-Contiguous Areas'' published in 
the December 28, 2021 Federal Register (86 FR 73860) (hereinafter CY 
2022 DMEPOS final rule), established fee schedule adjustment 
methodologies for items and services furnished in non-CBAs on or after 
February 28, 2022, or the date immediately following the duration of 
the emergency period described in section 1135(g)(1)(B) of the Act (42 
U.S.C. 1320b-5(g)(1)(B)), whichever is later.
    The CY 2022 DMEPOS final rule explained that the 50/50 blended 
rates in non-contiguous non-CBAs will continue to be paid, but the 50/
50 blend would no longer be a transition rule under Sec.  414.210(g)(9) 
and would instead be the fee schedule adjustment methodology for items 
and services furnished in these areas under Sec.  414.210(g)(2) unless 
revised in future rulemaking. For items and services furnished in non-
contiguous non-CBAs, the fee schedule amounts for such items and 
services furnished on or after the effective date of the CY 2022 DMEPOS 
final rule (February 28, 2022), or the date immediately following the 
duration of the emergency period described in section 1135(g)(1)(B) of 
the Act, whichever is later, would be adjusted so that they are equal 
to a blend of 50 percent of the greater of the average of the SPAs for 
the item or service for CBAs located in non-contiguous areas or 110 
percent of the national average price for the item or service 
determined under Sec.  414.210(g)(1)(ii) and 50 percent of the 
unadjusted fee schedule amount for the area, which is the fee schedule 
amount in effect on December 31, 2015, increased for each subsequent 
year beginning in 2016 by the annual update factors specified in 
sections 1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the Act, 
respectively, for durable medical equipment and supplies, off-the-shelf 
orthotics, and enteral nutrients, supplies, and equipment (86 FR 
73873).
    As explained in the CY 2022 DMEPOS final rule, the 50/50 blended 
rates in rural contiguous areas will continue to be paid, but the 50/50 
blend would no longer be a transition rule under Sec.  414.210(g)(9) 
and would instead be the fee schedule adjustment methodology for items 
and services furnished in these areas under Sec.  414.210(g)(2) unless 
revised in future rulemaking. For items and services furnished in rural 
contiguous areas on or after February 28, 2022, or the date immediately 
following the duration of the emergency period described in section 
1135(g)(1)(B) of the Act, whichever is later, the fee schedule amounts 
would be adjusted so that they are equal to a blend of 50 percent of 
110 percent of the national average price for the item or service 
determined under Sec.  414.210(g)(1)(ii) and 50 percent of the fee 
schedule amount for the area in effect on December 31, 2015, increased 
for each subsequent year beginning in 2016 by the annual update factors 
specified in sections 1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the 
Act, respectively, for DME and medical supplies, off-the-shelf 
orthotics, and enteral nutrients, supplies, and equipment (86 FR 
73873).
    For items and services furnished on or after February 28, 2022, or 
the date immediately following the termination of the emergency period 
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)) (that is, the COVID-19 PHE), whichever is later, in all 
other non-rural, non-CBAs within the contiguous United States, the fee 
schedule amounts would be equal to 100 percent of the adjusted payment 
amount established under Sec.  414.210(g)(1)(iv).
2. Current Issues
    Section 4139 of Division FF, Title IV, Subtitle D of the CAA, 2023 
sets the fee schedule adjustment methodologies for non-competitive 
bidding areas through the remainder of the duration of the emergency 
period described in section 1135(g)(1)(B) of the Act or December 31, 
2023, whichever is later. The federal PHE for COVID-19, declared by the 
Secretary under Section 319 of the Public Health Service Act, expired 
at the end of the day on May 11, 2023. We proposed to make conforming 
changes to the regulation at 42 CFR 414.210(g)(9) to account for these 
changes.
    Specifically, section 4139(a) of the CAA, 2023 directs the 
Secretary to implement 42 CFR 414.210(g)(9)(v) (or any successor 
regulation), to apply the transition rule described in the first 
sentence of such section to all applicable items and services furnished 
in areas other than rural or noncontiguous areas through the remainder 
of the duration of the emergency period described in section 
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)) or December 31, 
2023, whichever is later. This continues the policy set forth by 
section 3712(b) of the CARES Act, which requires CMS to pay for these 
DMEPOS items and services furnished in areas other than rural or 
noncontiguous areas based on 75 percent of the adjusted fee schedule 
amount and 25 percent of the historic, unadjusted fee schedule amount 
until the end of the emergency period. This

[[Page 77814]]

increases payments so that they are approximately 33 percent higher 
than the payments at the fully adjusted fee schedule amounts.
    Section 4139(b) of the CAA, 2023 directs the Secretary to not 
implement 42 CFR 414.210(g)(9)(vi) of title 42, Code of Federal 
Regulations (or any successor regulation) until the date immediately 
following the last day of the emergency period described in section 
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), or January 1, 
2024, whichever is later. This change has the effect of continuing the 
policy at Sec.  414.210(g)(9)(vi), but changes the February 28, 2022 
date in the regulation to January 1, 2024. That is, the fee schedule 
amount for all non-CBAs is equal to the adjusted payment amount 
established under paragraph (g) of this section only until the date 
immediately following the last day of the emergency period described in 
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), or 
January 1, 2024, whichever is later.
    Additionally, section 4139 of the CAA, 2023 does not affect the 
current adjusted fee schedule amounts in former CBAs. In accordance 
with Sec.  414.210(g)(10), the fee schedule amounts in the former CBAs 
will continue to be based on the single payment amounts from 2018 
increased by update factors for subsequent calendar years until new 
competitive bidding contracts are in place.
2. Final Changes
    We received several comments supporting the conforming changes to 
the regulations related to implementation of section 4139 of the CAA, 
2023.
    We thank the commenters for their support of the proposed changes. 
We are finalizing the proposed conforming changes to Sec.  
414.210(g)(9), consistent with requirements in section 4139(a) and 
4139(b) of the CAA, 2023. First, section 4139 of the CAA, 2023 does not 
change the current policy under Sec.  414.210(g)(9)(iii) of paying for 
DMEPOS items and services furnished in rural and non-contiguous non-
CBAs based on a 50/50 blend of adjusted and unadjusted fee schedule 
amounts through the duration of the PHE for COVID-19. While section 
4139 of the CAA, 2023 does not specifically mention Sec.  
414.210(g)(9)(iii), we believe that section 4139(b) of the CAA, 2023 
prohibits implementation of the regulation language in Sec.  
414.210(g)(vi) until the date immediately following the last day of the 
PHE, or January 1, 2024. This regulation applies the transition rules 
for the adjusted payment amount in the non-CBAs established under 
paragraph (g) of Sec.  414.210 to items and services furnished in ``all 
areas,'' and it also provides for extension of the transition 50/50 
blended rates in rural, non-contiguous areas and non-rural areas 
through December 31, 2023, if the PHE ends prior to that date. We are 
finalizing the revision of Sec.  414.210(g)(9)(vi), as described in 
this rule. Further, we are finalizing, the proposed revision of Sec.  
414.210(g)(9)(iii), to state that for items and services furnished in 
rural areas and non-contiguous areas (Alaska, Hawaii, and U.S. 
territories) with dates of service from June 1, 2018 through the 
duration of the emergency period described in section 1135(g)(1)(B) of 
the Act (42 U.S.C. 1320b-5(g)(1)(B)) or December 31, 2023, whichever is 
later, based on the fee schedule amount for the area is equal to 50 
percent of the adjusted payment amount established under this section 
and 50 percent of the unadjusted fee schedule amount. We are finalizing 
the conforming changes to Sec.  414.210(g)(2) for the rural and non-
contiguous areas in order to reference the December 31, 2023 date 
specified in section 4139 of the CAA, 2023.
    We are finalizing the revision of Sec.  414.210(g)(9)(v) to state 
that for items and services furnished in areas other than rural or 
noncontiguous areas with dates of service from March 6, 2020 through 
the remainder of the duration of the emergency period described in 
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)) or 
December 31, 2023, whichever is later, the fee schedule amount for the 
area is equal to 75 percent of the adjusted payment amount established 
under this section and 25 percent of the unadjusted fee schedule 
amount. We are finalizing the proposal to remove outdated text from 
Sec.  414.210(g)(9)(v) that states ``for items and services furnished 
in areas other than rural or noncontiguous areas with dates of service 
from the expiration date of the emergency period described in section 
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), through December 
31, 2020, the fee schedule amount for the area is equal to 100 percent 
of the adjusted payment amount established under this section.'' This 
is text that was added in the May 2020 COVID-19 IFC (85 FR 27571), as 
section 3712(b) of the CARES Act required CMS to pay the higher fee 
schedule amounts for the duration of the emergency period described in 
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), but it 
did not specify the fee schedule amounts that should be in effect if 
the emergency period ends before December 31, 2020. If not for section 
3712(b) of the CARES Act, CMS would have paid the fully adjusted fee 
schedule amounts for DME items and services furnished in non-rural and 
contiguous non-CBAs until December 31, 2020. As such, Sec.  
414.210(g)(9)(v) specified that the fee schedule amounts in non-rural 
and contiguous non-CBAs would again be based on 100 percent of the fee 
schedule amounts adjusted in accordance with Sec.  414.210(g)(1)(iv) if 
the emergency period described in section 1135(g)(1)(B) of the Act (42 
U.S.C. 1320b-5(g)(1)(B)) ended before December 31, 2020. As this 
situation no longer applies and is in the past, we are finalizing the 
proposal to remove this obsolete text from Sec.  414.210(g)(9)(v).
    We are finalizing the proposal to revise Sec.  414.210(g)(9)(vi) to 
state that for items and services furnished in all areas with dates of 
service on or after the date immediately following the duration of the 
emergency period described in section 1135(g)(1)(B) of the Act, or 
January 1, 2024, whichever is later, the fee schedule amount for the 
area is equal to the adjusted payment amount established under 
paragraph (g) of this section. Finally, we are finalizing the proposal 
to make conforming changes to Sec.  414.210(g)(2) for the rural and 
non-contiguous areas in order to specify the December 31, 2023 date 
specified in section 4139 of the CAA, 2023.
    Finally, section 4139(c) of the CAA, 2023 authorizes the Secretary 
to implement the provisions of this section by program instruction or 
otherwise. Given that the PHE for COVID-19 ended on May 11, 2023, which 
is prior to when the proposed changes to the regulations would be 
finalized, we stated in the proposed rule that we intend to issue 
program instructions or other subregulatory guidance to effectuate the 
changes, as previously described (88 FR 43767). We stated that we 
believed this approach will serve to ensure a smooth transition after 
the end of the PHE for COVID-19. We issued Transmittal 12068 and 12228, 
which updated the quarterly DMEPOS Fee Schedule and included a 
discussion of the changes required by section 4139 of the CAA, 
2023.163 164
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    \163\ https://www.cms.gov/files/document/r12068cp.pdf.
    \164\ https://www.cms.gov/files/document/r12228cp.pdf.
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B. Scope of the Benefit and Payment for Lymphedema Compression 
Treatment Items

1. Statutory Authority
    Effective for items furnished on or after January 1, 2024, section 
4133(a)(1)

[[Page 77815]]

of Division FF, Title V, Subtitle D of the CAA, 2023 amends section 
1861 of the Act, adding subparagraph (JJ) to subsection (s)(2) and 
coverage under a new benefit category under Medicare Part B for 
lymphedema compression treatment items as defined in new subsection 
(mmm) of section 1861 of the Act. Section 4133(a)(2) of the CAA, 2023 
amends section 1833(a)(1) of the Act, adding subparagraph (GG) to 
indicate that the amount paid for lymphedema compression treatment 
items defined in section 1861(mmm) of the Act shall be equal to 80 
percent of the lesser of the actual charge or the amount determined 
using the payment basis established by the Secretary under paragraph 
(1) of new subsection (z) of section 1834 of the Act. Paragraph (2) of 
new subsection (z) of section 1834 of the Act prohibits payments under 
Part B for lymphedema compression treatment items furnished other than 
at such frequency as the Secretary may establish. Paragraph (3) of new 
subsection (z) of section 1834 of the Act specifies that in the case of 
lymphedema compression treatment items that are included in a 
competitive bidding program under section 1847(a) of the Act, the 
payment basis under section 1847(a) of the Act shall be the payment 
basis determined under the competitive bidding program, and the 
Secretary may use information on the payment determined under the 
competitive bidding program to adjust the payment amount otherwise 
determined under section 1834(z) of the Act for an area that is not a 
competitive bidding area under section 1847 of the Act. Section 
4133(a)(3) of the CAA, 2023 amends section 1847(a)(2) of the Act, 
adding lymphedema compression treatment items to the competitive 
bidding program under subparagraph (D) of section 1847(a)(2) of the 
Act. Finally, section 4133(b)(3) of the CAA, 2023 amends section 1834 
of the Act under subsections (a)(20)(D) and (j)(5) to mandate 
application of the DMEPOS quality standards and accreditation and 
DMEPOS supplier enrollment and supplier standards requirements, 
respectively, to suppliers of lymphedema compression treatment items.
2. Background
    Currently, Medicare Part B does not include coverage for lymphedema 
compression treatment items other than compression pumps and 
accessories that meet the definition of DME covered under the DME 
benefit category under section 1861(n) of the Act. Section 4133 of the 
CAA, 2023 amends the Act to establish a new Part B benefit category for 
lymphedema compression treatment items.
    The lymphatic system is an integral component of the human 
circulatory system and consists of lymphatic vessels, lymph nodes and 
associated lymphoid organs.165 166 The International Society 
of Lymphology defines lymphedema as ``an external (and/or internal) 
manifestation of lymphatic system insufficiency and deranged lymph 
transport'' and is ``a symptom or sign resulting from underlying 
lymphatic disease.'' \167\ The Centers for Disease Control and 
Prevention (CDC) defines lymphedema as swelling due to a buildup of 
lymph fluid in the body.\168\ According to the National Institutes of 
Health (NIH) National Library of Medicine, lymphedema is a chronic 
disorder characterized by swelling under the skin caused by the 
inability of protein rich lymph fluid to drain, usually due to a 
blockage or damage to the lymph system.\169\ Additionally, according to 
the National Lymphedema Network, this swelling commonly occurs in the 
arm or leg, but it may also occur in other body areas including the 
breast, chest, head and neck, and genitals.\170\ Lymphedema develops 
when a body region, where lymphatic vessels and lymph nodes are missing 
or impaired, becomes overloaded with lymphatic fluid. Lymphedema is a 
chronic condition with no definitive curative treatment that can become 
progressive, so early detection and institution of decompressive 
measures are essential in avoiding its potentially disabling 
sequela.171 172 173 174 The gradual accumulation of plasma 
and cellular components into the interstitial tissue space leads to a 
chronic inflammatory process that can result in long-term tissue 
changes and permanent structural damage to the affected anatomical site 
and its overlying skin layer.175 176 177 These changes also 
make the patient more susceptible to skin and potentially disabling or 
life-threatening soft tissue infections.178 179 The physical 
manifestations of lymphedema are tissue swelling, pain, heaviness and 
difficulty using the affected body part.\180\
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    \165\ Aspelund A, Robciuc MR, Karaman S, Makinen T, Alitalo K. 
Lymphatic System in Cardiovascular Medicine. Circulation Research. 
2016. Volume 118(3). 515-530.
    \166\ Suamia H, Scaglioni MF. Anatomy of the Lymphatic System 
and the Lymphosome Concept with Reference to Lymphedema. Seminars in 
Plastic Surgery. 2018 Feb; 32(1): 5-11.
    \167\ International Society of Lymphology Executive Committee. 
The Diagnosis and Treatment of Peripheral Lymphedema. Lymphology 28 
(1995).
    \168\ Lymphedema CDC.gov. https://www.cdc.gov/cancer/survivors/patients/lymphedema.htm.
    \169\ Lymphedema. Bryan C. Sleigh; Biagio Manna, September 2018. 
Found at https://www.ncbi.nlm.nih.gov/books/NBK537239/.
    \170\ https://lymphnet.org/what-is-lymphedema.
    \171\ Korpan MI, Crevenna R, Fialka-Moser V. Lymphedema a 
Therapeutic Approach in the Treatment and Rehabilitation of Cancer 
Patients. American Journal of Physical Medicine and Rehabilitation. 
2011. May. 90(suppl). S69-S75.
    \172\ Preston NJ, Seers K, Mortimer PS. Physical therapies for 
reducing and controlling lymphoedema of the limbs. Cochrane Database 
of Systematic Reviews 2004, Issue 4. Art. No.: CD003141.
    \173\ The International Society of Lymphology. The Diagnosis and 
Treatment of Peripheral Lymphedema: 2020 Consensus Document of the 
International Society of Lymphology. Lymphology. 2020. 53: 3-19.
    \174\ King M, Deveaux A, White H, Rayson. Compression garments 
versus compression bandaging in decongestive lymphatic therapy for 
breast cancer-related lymphedema: a randomized controlled trial. 
Support Care Cancer. 2012; 20: 1031-1036.
    \175\ Korpan MI, Crevenna R, Fialka-Moser V. Lymphedema a 
Therapeutic Approach in the Treatment and Rehabilitation of Cancer 
Patients. American Journal of Physical Medicine and Rehabilitation. 
2011. May. 90(suppl). S69-S75.
    \176\ Warren AG, Brorson H, Borud LJ, Slavin SA. Lymphedema A 
Comprehensive Review. Annals of Plastic Surgery. 2007. Vol 59, No. 
4. 464-472.
    \177\ Ly CL, Kataru RO, Mehrara B. Inflammatory Manifestations 
of Lymphedema. Int J Mol Scie. 2017. Jan; 18(1): 171.
    \178\ Grada AA, Phillips TJ. Lymphedema, Pathophysiology and 
clinical manifestations. J Am Academ Dermatol. 2017;77: 1009-20.
    \179\ Bakar Y, Tugral A. Lower Extremity Lymphedema Management 
after Gynecologic Cancer Surgery: A Review of Current Management 
Strategies. Ann of Vasc Surg. 2017. Vol. 44; 442-450.
    \180\ Warren AG, Brorson H, Borud LJ, Slavin SA. Lymphedema A 
Comprehensive Review. Annals of Plastic Surgery. 2007. Vol 59, No. 
4. 464-472.
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    Lymphedema occurs in four stages. Stage one may have no outward 
signs or symptoms but is evidenced by abnormal flow through the 
lymphatic system. When stage two is reached, there is some swelling 
that may be alleviated by elevation or compression. Stage three is 
diagnosed by swelling of an area that does not resolve with elevation 
and there may be skin thickening and scarring. The fourth stage is 
characterized by severe swelling and skin abnormalities.\181\ 
Infections such as cellulitis and sepsis may result from lymphedema due 
to the dense protein rich nature of the lymphatic fluid and requires 
treatment with antibiotics.\182\ Lymphedema is treated in two phases: 
an acute ``intensive'' phase (Phase 1) and a maintenance phase (Phase 
2). In Phase 1 ``the individual is typically

[[Page 77816]]

wrapped with medical short-stretch compression bandages. In Phase 2, 
one goal is for the patient to be able to wear gradient pressure 
garments during the day and compression bandaging or alternatives (like 
nighttime garments) at night.\183\ Studies have shown that gradient 
compression garments are effective in reducing and/or preventing 
progression of lymphedema in the arm and leg.\184\ They have also shown 
to be effective in maintaining limb circumference.
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    \181\ The Johns Hopkins Hospital https://www.hopkinsmedicine.org/health/treatment-tests-and-therapies/treating-lymphedema.
    \182\ https://www.cancerresearchuk.org/about-cancer/coping/physically/lymphoedema-and-cancer/infection-lymphoedema#;~:text=Infection%20in%20people%20with%20lymphoedema,and%
20will%20need%20antibiotic%20treatment.
    \183\ Korpan MI, Crevenna R, Fialka-Moser V. Lymphedema: a 
therapeutic approach in the treatment and rehabilitation of cancer 
patients. Am J Phys Med Rehabil. 2011 May;90(5 Suppl 1):S69-75. doi: 
10.1097/PHM.0b013e31820be160. PMID: 21765266.
    \184\ Yasuhara H, Shigematsu H, Muto T. A study of the 
advantages of elastic stockings for leg lymphedema. Int Angiol. 1996 
Sep;15(3):272-7. PMID: 8971591. https://pubmed.ncbi.nlm.nih.gov/8971591/.
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    Gradient compression garments designed for daytime use, while an 
individual is awake, are different than those for nighttime use, when 
an individual is asleep. Gradient compression garments meant for 
daytime (waking) provide a higher level of compression, and use of them 
while sleeping could cause new or additional damage to the affected 
tissue.\185\ Additionally, gradient compression garments appropriate 
for daytime use can inadvertently become repositioned at night while 
the individual is sleeping and cause a tourniquet effect, essentially 
cutting off circulation to the limb and resulting in further 
swelling.\185\ In contrast, gradient compression garments made for 
nighttime use or times of low activity offer milder compression and are 
less snug against the skin.\186\ Wearing gradient compression garments 
designed for nighttime use may also help with skin abnormalities 
resulting from lymphedema and can help prevent a phenomenon called 
``creeping refill,'' where swelling reoccurs during sleep.\187\ 
Generally, more serious cases require gradient compression garments for 
both daytime and nighttime use. Various types of nighttime garments 
have been designed as alternatives to the daytime compression system 
garments. Nighttime garments apply gentle gradient pressure to the limb 
through a garment with a foam liner and a series of adjustable straps. 
The garments are non-elastic and provide low resting pressure on the 
limb, making them safe to wear while sleeping at night.\188\ Many of 
these garments are custom-made, but there are ready-to-wear options 
available as well. The elastic fibers of daytime compression garments 
will break down with wear. Because nighttime garments are made of 
inelastic components, compared to the day-time garments, they do not 
commonly break down with wear and last longer. While proper care will 
increase the lifespan of nighttime garments, they will need to be 
replaced sometime within 1 to 3 years if used daily. Studies showed if 
the garments are used with aftercare regimen, that is, they are in 
minimum contact with moisturizer during use, they could last 
longer.\189\ In meetings with CMS, some clinicians and lymphologists 
indicated that they believe that the nighttime garments are quite 
durable and can last for 2 to 3 years because the materials are more 
durable than the materials used with the daytime garments. They also 
indicated that previous versions used strapping in addition to more 
durable foam materials and could last for up to 5 years. In comparison, 
daytime garments are elastic garments that are typically made of 
breathable elastic fabrics such as nylon, cotton, spandex or natural 
rubber to provide compression and therefore have a much shorter 
lifespan of approximately 6 months.\190\
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    \185\ Lymphedema Products, LLC. (2019, September 11). Day 
Compression vs Night Compression. Lymphedemaproducts.com. https://www.lymphedemaproducts.com/blog/day-vs-night-compression-wear/.
    \186\ Caring Touch Medical, Inc. Can You Sleep in a Lymphedema 
Sleeve? Caringtouchmed.com. https://www.caringtouchmed.com/can-you-sleep-in-a-lymphedema-sleeve/.
    \187\ Mastectomy Shop. Can You Sleep in a Lymphedema Sleeve? 
Mastectomyshop.com. https://www.mastectomyshop.com/blogs/can-you-sleep-in-a-lymphedema-sleeve/.
    \188\ McNeely, M. L. et al. Nighttime compression supports 
improved self[hyphen]management of breast cancer related lymphedema: 
A multicenter randomized controlled trial. Cancer 128, 587-596 
(2021).
    \189\ Macintyre, Lisa Ph.D.; Gilmartin, Sian BSc; Rae, Michelle 
BSc; Journal of Burn Care & Research: September/October 2007--Volume 
28--Issue 5--pp 725-733.
    \190\ Mukhopadhyay, A., & Shaw, V. P. (2022). Reliability 
analysis of stretchable workwear fabric under abrasive damage: 
Influence of stretch yarn composition. Journal of Natural Fibers, 
20(1).
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    Gradient compression garments are either standard fit or custom-
fit. Standard compression garments are also referred to as ready-made 
or ready-to-wear and are widely available pre-made, off-the-shelf and 
in a range of standard sizes. Individuals with mild or moderate 
lymphedema can often use standard fit garments. Standard gradient 
compression garments are easier to measure and are readily available at 
retailers without requiring a prescription, but they do not conform as 
well to limbs or provide homogenous compression. Standard fit 
compression wear for all gradient compression garments come in 
different compression classification ranges specified in mmHg. While 
there are no national standards for gradient compression hosiery,\191\ 
the most common compression classification ranges for hosiery in the 
U.S. include: 8-15 mmHg (mild), 15-20 mmHg (medium or over the 
counter), 20-30 mmHg (firm or medical class 1), 30-40 mmHg (extra firm 
or medical class 2), and 40-50 mmHg (medical class 3).\192\ For all 
compression ranges, the highest compression is at the ankle or wrist, 
and compression slowly decreases as it moves up the extremity. Some 
manufacturers' compression class pressure ranges for hosiery may be 
different from the compression class ranges used for upper limb 
gradient compression garments.\193\
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    \191\ Lymphedema Framework. Best Practice for the Management of 
Lymphoedema. International Consensus. London. MEP Ltd, 2006. https://www.woundsme.com/uploads/resources/contentlowbar;11160.pdf.
    \192\ Lymphedema Products, LLC. Determining Compression Levels. 
Lymphedemaproducts.Com. https://www.lymphedemaproducts.com/blog/how-to-determine-compression-levels-for-your-garments/ garments/.
    \193\ Lympoedema Framework. Best Practice for the Management of 
Lymphoedema. International Consensus. London. MEP Ltd, 2006. https://www.woundsme.com/uploads/resources/content_11160.pdf.
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    Alternatively, custom-fit gradient compression garments are 
garments that are uniquely sized, shaped, and custom-made to fit the 
exact dimensions of the affected extremity (circumferential 
measurements are every 1 and a half to 2 inches) and provide more 
accurate and consistent gradient compression to manage the individual's 
symptoms.\194\ The type of gradient compression garment prescribed is 
influenced by the site and extent of the swelling, together with the 
individual's comfort, lifestyle, preferences, and ability to apply and 
remove garments. Poorly fitting gradient compression garments may not 
contain or resolve the lymphedema, can cause tissue damage, may be 
uncomfortable, and can dissuade a patient from long-term usage and 
adherence.\195\
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    \194\ https://www.forwardhealth.wi.gov/kw/html/3485_Compression_Garments.html.
    \195\ Doherty DC, Morgan PA, & Moffatt CJ (2009). Hosiery in 
Lower Limb Lymphedema. J Lymphoedema, 4(1), 30-37. https://www.woundsme.com/uploads/resources/content_11160.pdf.
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    Custom-fit gradient compression garments are typically required 
when an individual has severe shape distortion and/or short, long, or 
bulky limbs.\196\ In addition, individuals with complex lower limb and 
torso lymphedema often

[[Page 77817]]

require custom-fit gradient compression garments, as do those who need 
special adaptations or when there is need for varying levels of 
pressure within the same garment.\197\ Some studies indicate that 
approximately 50 percent of lymphedema patients require custom-fit 
gradient compression garments versus standard fit gradient compression 
garments for effective treatment, although estimates 
vary.198 199
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    \196\ Chang M-H, Chang DW, & Patel KM (2022). ``Lymphedema Risk 
Reduction and Management'' in Principles and Practice of Lymphedema 
Surgery, 2nd Ed., 78-90. https://www.sciencedirect.com/topics/medicine-and-dentistry/compression-garment.
    \197\ Doherty DC, Morgan PA, & Moffatt CJ (2009). Hosiery in 
Lower Limb Lymphedema. J Lymphoedema, 4(1), 30-37. https://www.woundsme.com/uploads/resources/content_11160.pdf.
    \198\ Lymphedema Advocacy Group (2021 Apr). ``Cost and 
Utilization of Lymphedema Compression Garments.'' https://lymphedematreatmentact.org/wp-content/uploads/2021/04/Cost-and-Utilization-of-Lymphedema-Compression-Garments.pdf.
    \199\ Boyages J, Xu Y, Kalfa S, Koelmeyer L, Parkinson B, Mackie 
H, Viveros H, Gollan P, & Taksa L (2017). Financial cost of 
lymphedema borne by women with breast cancer. Psychooncology, 26(6), 
849-855. doi: 10.1002/pon.4239. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5484300/.
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3. Current Issues: Scope of the Benefit for Lymphedema Compression 
Treatment Items
    In the CY 2024 HH PPS proposed rule (88 FR 43654), we proposed to 
implement a new benefit category established at section 1861(s)(2)(JJ) 
of the Act for ``lymphedema compression treatment items'' defined at 
section 1861(mmm) of the Act as standard and custom fitted gradient 
compression garments and other items determined by the Secretary that 
are--
     Furnished on or after January 1, 2024, to an individual 
with a diagnosis of lymphedema for the treatment of such condition;
     Primarily and customarily used to serve a medical purpose 
and for the treatment of lymphedema, as determined by the Secretary; 
and
     Prescribed by a physician (or a physician assistant, nurse 
practitioner, or a clinical nurse specialist (as these terms are 
defined in section 1861(aa)(5)) to the extent authorized under State 
law).
    In response to the CY 2024 HH PPS proposed rule (88 FR 43654), we 
received a number of comments from individuals health care providers 
and suppliers, medical associations, and medical device companies. More 
comments were received from healthcare consulting and medical 
technology organizations. In this section, we provide the proposed 
payment methodology, and a summary of the comments we received as well 
as our responses.
    We proposed that any other items covered under this new benefit 
category in addition to gradient compression garments must also use 
compression in treating lymphedema since the specific category of 
medical items to be covered under section 1861(s)(2) of the Act are 
``lymphedema compression treatment items.'' Similarly, we proposed that 
this benefit category is limited to compression treatment items and 
does not include professional lymphedema treatment services or other 
services not directly related to the furnishing of the lymphedema 
compression treatment items. Payment for any covered professional 
service related to these items would be made under the Medicare 
Physician Fee Schedule. The statute limits the benefit to items used 
for the treatment of lymphedema as determined by the Secretary, and we 
proposed that this includes items used to treat all types or diagnoses 
of lymphedema, but does not include the same items when used to treat 
injuries or illnesses other than lymphedema. In other words, if a 
gradient compression garment or other lymphedema compression treatment 
item is furnished to treat an injury or illness other than lymphedema, 
those items would not be classified under the Medicare benefit category 
for lymphedema compression treatment items. The following is a summary 
of the comments we received and our responses.
    Comment: A commenter recommended that CMS work with suppliers and 
manufacturers of compression garments, and the clinical community who 
have expertise in providing services to patients with lymphedema in 
developing the scope of benefit and payment for lymphedema compression 
treatment items. A commenter stated that the need for custom fit 
supplies should be based on the medical expertise of the prescribing 
healthcare provider and patients should not face undue burdens. A 
commenter expressed concern that the proposed provisions in this rule 
would not remove barriers to eligibility for custom garments.
    Response: We are appreciative of these comments. During the process 
of developing scope of benefit, payment, and coding policies for the 
new benefit for lymphedema compression items, we consulted with medical 
professionals, suppliers, manufacturers, trade organizations, and 
patients via public comments and meetings. Concerning coverage and the 
determination of a specific beneficiary's medical need for lymphedema 
compression treatment items, these concerns are outside the scope of 
this rulemaking. The final rule implements the new benefit category for 
lymphedema compression treatment items established under section 4133 
of the CAA, 2023, and does not address coverage for these items or the 
Medicare coverage process or criteria.
    Comment: A commenter urged CMS to reconsider the interpretation 
section 4133 of the Consolidated Appropriations Act, 2023. The 
commenter stated that Congress intended to make lymphedema compression 
treatment items available and accessible to Medicare beneficiaries with 
illnesses other than lymphedema. The commenter supports Congress' 
intent to expand patient access to lymphedema compression treatment 
items and urged CMS to ensure that its coverage and payment policies 
are consistent with and promote Congress' intent of expanding patient 
access to lymphedema compression treatment items. Another commenter 
stated that phlebolymphedema is lymphedema secondary to chronic venous 
insufficiency and that all patients with CVI (CEAP scores C3-C6) should 
be considered lymphedema patients.
    Response: Section 4133 of the Consolidated Appropriations Act, 2023 
establishes section 1861(mmm)(1) of the Act, stating that the new 
benefit is to be ``furnished to the individual with a diagnosis of 
lymphedema for the treatment of such condition''. As such, we are 
finalizing the proposed rule to limit the scope of the new benefit for 
lymphedema compression treatment items to items furnished to an 
individual with a diagnosis of lymphedema and not illnesses other than 
lymphedema.
    In accordance with section 1861(mmm)(2) of the Act we are defining, 
in addition to the standard and custom fitted gradient compression 
garments that are included in the scope of the benefit, what ``other 
items as determined by the Secretary'' are included within the scope of 
the benefit. We proposed that other compression items used to treat 
lymphedema that would be covered under this benefit category in 
addition to gradient compression garments would include ready-to-wear, 
non-elastic, gradient compression wraps with adjustable straps such as 
the items described by HCPCS code A6545. In addition, we proposed that 
clinicians (or other qualified professionals) that furnish these items 
become enrolled and accredited as DMEPOS suppliers to bill for these 
items as lymphedema compression treatment items per section 
1834(j)(5)(E) of the Act or payment for the items applied during phase 
one of decongestive therapy would not be allowed. We also note that 
while these items may be covered under the new

[[Page 77818]]

Part B benefit for lymphedema compression treatment items, the 
professional services associated with applying these items would need 
to be covered under a different Medicare benefit category for Medicare 
payments to be made for these services. We specifically solicited 
comments on the topic of coverage of compression bandaging items under 
the new benefit for lymphedema compression treatment items. We also 
solicited comments on whether the professional services of applying 
these bandages could be covered under another Medicare benefit 
category, such as outpatient physical therapy services under section 
1861(p) of the Act or physician services under section 1861(s) of the 
Act. The following is a summary of the comments we received and our 
responses.
    Comment: Several commenters thanked and supported CMS for the 
inclusion of compression bandaging systems being covered during the 
intensive/decongestive phase of the treatment. However, many commenters 
were concerned about the proposal that compression bandaging systems 
applied in a clinical setting as part of phase one decongestive therapy 
would be covered to the exclusion of their coverage during other phases 
of the treatment despite being critical to improvement and maintenance 
phases of treatment. Several commenters requested CMS consider 
including coverage of bandaging not only for the initial acute or 
decongestive phase (Phase 1), but also for the maintenance phase (Phase 
2) of treatment for patients who use compression wraps and bandaging 
systems in addition to the coverage of daytime and nighttime garments.
    A few commenters shared concerns over terms used in the proposed 
rule. A commenter recommended that CMS eliminate a reference to 
``bandaging systems'' and replace with language that includes 
``lymphedema bandages and related supplies such as foam rolls or 
sheets, lining materials.'' Several commenters indicated that patients 
need ``sets of garments'' as opposed to individual garments.
    Many commenters requested CMS ensure inclusion of bandaging for 
various body parts including stretch bandages, firm bandaging, custom 
and adjustable wraps, bandage liners, night garments, Kinesio tape, 
Circaid wraps, Ready wraps, digital bandaging, elastic and non-elastic 
wraps, rolls of gauze bandaging, wraps for foot, calf, knee, thigh, 
hand, arm, Velcro bandage/compression systems, all knit type garments, 
compression socks/sleeve/gloves/gauntlets/pantyhose/thigh highs, 
standard fitted compression garments for the chest and back, such as 
compression bras which are able to hold a breast prosthesis; and toe 
caps that may be used for long term treatment, nighttime or other 
phases of treatment.
    Response: We appreciate the comments on a variety of different 
viewpoints on bandaging, bundling payments and how to approach payment 
for therapists and other skilled professionals. We understand and agree 
that bandaging may be provided at different phases of the beneficiary's 
treatment of lymphedema and the use of bandaging can continue at 
various stages of lymphedema as long as medically necessary. We are 
clarifying that payment for compression bandaging systems under this 
benefit category is not limited to Phase 1 (acute or decongestive 
therapy) but is also available under Phase 2 (maintenance therapy). 
With regards to payment, we note that currently a therapist who applies 
compression bandaging supplies during Phase 1 of treatment can bill for 
the service of applying the bandages using CPT codes 29581 and 29584. 
It is important to note, however, that if the CPT codes are billed and 
paid for a particular date of service, then billing for the bandaging 
supplies used during that date of service using the HCPCS A codes is 
not allowed and would be denied as it would result in duplicate payment 
of the supplies since the Medicare payment amounts for codes 29581 and 
29584 include payment for the compression bandaging supplies.
    We are finalizing the proposal to cover gradient compression wraps 
with adjustable straps and compression bandages under the new benefit 
as well as accessories necessary for the effective use of gradient 
compression garments and wraps with adjustable straps. In response to 
comments about ensuring inclusion of bandaging for various body parts 
we are adding more HCPCS codes, in addition to those originally 
proposed, to be clearer about the inclusion of bandaging and 
accessories for the various body parts. Detailed discussion on HCPCS 
coding is included in section 4 ``Healthcare Common Procedure Coding 
System (HCPCS) Codes for Lymphedema Compression Treatment Items'' and a 
list of HCPCS codes being added is included in Table FF-A 2.
    With regard to the reference to ``compression bandaging systems'', 
we are finalizing the use of the term ``compression bandaging systems'' 
in our regulations at 42 CFR 410.36(4)(iii) for lymphedema compression 
treatment items that are comprised of a combination of individual 
lymphedema compression bandages and related supplies as well as kits 
that can include both lymphedema bandages and related supplies used to 
create the compression bandaging system.
    Comment: Many commenters requested that CMS provide separate 
payment for the measurement and fitting services to ensure that 
patients receive the best care for their individual needs and that 
clinicians, therapists, and certified fitters are paid fairly and 
directly for the service they provide in all settings where fittings 
may be provided. Some commenters suggested they had greater trust in 
therapists than in general DMEPOS suppliers for garment measurement, 
believing that therapists provided more accurate measurements. Some 
commenters suggested precedent with orthotics and prosthetics for 
separate codes specifically for fitting services (with varying 
recommendations for the specific codes that could be created), and 
these codes may also assist in reimbursement in the event follow-up 
visits are needed to assess possible re-fitting as limb size may change 
significantly over time (for example, HCPCS level 1 code 97760 
``Orthotic management and training'' when services are not provided by 
a DMEPOS supplier).
    A commenter expressed concern that DMEPOS suppliers may not be 
prepared for the influx of referrals for lymphedema compression 
treatment garments, and that only separate payment for fitting services 
would alleviate wait times or other access issues.
    At the same time, many commenters expressed concerns with aspects 
that would arise from separate payment for fitting services. A 
commenter expressed concern that the patient receive clear and correct 
pricing for each garment, regardless of how the fitting services are 
provided. A commenter stated that therapists may use multiple garment 
suppliers which may create complications in arranging for separate 
payment for fitting.
    A commenter believed the proposal to implement a separate fitting 
component where payment is made to a therapist for taking measurements 
would be difficult for suppliers, particularly those that maintain a 
physical office where patients can attend a complimentary fitting 
appointment with a trained fitter.
    Several commenters expressed concern with responsibility for 
replacement of ill-fitting garments if separate payment for fitting 
services were established. While most commenters believe that 
separately paid fitters should not bear financial responsibility for 
garments that do not fit as expected, a commenter

[[Page 77819]]

recommended that if the garment matches the written fitting order, the 
fitter should bear responsibility for the cost of replacement in the 
event of a poor fit. A commenter specifically recommended that since 
the supplier retains responsibility for replacement or alteration of an 
ill-fitting garment, their payment should include the cost of fitting. 
A commenter noted that improperly measured garments could be altered 
(so full replacement may not be necessary) and that even with accurate 
measurement there is no guarantee of proper fit since there can be 
reduction or increase in the patient's condition during the weeks 
between measuring and receipt of the garment.
    A few commenters support the proposal to bundle payment for fitting 
and garments and that it be coordinated by enrolled DMEPOS suppliers A 
commenter indicated that if DMEPOS suppliers are enabled to act as 
administrator of payments for these services it would allow DMEPOS 
suppliers to set rates and administer payments without oversight or 
infrastructure to address non-payments, appeals and other unforeseen 
billing and reimbursement circumstances. Several commenters shared 
concerns that DMEPOS suppliers may not be ideal or have adequate 
training for measuring, assisting in choices or educating patients with 
certain circumstances such as lymphedema in sensitive areas, 
compression choices based on sensitivities or personal challenges in 
doffing and donning, or reach and balance concerns and may lead to 
delay and regression in treatment. A few commenters believe DMEPOS 
suppliers will have financial incentives that do not account for 
patient needs or preference. A few commenters indicated there is a 
difference between the measuring and fitting services provided by a 
DMEPOS supplier as compared to a therapist and indicated that when 
DMEPOS suppliers perform the measuring services the garment is 
typically sent to the patients home and the supplier is not required to 
follow-up with the patient whereas with therapists the garment is sent 
to the therapists office where they ensure the garment fits properly 
and the patient's comfort and functional needs are met leading to 
higher rates of compliance. A commenter indicated that the differences 
should be acknowledged in the payment.
    Response: We appreciate the many concerns commenters expressed both 
in support and against the idea of separate payment for fitting 
services. In the proposed rule, we noted that therapists often take 
measurements of affected body areas and perform other fitting services 
related to the furnishing of gradient compression garments. These 
measurements are an integral part of furnishing the custom garments and 
in some cases, the standard garments, and the suppliers of the garments 
are responsible for fitting the garments they furnish. Typically, 
DMEPOS suppliers are responsible for all aspects of furnishing the 
item, including fitting and measuring services. Following that 
approach, a supplier receiving payment for furnishing a lymphedema 
compression treatment item to a beneficiary has responsibility for 
ensuring that any necessary fitting, training (how to appropriately 
don/doff and maintain), and adjustment services are provided as part of 
furnishing the item. The supplier receiving payment for the garment may 
work out an arrangement with the therapist for the fitting component 
that is an integral part of furnishing the item. Although we solicited 
comments on the option of paying separately for the fitting component 
furnished by the therapist and then backing this payment out of the 
payment for the garment, we did not propose this policy. We did not 
propose this policy because of the many complexities associated with 
this policy and the comments reinforced that this is a very complicated 
alternative that requires careful analysis and consideration. We do not 
believe we are in a position to implement such a policy in 2024, but it 
is something we could consider under future rulemaking if we believe it 
would improve the administration of this new DMEPOS benefit category.
    As part of the DMEPOS supplier standards, a supplier must accept 
return of substandard items. In cases where a mistake is made in 
measuring and fitting the beneficiary for gradient compression 
garments, resulting in the furnishing and payment for custom gradient 
compression garments that do not properly fit the patient, the risk 
would be assumed by the fitter and not the supplier to accept return of 
the garments and cover the cost of two replacement garments. Again, we 
did not propose to make separate payment for the fitting services under 
this benefit when furnished by a supplier other than the supplier of 
the garments; however, we specifically solicited comments on the topic 
and comments on options to resolve the issues we outlined previously. 
We recognize that there is not necessarily a standard industry practice 
for the fitting and training components for furnishing lymphedema 
compression garments and sought comment on whether there are best 
practices in this space that CMS should consider further in the future. 
We also solicited comments on whether any HCPCS Level I (Current 
Procedural Terminology or CPT[supreg]) codes may describe the services 
of the therapist in these scenarios. The following is a summary of the 
comments we received and our responses.
    Comment: A commenter recommended a specific proposal where the 20 
percent beneficiary copay would be directed to the fitter for these 
services while the supplier of the garment would receive 80 percent of 
the allowed payment amount for the garment.
    Response: The CAA, 2023 did not modify or exempt lymphedema 
compression treatment items from the normal copay requirements that 
apply to Medicare items and services, so we do not intend to direct 
that beneficiaries make copayments for these items to fitters rather 
than the DMEPOS suppliers of the items.
    Comment: A few commenters are concerned that having DME suppliers 
administer payment for these services may open a window for abuse of 
Federal anti-kickback laws in the industry.
    Response: With regard to the concerns raised by the commenters 
about the Federal anti-kickback statute, while all applicable parties 
must comply with this law, such concerns are outside the scope of this 
rulemaking.
    Comment: A few commenters requested CMS to require non-clinician 
fitters to complete a training program, while a few other commenters 
requested CMS to adopt quality standards for non-clinician fitters of 
lymphedema compression treatment items. Alternatively, a few commenters 
recommended CMS provide a separate payment to clinicians for providing 
DME services and did not support DME suppliers administrating payment 
for these critical services. A commenter requested clarification from 
CMS on whether private practice physical (PT) and occupational 
therapists (OT) are exempt from proposed surety bond requirements if 
the business is solely owned and operated by the PT or OT's. This 
commenter requested CMS to premise payment on enrolling as a DME 
supplier. Some commenters expressed concern that CMS may have omitted 
from the proposal the full range of medical professionals who provide 
fitting services. Some commenters recommend that CMS support the 
establishment of an industry-standard licensing or certification 
process for fitting services to ensure training in garment selection, 
fabric type, compression class and the necessary

[[Page 77820]]

options for specific disease states, and presentation, while other 
commenters expressed concern with limiting fitting services to certain 
licensed health professionals in a way that may reduce access in areas 
of the country already struggling with a lack of lymphedema treatment 
professionals.
    Response: Suppliers of lymphedema compression treatment items are 
required to become enrolled DMEPOS suppliers, which in turn requires 
the supplier to obtain a surety bond, become accredited, and be in 
compliance with the DMEPOS supplier standards and quality standards. 
Medical professionals that currently provide fitting services are able 
to enroll in Medicare as DMEPOS suppliers and receive such bundled 
payment for garments and related supply services provided to 
beneficiaries. We will consider whether specific quality standards for 
suppliers of lymphedema compression treatment items should be added to 
the DMEPOS quality standards in the future. With regards to the comment 
requesting exemption from the surety bond requirements, we note that 
section 1834(a)(16) of the Act requires DMEPOS suppliers to maintain a 
surety bond of at least $50,000 as a condition for the receipt or 
renewal of a Medicare provider number.
    Comment: Several comments noted that fitting may be required not 
only for patients wearing custom garments, but also ready-to-wear 
products, although some comments specifically noted that the time 
required to fit for custom garments is longer. Some commenters stated 
that patients sometimes require multiple visits to ensure a proper fit, 
particularly for patients with more complex cases. A few commenters 
also noted that in certain complex cases it may be necessary for the 
supplier or manufacturer to interact with the therapist to co-engineer 
a custom garment, so CMS should ensure appropriate reimbursement for 
this type of work. A commenter urged CMS to collect and make public 
data on where beneficiaries are accessing lymphedema products, whether 
through suppliers or therapists, and to implement an auditing process 
to ensure that therapists are being adequately reimbursed.
    Response: We appreciate these comments. Payment for all services 
necessary for furnishing a gradient compression garment are included in 
the rates paid by Medicaid State agencies and we proposed to use the 
average Medicaid payment rate plus twenty percent as the payment basis 
for Medicare (when such Medicaid rates are available). Therefore, 
Medicare payments likewise include payment for all services necessary 
for furnishing the gradient compression garment, which is consistent 
with how Medicare payment is made for other DMEPOS items and services. 
We intend to closely monitor access to lymphedema compression treatment 
items and related services necessary for the effective use of these 
items to ensure that the Medicare payments for these items are 
appropriate.
    Comment: A few commenters raised concerns that bundling payment for 
a lymphedema compression treatment item that is supplied by a DMEPOS 
supplier where the measuring and fitting of the item is performed by a 
therapist or other practitioner would require the therapist or 
practitioner to enter into a financial relationship with the DMEPOS 
supplier that would implicate the physician self-referral law at 
section 1877 of the Act. A commenter requested that CMS clarify that a 
financial relationship between a DMEPOS supplier and a therapist or a 
practitioner who performs the fitting component of the service would be 
permissible under the physician self-referral law.
    Response: Section 1877 of the Act, also known as the physician 
self-referral law: (1) Prohibits a physician from making referrals for 
certain designated health services payable by Medicare to an entity 
with which he or she (or an immediate family member) has a financial 
relationship, unless an exception applies; and (2) prohibits the entity 
from filing claims with Medicare (or billing another individual, 
entity, or third-party payer) for those referred services. A financial 
relationship is an ownership or investment interest in the entity or a 
compensation arrangement with the entity. The statute establishes a 
number of specific exceptions and grants the Secretary the authority to 
create regulatory exceptions for financial relationships that do not 
pose a risk of program or patient abuse.
    The physician self-referral law would be implicated only if the 
therapist or practitioner who provides the fitting component of a 
service is a physician or the immediate family member of a physician 
(as defined at Sec.  411.351) and there is a financial relationship 
between the therapist or practitioner and the DMEPOS supplier. Where 
the physician self-referral law is implicated, a physician's referrals 
to the DMEPOS supplier with which the physician (or the immediate 
family member of the physician) has the financial relationship will not 
be prohibited if all the requirements of an applicable exception are 
satisfied. We note that several statutory and regulatory exceptions may 
be applicable to the type of financial relationship described by the 
commenters.
    We are finalizing the proposal to include payment for fitting 
services in the overall payment for lymphedema compression treatment 
garments that CMS will make to Medicare-enrolled DMEPOS suppliers that 
furnish lymphedema compression treatment items to Medicare 
beneficiaries.
    Finally, there are accessories such as zippers in garments, liners 
worn under garments or wraps with adjustable straps, and padding or 
fillers that are not compression garments but may be necessary for the 
effective use of a gradient compression garment or wraps with 
adjustable straps. There are also accessories like donning and doffing 
aids for different body parts such as lower limb butlers or foot 
slippers that allow the patients to put on the compression stockings 
with minimum effort and are not used with compression bandaging systems 
or supplies.
    We proposed that accessories necessary for the effective use of 
gradient compression garments and gradient compression wraps with 
adjustable straps would also fall under this new benefit for lymphedema 
compression treatment items. For example, a liner that is used with a 
garment because it is needed to prevent skin breakdown could be covered 
under the new benefit because it is necessary for the effective use of 
the garment. We solicited comments on the topic of coverage of 
accessories necessary for the effective use of gradient compression 
garment or wraps with adjustable straps, including what HCPCS codes 
should be established to describe these items, as well as comments on 
whether there are additional items other than the gradient compression 
garments, gradient compression wraps with adjustable straps, and 
compression bandaging supplies that could potentially fall under the 
new benefit category for lymphedema compression treatment items. The 
following is a summary of the comments we received and our responses.
    Comment: All commenters supported the addition of accessories to 
the items and services covered under the Medicare benefit category for 
lymphedema compression treatment items. Several commenters thanked and 
supported CMS's proposal to include accessories such as donning and 
doffing aids that assist patients with putting on compression items. 
Several commenters indicated that lymphedema treatment items are 
customizable and vary widely

[[Page 77821]]

by patient but are especially important for Medicare recipients who are 
more likely to have multiple co-morbidities that restrain their 
strength and range of motion. A few commenters indicated the need to 
account for layering garments as recommended by clinicians. A few 
commenters described these items as part of a ``build'' of a garment/
solution and suggested they have unique HCPCS codes to support the 
``build.''
    Several commenters requested clarification on the term ``padding'' 
suggesting this should be itemized for the sake of comprehensiveness 
and include foam sheets, foam rolls, cotton or synthetic padding, 
stockinette, customized foam cutouts, and chip pads as well as Swell 
Spots or similar quilted items to be used under clothing. A commenter 
suggested padding be listed according to use (that is, skin protection 
and cushioning, compression, fibrosis). A commenter indicated that the 
proposed definition in 42 CFR 410.36(a)(4) needs additional language to 
better describe the wide range of accessories that are necessary for 
effective use of medically necessary lymphedema compression treatment 
items.
    Many commenters indicated the need for coverage of aids that 
facilitate use and enhance compliance rates such as: adhesive roll on, 
fasteners and closures, bandage liners, donning and doffing aids (such 
as limb butlers, foot slippers, liners, silicone donning lotions, and 
bandaging supplies), padding, skin barrier stocking, accessories which 
are attached to and modify the lymphedema treatment garment, and 
accessories which are separate from the lymphedema garments such as 
oversleeves and undersleeves. Many commenters made suggestions on the 
range of accessories for which HCPCS codes are needed. Many commenters 
identified the following accessories for HCPCS code development: 
stockinettes, customized foam cutouts, foam pads, foam chips, bandage 
rollers (manual and motorized), bandaging liners, medium-stretch 
bandages, under-bandage pads and bandage liners, and short-stretch 
bandages, securing tape, donning and doffing aids such as wire frame 
butlers, easy slide sleeves, donning gloves, lubricants and adhesives, 
garment washing fluid, oversleeves, strap extenders, lobe straps, tape 
measures, garter belts, zippers, pull loops, silicone bands, comfort/
flexion zones, outer jackets, and fitting lotion.
    A few commenters indicated that padding is generally durable but 
only some is washable and that materials break down over time and need 
replacement every 1 to 2 years. The commenter indicated bandages lose 
their stretch and need replacing at least every 4 to 6 weeks. A few 
commenters requested CMS clarify that lymphedema compression treatment 
items and pneumatic compression pumps may be covered concurrently if 
medically necessary. A commenter suggested that supporting the cost of 
donning and doffing aids would benefit patients who lack the mobility 
to don and doff the garments themselves.
    Response: We appreciate the detailed lists and comments that the 
commenters have provided to us on the types of accessories as well as 
suggestions for accessory HCPCS codes. We thank commenters for the 
support of our proposal to cover accessories necessary for the 
effective use of gradient compression garments and gradient compression 
wraps with adjustable straps, including donning and doffing aids, under 
the new lymphedema compression treatment items benefit. We recognize 
that the form accessories may take in relation to the garments and 
wraps is varied with some accessories part of the garment as furnished 
such as zippers and others separate such as liners worn under garments 
or wraps. We believe the proposed definition of accessories for 
lymphedema compression treatment items at 42 CFR 410.36(a)(4) captures 
the variance in form and range of accessories that are needed for the 
effective use of garments and wraps with adjustable straps. We also 
believe that additional specification in terms of type or use on the 
term ``padding'' that is provided as an example in the definition is 
not necessary to clarify the scope of the benefit and are finalizing 
the definition as proposed. Concerning HCPCS codes to describe these 
items, as commenters note, there is a wide array of accessories on the 
market that can be used to facilitate effective use of the garments or 
wraps. Given the number and types of accessories available, we have 
initially established a not otherwise specified code for accessories, 
as shown in Table FF A 2, that will be effective January 1, 2024 for 
use in identifying accessories used in conjunction with lymphedema 
garments and wraps. We believe it is important to have a code in place 
on January 1, 2024 for identifying such items and we refer readers to 
the public HCPCS process, described at https://www.cms.gov/medicare/coding/medhcpcsgeninfo/hcpcspublicmeetings, as a means for modifying 
the code set in the future. Since Medicare coverage determinations have 
not been developed at this time for different types of accessories used 
in conjunction with lymphedema garments and wraps, the coverage 
determinations for any claims submitted for these items must be made on 
an individual, claim-by-claim basis, beginning on January 1, 2024. We 
note that one code for these accessories is all that will be needed to 
process claims for these items and services. Should CMS develop an NCD 
or LCDs with specific medical necessity criteria for different types of 
accessories in the future, we would add codes for the different types 
of accessories addressed in these coverage determinations for Medicare 
claims processing purposes. With respect to concurrent coverage of 
lymphedema compression treatment items and pneumatic compression pumps, 
DME MACs will continue to make determinations on the medical necessity 
of items and services, including items that fall under the new benefit 
category for lymphedema compression treatment items and existing 
benefit categories.
4. Healthcare Common Procedure Coding System (HCPCS) Codes for 
Lymphedema Compression Treatment Items
    HCPCS codes are divided into two principal subsystems, referred to 
as Level I and Level II of the HCPCS. Level I of the HCPCS is comprised 
of Current Procedural Terminology (CPT), a numeric coding system 
maintained by the American Medical Association (AMA). HCPCS Level II is 
a standardized coding system that is used primarily to identify drugs, 
biologicals and non-drug and non-biological items, supplies, and 
services not included in the CPT codes, such as ambulance services and 
DMEPOS when used outside a physician's office. As shown in Table FF-A 
1, there are currently HCPCS Level II codes for compression garments 
(stockings, sleeves, gloves, and gauntlets) and compression wraps with 
adjustable straps that may be used in the treatment of lymphedema and 
other conditions.
BILLING CODE 4120-01-P

[[Page 77822]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.067

BILLING CODE 4120-01-C
    The items described by HCPCS codes A6531, A6532, and A6545 are 
covered by Medicare under the Part B benefit for surgical dressings at 
section 1861(s)(5) of the Act, when used in the treatment of an open 
venous stasis ulcer. Total allowed charges for these three codes in 
2022 was approximately $2.5 million, with around $1.9 million for the 
non-elastic, below knee, gradient compression wrap with adjustable 
straps described by code A6545, $500,000 for the below knee, gradient 
compression stocking code A6531, and $100,000 for the below knee, 
gradient compression stocking code A6532. We did not propose to change 
this policy with this rule, but we addressed the codes for items when 
they are covered under Medicare Part B as surgical dressing versus when 
they are covered under Medicare Part B as lymphedema compression 
treatment for billing and claims processing purposes. We therefore 
proposed to add three new HCPCS codes for use when billing for A6531, 
A6532, and A6545 items used as surgical dressings. The proposed codes 
are as follows:

 A--Gradient compression stocking, below knee, 30-40 mmhg, used 
as surgical dressing in treatment of open venous stasis ulcer, each
 A--Gradient compression stocking, below knee, 40-50 mmhg, used 
as surgical dressing in treatment of open venous stasis ulcer, each
 A--Gradient compression wrap with adjustable straps, non-
elastic, below knee, 30-50 mmhg, used as surgical dressing in treatment 
of open venous stasis ulcer, each

The surgical dressing fee schedule amounts for codes A6531, A6532, and 
A6545 would be applied to the three new codes. The remaining discussion 
in this section addresses the coding for the lymphedema compression 
treatment items.
    For gradient compression stockings, we proposed to use existing 
codes A6530 through A6541, and code A6549 from Table FFA-1. For codes 
A6530 through A6541, we solicited comments on whether we should 
maintain the three pressure level differentiations in the codes and 
whether these differentiations should be something other than 18-30, 
30-40, and 40-50 mmHg. We also solicited comments on whether there is a 
better way to describe the body areas these garments cover rather than 
``below knee,'' ``thigh-length,'' ``full-length/chap style,'' and

[[Page 77823]]

``waist-length.'' For each code, we proposed to add a matching code for 
the custom version of the garment. For example, if we continue to use 
codes A6530 through A6532 for below knee stockings with the current 
descriptions, we would add corresponding codes for the custom versions 
of these garments, such as the following:

 A--Gradient compression stocking, below knee, 18-30 mmhg, 
custom, each
 A--Gradient compression stocking, below knee, 30-40 mmhg, 
custom, each
 A--Gradient compression stocking, below knee, 40-50 mmhg, 
custom, each

    For gradient compression garments for the upper extremities and 
areas of the body, we proposed to use existing codes A6549 and S8420 
through S8428. We proposed renumbering codes S8420 through S8428 as 
``A'' codes rather than S codes. We proposed removing the words 
``ready-made'' and revising ``custom made'' to ``custom'' for the codes 
for the upper extremity gradient compression garments and replacing the 
word ``pressure'' with ``compression,'' in order to be consistent with 
the wording for the codes for the lower extremity garments. We proposed 
to add the word ``arm'' in front of the word ``sleeve'' for the upper 
extremity garments. We also proposed to add a code for a custom 
gauntlet. Finally, we proposed to add the word ``each'' to the 
description for each code. We proposed that if no other changes are 
made, the new codes would be as follows:

 A--Gradient compression arm sleeve and glove combination, each
 A--Gradient compression arm sleeve and glove combination, 
custom, each
 A--Gradient compression arm sleeve, each
 A--Gradient compression arm sleeve, custom, medium weight, 
each
 A--Gradient compression arm sleeve, custom, heavy weight, each
 A--Gradient compression glove, each
 A--Gradient compression glove, custom, medium weight, each
 A--Gradient compression glove, custom, heavy weight, each
 A--Gradient compression gauntlet, each
 A--Gradient compression gauntlet, custom, each

We solicited comment on whether separate codes are needed for 
mastectomy sleeves or whether these items can be grouped together under 
the same codes used for other arm sleeves (S8422 thru S8424). We 
solicited comments on whether there is a need to retain codes S8420 
through S8428, in addition to the renumbered A code versions, for use 
by other payers other than Medicare. If these codes are retained, they 
would be invalid for Medicare use, but could be used by other payers in 
lieu of the new A codes.
    We also proposed to add the following new codes for other upper 
body areas:

 A--Gradient compression garment, neck/head, each
 A--Gradient compression garment, neck/head, custom, each
 A--Gradient compression garment, torso and shoulder, each
 A--Gradient compression garment, torso/shoulder, custom, each
 A--Gradient compression garment, genital region, each
 A--Gradient compression garment, genital region, custom, each

    For all of the codes for the upper extremities and upper body 
areas, we solicited comments on whether we should establish codes for 
pressure level differentiations similar to the pressure level 
differentiations in codes A6530 through A6541, possibly replacing the 
words medium and heavy weight, as well as whether codes are needed for 
additional upper body areas.
    We proposed the following new codes for nighttime garments:

 A--Gradient compression garment, glove, padded, for nighttime 
use, each
 A--Gradient compression garment, arm, padded, for nighttime 
use, each
 A--Gradient compression garment, lower leg and foot, padded, 
for nighttime use, each
 A--Gradient compression garment, full leg and foot, padded, 
for nighttime use, each

For gradient compression wraps with adjustable straps, we proposed to 
use code A6545 in Table FF-A 1 for below knee wraps and solicit 
comments on whether additional codes or coding revisions are needed for 
the purpose of submitting claims for gradient compression wraps with 
adjustable straps. Regarding HCPCS codes for compression bandaging 
systems, we believe more codes are needed than existing codes S8430 
(Padding for compression bandage, roll) and S8431 (Padding for 
compression bandage, roll), for example, to describe the supplies used 
in a compression bandaging system consisting of more than two layers. 
We also believe that specific base sizes should be added to the code, 
for example ``10cm by 2.9m'' rather than the vague unit of ``roll'' and 
are soliciting comments on HCPCS coding changes needed to adequately 
describe the various compression bandaging systems used for the 
treatment of lymphedema. Finally, as noted in section VII.B.3. of this 
rule, we solicited comments on HCPCS codes needed to describe 
accessories necessary for the effective use of gradient compression 
garments or wraps with adjustable straps. The following is a summary of 
the comments we received and our responses.
    Comment: Several commenters recommended that flat-knit garments 
have separate codes from circular-knit garments. A commenter supported 
development of separate HCPCS codes for circular knit vs flat knit 
garments as they have different costs and are appropriate for different 
patients.
    Response: While some commenters supported having different codes 
for flat knit and circular knit garments, we do not believe this 
differentiation is necessary since it is our understanding that the 
majority of flat knit garments are custom garments, and the majority of 
circular knit garments are non-custom. We believe that having separate 
codes for custom and non-custom codes should be sufficient to address 
this difference in garment material.
    Comment: A few commenters expressed general support for existing 
compression stocking codes (A6530-41 and A6549). A few commenters 
indicated that changes to these codes would affect existing processes, 
knowledge, and experience throughout the insurance industry. A few 
commenters did not support any changes in these codes. A few commenters 
supported changes to the A6530-41 and A6549 codes to reflect the 
different kinds of knits, lengths, and other variations in garments, 
including the addition of modifiers to describe each criterion when 
billed with a specific HCPCS code. Other commenters favored 
establishing new codes with additional textile and technology 
specifications instead of using the existing compression stocking 
codes. A few commenters indicated that the number of proposed HCPCS 
codes was inadequate. A few commenters made suggestions on codes on 
custom versions of Existing Gradient Compression Stocking Codes (A6530-
41 and A6549). A commenter recommended custom nighttime compression 
garments be available at any compression pressure and custom non-
elastic gradient compression wrap at any compression pressure.
    A commenter suggested expanding and updating the codes for each 
type of material (circular knit, flat knit, inelastic wraps) and 
indicating whether it is ready made or custom made. Many commenters 
offered suggestions on better ways to describe body areas.

[[Page 77824]]

Several commenters suggested adding descriptions that would apply to 
multiple body areas, including toe and individual toes, calf, foot, 
ankle, below knee, knee, above knee, thigh, pelvis, and pelvis and 
thigh(s), genital, head, neck, chest, torso, arm, hand, and finger. 
Several commenters suggested descriptions for items that apply to a 
range of body areas, including shorts, thigh to waist length 
compression shorts, ankle to waist length compression capris, full body 
suit, biker short and adding ``knee-high'' or ``thigh-high'' to 
descriptions, combined gauntlet and arm sleeve, and torso only 
(bodysuits, bras, axillary compression items, vests, abdominal 
compression items, short-sleeve shirts, and long-sleeve shirts) and 
chest/torso compression garments. A few commenters noted the need for 
descriptions that would cover garment items used for multiple body 
areas. A commenter suggested ``high rise panty'' or ``high rise panty 
with leg'' or ``bicycle short style'' to clarify that stocking 
definitions include the buttocks, the foot, open or closed toe, as well 
as a partial leg on the non-affected side. A commenter indicated the 
need for a description that would apply to a standard thigh high 
compression garment on one leg to a custom panty hose with 2 legs of 
differing lengths and compression levels. A commenter indicated the 
need for a description that would apply to a garment item that covers 
an entire limb/body part or is divided into components to allow ease of 
donning/doffing and best coverage per patient. The description should 
also be inclusive of all body parts with appropriate codes for each. A 
few commenters suggested new HCPCS billing codes for items such as 
custom flat knit compression waist high pantyhose (with multiple 
compression levels in different body parts) and a groin compression 
panel option.
    Response: We thank the commenters for providing comments on the use 
of the existing codes (A6530-41 and A6549) and for support of our 
proposal. After careful review, we believe that retaining the existing 
longstanding compression stocking codes will work to identify and 
describe these items and will be less disruptive across all payer 
settings than establishing new HCPCS codes that would replace the 
existing codes. Some commenters suggested separate new codes or 
modifications to the existing codes to distinguish custom versions of 
garments, different types of textiles (flat and custom knit), different 
pressure designations or different body areas. We thank commenters for 
supporting our proposal to add a matching code for the custom version 
of each garment and are adding these new codes for use on January 1, 
2024. We also proposed use of existing not otherwise specified code 
A6549 and are finalizing this along with a change to the code 
descriptor from ``stocking/sleeve'' to ``garment'' to clarify its use 
as a gradient compression garment code. We thank commenters for the 
numerous suggestions on ways to describe the various body areas that 
gradient compression areas can cover, including ranges of body areas 
and descriptions such as ``high rise panty with leg.'' After careful 
review, we have identified in Table FF-A 2 new codes that we will be 
finalizing as part of this rule with an effective date of January 1, 
2024, including gradient compression garment codes for the genital 
regions, neck/head and toe caps. In addition to the new codes in Table 
FF-A 2, we are retaining the following existing codes, with revisions 
to the descriptors where applicable as noted previously, that are also 
available to describe lymphedema compression treatment items:
[GRAPHIC] [TIFF OMITTED] TR13NO23.068

    We believe it is important to have a set of codes in place on 
January 1, 2024, that will generally meet the needs of the majority of 
patients. However, we recognize that additional refinements may be 
necessary. As such, the public HCPCS process, described at https://www.cms.gov/medicare/coding/medhcpcsgeninfo/hcpcspublicmeetings is 
available as a means for modifying the code set in the future.
    Comment: Many commenters offered suggestions on changes to the 
proposal on differentiating pressure levels for HCPCS codes A6530-41 
and A6549. A commenter supported the pressure levels described, while 
adding language to acknowledge that they do not include all pressure 
levels available. A few commenters supported including compression 
levels higher than 50 mmHg. A commenter recommended aligning the 
pressure level differentiations in codes A6530-A6541 to the compression 
class designations utilized by providers to ensure that higher levels 
of compression are captured for reimbursement. A few commenters 
suggested separate treatment of pressure levels for circular and flat 
knit garments. A commenter suggested including nighttime compression 
items at any compression pressure. Another commenter suggested 
including pressure level differentiations with all items for upper 
extremity and upper body areas. A few commenters suggested use of Mild 
Pressure, Moderate Pressure, Maximum Pressure across all codes because 
some vendors use class levels and some use specific levels. A commenter 
indicated that

[[Page 77825]]

ranges of compression be explicitly covered (15-20 mmHg, 20-30 mmHg, 
30-40 mmHg, and 40-50 mmHg). A commenter recommended keeping the 
pressure levels the same for lower and upper extremity garments. A 
commenter suggested having a standard and custom garment for each 
pressure level as well as for each garment type. A commenter suggested 
adding a matching code for the custom version of the garment, dividing 
custom garments by compression class (18-30 mmHg; 30-40 mmHg; 40-50 
mmHg) and custom flat knit garments (15-21 mmHg; 22-32 mmHg; 33-46+ 
mmHg).
    Response: We believe that the existing pressure designations in 
mmHg generally capture how these items are presented and marketed in 
the U.S. market. We believe a change to an alternative pressure 
designation such as mild, moderate or maximum pressure would present 
more challenges for billing and be more disruptive to the lymphedema 
market. However, we recognize that the existing pressure ranges that 
end in 50 mmhg that we proposed may not capture all the pressure levels 
available, so we are revising the following gradient compression 
stocking code pressure ranges by removing ``40-50 mmhg'' and adding 
``40 mmhg or greater'' to ensure that higher levels of compression are 
addressed in both the standard and custom versions:

 A--Gradient compression stocking, below knee, 40 mmhg or 
greater, each
 A--Gradient compression stocking, below knee, 40 mmhg or 
greater, custom, each
 A--A6535 Gradient compression stocking, thigh length, 40 mmhg 
or greater, each
 A--Gradient compression stocking, thigh length, 40 mmhg or 
greater, custom, each
 A--A6538 Gradient compression stocking, full length/chap 
style, 40 mmhg or greater, each
 A--Gradient compression stocking, full length/chap style, 40 
mmhg or greater, custom, each
 A--A6541 Gradient compression stocking, waist length, 40 mmhg 
or greater, each
 A--Gradient compression stocking, waist length, 40 mmhg or 
greater, custom, each

    Table FF-A2 also includes the five new A codes that instead of 
finalizing as proposed, we are finalizing by adding ``40 mmhg or 
greater'' to the stocking code pressure ranges.
    Comment: A few commenters expressed general support for the 
addition of new HCPCS codes for use when billing for A6531, A6532, and 
A6545 items used as surgical dressings only. Several commenters 
disagreed with the addition of three new HCPCS codes for use when 
billing for A6531, A6532, and A6545 items used as surgical dressings. A 
few commenters suggested that the addition of new codes was 
unnecessary. Another commenter suggested current HCPCS modifiers are 
sufficient to differentiate these garments when used for different 
purposes and was concerned with overcomplicating coding decisions. 
Several commenters believe it might require a change to existing wound 
care guidance, affect national and local coverage determinations, and 
increase administrative burden. A few commenters indicated that the new 
HCPCS codes would be confused with existing HCPCS codes. A commenter 
indicated that the addition of new codes would lead to payment errors. 
A few commenters recommended that existing A6531, A6532, and A6545 
codes not be modified for coverage of lymphedema compression garments 
and that new codes be developed to describe items under the new benefit 
to avoid confusion.
    Response: We appreciate the comments and agree with commenters that 
establishing new codes for lymphedema compression garments would be 
preferable to modifying the existing A6531, A6532, and A6545 surgical 
dressing codes for use under the new benefit as proposed. To avoid 
confusion and disruption associated with repurposing the existing 
A6531, A6532, and A6545 surgical dressing codes, instead of finalizing 
new A codes for the existing A6531, A6532 and A6545 codes under the 
surgical dressing benefit and retaining A6531, A6532 and A6545 for use 
under the lymphedema benefit as proposed, we are instead finalizing new 
A codes for the following gradient compression garment and wrap codes 
under the lymphedema compression benefit effective January 1, 2024.

 A--Gradient compression stocking, below knee, 30-40 mmhg, each
 A--Gradient compression stocking, below knee, 40 mmhg or 
greater, each
 A--Gradient compression wrap with adjustable straps, below 
knee, 30-50 mmhg, each

Additionally, we will revise the descriptors of existing A6531, A6532, 
and A6545 to clarify their use under the surgical dressing benefit. For 
example, A6531 would read ``Gradient compression stocking, below knee, 
30-40 mmhg, used as surgical dressing, each.''
    Comment: On CMS's proposal to use existing A6549 and S8428-S8428 
codes, a few commenters supported renumbering S8420 through S8428 to A 
codes. A commenter suggested replacing the terms ``medium weight'' and 
``heavy weight'' with compression values, or, in the alternative, 
adding section defining the range of compression values that qualify as 
``medium weight'' and ``heavy weight.'' A few commenters disagreed with 
renumbering S-8420 through S8428 to A codes and indicated it could lead 
to problems with claims payment by private and other payers. A few 
commenters expressed general support for existing codes for upper 
extremities and body garments (A6549, S8420-28). A few commenters 
indicated support for the addition of codes for upper body areas. A 
commenter supported the addition of codes for non-limb areas of the 
body. A commenter recommended that existing codes not be changed 
because they are used across the insurance industry. A few commenters 
supported differentiating pressure levels for codes for upper 
extremities and body areas. A commenter agreed with differentiation for 
upper limb garment, suggesting differentiation by compression ranges 
(20-30, 30-40, 40-50 mmHg) or compression class level (for example, 
Class 1, Class 2, Class 3). Another commenter supported the three-
pressure level differentiations but indicated the need to distinguish 
circular-knit and flat-knit compression garments. A commenter suggested 
the coverage of gradient compression garments such as the compression 
arm sleeve with shoulder attachment and the compression arm sleeve with 
gauntlet attachment. A commenter also suggested that the proposed list 
of arm sleeves needs should include ``A--Gradient compression arm 
sleeve and gauntlet, custom'' as they believe it is frequently 
prescribed and indicated. A commenter did not support retention of 
HCPCS codes S8420-S8428, indicating that they could be included with 
other code changes effective in 2024. Another commenter also supported 
the removal of the ``S'' codes due to difficulties obtaining a Medicare 
denial when other insurers require use of these garment codes for the 
upper extremities. A commenter supported maintaining HCPCS codes S8420-
S8428 because they are used by insurers for diagnoses other than 
lymphedema. Other commenters noted billing challenges if not all 
Medicaid and commercial payers adopt the replacement ``A'' codes for 
HCPCS codes S8420-S8428.
    Response: Thank you for your comments on our proposal to use

[[Page 77826]]

existing HCPCS code A6549 and to add new ``A'' codes based on the 
S8420-S8428 codes for upper extremity gradient compression garments. 
After careful review, we are finalizing the addition of A codes that 
align with the codes and descriptors of S8420 through S8428 along with 
the following changes to the A code descriptors: removing the words 
``ready-made,'' revising ``custom made'' to ``custom,'' replacing the 
word ``pressure'' with ``compression,'' adding ``each,'' and adding the 
word ``arm'' in front of the word ``sleeve'' for the upper extremity 
garments. We are also finalizing the addition of a code for a custom 
gauntlet as proposed. Based on commenter input, we will retain codes 
S8420 through S8428, in addition to the new A code versions, for use by 
other payers other than Medicare. The ``S'' codes will be invalid for 
Medicare use, but they could be used by other payers in lieu of the new 
upper extremity garment ``A'' codes. Similar to the lower extremity 
gradient compression garments, we did not find a need to further 
differentiate the proposed upper extremity codes based on circular-knit 
and flat-knit compression materials. Since the majority of flat-knit 
garments are custom garments and circular-knit garments are non-custom 
garments, we do not believe further stratification of the proposed 
custom and non-custom upper extremity HCPCS codes is necessary for this 
distinction. While some commenters recommended adding pressure level 
differentiations such as (20-30, 30-40, 40-50 mmHg) or compression 
class level (for example, Class 1, Class 2, Class 3) to the upper 
extremity codes, we believe the long-standing ``S'' codes that are 
being established as A codes provide a way to identify upper extremity 
gradient compression garments without further stratification by 
pressure level. Our review of the cost of these items also does not 
generally support a need to stratify by pressure level tiers. We will 
retain the medium and heavy weight terminology in the new sleeve and 
arm ``A'' codes from the predicate S8422, S8423, S8425 and S8426 codes. 
The new codes we are finalizing in Table FF-A 2 identify the new 
gradient compression garment codes we are adding for upper limb and 
non-limb areas of the body such as the neck and head and the genital 
regions. In addition to the new codes in Table FF-A 2, we are 
finalizing the addition of the following new A codes that align with 
the codes and descriptors of S8420 through S8428, as discussed 
previously, effective January 1, 2024:

 A--Gradient compression arm sleeve and glove combination, 
custom, each
 A--Gradient compression arm sleeve and glove combination, each
 A--Gradient compression arm sleeve, custom, medium weight, 
each
 A--Gradient compression arm sleeve, custom, heavy weight, each
 A--Gradient compression arm sleeve, each
 A--Gradient compression glove, custom, medium weight, each
 A--Gradient compression glove, custom, heavy weight, each
 A--Gradient compression glove, each
 A--Gradient compression gauntlet, each

    Comment: Many commenters made suggestions on codes for mastectomy 
sleeves. Many commenters supported including mastectomy sleeves in the 
codes for compression sleeves and not creating separate mastectomy 
codes. Many commenters did not believe it was necessary to distinguish 
via separate coding patients with breast cancer from patients with 
other types of lymphedema. A commenter opposed the inclusion of 
mastectomy or other procedures in the new codes for lymphedema 
compression treatment items. Another commenter noted that all sleeves 
for mastectomy are the same as all compression garments used for 
lymphedema, so they did not see a need for separate codes. A few 
commenters suggested not using the L8010 HCPCS code for a compression 
sleeve. Several commenters suggested deleting code L8010.
    Response: We appreciate the recommendations provided related to 
whether separate codes are needed for mastectomy sleeves and if items 
can be grouped together under the same codes used for other arm sleeves 
(S8422 thru S8424). After reviewing the comments, we agree that 
separate codes are not necessary to distinguish mastectomy sleeves from 
other arm compression sleeves used for lymphedema. We will also 
continue to consider what to do with regard to the status of existing 
code L8010 Breast prosthesis, mastectomy sleeve and may announce our 
views in advance of a future public meeting related to the HCPCS code 
set.
    Comment: A few commenters supported new HCPCS codes for nighttime 
garments in general. A commenter supported coverage of a nighttime 
chipped foam compression garment for the body parts that are affected. 
A few commenters indicated the need for additional codes. A commenter 
indicated that there should be fewer HCPCS codes for nighttime 
garments. Another commenter recommended additional codes to reflect 
nighttime use of padded head/neck garments for lymphedema management. 
Concerning gradient compression wraps with adjustable straps, a 
commenter indicated the need for codes for gradient compression wraps 
for below knee and above knee and a code for a full-leg wrap. Another 
commenter indicated that gradient compression wraps with adjustable 
straps should include: foot wraps, calf wraps, knee wraps, thigh wraps, 
hand wraps, and arm wraps. A commenter indicated that additional HCPCS 
codes need to be established for wraps for different parts of the body. 
With respect to other comments related to garments or wraps with 
adjustable straps, a commenter indicated that the term ``with 
adjustable straps'' refers to both garments and wraps. The commenter 
indicated that it might be clearer to eliminate ``with adjustable 
straps,'' which would indicate coverage for wraps that are adjustable 
by straps or by other means.
    Response: Thank you for your comments on the HCPCS codes for 
nighttime garments and gradient compression wraps with adjustable 
straps. We appreciate the support for our proposal to add the following 
nighttime garment codes and will be finalizing these codes for use 
effective January 1, 2024.

 A--Gradient compression garment, glove, padded for nighttime 
use, each
 A--Gradient compression garment, arm, padded for nighttime 
use, each
 A--Gradient compression, lower leg and foot, padded, for 
nighttime use, each
 A--Gradient compression garment, full leg and foot, padded, 
for nighttime use, each

    Table FF-A 2 identifies the new nighttime garment HCPCS codes that 
we are adding to the HCPCS code set effective January 1, 2024, 
including a bra garment and custom versions of the glove, arm, lower 
leg and full leg and foot nighttime garments. Regarding gradient 
compression wrap coding, we proposed to use existing code A6545 to 
identify below knee gradient compression wraps with adjustable straps. 
As discussed in a prior response, to avoid confusion with repurposing 
the existing A6545 code used for surgical dressings, we will establish 
a new A code to describe below knee gradient pressure wraps with 
adjustable straps under the new lymphedema benefit for use effective 
January 1, 2024. We appreciate the commenters input on additional 
coding for other areas of the body and descriptor language. We

[[Page 77827]]

believe that including adjustable straps in the descriptor for gradient 
pressure wrap with adjustable straps is necessary to help identify the 
general type of wrap that supplies gradient pressure and are retaining 
this terminology. Table FF-A 2 includes the new codes we are adding for 
gradient pressure wraps with adjustable straps and includes wraps for 
above knee, full leg, and foot.
    Comment: Many commenters provided comments on a range of issues 
related to HCPCS Codes for lymphedema compression items. A few 
commenters indicated that the number of proposed HCPCS codes was 
inadequate. Many expressed support for a range of new codes. A few 
supported a proposal for 229 new HCPCS codes that differentiate between 
textiles and technologies (circular knit, flat knit, inelastic 
adjustable wraps). A commenter supported development of a code for each 
individual component. A commenter indicated that limiting the number of 
HCPCS codes would not reflect the large variety of lymphedema 
compression treatment items. Commenters also provided suggestions on 
codes for bandaging systems. A commenter indicated a need for more 
codes than the existing S bandaging codes as lymphedema bandaging 
systems can include: short-stretch compression bandages, stockinette or 
tubular gauze sleeves, finger/toe bandages, rolled padding (synthetic 
or foam), adhesive tape, foam pads, chip pads; chip bags. A commenter 
recommended that HCPCS codes should be added for lymphedema compression 
bandaging kits for: a single upper limb; two upper limbs; a single 
lower limb; and two lower limbs. Some commenters supported new codes 
for bandages and recommended that the descriptors be based on the width 
and length. A commenter requested that CMS ensure these garments/
bandaging/padding are properly identified via the HCPCS codes. Another 
commenter submitted a list of recommended new HCPCS codes for bandaging 
system components that were based on size. A commenter indicated that 
many of the longer and wider bandages specifically used on large lower 
extremity legs, hips and buttocks are too long or too wide for existing 
HCPCS code categories and need to correct the description or add a new 
code. A commenter cited concerns using the same codes as traditional 
bandaging materials will result in reimbursement that is too low.
    Response: We thank the commenters for the detailed HCPCS 
recommendations for lymphedema compression treatment items. We have 
identified in the chart 57 HCPCS codes that we are finalizing for 
lymphedema compression treatment items and accessories, as discussed in 
the previous responses. We recognize that additional refinements to the 
code set may be necessary, thus we direct readers to the HCPCS Level II 
coding process, described at https://www.cms.gov/medicare/coding/medhcpcsgeninfo/hcpcspublicmeetings, which provides a means for 
modifying the HCPCS code set for lymphedema compression treatment items 
in the future. Regarding the commenter's request for 229 new HCPCS 
codes that differentiate between textiles and technologies (circular 
knit, flat knit, inelastic adjustable wraps), we do not currently see a 
Medicare program need to add codes at this level of specificity. If 
commenters continue to believe that coding for one textile vs. another 
(for example, circular knit vs. flat knit) would still be useful after 
January 1, 2024, we direct commenters to the HCPCS Level II coding 
process described previously. We appreciate the suggestions for HCPCS 
coding changes needed to describe the various compression bandaging 
systems used for the treatment of lymphedema. We agree with commenters 
that more codes are needed beyond existing codes S8430 (Padding for 
compression bandage, roll) and S8431 (Compression bandage, roll) to 
describe the bandaging systems.
    Therefore, after careful review of the comments, we are 
establishing new HCPCS codes, effective January 1, 2024, to describe 
the following bandaging system components: upper and lower extremity 
bandage liners; high density foam rolls; long, medium and short stretch 
bandages; high density foam sheets and pads; low density channel and 
flat foam sheets; padded foam and textile; and tubular protective 
absorption layers with and without padding. These new codes will allow 
suppliers to separately identify the supplies that are being furnished 
to the patient as opposed to establishing bandaging kit HCPCS codes 
delineated by the extremity body type. The list of the new HCPCS 
bandaging codes and descriptors that we are adding to the HCPCS code 
set effective January 1, 2024 is available in Table FF-A 2. Similar to 
the disposition of the other existing S codes, we will retain bandaging 
codes S8430 and S8431 in the HCPCS code set for use by other payers. We 
are also establishing a new gradient compression bandaging supply not 
otherwise specified code, effective January 1, 2024, that will be 
available for use in identifying bandaging supplies that are not 
identified by a unique HCPCS code. Since this is a new benefit 
category, payment for lymphedema compression treatment items will be 
established in accordance with the requirements at section 1834(z) of 
the Act and will not be based on the surgical dressing payment 
requirements for traditional Medicare bandaging at 42 CFR 414.220.
BILLING CODE 4120-01-P

[[Page 77828]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.069


[[Page 77829]]


[GRAPHIC] [TIFF OMITTED] TR13NO23.070

BILLING CODE 4120-01-C
5. Procedures for Making Benefit Category Determinations and Payment 
Determinations for New Lymphedema Compression Treatment Items
    We proposed to implement the new Part B benefit for lymphedema 
compression treatment items and the initial set of HCPCS codes to 
identify these items for claims processing purposes, effective January 
1, 2024. In the future, as new products come on the market and 
refinements are made to existing technology, there will be a need to 
determine whether these newer technology items are lymphedema 
compression treatment items covered under this new benefit and what 
changes to the HCPCS are needed to identify these items for claims 
processing purposes. There will also be a need to establish payment 
amounts for the newer items in accordance with the payment rules 
established as part of this rulemaking.
    Currently, CMS uses the procedures at 42 CFR 414.114 to make 
benefit category determinations and payment determinations for new 
splints and casts, parenteral and enteral nutrition (PEN) items and 
services covered under the prosthetic device benefit, and intraocular 
lenses (IOLs) inserted in a physician's office covered under the 
prosthetic device benefit. CMS uses the same procedures at 42 CFR 
414.240 to make benefit category determinations and payment 
determinations for new DME items and services, prosthetics and 
orthotics, surgical dressings, therapeutic shoes and inserts, and other 
prosthetic devices other than PEN items and services and IOLs inserted 
in a physician's office. These procedures involve the use of the HCPCS 
public meetings where consultation from the public is obtained on 
preliminary HCPCS coding determinations for new items and services. 
Public consultation is also obtained at these meetings on preliminary 
benefit category determinations and preliminary payment determinations 
for the new items and services. To ensure appropriate and timely 
consideration of future items that may qualify as lymphedema 
compression treatment items, we proposed to use these same procedures 
to make benefit category determinations and payment determinations for 
new lymphedema compression treatment items. Future

[[Page 77830]]

changes to the HCPCS codes established in section 2 of this rule for 
lymphedema compression treatment items would also be made using this 
public meeting process.
    We proposed to use the same process described in Sec.  414.240 to 
obtain public consultation on preliminary coding, benefit category, and 
payment determinations for new lymphedema compression treatment items. 
That is, when a request is received for a new HCPCS code or change to 
an existing HCPCS code(s) for a lymphedema compression treatment item, 
CMS would perform an analysis to determine if a new code or other 
coding change is warranted and if the item meets the definition of 
lymphedema compression treatment item at section 1861(mmm) of the Act. 
A preliminary payment determination would also be developed for items 
determined to be lymphedema compression treatment items and are 
implemented in April or October of each year. The preliminary 
determinations would be posted on CMS.gov approximately 2 weeks prior 
to a public meeting. As part of this coding and payment determination 
process, it may be necessary to combine or divide existing codes; in 
this situation, we proposed to follow the same process as outlined in 
42 CFR 414.236. After consideration of public input on the preliminary 
determinations, CMS would post final HCPCS coding decisions, benefit 
category determinations, and payment determinations on CMS.gov, and 
then issue program instructions to implement the changes.
    In addition to these proposals for initial payment determinations 
for lymphedema treatment items and the proposed process for addressing 
new lymphedema treatment items, as required by the Act, we also 
proposed to revise the DMEPOS regulations to include lymphedema 
treatment items in the competitive bidding process. We proposed changes 
to 42 CFR 414.402 to add lymphedema treatment items to the definition 
of ``items'' for competitive bidding, Sec.  414.408 to include 
lymphedema treatment items in the list of items for which payment would 
be made on a lump sum purchase basis under the competitive bidding 
program in accordance with any frequency limitations established under 
proposed subpart Q in accordance with section 1834(z)(2) of the Act, 
and Sec.  414.412 to add reference to the proposed subpart Q to the bid 
rules. The following is a summary of the comments we received and our 
responses.
    We received approximately 14 comments from suppliers, 
manufacturers, professional, State and national trade associations, 
beneficiaries and their caregivers related to the proposal to use the 
same process for benefit category and payment determination for future 
lymphedema compression treatment items as for new DMEPOS items and the 
inclusion of lymphedema compression treatment items in the DMEPOS 
competitive bidding program mandated by section 1847(a) of the Act.
    Comment: Commenters opposed the inclusion of lymphedema compression 
treatment items in the DMEPOS competitive bidding program due to 
concerns that competitive bidding could result in reduced access to 
these items for beneficiaries. Commenters supported the proposed use of 
the existing process for addressing benefit category and payment 
determinations for DMEPOS for benefit category and payment 
determinations for lymphedema compression treatment items in the 
future.
    Response: Section 1847(a)(2)(D) of the Act mandates the inclusion 
of lymphedema compression treatment items in the DMEPOS competitive 
bidding program, and the proposed changes to the regulation were merely 
conforming changes to reflect this statutory requirement. We note 
however, that section 1847(a)(3) of the Act provides discretionary 
authority to exempt certain areas and items from the DMEPOS competitive 
bidding program, including rural areas and areas with low population 
density within urban areas that are not competitive, unless there is a 
significant national market through mail order for a particular item or 
service, and items and services for which the application of 
competitive acquisition is not likely to result in significant savings. 
In addition, section 1847(b)(2) of the Act mandates certain conditions 
that must be met before contracts can be awarded under the DMEPOS 
competitive bidding program. A contract may not be awarded to a 
supplier that does not meet applicable quality and financial standards 
and State licensure requirements. Contracts may not be awarded in a 
competitive bidding area unless access to a choice of multiple 
suppliers in the area is maintained and total amounts to be paid in the 
area are expected to be less than the total amounts that would 
otherwise be paid. Section 1847(a)(5) of the Act provides authority for 
and regulations at 42 CFR 414.420 establish a physician authorization 
process which requires contract suppliers to furnish specific brands of 
items the beneficiary's physician or treating practitioner prescribes 
to avoid an adverse medical outcome for the beneficiary. These 
requirements and additional terms for contract suppliers that ensure 
access to quality items and services under the program are spelled out 
in the regulations at 42 CFR 414.422. CMS closely monitors the DMEPOS 
competitive bidding program to ensure that all suppliers are in 
compliance with the terms of their contracts and access to quality 
items and services is maintained at all times.
    We appreciate the comments in support of using the existing DMEPOS 
process for addressing benefit category and payment determinations for 
new lymphedema compression treatment items.
    After consideration of the public comments, we are finalizing that 
future items that the public considers to be lymphedema compression 
items would be addressed by CMS pursuant to the same process as the 
benefit category and payment determination process for new DMEPOS items 
(including the HCPCS public meeting process) at 42 CFR 414.240, as 
proposed. We are also finalizing the conforming changes to 42 CFR 
414.402, 42 CFR 414.408 and 42 CFR 414.412 to incorporate lymphedema 
compression treatment items in the competitive bidding program as 
proposed.
6. Enrollment, Quality Standards, and Accreditation Requirements for 
Suppliers of Lymphedema Compression Treatment Items and Medicare Claims 
Processing Contractors for These Items
    Section 1834(a)(20) of the Act requires the establishment of 
quality standards for suppliers of DMEPOS that are applied by 
independent accreditation organizations. Section 4133(b)(1) of the CAA, 
2023 amends section 1834(a)(20)(D) of the Act to apply these 
requirements to lymphedema compression treatment items as medical 
equipment and supplies.
    Section 1834(j) of the Act requires that suppliers of medical 
equipment and supplies obtain and continue to periodically renew a 
supplier number in order to be allowed to submit claims and receive 
payment for furnishing DMEPOS items and services. The suppliers must 
meet certain supplier standards in order to possess a supplier number 
and are also subject to other requirements specified in section 1834(j) 
of the Act. Section 4133(b)(2) of the CAA, 2023 amends section 
1834(j)(5)(E) of the Act to include lymphedema compression treatment 
items as medical equipment and supplies subject to the requirements of 
section 1834(j) of the Act.

[[Page 77831]]

    Suppliers of DMEPOS meeting the requirements of sections 
1834(a)(20) and 1834(j) of the Act, and related implementing 
regulations at 42 CFR 424.57 must enroll in Medicare or change their 
enrollment using the paper application Medicare Enrollment Application 
for DMEPOS Suppliers (CMS-855S) or through the Medicare Provider 
Enrollment, Chain, and Ownership System (PECOS). For more information 
on supplier enrollment, go to: https://www.cms.gov/medicare/provider-enrollment-and-certification/become-a-medicare-provider-or-supplier.
    Regulations at 42 CFR 421.210 establish regional contractors to 
process Medicare claims for DMEPOS items and services. These 
contractors are known as Durable Medical Equipment Medicare 
Administrative Contractors (DME MACs). We proposed to include 
lymphedema compression treatment items as DMEPOS items that fall within 
the general text of section 421.210(b)(7) for other items or services 
which are designated by CMS. Thus, claims for these items would be 
processed by the DME MACs.
    Comment: Many commenters disagreed that fitting specialists like 
therapists should not have an undue burden of having to apply as a 
DMEPOS supplier and adhere to enrollment, quality standards and 
accreditation. A commenter agreed that all those who provide and fit 
garments should be accredited and should adhere to all quality 
standards.
    Response: We appreciate all the comments in regard to Medicare 
enrollment, quality standards and accreditation. Section 1834(j)(5)(E) 
of the Act mandates that to receive Medicare payment for lymphedema 
items and services, suppliers must enroll in Medicare, receive a 
supplier number, and meet all of the same supplier standards as a 
DMEPOS supplier.
    We are finalizing Medicare enrollment, quality standards, and 
accreditation requirements for suppliers of lymphedema compression 
treatment items as proposed.
7. Payment Basis and Frequency Limitations for Lymphedema Compression 
Treatment Items
    Section 1834(z)(1) of the Act mandates an appropriate payment basis 
for lymphedema compression treatment items defined in section 1861(mmm) 
of the Act and specifically identifies payment rates from other 
government and private sector payers that may be taken into account in 
establishing the payment basis for these items. These sources include 
payment rates used by Medicaid state plans, the Veterans Health 
Administration (VHA), group health plans, and health insurance coverage 
(as defined in section 2791 of the Public Health Service Act). Section 
1834(z)(1) of the Act also indicates that other information determined 
to be appropriate may be taken into account in establishing the payment 
basis for lymphedema compression treatment items.
    Based on our research, Medicaid state plans generally classify and 
provide lymphedema compression treatment items in the same manner as 
other durable medical equipment and supplies for home health. While 
State Medicaid Director Letter #18-001 focuses on how states may 
demonstrate compliance with the restriction on claiming federal 
financial participation for ``excess'' durable medical equipment 
spending, it describes how Medicaid state plan payment for the broader 
category of such items (outside of a managed care contract) is usually 
made either through established fee schedules, a competitive bidding 
process of the state's design, or through a manual pricing methodology 
based on the invoice submitted with each claim.\200\ For the purpose of 
this final rule, we took into account the average Medicaid fee schedule 
payment amounts across all states that have published fee schedule 
amounts for these items in developing, in part, an appropriate payment 
basis for lymphedema compression treatment items under Medicare. These 
fee schedule payment amounts will be finalized based on the average 
Medicaid fee schedules in effect at the time this rule is 
finalized.\201\
---------------------------------------------------------------------------

    \200\ Available at https://www.medicaid.gov/federal-policy-guidance/downloads/smd18001.pdf.
    \201\ At the time of writing, this would include fee schedule 
amounts from up to 38 state Medicaid plans.
---------------------------------------------------------------------------

    The VHA does not have established fee schedules for lymphedema 
compression treatment items, but rather follows a policy of paying for 
these items based on the reasonableness of vendor pricing. Based on our 
conversations with the VHA, we understand that for these items, vendor 
prices at or below acquisition cost plus 50 percent is typically 
considered reasonable, while Medicaid state plans typically pay for 
DMEPOS items that do not have fee schedule amounts at acquisition cost 
plus 20 to 30 percent. Given this difference in the allowed supplier 
margin, the amounts determined to be reasonable payment rates for these 
items by the VHA may be approximated by increasing the average Medicaid 
payment rate by 20 to 30 percent. While the VHA may not have fee 
schedule amounts for these items, the Department of Defense's TRICARE 
system maintains fee schedule amounts for lower-extremity lymphedema 
compression garments. These amounts are approximately equal to the 
average Medicaid fee schedule amount plus 20 percent. Therefore, we 
believe that the average Medicaid fee schedule amount plus 20 percent 
represents what other government payers such as the VHA and TRICARE 
consider an appropriate payment basis for these items and a slightly 
higher payment basis than the average payment rates established by 
Medicaid state plans that have fee schedule amounts for these items; we 
sought comments on this. We also conducted a search of internet prices 
for lymphedema compression treatment items and found these prices to be 
in line with the TRICARE fee schedule amounts and average Medicaid fee 
schedule amounts plus 20 percent. We believe that appropriate payment 
amounts for Medicare for lymphedema compression treatment items would 
be payment amounts that approximate the payment rates determined to be 
reasonable by other government payers such as TRICARE, State Medicaid 
agencies, and, as previously explained, estimates of the payment rates 
determined to be reasonable by the VHA based on 120 percent of the 
average Medicaid state plan rates. Because these rates are in line with 
internet retail prices, we have not closely examined non-government 
payers.
    Having taken into account the payment amounts from the various 
sources, as previously described, as required by the Act, we proposed 
to set payment amounts for lymphedema compression treatment items using 
the following methodology. Where Medicaid state plan payment amounts 
are available for a lymphedema compression treatment item, we proposed 
to set payment amounts at 120 percent of the average of the Medicaid 
payment amounts for the lymphedema compression treatment item. Where 
Medicaid payment amounts are not available for an item, we proposed to 
set payment amounts at 100 percent of the average of internet retail 
prices and payment amounts for that item from TRICARE. Where payment 
amounts are not available from Medicaid state plans or TRICARE for a 
given lymphedema compression treatment item, we proposed to base 
payment amounts based on 100 percent of average internet retail prices 
for that item. We sought

[[Page 77832]]

comment on these payment methodologies and whether further adjustments 
are appropriate.
    As previously noted, payment rates established by Medicaid, the 
VHA, and TRICARE for the supply of these items includes payment for 
fitting services and any other services necessary for furnishing the 
item, including training beneficiaries in the proper use of these 
items. The cost of these services is also reflected in the price 
suppliers would charge a beneficiary directly. For these reasons, we 
believe that our payment methodology will implicitly incorporate 
payment for these services. As noted earlier, taking measurements of 
affected body areas and other fitting services necessary for furnishing 
lymphedema compression treatment items are an integral part of 
furnishing the items and the suppliers receiving payment for furnishing 
lymphedema compression treatment items are responsible for ensuring 
that any necessary fitting services are provided as part of furnishing 
the items.
    The following table presents a preliminary example of what payment 
amounts may be, based on the proposed methodology described, as 
previously detailed, and certain HCPCS codes that we proposed to be 
classified under the Medicare Part B benefit category for lymphedema 
treatment items. This table reflects the application of our methodology 
to the underlying data sources as they were available in early 2023.
[GRAPHIC] [TIFF OMITTED] TR13NO23.071

    Final payment amounts will be determined in accordance with the 
methodology as previously detailed based on the most recent data 
available in late 2023 and will most likely be higher than these 
example payment amounts. Beginning January 1, 2025, and annually 
thereafter, these final payment amounts will be updated by the 
percentage change in the Consumer Price Index for All Urban Consumers 
(CPI-U) for the 12-month period ending June of the preceding year.
    When new items are added to this benefit category, following the 
process outlined in section 3 of this section of this rule, the data 
sources (Medicaid, TRICARE, VHA, or internet prices) may not initially 
be available for establishing an appropriate payment amount. We 
proposed that in this situation, until the data necessary for 
establishing the payment amount becomes available, the DME MACs would 
consider what an appropriate payment amount would be for each item on 
an individual, claim-by-claim basis and may consider using pricing for 
similar items that already have established payment amounts.
    We received approximately 62 comments related to the proposed 
payment methodology: eight from organizations of providers, suppliers, 
or manufacturers; 15 from individual supply businesses or practices; 
and 39 from individual beneficiaries, caregivers, or providers. A 
summary of the major issues raised in these comments and our responses 
are as follows.
    Comment: Several commenters, without specifically voicing concern 
or support for our proposed payment methodology, emphasized the need to 
balance payment amounts high enough to support beneficiary access and 
low enough to ensure that copays remain affordable to beneficiaries.
    Response: We agree with these comments and believe that our 
proposed payment methodology meets

[[Page 77833]]

these goals. We share the commenters views that beneficiary copayments 
will affect access to the products and their health outcomes.
    Comment: Some commenters expressed concern that the proposed 
payment amounts appeared low compared to what the commenters pay out of 
pocket for specific garments, and some of these commenters also 
requested limits to the copayment amount (either limited to a specific 
dollar amount or reduced to zero).
    Response: Beneficiary copayment amounts under Medicare are 
determined by statute, and CMS did not propose to or intend to waive or 
modify beneficiary copayment amounts for lymphedema compression 
treatment items in the proposed rule. While we appreciate concerns 
regarding payment amounts for specific items, many of the items 
mentioned by commenters were custom garments for which we did not 
provide example pricing. We expect that custom garments will have 
payment amounts substantially higher than standard garments. For 
example, based on our payment methodology, the payment amount for a 
standard gradient compression arm sleeve would be approximately $58 
while the payment amount for a custom gradient compression arm sleeve 
would be approximately $175. There will always be situations where 
specific items cost more or less than the Medicare payment amount but 
our methodology is sound because we believe that most items described 
by each code will be adequately covered by the payment amount 
established. As outlined in the DMEPOS Quality Standards, enrolled DME 
suppliers are required to provide all items as ordered by the 
prescribing provider.
    Comment: Several commenters expressed concern that the proposed 
payment methodology would result in payment amounts that are below the 
supplier's cost for furnishing the items, with one noting specifically 
that average internet pricing may be skewed by large online retailers 
selling garments that may not be medical-grade garments. The commenters 
urged the adoption of a more ``real world'' method for payment 
determination, without offering specific suggestions for an alternate 
model.
    Response: We thank the commenters for sharing this concern. Our 
methodology is designed to approximate what the VHA pays suppliers for 
veterans to have appropriate access to lymphedema treatment items, and 
we are not aware of any access concerns that veterans have experienced. 
We note that the use of internet retail pricing is a long-established 
method of determining commercial prices for use in the DME payment 
determination process. When collecting internet retail prices for use 
in any such averages, we only consider prices for items that meet the 
requirements for payment under each code in question. Specifically 
addressing the commenters' concern, we would exclude from consideration 
any items that are not medical-grade items, and for this reason we 
often must exclude retail listings from common consumer internet 
retailers. We continue to believe that prices from online suppliers of 
medical-grade products offer real-world examples of commercial pricing 
for use in the Medicare payment determination process when other 
payers, such as VHA or State Medicaid agencies, do not have established 
pricing histories.
    Comment: A commenter disagreed with our proposed payment 
methodology, raising a number of specific concerns. These include 
concerns that many payers, including Medicaid state plans and TRICARE, 
have not consistently covered lymphedema compression garments and do 
not represent large shares of the market, and so these sources would 
not represent appropriate pricing information. The commenter expressed 
further concerns that Medicaid pricing may not be available for many 
proposed codes and may not be at a level sufficient to ensure 
appropriate patient access. The commenter stated that internet prices 
may not account for costs of compliance and claims filing faced by 
Medicare DMEPOS suppliers and that cash-pay transactions have reduced 
administrative burden, but that customers may face charges in addition 
to the item price upon check out (such as shipping and handling). The 
commenter proposed an alternate payment methodology based on the 
average manufacturer's Minimum Advertised Price (MAP) plus 20 percent, 
together with recommendations to simplify the calculation of payment 
amounts by using the average ratio of standard to custom garment prices 
and the ratio of prices for different compression levels of the same 
garment type. The commenter separately submitted to CMS confidential 
commercial MAP amounts to support our analysis of this proposed 
methodology. Other commenters expressed their support for this 
commenter's proposal.
    Response: We appreciate the comment and the alternative pricing 
proposal. In developing our payment methodology, we have tried to set 
payment amounts at a level high enough to ensure beneficiary access, 
while low enough to ensure that copay amounts do not present a barrier 
for beneficiaries. As we expressed, we continue to believe that the 
most appropriate source for Medicare payment determination would be the 
prices paid by the Veteran's Health Administration (VHA). While the VHA 
does not publish national fee schedules for these items, we believe 
that our payment methodology is a good approximation of what the VHA 
would pay. We recognize that there are gaps in the available data among 
TRICARE, Medicaid, and other payors. We believe that internet retail 
prices continue to be the most appropriate source of commercial pricing 
to fill these gaps, as this has been a longstanding method of pricing 
used for Medicare DMEPOS items that has not hindered beneficiary access 
to DMEPOS items. We note that internet retailers often offer free 
shipping in order to compete with brick-and-mortar businesses. We agree 
that cash-pay transactions may be administratively simpler than billing 
insurance. However, suppliers and providers that accept insurance also 
enjoy a far higher volume; for this reason, it is common practice in 
healthcare for large insurers to receive a substantial discount off of 
the cash price, despite the additional administrative burden. We have 
carefully considered the proposed alternative payment methodology. Our 
analysis shows that across a representative sample of compression 
treatment garments, this alternative methodology would result in 
payment amounts approximately 35 percent higher than our imputed VHA 
\202\ or TRICARE payment amounts. There is no evidence that 
beneficiaries of the VHA or TRICARE programs experience difficulty 
accessing compression treatment garments, so it would be difficult to 
justify the need for such a significantly higher payment amount--and 
commensurately higher beneficiary copay--for Medicare, potentially 
resulting in payment amounts that are too high, which, as noted 
previously, was a concern of other commenters.
---------------------------------------------------------------------------

    \202\ Imputation based on 120 percent of the average of up to 38 
Medicaid state plan fee schedules as currently in effect.
---------------------------------------------------------------------------

    Comment: A commenter recommended that decongestive therapy services 
and the associated supplies be covered by Part A/B MACs or Home Health 
Services as they believe there would be problems with implementing 
decongestive therapy services if they are covered by a non-DME MAC 
contractor while the DME MACs cover the associated supplies since 
providers and suppliers have up to one year to submit

[[Page 77834]]

the claim and DME MACs are unable to verify if decongestive therapies 
were covered to appropriately allow the related supplies.
    Response: We are not finalizing our alternative proposal, but we 
appreciate the comments concerning the implementation problems that 
could arise with separate payment for the bandaging and fitting therapy 
services. As stated earlier, while compression bandaging systems are 
included in the lymphedema treatment items benefit category when 
applied during Phase 1 (acute or decongestive therapy) and/or Phase 2 
(maintenance therapy), payment for decongestive therapy services would 
not be covered under this lymphedema treatment items benefit category, 
and so would not fall within the established remit of the Part B MACs.
    Comment: A commenter requested that the payment amounts should be 
set by the individual DME MACs, or alternatively established as the 
manufacturer's MAP plus 50 percent.
    Response: We are required by statute to establish payment amounts 
for these items. Contractor pricing is generally reserved for 
situations where we do not have adequate data to establish payment 
amounts for newly developed items or where codes represent such a 
disparate variety of items that a single payment amount would prove 
impractical (such as for ``not otherwise classified'' codes). Regarding 
the proposal to pay MAP plus 50 percent, as noted earlier, we have not 
seen evidence that beneficiaries experience difficulties accessing 
lymphedema treatment garments through the VHA or TRICARE at the payment 
amounts they set, so we do not believe there is good justification for 
Medicare to burden beneficiaries with the substantial higher copay 
implied by the commenter's proposed reimbursement methodology.
    Comment: A commenter expressed broad support for the proposed 
payment methodology, but expressed concern that data may not be 
available to establish payment amounts for custom garments if it were 
necessary to use the fallback approach of internet retail pricing.
    Response: We appreciate the comment and understand that many common 
internet suppliers do not offer custom garments or do not make pricing 
publicly available. However, we believe that a sufficient number of 
internet suppliers offer public pricing for custom garments to allow 
for accurate pricing of these items, if this approach were needed.
    Comment: A few commenters proposed that, in place of average 
internet pricing, we use either MAP or average internet pricing plus 30 
percent, in order to adequately compensate for suppliers' overhead 
costs, particularly those with bricks-and-mortar locations.
    Response: As noted earlier, when collecting internet retail prices 
for use in any such averages, we only consider prices for items that 
meet the requirements for payment under each code in question. 
Furthermore, we exclude pricing that is not publicly displayed. For 
this reason, we believe that our methods capture an average internet 
price that is likely very close to the manufacturers' MAP.
    Comment: Several commenters suggested using third party (commercial 
insurance) payment amounts, as these might avoid possible variation 
between payment amounts based on the other proposed methods.
    Response: We thank the commenters for this suggestion. We believe 
that as a large government payer, our estimate of what the VHA, another 
large government payer, pays for these items is the best method for 
establishing an appropriate Medicare payment basis for these items. 
Furthermore, use of commercial insurance payment amounts poses a number 
of practical difficulties. Commercial insurance reimbursement amounts 
are not freely available, and procuring and processing the necessary 
data would have jeopardized our ability to meet the January 1, 2024, 
start date for this benefit.
    Comment: A commenter noted support for the proposed annual 
adjustment of payment amounts based on the CPI-U.
    Response: We appreciate this comment.
    Comment: A commenter proposed that instead of adjusting based on 
the CPI-U, we base adjustment on the average change in online prices 
from year to year.
    Response: We thank the commenter for this proposal, but we believe 
the CPI-U is an adequate approximation of the price changes these items 
will experience. While we acknowledge that in any given year this 
method may over- or under-adjust for price changes observed for 
specific lymphedema compression treatment items, we do not believe that 
the gains from an alternative methodology outweigh the costs of 
introducing a new method of annual adjustment to lymphedema payment 
amounts that differs from those applied to DMEPOS payment amounts.
    Section 1834(z)(2) of the Act authorizes the establishment of 
frequency limitations for lymphedema compression treatment items and 
specifies that no payment may be made for lymphedema compression 
treatment items furnished other than at a frequency established in 
accordance with this provision of the Act. Gradient compression 
garments are designed differently depending on whether for daytime or 
nighttime use. Those meant for daytime provide a higher level of 
compression while those for nighttime offer milder compression and are 
less snug against the skin. We sought comment on our proposal to cover 
and make payment for two garments or wraps with adjustable straps for 
daytime use (one to wear while another is being washed), per affected 
extremity, or part of the body, to be replaced every 6 months or when 
the item is lost, stolen, or irreparably damaged, or if needed based on 
a change in the beneficiary's medical or physical condition such as an 
amputation, complicating injury or illness, or a significant change in 
body weight. In order to maintain mobility, patients may require 
separate garments or wraps above and below the joint of the affected 
extremity or part of the body. As discussed later in this section of 
this rule, nighttime garments are inelastic and more durable than the 
elastic daytime garments and we believe it would be appropriate to 
replace these garments once per year. We proposed to cover one 
nighttime garment per affected extremity or part of the body to be 
replaced once a year or when the garment is lost, stolen, or 
irreparably damaged, or if needed based on a change in the 
beneficiary's medical or physical condition such as an amputation, 
complicating injury or illness, or a significant change in body weight. 
Lymphedema is a chronic condition that can be stabilized if properly 
treated. It may also worsen as the result of infection, radiation and 
chemotherapy, or progression of comorbid conditions such as obesity. At 
this point, patients may require changes in their garment prescription. 
Such changes due to medical necessity will not be subject to the 
frequency limitations, as previously described. In addition, as with 
DMEPOS items, payment could be made for replacement of garments and 
other items when they are lost, stolen, or irreparably damaged. 
Examples of lost items include items left behind after evacuating due 
to a disaster like a hurricane or tornado. Examples of irreparably 
damaged items include items that burn in a fire, are exposed to toxic 
chemicals, or are damaged by some other event and does not include 
items that wear out over time.
    Comment: Commenters expressed appreciation for the new Medicare 
benefit that covers lymphedema compression items. However, some

[[Page 77835]]

commenters suggested that Medicare provide coverage for more than two 
units of daytime garments or wraps and one nighttime garment or wrap as 
stated in the proposed rule. They explained that patients may have 
difficulty keeping up with the daily task of washing and drying 
compression treatment items, which may prevent them from effectively 
treating and managing their condition. Also, they stated that since 
some compression items take a day or more to dry completely, this would 
leave the patient without a compression item to wear on a daily basis. 
They also described hygiene concerns associated with the environment, 
such as sweating from heat in certain regions of the country, that 
warranted the need to wash garments more frequently.
    Response: We appreciate the comments in response to our request for 
input on our proposal for the frequency limitations for lymphedema 
compression treatment items and are finalizing changes based on that 
input. We are making the changes based on the concerns of the 
commenters related to multiple reasons for needing adequate time to 
wash and dry compression treatment items, and to be responsive to the 
needs of Medicare beneficiaries. Specifically, Medicare will cover and 
pay for three daytime garments or wraps every six months and two 
nighttime garments or wraps every 2 years. Three units of daytime 
garments or wraps allows the patient to wear one, wash one, and dry 
one. Also, Medicare will cover two nighttime garments or wraps every 2 
years, allowing the beneficiary to wear one, while a second garment 
washed during the day is allowed to completely dry and be ready for use 
the following night.
    Comment: Many commenters appreciate and support the provision of 
the proposed regulation that provides Medicare coverage for compression 
garments and wraps when these items are lost, stolen, or irreparably 
damaged, or when there is a change in the patient's medical or physical 
condition. A commenter believes that the allowance for patients with 
respect to the number of sets of garments per year should allow for 
change in style, size, fit and other features to accommodate the 
patients' clinical progression, as a patient could experience rapid 
physical changes that require a change in size, style or materials of 
their compression garments.
    Response: We thank the commenters for their support of the proposed 
rule. If an item is lost, stolen, or irreparably damaged, for example a 
garment is accidentally ripped by a sharp object, payment can be made 
for replacement of the garment(s) that has been lost, stolen, or 
irreparably damaged. Documentation explaining the circumstances of how 
the garment(s) was lost, stolen, or irreparably damaged should be 
maintained and may need to be furnished for Medicare claims processing 
and appeals purposes. If a patient's medical condition has changed 
enough to warrant the need for a new size or type of garment or wrap, 
payment can be made for three new daytime garments or wraps and/or two 
new nighttime garments. Replacement of both the daytime and nighttime 
garments used for the same area where lymphedema treatment is needed 
may be necessary in this situation. Documentation explaining the 
circumstances of the change in the patient's medical or physical 
condition and why new garments or wraps are needed should be maintained 
and may need to be furnished for Medicare claims processing and appeals 
purposes.
    Comment: Some commenters support the replacement of compression 
garments and wraps sooner if the items wear out due to normal wear 
before the specified time stated in the proposed rule. Also, some 
commenters suggest that irreparably damaged items and worn items are 
the same.
    Response: We do not agree. As explained in the proposed rule (88 FR 
43776), irreparable damage does not include items that have worn out. 
Examples of irreparably damaged items include items that burn in a 
fire, are exposed to toxic chemicals, or are damaged by some other 
event and does not include items that wear out over time.
    Comment: A few commenters stated that patients should not have to 
re-qualify each time they need to reorder supplies. A few commenters 
suggested careful consideration to cover all items a patient may need 
such as custom stockings or flat knit compression toe caps for the toes 
and foot and should be limited to only physical items and not services 
such as therapy, education or treatment. A few commenters indicated 
that the number and type of bandages covered should be determined by 
the treating therapist based on the body part, the severity of the 
lymphedema, and the patient's body shape and size. A commenter 
suggested the bandages and garments be separated into two categories 
and without a cap.
    Response: Thank you for sharing your concerns regarding patients' 
access to lymphedema compression items. The lymphedema benefit includes 
Medicare coverage of items such as compression garments, wraps, 
stockings, gauntlets, bandaging and accessories. Once a patient has 
been furnished a lymphedema compression item, the patient is eligible 
to receive a replacement as stated in the frequency limitation section 
of the rule.
    With regard to replacement frequencies for compression bandaging 
systems and supplies, the weekly frequency and overall length of phase 
one (active) treatment is dependent on the severity of lymphedema. Some 
patients may require treatment 4 to 5 days per week in phase one while 
others may only need treatment 2 to 3 days per week. Bandages are used 
following some form of hands-on decompression to maintain the 
reduction. Therefore, we did not propose specific replacement 
frequencies for the compression bandaging systems and supplies. We 
proposed that the DME MACs would make determinations regarding whether 
the quantities of compression bandaging supplies furnished and billed 
during phase one of treatment of the beneficiary's lymphedema are 
reasonable and necessary. As discussed in section VII.B.3 of this rule, 
commenters expressed concerns that coverage under the lymphedema 
benefit category for compression bandaging supplies or systems could 
continue during the various stages of lymphedema and we clarified that 
coverage is not limited to Phase 1 (acute or decongestive therapy) but 
is also available under Phase 2 (maintenance therapy). As a result of 
this clarification, we are making a conforming change to the regulation 
text at Sec.  414.1680 to remove ``during phase one of decongestive 
therapy'' so that determinations regarding the quantity of compression 
bandaging supplies needed by each beneficiary would be made by the DME 
MACs regardless of the lymphedema stage.
8. Final Policies
    We are finalizing the amendment of 42 CFR 410.36 to add paragraph 
(a)(4) for lymphedema compression treatment items as a new category of 
medical supplies, appliances, and devices covered and payable under 
Medicare Part B, including: standard and custom fitted gradient 
compression garments; gradient compression wraps with adjustable 
straps; compression bandaging systems; other items determined to be 
lymphedema compression treatment items under the process established 
under Sec.  414.1670; and accessories such as zippers in garments, 
liners worn under garments or wraps with adjustable straps, and padding 
or fillers that are necessary for the effective use of a gradient

[[Page 77836]]

compression garment or wrap with adjustable straps. In order to 
maintain mobility, patients may require separate garments or wraps 
above and below the joint of the affected extremity or part of the 
body, and we are finalizing that payment may be made in these 
circumstances. We are finalizing that payment may be made for multiple 
garments used on different parts of the body when the multiple garments 
are determined to be reasonable and necessary for the treatment of 
lymphedema. For example, if it is determined that a beneficiary needs 
three daytime garments to cover one affected area for the treatment of 
lymphedema, Medicare would cover and pay for those three garments for 
that specific affected area, as well as any other areas of the body 
affected by lymphedema. For the purpose of establishing the scope of 
the benefit for these items, we are finalizing the following 
definitions by adding them to 42 CFR 410.2 as they apply to lymphedema 
compression treatment items:
    Gradient compression means the ability to apply a higher level of 
compression or pressure to the distal (farther) end of the limb or body 
part affected by lymphedema with lower, decreasing compression or 
pressure at the proximal (closer) end of the limb or body part affected 
by lymphedema.
    Custom fitted gradient compression garment means a garment that is 
uniquely sized and shaped to fit the exact dimensions of the affected 
extremity or part of the body of an individual to provide accurate 
gradient compression to treat lymphedema.
    The definition of ``gradient compression'' would apply to all 
lymphedema compression treatment items (garments, wraps, etc.) that 
utilize gradient compression in treating lymphedema. The definition of 
``custom fitted gradient compression garment'' would apply to custom 
fitted gradient compression garments covered under the new benefit 
category for lymphedema compression treatment items. We believe these 
definitions are necessary for establishing the scope of this new 
benefit.
    Lymphedema compression treatment item means standard and custom 
fitted gradient compression garments and other items specified under 
Sec.  410.36(a)(4) that are--
     Furnished on or after January 1, 2024, to an individual 
with a diagnosis of lymphedema for treatment of such condition;
     Primarily and customarily used to serve a medical purpose 
and for the treatment of lymphedema; and
     Prescribed by a physician (or a physician assistant, nurse 
practitioner, or a clinical nurse specialist (as those terms are 
defined in section 1861(aa)(5) of the Social Security Act) to the 
extent authorized under State law.
    After consideration of the public comments received, we are 
finalizing Sec.  414.1680 with the following modifications to the 
frequency limitations for lymphedema compression items established in 
accordance with section 1834(z)(2) of the Act under new subpart Q:
     Three daytime garments or wraps with adjustable straps for 
each affected limb or area of the body, replaced every 6 months.
     Two nighttime garments for each affected limb or area of 
the body, replaced once every 2 years.
    We are finalizing coverage of replacements of garments or wraps 
that are lost, stolen, irreparably damaged. If a patient's medical 
condition has changed enough to warrant the need for a new size or type 
of garment or wrap, payment can be made for new garments or wraps. We 
are also finalizing that determinations regarding the quantity of 
compression bandaging supplies covered for each beneficiary will be 
made by the DME MAC that processes the claims for the supplies with a 
modification to remove proposed language referring to ``phase one of 
decongestive therapy.''
    We are modifying and adding to the existing HCPCS codes for 
surgical dressings and lymphedema compression treatment items as 
explained in section VII.B.4. of this rule. Future changes to the HCPCS 
codes for these items based on external requests for changes to the 
HCPCS or internal CMS changes would be made through the HCPCS public 
meeting process described at: https://www.cms.gov/medicare/coding/medhcpcsgeninfo/hcpcspublicmeetings.
    We are adding Sec.  414.1670 under new subpart Q to use the same 
process described in Sec.  414.240 to obtain public consultation on 
preliminary benefit category determinations and payment determinations 
for new lymphedema compression treatment items. The preliminary 
determinations will be posted on CMS.gov in advance of a public 
meeting. After consideration of public input on the preliminary 
determinations, CMS will post final HCPCS coding decisions, benefit 
category determinations, and payment determinations on CMS.gov, and 
then issue program instructions to implement the changes.
    We are adding a new subpart Q under the regulations at 42 CFR part 
414 titled, ``Payment for Lymphedema Compression Treatment Items'' to 
implement the provisions of section 1834(z) of the Act. We are adding 
Sec.  414.1600 to our regulations explaining the purpose and 
definitions under the new subpart Q. We are adding Sec.  414.1650 and 
paragraph (a) to establish the payment basis equal to 80 percent of the 
lesser of the actual charge for the item or the payment amounts 
established for the item under paragraph (b). Under Sec.  414.1650(b) 
the payment amounts for lymphedema compression treatment items will be 
based on the average of state Medicaid fee schedule amounts plus 20 
percent. Where Medicaid rates are not available, we will use the 
average of average internet retail prices and payment amounts 
established by TRICARE (or, where there is no TRICARE fee schedule 
rate, the average of internet retail prices alone). In accordance with 
Sec.  414.1650(c), beginning January 1, 2025, and on January 1 of each 
subsequent year, the Medicare payment rates established for these items 
in accordance with section 1834(z)(1) of the Act and Sec.  414.1650(b) 
would be increased by the percentage change in the Consumer Price Index 
for All Urban Consumers (CPI-U) for the 12-month period ending June of 
the preceding year. For example, effective beginning January 1, 2025, 
the payment rates that were in effect on January 1, 2024 would be 
increased by the percentage change in the CPI-U from June 2023 to June 
2024.
    We are also adding Sec.  414.1660 to address continuity of pricing 
when HCPCS codes for lymphedema compression treatment items are divided 
or combined. Similar to current regulations at 42 CFR 414.110 and 
414.236, we are finalizing that when there is a single HCPCS code that 
describes two or more distinct complete items (for example, two 
different but related or similar items), and separate codes are 
subsequently established for each item, the payment amounts that 
applied to the single code continue to apply to each of the items 
described by the new codes. When the HCPCS codes for several different 
items are combined into a single code, the payment amounts for the new 
code will be established using the average (arithmetic mean), weighted 
by allowed services, of the payment amounts for the formerly separate 
codes.
    We are finalizing the revision to the regulations for competitive 
bidding under subpart F at 42 CFR 414 to include lymphedema compression 
treatment items under the competitive bidding program as mandated by 
section 1847(a)(2)(D) of the Act. We are

[[Page 77837]]

modifying the list of items that may be included in competitive bidding 
described in Sec.  414.402 to include lymphedema treatment items and 
are revising Sec.  414.408 to include lymphedema treatment items in the 
list of items for which payment would be made on a lump sum purchase 
basis under the competitive bidding program in accordance with any 
frequency limitations established under proposed subpart Q in 
accordance with section 1834(z)(2) of the Act. Finally, we are adding 
reference to the proposed subpart Q to the bid rules described at Sec.  
414.412.
    The methodologies for adjusting DMEPOS payment amounts for items 
included in the DMEPOS Competitive Bidding Program (CBP) that are 
furnished in non-CBAs based on the payments determined under the DMEPOS 
CBP are set forth at Sec.  414.210(g). Section 4133(a)(3) of the CAA, 
2023 amended section 1847(a)(2) of the Act to include lymphedema 
compression treatment items under the DMEPOS CBP, and section 
4133(a)(2) of the CAA, 2023 amended section 1834 of the Act to provide 
authority to adjust the payment amounts established for lymphedema 
compression treatment items in accordance with new subsection z based 
on the payments determined for these items under the DMEPOS CBP. We 
believe the methodologies for adjusting DMEPOS payment amounts at Sec.  
414.210(g) should also be used to adjust the payment amounts for 
lymphedema compression treatment items included in the DMEPOS CBP that 
are furnished in non-CBAs. We see no reason why different methodologies 
for adjusting payment amounts based on payments determined under the 
DMEOPS CBP would need to be established for lymphedema compression 
treatment items. We are therefore adding Sec.  414.1690 to indicate 
that the payment amounts established under Sec.  414.1650(b) for 
lymphedema compression treatment items may be adjusted using 
information on the payment determined for lymphedema compression 
treatment items as part of implementation of the DMEPOS CBP under 
subpart F using the methodologies set forth at Sec.  414.210(g).

C. Definition of Brace

1. Background
    The Social Security Act of 1965 (the Act) defines the scope of 
benefits available to eligible Medicare beneficiaries under Medicare 
Part B, the voluntary supplementary medical insurance program defined 
by section 1832 of the Act. Section 1832(a)(1) of the Act establishes 
the Medicare Part B benefit for ``medical and other health services.'' 
Section 1861(s) of the Act further defines ``medical and other health 
services'' to include under paragraph (9) leg, arm, back, and neck 
braces, and artificial legs, arms, and eyes. Artificial legs, arms, and 
eyes are artificial replacements for missing legs, arms, and eyes and 
this rule does not address the scope of the Medicare benefit for these 
items. Section 1834(h)(4)(C) of the Act details the payment rules for 
particular items and services including specifying that ``the term 
`orthotics and prosthetics' has the meaning given to such term in 
section 1861(s)(9).'' Regulations at 42 CFR 410.36(a)(3) include leg, 
arm, back, and neck braces under the list of medical supplies, 
appliances, and devices in the scope of items paid for under Part B of 
Medicare. However, the term ``brace'' is not defined in the Act or in 
regulation. Specifically, the term brace is not defined in 42 CFR 410.2 
Definitions for supplementary medical insurance benefits for Medicare.
    The Medicare program instruction that defines the term brace is 
located at CMS Pub. 100-02, Chapter 15, Sec.  130 of the Medicare 
Benefit Policy Manual for Part B coverage of ``Leg, Arm, Back, and Neck 
Braces, Trusses, and Artificial Legs, Arms, and Eyes.'' Within this 
instruction, braces are defined as ``rigid and semi-rigid devices which 
are used for the purpose of supporting a weak or deformed body member 
or restricting or eliminating motion in a diseased or injured part of 
the body.'' The Medicare definition of brace in program instructions 
dates back to the 1970s and was previously located in the Medicare 
Carriers Manual, HCFA Pub. 14, Part III, Chapter 2, Sec.  2133. This 
longstanding definition of brace in our program instructions is used 
for the purpose of making benefit category determinations in accordance 
with the procedures located at 42 CFR 414.240 (86 FR 73911) regarding 
when a device constitutes or does not constitute a leg, arm, back, or 
neck brace for Medicare program purposes.
2. Current Issues
    We believe that adding the definition of brace to the regulations 
at 42 CFR 410.2 is necessary for describing the scope of the Medicare 
Part B benefit for leg, arm, back, and neck braces. We believe that 
codifying the definition that is currently located in Medicare program 
instructions would continue the efficiency of the administration of the 
Medicare program by providing clarity and transparency regarding the 
scope of the benefit, for example, whether a specific device is a leg, 
arm, back, or neck brace as defined in section 1861(s)(9) of the Act, 
and consequently, payment determinations for such items. We also 
believe that adding the definition of brace to the regulations would 
support our benefit category determination process described in 42 CFR 
414.240 (86 FR 73911).
    The orthopedic industry has long established the attributes of a 
``brace.'' We believe the definition of a brace in CMS Pub 100-02, 
Chapter 15, Sec.  130 adequately captures the attributes of a brace. 
The words ``rigid'' and ``semi-rigid'' are used to describe the 
stiffness of a material. Rigid materials are used to eliminate motion 
but also to support underload. Components of a brace can use semi-rigid 
materials, which intentionally allow some amount of motion as compared 
to materials that completely immobilize a part of the body. Braces are 
typically prescribed to patients during the process of recovery and 
rehabilitation in order to stop limbs, joints, or specific body 
segments from moving for a pre-determined period. Braces may also be 
prescribed for ongoing medical problems that require restriction or 
limitation of joint movement; removal of weight or pressure from 
healing or injured joints, muscles, or body parts; or reduction of 
misalignment and function to reduce pain and facilitate improved 
mobility. 203 204
---------------------------------------------------------------------------

    \203\ Webster, J., Murphy, D., 2019, Atlas of Orthoses and 
Assistive Devices, 5th Edition, Elsevier, Philadelphia, PA. (Chapter 
1) https://www.sciencedirect.com/book/9780323483230/atlas-of-orthoses-and-assistive-devices.
    \204\ CHAMPVA OPERATIONAL POLICY MANUAL: CHAPTER:2, SECTION: 
17.4. https://www.vha.cc.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001036/content/554400000008979/021704-ORTHOTICS.
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    In order for a brace to properly function, it must utilize a three-
point pressure system to provide angular control over anatomical 
joints.205 206 207 A three-point pressure system places a 
single force at the area of the deformity, while two counter forces act 
in the opposing direction. This pressure system requires that a brace 
be rigid or

[[Page 77838]]

semi-rigid in structure to apply sufficient relevant force to support, 
restrict, or eliminate motion of the joint or specific body part. The 
rigidity level of a brace is dependent on the body part and purpose for 
which the brace is used. For example, a fully rigid brace is used to 
eliminate motion and support underload. We believe the definition of 
brace in CMS Pub. 100-02, Chapter 15, Sec.  130, and our proposed 
definition of brace, adequately captures the various attributes of a 
brace.
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    \205\ Webster, J., Murphy, D., 2019, Atlas of Orthoses and 
Assistive Devices, 5th Edition, Elsevier, Philadelphia, PA. (Chapter 
18). https://www.sciencedirect.com/book/9780323483230/atlas-of-orthoses-and-assistive-devices.
    \206\ Chalmers, D.D., & Hamer, G.P. (1985). Three-point dynamic 
orthosis. Prosthetics and Orthotics International, 9(2), 115-116. 
https://journals.sagepub.com/doi/pdf/10.3109/03093648509164718.https://journals.sagepub.com/doi/pdf/10.3109/03093648509164718.https://journals.sagepub.com/doi/pdf/10.3109/03093648509164718.https://journals.sagepub.com/doi/pdf/10.3109/03093648509164718.
    \207\ Article--Spinal Orthoses: TLSO and LSO--Policy Article 
(A52500) (cms.gov).
---------------------------------------------------------------------------

    It is important to note that a rigid or semi-rigid device may look 
like a brace in that it has metal struts, joints, and cuffs that go 
over a limb, but may be used for purposes other than bracing the limb. 
We believe that devices used for purposes other than supporting a weak 
or deformed body member or restricting or eliminating motion of a 
diseased or injured part of the body do not fall within the definition 
of a brace in accordance with Pub 100-02, Chapter 15, Sec.  130 
Medicare Benefit Policy Manual, and would not fall within our proposed 
definition of brace. However, items that are not braces may meet the 
Medicare Part B definition for durable medical equipment (DME) at 42 
CFR 414.202. For example, continuous passive motion devices are covered 
as DME in accordance with CMS Pub. 100-03, Chapter 1, Part 4, Sec.  
280.1 of the Medicare National Coverage Determinations Manual to 
rehabilitate the knee to increase range of motion following surgery. 
During continuous passive motion therapy, the joint area is secured to 
the device, which then moves the affected joint through a prescribed 
range of motion for an extended period of time. Continuous passive 
motion devices have metal struts, joints, and cuffs that go over a limb 
but are not used for the purpose of restricting or eliminating motion 
in a diseased or injured part of the body or to support a weak or 
deformed body member. While these devices do not meet the definition of 
a brace in accordance with Pub. 100-02, Chapter 15, Sec.  130 of the 
Medicare Benefit Policy Manual, they are covered by Medicare as DME. 
Similarly, dynamic adjustable extension/flexion devices and static 
progressive stretch devices are used to stretch an arm or leg or other 
part of the body to treat contractures and increase range of motion. 
While these devices may look similar to a brace, they are used for the 
purpose of treating contractures and are not used for the purpose of 
supporting a weak or deformed body member or restricting or eliminating 
motion in a diseased or injured part of the body. As a result, dynamic 
adjustable extension/flexion devices and static progressive stretch 
devices do not fall under the definition of brace in accordance with 
CMS Pub. 100-02, Chapter 15, Sec.  130, but are covered by Medicare as 
DME.
    It is also important to note that although braces in the past have 
typically not included powered devices or devices with power features, 
technology has evolved to include newer technology devices with power 
features designed to assist with traditional bracing functions. For 
example, effective January 1, 2020, code L2006 was added to the HCPCS 
for a knee ankle foot device, any material, single or double upright, 
swing and stance phase microprocessor control with adjustability, 
includes all components (for example, sensors, batteries, charger), any 
type of activation, with or without ankle joint(s), custom fabricated). 
CMS classified this device as a brace because it supports a weak or 
deformed knee by preventing it from buckling under the patient. This 
brace includes a microprocessor controlled hydraulic swing and stance 
control knee joint that restricts/affects knee joint kinematics during 
the swing and stance phases of the gait cycle. There are also powered 
brace exoskeleton devices that support a patient's weak arms or legs 
and have been classified as DME in the past. We determined that these 
devices should be classified as braces due to their use in stabilizing, 
positioning, supporting and restoring the function of a patient's weak 
limbs. In addition, upper extremity powered exoskeleton devices used by 
patients with chronic arm weakness such as from complications of stroke 
or other neurological/neuromuscular injury and illness to support and 
assist movement of weak arms were recently introduced to the market. 
HCPCS codes L8701 (Powered upper extremity range of motion assist 
device, elbow, wrist, hand with single or double upright(s), includes 
microprocessor, sensors, all components and accessories, custom 
fabricated) and L8702 (Powered upper extremity range of motion assist 
device, elbow, wrist, hand, finger, single or double upright(s), 
includes microprocessor, sensors, all components and accessories, 
custom fabricated)) were added to the HCPCS effective January 1, 2019 
to describe two categories of these items. These devices support the 
arm of the patient and allows them to use volitional, intact 
electromyographic signals in weak muscles to control the device through 
a normal range of motion. A lower extremity powered exoskeleton device 
that supports the weak legs of a patient with spinal cord injury (SCI) 
at levels T7 to L5 to enable the patient to perform ambulatory 
functions was also recently introduced to the market. Code K1007 
(Bilateral hip, knee, ankle, foot device, powered, includes pelvic 
component, single or double upright(s), knee joints any type, with or 
without ankle joints any type, includes all components and accessories, 
motors, microprocessors, sensors)) was added to the HCPCS effective 
October 1, 2020 to describe this category of items. The device uses 
motion sensors with an exoskeleton frame and onboard computer system. 
Patients using all of the devices, as previously described, are better 
able to elongate and flex their limbs using the respective device, 
sometimes in a braced manner and sometimes in a controlled manner of 
motion, thus improving the functioning of the malformed body member and 
supporting the weak limbs. Additional information on the items, as 
previously discussed, can be found at: www.cms.gov/files/document/2022-hcpcs-application-summary-biannual-1-2022-non-drug-and-non-biological-items-and-services.pdf.
    One additional issue related to leg braces with shoes that are an 
integral part of the brace. Section 1862(a)(8) of the Act generally 
excludes orthopedic shoes or other supportive devices for the feet from 
coverage under the Medicare program. However, longstanding policy at 
CMS Pub. 100-02, Chapter 15, Sec.  290 of the Medicare Benefit Policy 
Manual indicates that this exclusion does not apply to such a shoe if 
it is an integral part of a leg brace, and if that shoe or other 
supportive device for the feet is an integral part of a leg brace, then 
the cost of that shoe or device is included as part of the cost of the 
brace. We proposed to include this exception in the proposed definition 
of a brace at Sec.  410.2.
    We received approximately 55 comments from individuals, health care 
providers, medical technology manufacturers, patient and medical 
technology advocacy organizations, academic research institutions, and 
health care providers employed by the government agencies of the U.S. 
Department of Veterans Affairs and U.S. Department of Defense.
    Comment: Many commenters supported finalizing the definition of 
brace at 42 CFR 410.2 to be consistent with section 130 of chapter 15 
of the Medicare Benefit Policy Manual (CMS Pub. 100-02) which indicates 
that a brace includes rigid or semi-rigid devices which are used for 
the purpose of supporting a weak or deformed body member or restricting 
or eliminating

[[Page 77839]]

motion in a diseased or injured part of the body. Many commenters also 
agreed with our discussion in the CY 2024 HH PPS proposed rule (88 FR 
43779) that adding the definition in regulations will improve the 
efficiency of the administration of the Medicare program when 
considering whether items meet the definition potentially providing 
faster claims processing and access to these new healthcare 
technologies for Medicare beneficiaries.
    Response: We appreciate the commenters' support for the proposed 
definition of brace at 42 CFR 410.2.
    Comment: A few commenters opposed the proposed definition for brace 
at 42 CFR 410.2, stating that including in regulations a definition for 
brace that is many years old will deter innovation in a dynamically 
changing area of medical technology. The commenters urged CMS to 
consider an alternative approach and obtain input from a broad range of 
stakeholders on a definition of brace that focuses on device 
functionality rather than the materials used in making the brace. The 
commenters stated material stiffness should not be the key indicator in 
defining a brace. The commenters explained that by emphasizing 
materials, the definition will box manufacturers into a corner and 
limit the use of new materials that would be used if the medical 
criteria were based on functionality and not rigidity and materials. In 
addition, rigid materials often add weight to the brace and affect 
comfort, with the effect that non-compliance with wearing the brace 
becomes an unintended consequence. The commenters noted manufacturers 
are trying to build a brace that uses lighter and breathable materials 
resulting in a brace that patients will wear. Also, the commenters 
stated with the advancements in materials science and nanotechnology, 
limiting the definition of brace to items that are rigid or semi-rigid 
will stifle innovation and adversely impact progress in patient 
treatment options and care.
    Other commenters stated from a functional standpoint, braces are 
used to enhance the ability to effectively utilize affected upper and 
lower limbs to better perform activities of daily living. In 
contemporary practice, orthoses are externally applied devices used to 
support body segments or joints which are weakened, unstable or mal-
aligned, for the purpose of enhancing function and individual 
independence. These commenters urged CMS to interpret the brace benefit 
through contemporary orthotic clinical practice when making coding, 
coverage and payment decisions in the future.
    Response: We do not agree with these comments. The proposed 
definition focuses on the two key functions of a brace, which are to 
support a weak or deformed body member and restrict or eliminate motion 
in a diseased or injured part of the body. As discussed in the CY 2024 
HH PPS proposed rule (88 FR 43654), the information we gathered during 
our review supported our proposal to amend regulations at 42 CFR 410.2 
to add the definition of brace to be consistent with CMS's longstanding 
brace policy and information at section 130 of chapter 15 of the 
Medicare Benefit Policy Manual (CMS Pub. 100- 02). This discussion 
explains why a device must be rigid or semi-rigid in order to be able 
to provide support or restrict or eliminate motion. Rigid refers to 
material used to eliminate motion but also to support underload. 
Components of a brace will use semi-rigid materials, which 
intentionally allow some amount of motion (restricted motion) as 
compared to materials that completely immobilize. We are not aware of 
evidence that elastic or non-rigid devices are capable of supporting a 
weak or deformed body member or restricting or eliminating motion in a 
diseased or injured part of the body. We can consider addressing in 
future rulemaking should evidence supporting the effectiveness of 
elastic or non-rigid devices in performing the functions of a brace 
become available.
    Comment: Several commenters recommended to finalize the definition 
of brace in 42 CFR 410.2 to include the words ``including powered 
devices''. The commenters recommended the definition of brace should 
read as follows: Brace means a rigid or semi-rigid device, including 
powered devices, used for the purpose of supporting a weak or deformed 
body member or restricting or eliminating motion in a diseased or 
injured part of the body.
    Response: We thank the commenters for their recommendation, but we 
do not believe it is necessary to include the words ``including powered 
devices'' in the definition of brace. As we explained in our proposal 
in the CY 2024 HH PPS proposed rule (88 FR 43654), certain powered 
devices perform the key bracing functions of supporting weak or 
deformed body members and therefore are included in the proposed 
definition. Therefore, we recognize that a powered device can be 
included in the definition of a brace. Also, as discussed in the CY 
2024 HH PPS proposed rule, new items including powered devices, will be 
considered for classification under the definition of brace using the 
processes outlined in regulations at 42 CFR 414.240. These processes 
require interested parties to submit an application for review of a new 
item including public consultation on proposed preliminary benefit 
category and payment determinations and then a final determination can 
be established on whether the new item meets the definition of brace in 
accordance with in 42 CFR 410.2.
    We are finalizing our definition of brace and adding it to 42 CFR 
410.2 as proposed, without modifications.
    Comment: Multiple commenters supported the proposal to specify at 
Sec.  410.36(a)(3)(i)(A) that a brace may include a shoe if it is an 
integral part of a leg brace and its expense is included as part of the 
cost of the brace. A commenter requested clarification regarding 
whether shoes that are integral to a brace are covered as part of the 
brace and can, in fact, be separately billed under distinct HCPCS L-
codes for the shoes alone. The commenter requested clarification to 
remove any confusion as to the separate reimbursement for the shoes, 
themselves, that are deemed integral to the function of an orthoses.
    Response: We appreciate the commenters' support for our proposal to 
specify at Sec.  410.36(a)(3)(i)(A) that a brace may include a shoe if 
it is an integral part of a leg brace and its expense is included as 
part of the cost of the brace. HCPCS codes L3224 and L3225 are 
available to submit claims for shoes that are an integral part of a 
brace.
    We are finalizing our proposal without modification to specify at 
Sec.  410.36(a)(3)(i)(A) that a brace may include a shoe if it is an 
integral part of a leg brace and its expense is included as part of the 
cost of the brace.
    In the CY 2024 HH PPS proposed rule (88 FR 43780), we noted three 
HCPCS codes were established to permit billing of the powered upper 
extremity devices and powered lower extremity exoskeleton devices. Two 
HCPCS codes were established effective October 1, 2019 which are: L8701 
(Powered upper extremity range of motion assist device, elbow, wrist, 
hand with single or double upright(s), includes microprocessor, 
sensors, all components and accessories, custom fabricated) and L8702 
(Powered upper extremity range of motion assist device, elbow, wrist, 
hand, finger, single or double upright(s), includes microprocessor, 
sensors, all components and accessories, custom fabricated). One HCPCS 
code was established effective October 1, 2020 which is K1007 
(Bilateral hip, knee, ankle, foot device, powered, includes pelvic 
component, single or double upright(s), knee joints any type, with or 
without ankle joints

[[Page 77840]]

any type, includes all components and accessories, motors, 
microprocessors, sensors). However, corresponding Medicare benefit 
category and Medicare payment determinations were not finalized for 
these HCPCS codes to permit more time for evaluation. We explained that 
as a result of the proposal to amend the regulations at 42 CFR 410.2 to 
add the definition of brace, if finalized, these codes would be 
classified under the definition of brace because they are used to 
support weak arms and legs. Also, we stated using the processes 
outlined in regulations at 42 CFR 414.240, we intend to obtain public 
consultation on the payment determinations for these codes at an 
upcoming HCPCS Level II public meeting. Additional information on these 
HCPCS codes can be found in the HCPCS Level II Final Coding, Benefit 
Category and Payment Determinations First Biannual (B1), 2022 HCPCS 
Coding Cycle at www.cms.gov/files/document/2022-hcpcs-application-summary-biannual-1-2022-non-drug-and-non-biological-items-and-services.pdf. The agenda and dates for a public meeting will be 
available on the CMS HCPCS website: https://www.cms.gov/Medicare/
Coding/MedHCPCSGenInfo/HCPCSPublicMeetings.
    Comment: Many commenters supported classification of devices 
described by HCPCS codes K1007, L8701, and L8702 as braces. Multiple 
commenters described the use of a powered upper extremity device as 
supporting a patient when using the device thereby increasing the 
patient's ability to be more independent resulting in less burden on 
caretakers and improving participation in family, work, and community 
activities. Also, many commenters described the use of a powered 
exoskeleton device as supporting a patient to reduce lower-limb 
spasticity and contracture of the limbs. Commenters supported the use 
of powered exoskeleton devices stating improvements also occur for 
patients' circulation, mental health, and quality of life.
    Response: We appreciate the commenters' support for classification 
of these devices as braces. We agree codifying the definition of brace 
and clarifying that newer powered devices described by these HCPCS 
codes will permit Medicare beneficiaries to access these newer 
technology braces and particularly help those with disabilities 
associated with muscular and/or neural (for example, spinal cord 
injuries) conditions.
    Comment: Some commenters requested classification of HCPCS codes 
K1007, L8701, and L8702 under the Medicare brace benefit category 
effective as of the date that the final rule is published in order to 
expedite claims processing for items billed using these codes.
    Response: We do not agree. These items will be classified as braces 
effective on the effective date of this final rule, not the publication 
date.
    Comment: Some commenters requested expediting payment 
determinations for HCPCS codes K1007, L8701, and L8702, including 
developing and issuing preliminary payment determinations for 
consideration as part of the second biannual 2023 non-drug and 
nonbiological items and services HCPCS public meeting in late 2023 or 
the next subsequent non-drug and nonbiological items and services HCPCS 
public meeting.
    Response: As discussed in the CY 2024 HH PPS proposed rule (88 FR 
43654), rather than expedite payment determinations, we intend to use 
the processes outlined in regulations at 42 CFR 414.240 to obtain 
public consultation on the preliminary payment determinations for these 
codes at an upcoming HCPCS Level II public meeting. We recognize the 
importance of reviewing payment information efficiently on these items 
in order to establish the payment determinations for these items. We 
expect to issue a payment determination for consideration as part of 
the second biannual 2023 non-drug and nonbiological items and services 
HCPCS public meeting in late 2023 or in the next subsequent non-drug 
and nonbiological items and services HCPCS public meeting.
3. Final Regulations
    We are finalizing our proposal without modification to amend the 
regulations at 42 CFR 410.2 to add the definition of brace to improve 
clarity and transparency regarding coverage and payment for the term 
brace as defined in section 1861(s)(9) of the Act. Also, we believe 
adding the definition in regulations will improve the efficiency of the 
administration of the Medicare program when considering whether a new 
device is a leg, arm, back, or neck brace for benefit category and 
payment determinations under our review procedures at Sec.  414.240. In 
addition, we believe that adding the definition of a brace in 
regulation would expedite coverage and payment for newer technology and 
powered devices, potentially providing faster access to these new 
healthcare technologies for Medicare beneficiaries. Also, we are 
finalizing our proposal without modification to specify at Sec.  
410.36(a)(3)(i)(A) that a brace may include a shoe if it is an integral 
part of a leg brace and its expense is included as part of the cost of 
the brace.

D. Documentation Requirements for Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies Products Supplied as Refills to 
the Original Order

1. Background
    Durable medical equipment (DME) is covered as a benefit category 
under Part B under medical or other health services as described in 
section1861(s)(6) of the Act and defined under section 1861(n) of the 
Act. We further defined DME in regulations at Sec.  414.202 as 
equipment that can withstand repeated use, is primarily and customarily 
used to serve a medical purpose, is not generally useful to a person in 
the absence of an illness or injury, is appropriate for use in the 
home, and effective with respect to items classified as DME after 
January 1, 2012, has an expected life of at least 3 years. Certain 
items of DME require supplies for effective use. Supplies include, but 
are not limited to, drugs and biologicals that must be put directly 
into the equipment to achieve the therapeutic benefit or to assure the 
proper functioning of the equipment. Examples include oxygen, tumor 
chemotherapy agents transfused via an infusion pump, or diabetic test 
strips used with a home glucose monitor.
    Prosthetics and orthotics are defined under section 1861(s)(9) of 
the Act and include leg, arm, back, and neck braces and artificial 
legs, arms, and eyes--including replacements if required because of a 
change in the patient's physical condition. These items are referred to 
collectively as Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies (DMEPOS).
    DMEPOS items and supplies may be furnished on a recurring basis to 
beneficiaries with chronic or longer-term conditions. For such items, 
the practitioner may be able to forecast and prescribe, at the time of 
the beneficiary's initial need or during later clinical interaction, 
the ongoing medical need for DMEPOS items and/or supplies. In other 
words, the practitioner may be able to determine the beneficiary's 
expected, ongoing medical need both at the time of the interaction and 
as anticipated need for later dates of service. In such cases, the 
practitioner may write an order for immediate use and refills for later 
dates of service.
    Section 1893(a) of the Act authorized the Secretary to promote the 
program integrity of the Medicare program by entering into contracts 
with eligible

[[Page 77841]]

entities to carry out activities specified in subsection (b) of such 
section. Section 1893(b)(1) of the Act, authorizes ``[r]eview of 
activities of providers of services or other individuals and entities 
furnishing items and services for which payment may be made under this 
title . . . including medical and utilization review [emphasis added] . 
. .''. In response to concerns related to auto-shipments and delivery 
of DMEPOS supplies that may no longer be needed or not needed at the 
same level of frequency/volume (for example, stockpiling), CMS 
instituted policies to require suppliers to contact the beneficiary 
prior to dispensing DMEPOS refills. In CY 2004, we updated our Medicare 
Program Integrity Manual to include timeframes related to refillable 
DMEPOS items.\208\ This was done to ensure that the refilled item was 
necessary and to confirm any changes/modifications to the order. At 
that time, CMS stated that contact with the beneficiary or designee 
regarding refills should take place no sooner than 7 days prior to the 
delivery/shipping date. CMS further stated that subsequent deliveries 
of refills of DMEPOS products should occur no sooner than 5 days prior 
to the end of the usage for the current product. This change intended 
to allow for shipping of refills on ``approximately'' the 25th day of 
the month in the case of a month's supply, as later clarified and 
emphasized in preamble discussion in the CY 2005 Physician Fee Schedule 
final rule (69 FR 66235).
---------------------------------------------------------------------------

    \208\ Internet Only Manual 100-08, Program Integrity Manual 
(2004), available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R61PI.pdf.
---------------------------------------------------------------------------

    In 2011, due to stakeholder concerns related to burden, we amended 
the Medicare Program Integrity Manual to state that contact with the 
beneficiary or designee regarding refills must take place no sooner 
than 14 calendar days prior to the delivery/shipping date, and that 
delivery of the DMEPOS product occur no sooner than 10 calendar days 
prior to the end of usage for the current product.\209\ This is the 
current policy on DMEPOS refills as described in the Medicare Program 
Integrity Manual.\210\
---------------------------------------------------------------------------

    \209\ Internet Only Manual 100-08, Program Integrity Manual 
(2011), available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R378PI.pdf
    \210\ Internet Only Manual 100-08, Program Integrity Manual, 
Chapter 5, Section 5.2.6--Refills of DMEPOS Items Provided on a 
Recurring Basis (2022), available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c05.pdf.
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    We note that while the timeframes are applicable to all refillable 
items, they are most pertinent to the mail/delivery model because those 
beneficiaries could potentially be most at risk for receiving 
unnecessary or unsolicited items and supplies. For beneficiaries 
calling, texting, or otherwise contacting their pharmacy or retail 
store and picking up their refills, we note the decreased potential for 
providing supplies that may not be medically necessary or for which the 
beneficiary has sufficient supply. For items that the beneficiary 
obtains in-person at a retail store, the signed delivery slip or a copy 
of the itemized sales receipt is sufficient documentation of a request 
for refill.
    Both delivery models are intended to allow for uninterrupted supply 
of the necessary item(s) and allow for the processing of claims for 
refills delivered/shipped prior to the beneficiary's complete 
exhaustion of their supply. We note that prior guidance related to this 
policy referred to this sort of permissible overlap as refills for 
items ``pending exhaustion''.
    Despite the long-standing programmatic safeguards, compliance with 
refill procedures continues to cause concerns. As recently as 2019, the 
HHS Office of Inspector General (HHS OIG) did a national study 
demonstrating that suppliers did not maintain sufficient refill 
documentation.\211\ In fact, one national DMEPOS supplier was recently 
revoked from the Medicare program due to billing for refills for 
beneficiaries that were deceased.\212\
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    \211\ Medicare Improperly Paid Suppliers an Estimated $92.5 
Million for Inhalation Drugs, (October 2019), https://oig.hhs.gov/oas/reports/region9/91803018.pdf.
    \212\ Press Release: Mail-Order Diabetic Testing Supplier and 
Parent Company Agree to Pay $160 Million to Resolve Alleged False 
Claims to Medicare (August 2, 2021), available at: https://www.justice.gov/opa/pr/mail-order-diabetic-testing-supplier-and-parent-company-agree-pay-160-million-resolve-alleged.
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    Due to ongoing compliance concerns, and in efforts to promote 
transparency, we propose to codify our refill documentation 
requirements. At the same time, we are continuing our efforts to reduce 
administrative burden. We have worked to identify many obsolete and 
burdensome regulations that could be eliminated or reformed to improve 
effectiveness. We have also examined our longstanding policies and 
practices that are not codified in regulations but could be changed or 
streamlined to achieve better outcomes and reduce provider and supplier 
burden. Additionally, we are requesting comment on whether there are 
ways to reduce burden for certain beneficiary populations for future 
rulemaking.
    Our refill policy has primarily been maintained in the Medicare 
Program Integrity Manual, Local Coverage Determinations, and related 
articles. We proposed to codify and update our refill policy to 
maintain program integrity controls while being mindful of supplier 
burden. We are finalizing the policy as proposed.
2. Provisions of the Regulation
a. Overview
    At this time, we believe it is appropriate to codify policies 
related to refills of DMEPOS items; taking into consideration the need 
to balance program integrity concerns (for example, stockpiling) 
against supplier burden concerns. While we continue to believe it 
appropriate to confirm the medical need for the refill prior to 
disbursement, we have found that minor deviations in timing are not 
always reflective of medical need. Therefore, we proposed to strengthen 
our program integrity requirements to not only require beneficiary 
contact, but to specify that such contact must result in affirmative 
response from the beneficiary or designee. We proposed to eliminate the 
14-day timeframe, for beneficiary contact, and to rather rely upon a 
single 30-day timeframe for contact and confirmation of the need for 
refill. That is, beneficiary contact and confirmation of need for the 
refill must occur within the 30-day period prior to the end of the 
current supply. We proposed to remove the term ``pending exhaustion'', 
which may be subject to interpretation, and instead use the phrase 
``the expected end of the current supply.''
    We note that documentation of the need for refill, as obtained from 
the Medicare beneficiary or designee, is not expected to require 
specific quantities remaining--but rather to simply confirm their need 
for the next refillable item. This clarification is expected to 
alleviate any associated burden with the beneficiary or their designee 
counting supplies. Suppliers contacting the beneficiaries to confirm 
their need for the refill, shall confirm both that the beneficiary is 
using the item and requires the refill, as evidenced by the supplier 
documentation of an affirmative need for the refill. We believe this 
type of generalized affirmation, in conjunction with our claims 
processing controls, will provide sufficient program integrity 
controls.
    We proposed to codify our longstanding requirement that delivery of 
DMEPOS items (that is, date of service) be no sooner than 10 calendar 
days before the expected end of the current supply. We note that the 
shipping timeframes have been relied upon for approximately 20 years--
to help both suppliers and Medicare Fee-

[[Page 77842]]

for-Service contractors prevent overlapping billings and unnecessary 
refills. For example, contractors may use this timeframe to set up 
claims processing edits and alert suppliers when an item is being 
rendered/billed that was previously rendered and is not yet eligible 
for refill. We proposed that date of service may be defined as either 
the date of delivery of the DMEPOS item, or for items rendered via 
delivery or shipping service, the supplier may use the shipping date as 
the date of delivery. We proposed the shipping date may be defined as 
either the date the delivery/shipping service label is created or the 
date the item is retrieved for shipment by the mail carrier/delivering 
party; however, such dates should not demonstrate significant 
variation.
    We believe the refill policy ensures that beneficiaries are 
participating in their health care to confirm they get the DMEPOS 
item(s) ordered and needed, which prevents individuals from receiving 
unnecessary supplies. It also protects the Trust Fund from the 
unnecessary provision of DMEPOS. We elongated the timeframe to 30-days 
and clarified that the beneficiary need not provide specific remaining 
quantities to comply. We believe this helps mitigate potential burden. 
However, we sought comments on if, due to beneficiary burdens, there 
are certain diagnosis/device combinations that a beneficiary should not 
need to confirm the need for a refill or confirm the need for refill 
with the same frequency. In other words, are there beneficiary 
populations for which we will not expect any fluctuations in the type 
or quantity of device, due to a permanent disability or health 
condition, for which the supplier verification of need will prove 
burdensome? Are there ways that Medicare could better balance the 
beneficiary burden of responding to supplier outreach (for example, 
text messaging, phone call to affirm need for recurring supply) when 
contrasted with the burden of receiving potentially unnecessary items 
(for example, co-insurance payments)? We will take these comments into 
consideration for potential future policy changes to our DMEPOS refill 
policies.
    We received 15 comments for our review, as submitted from DMEPOS 
suppliers, DMEPOS industry groups, and providers treating beneficiaries 
through the use of DMEPOS. Of those submitted, 10 were responsive to 
our solicitation questions. The feedback we received is summarized in 
the following:
    Comment: Commenters provided certain chronic conditions, in 
response to CMS solicitation for consideration for potential future 
rulemaking, ``. . . for which we would not expect any fluctuations in 
the type or quantity of device, due to a permanent disability or health 
condition, for which the supplier verification of need would prove 
burdensome'' (88 FR 43781). Specifically, commenters shared their 
belief that certain conditions, such as type I and type II diabetics, 
beneficiaries with obstructive sleep apnea, and those in need of 
permanent urinary or ostomy supplies, are the types of beneficiaries 
which may benefit from additional regulatory consideration. Commenters 
suggested that the identification of such items would benefit from 
contractor/stakeholder communications and public posting. Commenters 
suggested that such persons should not require beneficiary contact 
prior to refill and should be permitted to ``opt-in'' on an annual 
basis to authorize continual refills. Commenters suggested that 
suppliers could help control program integrity concerns by maintaining 
their responsibility for ensuring that supplies continue to be 
medically necessary and that there has been no interruption in medical 
need. Conversely, a commenter shared their concern that the creation of 
differing refill requirements, absent a universal electronic system, 
would prove confusing and difficult to effectuate.
    Response: CMS thanks commenters for their thoughtful input. We will 
consider the beneficiary populations for which commenters would not 
expect any fluctuations in the type or quantity of supplies due to a 
permanent disability or health condition. We will look at the 
associated access and burden issues raised, in conjunction with program 
integrity concerns and the ability to operationalize programmatic 
instruction, for potential future rulemaking.
    Comment: Commenters were generally supportive of our proposal to 
codify our existing refill requirements, with amendments. The proposed 
policy extends the timeframe for the supplier to contact the 
beneficiary and clarifies that such contact: (1) must affirm the need 
for refill; but (2) does not require beneficiaries to ``count'' their 
remaining supplies. Commenters were appreciative of our burden 
reduction efforts for both suppliers and beneficiaries.
    Response: We thank commenters for their feedback. This rule 
finalizes the documentation requirements for DMEPOS products supplied 
as refills as proposed.
    Comment: Commenters were supportive of our proposal to remove the 
phrase ``pending exhaustion'' and replace it with ``expected end of the 
current supply'' to ensure clarity.
    Response: We appreciate the feedback. This rule finalizes the new 
terminology as proposed.
    Comment: Commenters encouraged CMS to permit, or even require, 
suppliers to use multiple modes of communication to contact the 
beneficiaries, such as via phone, text message, or email. Several 
commenters noted that regardless of the type of communication a DME 
supplier uses, the DME supplier is still responsible for compliance 
with any applicable Medicare requirements--including the production of 
documentation upon request.
    Response: We thank commenters for their feedback and clarify that 
we do not prescribe the mode of communication for contacting the 
beneficiary to affirm the need for refill. Suppliers are permitted to 
use any mode of communication so long as the beneficiary affirmation is 
received, and documentation of the contact is captured and can be 
provided upon request.
    Comment: Commenters requested that suppliers be permitted to bill a 
single time for a 90-day supply of CGM sensors, as opposed to every 30 
days.
    Response: CGM billing is outside the scope of the proposed 
regulation. However, we will take the commenters feedback under 
advisement.
    Comment: Some commenters suggested the adoption of electronic 
ordering or communication systems, as well as DMEPOS templates. A 
commenter suggested that CMS establish standards for DMEPOS electronic 
ordering systems.
    Response: We thank commenters for their feedback for our 
consideration. We note that this is outside the scope of the proposed 
regulation.
    Comment: A commenter suggested that the documentation to support 
the DMEPOS item supplied as a refill be signed off by the ordering 
provider. We understood the commenter's request to seek additional, 
more frequent practitioner verification, in addition to the initial 
order prescribing the item and refills.
    Response: We thank the commenter for their feedback. At this time, 
we respectfully decline to adopt the suggestion. The suggestion does 
not align with current clinical practice, and we do not wish to impose 
additional burden on beneficiaries, providers, and suppliers.
    Comment: Commenters suggested we minimize any conflict between 
Medicare and other payer's documentation requirements to support

[[Page 77843]]

DMEPOS products supplied as refills, such as those required of Medicaid 
and for beneficiaries in Medicare Advantage plans.
    Response: While Medicaid and Medicare Advantage requirements are 
outside the scope of our proposed policy, we agree with reducing burden 
whenever possible.
    Final Rule Action: We are finalizing the documentation requirements 
for DMEPOS products supplied as refills to the original order, as 
proposed.
b. Documentation to Support Refill
    We proposed to revise Sec.  410.38, paragraph (d), by adding 
paragraph (d)(4) which outlines the documentation needed to support 
refill requirements. In paragraph (d)(4)(i), we define refills, date of 
service, and shipping date for purposes of this section. In paragraph 
(d)(4)(ii), we proposed that documentation must include the following:
     Evidence of the beneficiary or their representative's 
affirmative response of the need for supplies, which should be obtained 
as close to the expected end of the current supply as possible; Contact 
and affirmative response shall be within 30 calendar days from the 
expected end of the current supply.
     For shipped items, the beneficiary name, date of contact, 
the item requested, and an affirmative response from the beneficiary, 
indicative of the need for refill, prior to dispensing the product.
     For items obtained in-person from a retail store, the 
delivery slip signed by the beneficiary or their representative or a 
copy of the itemized sales receipt is sufficient documentation of a 
request for refill.
    In paragraph (d)(4)(iii), we proposed the date of service for 
DMEPOS items provided on a recurring basis be no sooner than 10 
calendar days prior to the expected end of the current supply.

VIII. Changes to the Provider and Supplier Enrollment Requirements

A. Background

1. Overview of Medicare Provider Enrollment
    Section 1866(j)(1)(A) of the Act requires the Secretary to 
establish a process for the enrollment of providers and suppliers into 
the Medicare program. The overarching purpose of the enrollment process 
is to help confirm that providers and suppliers seeking to bill 
Medicare for services and items furnished to Medicare beneficiaries 
meet all applicable federal and state requirements to do so. The 
process is, to an extent, a ``gatekeeper'' that prevents unqualified 
and potentially fraudulent individuals and entities from entering and 
inappropriately billing Medicare. Since 2006, we have undertaken 
rulemaking efforts to outline our enrollment procedures. These 
regulations are generally codified in 42 CFR part 424, subpart P 
(currently Sec. Sec.  424.500 through 424.575 and hereafter 
occasionally referenced as subpart P). They address, among other 
things, requirements that providers and suppliers must meet to obtain 
and maintain Medicare billing privileges.
    As outlined in Sec.  424.510, one such requirement is that the 
provider or supplier must complete, sign, and submit to its assigned 
Medicare Administrative Contractor (MAC) the appropriate enrollment 
form, typically the Form CMS-855 (OMB Control No. 0938-0685). The Form 
CMS-855, which can be submitted via paper or electronically through the 
internet-based Provider Enrollment, Chain, and Ownership System (PECOS) 
process (SORN: 09-70-0532, PECOS), collects important information about 
the provider or supplier. Such data includes, but is not limited to, 
general identifying information (for example, legal business name), 
licensure and/or certification data, and practice locations. The 
application is used for a variety of provider enrollment transactions, 
including the following:
     Initial enrollment--The provider or supplier is--(1) 
enrolling in Medicare for the first time; (2) enrolling in another 
Medicare contractor's jurisdiction; or (3) seeking to enroll in 
Medicare after having previously been enrolled.
     Change of ownership--The provider or supplier is reporting 
a change in its ownership.
     Revalidation--The provider or supplier is revalidating its 
Medicare enrollment information in accordance with Sec.  424.515. 
(Suppliers of durable medical equipment, prosthetics, orthotics, and 
supplies (DMEPOS) must revalidate their enrollment every 3 years; all 
other providers and suppliers must do so every 5 years.)
     Reactivation--The provider or supplier is seeking to 
reactivate its Medicare billing privileges after it was deactivated in 
accordance with Sec.  424.540.
     Change of information--The provider or supplier is 
reporting a change in its existing enrollment information in accordance 
with Sec.  424.516.
    After receiving the provider's or supplier's initial enrollment 
application, CMS or the MAC reviews and confirms the information 
thereon and determines whether the provider or supplier meets all 
applicable Medicare requirements. We believe this screening process has 
greatly assisted CMS in executing its responsibility to prevent 
Medicare fraud, waste, and abuse.
    As previously discussed, over the years we have issued various 
final rules pertaining to provider enrollment. These rules were 
intended not only to clarify or strengthen certain components of the 
enrollment process but also to enable us to take action against 
providers and suppliers: (1) engaging (or potentially engaging) in 
fraudulent or abusive behavior; (2) presenting a risk of harm to 
Medicare beneficiaries or the Medicare Trust Funds; or (3) that are 
otherwise unqualified to furnish Medicare services or items. Consistent 
with this, and as we discuss in section VIII.B. of this final rule, we 
proposed several changes to our existing Medicare provider enrollment 
regulations.
2. Legal Authorities
    There are two principal categories of legal authorities for our 
proposed Medicare provider enrollment provisions:
     Section 1866(j) of the Act furnishes specific authority 
regarding the enrollment process for providers and suppliers.
     Sections 1102 and 1871 of the Act provide general 
authority for the Secretary to prescribe regulations for the efficient 
administration of the Medicare program.

B. Proposed Provisions

1. Provisional Period of Enhanced Oversight
a. Background
    Section 1866(j)(3)(A) of the Act states that the Secretary shall 
establish procedures to provide for a provisional period of between 30 
days and 1 year during which new providers and suppliers--as the 
Secretary determines appropriate, including categories of providers or 
suppliers--will be subject to enhanced oversight. (Per section 
1866(j)(3)(A) of the Act, such oversight can include, but is not 
limited to, prepayment review and payment caps.) As authorized by 
section 1866(j)(3)(B) of the Act, CMS previously implemented such 
procedures through subregulatory guidance with respect to newly 
enrolling HHAs' requests for anticipated payments (RAP).\213\ More 
recently, in July 2023 we began placing newly enrolling hospices 
located in Arizona,

[[Page 77844]]

California, Nevada, and Texas in a PPEO. (See https://www.cms.gov/files/document/mln7867599-period-enhanced-oversight-new-hospices-arizona-california-nevada-texas.pdf for more information.)
---------------------------------------------------------------------------

    \213\ CMS eliminated the use of RAPs for HHAs; beginning January 
1, 2022, CMS replaced RAP submissions with a Notice of Admission.
---------------------------------------------------------------------------

    During the PPEO involving HHA RAPs, CMS received inquiries 
regarding (1) the scope of the term ``new'' HHA for purposes of 
applying a PPEO and (2) when the provisional period commenced. While 
section 1866(j)(3)(B) of the Act states that we may implement 
procedures by program instruction, we proposed in the July 10, 2023, 
proposed rule (88 FR 43654) to clarify these two issues.
    First, we proposed in new Sec.  424.527(a) to define a ``new'' 
provider or supplier (again, exclusively for purposes of our PPEO 
authority under section 1866(j)(3) of the Act) as any of the following:
    ++ A newly enrolling Medicare provider or supplier. (This includes 
providers that must enroll as a new provider per the change in majority 
ownership provisions in Sec.  424.550(b).)
    ++ A certified provider or certified supplier undergoing a change 
of ownership consistent with the principles of 42 CFR 489.18. (This 
includes providers that qualify under Sec.  424.550(b)(2) for an 
exception from the change in majority ownership requirements in Sec.  
424.550(b)(1) but which are undergoing a change of ownership under 42 
CFR 489.18).
    ++ A provider or supplier (including an HHA or hospice) undergoing 
a 100 percent change of ownership via a change of information request 
under Sec.  424.516.
    We included these transactions within our proposed definition 
because they have historically and generally involved the effective 
establishment of a new provider or supplier for purposes of Medicare 
enrollment. We stated that CMS would rely on the codified version of 
this policy once it becomes effective.
    Second, we proposed in Sec.  424.527(b) that the effective date of 
the PPEO's commencement is the date on which the new provider or 
supplier submits its first claim (rather than, for example, the date 
the first service was performed or the effective date of the ownership 
change). A core reason for this proposal was that we found during the 
previously referenced HHA PPEO that certain affected HHAs refrained 
from billing after their placement in the PPEO to circumvent the 
enhanced oversight mechanism; then, once their PPEO lapsed, the HHA 
engaged in improper billing without the intended oversight. We believed 
that proposed Sec.  424.527(b) would help stem this practice because 
the provider or supplier would be unable to avoid the PPEO by delaying 
billing until the PPEO's expiration, as was the case with the HHA PPEO.
    Although we elected to address the issues in proposed Sec.  424.527 
via rulemaking, we noted in the proposed rule that we retained the 
authority under section 1866(j)(3)(B) of the Act to establish and 
implement PPEO procedures via sub-regulatory guidance.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposed PPEO 
clarifications in new Sec.  424.527.
    Response: We appreciate the commenters' support.
    Comment: A commenter questioned: (1) how CMS determines the exact 
length of time within the PPEO's 30-day to 1-year period (for example, 
6 months) that a particular provider or supplier remains under a PPEO; 
and (2) whether CMS uses any specific criteria in this determination. 
The commenter also suggested a maximum 60-day PPEO timeframe for 
providers and suppliers with a long history of accreditation; the 
commenter believed this would reduce the burden on affected providers 
and suppliers.
    Response: While we appreciate these comments, they do not directly 
pertain to the topics covered in our PPEO proposals. Therefore, we 
respectfully believe they are outside the scope of this final rule.
    Comment: A commenter expressed support for our previously mentioned 
hospice PPEO for Arizona, California, Nevada, and Texas.
    Response: While we appreciate the commenter's support, we 
respectfully believe this comment is outside the scope of this final 
rule.
    Comment: A commenter sought clarification on all of the following 
issues:
     Whether the determination as to which providers and 
suppliers are subject to a PPEO is based on the provider's or 
supplier's individual circumstances or on whether they meet the new 
definition of ``new provider or supplier''.
     Whether CMS or, instead, the MAC determines: (1) the 
providers and/or suppliers to which a PPEO will apply; (2) the length 
of a PPEO; and (3) whether a PPEO will include prepayment review.
     Whether providers and suppliers have appeal or 
administrative review rights regarding the application and specifics of 
a PPEO.
     The criteria that are used in determining the length and 
other components of a PPEO.
    Response: Concerning the first issue, the PPEO applies to new 
providers and suppliers (as we proposed to define in Sec.  424.527) in 
the provider or supplier category (for example, hospices in a certain 
geographic area) that the PPEO encompasses.
    We respectfully believe the remaining three issues are outside the 
scope of this rule.
    After reviewing the comments received, we are finalizing our PPEO 
proposals without modification.
2. Retroactive Provider Agreement Terminations
    Under section 1866(a)(1) of the Act, all Medicare providers (as 
that term is defined in section 1866(e) of the Act) must enter into a 
provider agreement with the Secretary. Subparts A, B, and E of 42 CFR 
part 489 contain regulations concerning provider agreements. In 
accordance with Sec.  489.52, a provider may voluntarily terminate its 
provider agreement and thus depart the Medicare program. In doing so, 
and under existing sub-regulatory policy, the provider may request a 
retroactive termination effective date (for example, retroactive to the 
date the provider's facility closed). To incorporate this practice into 
regulation, we proposed in new Sec.  489.52(b)(4) that a provider may 
request a retroactive termination date, but only if no Medicare 
beneficiary received services from the facility on or after the 
requested termination date. This latter caveat would financially 
protect beneficiaries by helping to ensure that Medicare may still 
cover the services furnished to them near the end of the provider's 
operations.
    Comment: Several commenters supported our proposed change.
    Response: We appreciate the commenters' support.
    After reviewing the comments received, we are finalizing new Sec.  
489.52(b)(4) without modification.
3. Hospice Screening Category
a. Categorical Risk Screening
    Under the authority granted to us by section 6401(a) of the 
Affordable Care Act (which amended section 1866(j) to the Act), Sec.  
424.518 outlines levels of screening by which CMS and its MACs review 
initial applications, revalidation applications, applications to add a 
practice location, and applications to report any new owner. These 
screening categories and requirements are based on a CMS assessment of 
the level of risk of fraud, waste, and abuse posed by a

[[Page 77845]]

particular type of provider or supplier. In general, the higher the 
level of risk a certain provider or supplier type poses, the greater 
the level of scrutiny with which CMS will screen and review providers 
or suppliers within that category.
    There are three levels of screening in Sec.  424.518: high, 
moderate, and limited. Irrespective of which level a provider or 
supplier type falls within, the MAC performs the following screening 
functions upon receipt of an initial enrollment application, a 
revalidation application, an application to add a new location, or an 
application to report a new owner:
     Verifies that the provider or supplier meets all 
applicable federal regulations and state requirements for their 
provider or supplier type.
     Conducts state license verifications.
     Conducts database checks on a pre- and post-enrollment 
basis to ensure that providers and suppliers continue to meet the 
enrollment criteria for their provider or supplier type.
    Providers and suppliers at the moderate and high categorical risk 
levels must also undergo a site visit. Furthermore, for those at the 
high screening level, the MAC performs two additional functions under 
Sec.  424.518(c)(2). First, the MAC requires the submission of a set of 
fingerprints for a national background check from all individuals who 
have a 5 percent or greater direct or indirect ownership interest in 
the provider or supplier. Second, it conducts a fingerprint-based 
criminal history record check of the Federal Bureau of Investigation's 
Integrated Automated Fingerprint Identification System on these 5 
percent or greater owners. These additional verification activities are 
meant to correspond to the heightened risk involved.
    There currently are only five provider and supplier types that fall 
within the high categorical risk level under Sec.  424.518(c)(1): 
newly/initially enrolling opioid treatment programs that have not been 
fully and continuously certified by SAMHSA since October 23, 2018 
(hereafter collectively referenced as simply ``OTPs'' unless specified 
otherwise); newly/initially enrolling HHAs; newly/initially enrolling 
DMEPOS suppliers; newly/initially enrolling Medicare diabetes 
prevention program (MDPP) suppliers; and newly/initially enrolling 
skilled nursing facilities (SNFs).
    Hospices are presently in the moderate-risk screening category 
under Sec.  424.518. However, CMS in recent years has become 
increasingly concerned about program integrity issues within the 
hospice community, particularly (though not exclusively) potential and 
actual criminal behavior, fraud schemes, and improper billing. We 
outlined in the July 10, 2023, proposed rule numerous criminal and 
False Claims Act cases involving hospice owners and overseers that have 
arisen since our initial designation of hospices as moderate risk in 
2011. A recent and especially disturbing case we referenced involved 
the sentencing in January 2022 of the CEO of a Texas hospice agency to 
over 13 years in prison after pleading guilty to conspiracy to commit 
Medicare and Medicaid fraud. The CEO admitted that he: (1) billed 
Medicare and Medicaid for hospice services that were not provided, not 
directed by a medical professional, or provided to patients who were 
ineligible for hospice care; and (2) used blank, pre-signed controlled 
substance prescriptions to prescribe potent drugs even though the CEO 
was not a medical professional.\214\ The CEO's scheme involved other 
individuals, thirteen of whom (including physicians) also pled guilty 
to crimes such as conspiracy to commit health care fraud.\215\ The 
Federal Bureau of Investigation special agent in charge stated: ``In 
addition to causing fraudulent billing for tens of millions of dollars, 
[the CEO] preyed upon patients and families that did not have a true 
understanding of [the company] and hospice services. The core of the 
company was rooted in deception, and the lack of physician oversight 
allowed [the defendant] to make medical decisions for his own financial 
benefit.'' \216\
---------------------------------------------------------------------------

    \214\ https://www.justice.gov/usao-ndtx/pr/novus-hospice-ceo-sentenced-13-years-healthcare-fraud.
    \215\ https://www.justice.gov/usao-ndtx/pr/13-novus-healthcare-
fraud-defendants-sentenced-combined-84-years-
prison#:~:text=Bradley%20Harris%2C%20Novus%20CEO%2C%20pleaded,Dr.
    \216\ Ibid.
---------------------------------------------------------------------------

    We also noted in the proposed rule the OIG's July 2018 study titled 
``Vulnerabilities in the Medicare Hospice Program Affect Quality Care 
and Program Integrity'' (OEI-02-16-00570). According to this report, 
Medicare in 2016 spent about $16.7 billion for hospice care for 1.4 
million beneficiaries, an increase from $9.2 billion for less than 1 
million beneficiaries in 2006; with this growth, the OIG stated that 
``significant vulnerabilities'' have arisen, one of which involves 
improper activity.\217\ The report noted that some such schemes 
involved: (1) paying recruiters to target beneficiaries who were 
ineligible for hospice services; and (2) physicians falsely certifying 
beneficiaries as terminally ill when they were not. The OIG cited 
several of the cases we outlined in the July 10, 2023, proposed rule as 
examples of this behavior.\218\
---------------------------------------------------------------------------

    \217\ https://oig.hhs.gov/oei/reports/oei-02-16-00570.pdf, p. 1.
    \218\ Ibid.
---------------------------------------------------------------------------

    Given the foregoing, we believed that closer screening of hospice 
owners was necessary. Although not every case of hospice fraud involves 
or can be attributable to the hospice's owner, we noted that the owner 
can set the tone for the hospice's operations as a whole. If, 
accordingly, an owner has a criminal background involving fraud or 
patient abuse, this could lead to similar activity within the hospice. 
We also stated in the proposed rule that the increasing number of fraud 
cases warrants a revisiting of our original assignment of hospices to 
the moderate risk category. With our obligation to protect the Trust 
Funds and vulnerable Medicare beneficiaries, we believe more thorough 
scrutiny of hospice owners is required.
    Therefore,we proposed to revise Sec.  424.518 to move initially 
enrolling hospices and those submitting applications to report any new 
owner (as described in Sec.  424.518's opening paragraph) into the 
``high'' level of categorical screening; revalidating hospices would be 
subject to moderate risk-level screening. Requiring all hospice owners 
with 5 percent or greater direct or indirect ownership to submit 
fingerprints for a criminal background check would help us detect 
parties potentially posing a risk of fraud, waste, or abuse before it 
begins. Indeed, we have found our fingerprint-based criminal background 
checks to be of great assistance in detecting felonious behavior by the 
owners of high-risk providers and suppliers.
    Under our proposal, initially enrolling hospices would be 
incorporated within revised paragraph (c)(1)(vi). The current language 
in paragraph (c)(1)(vi) would be included within new proposed paragraph 
(c)(1)(vii), to which would be added hospices disclosing a new owner.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposed elevation of 
hospices to the high-risk screening category.
    Response: We appreciate the commenters' support.
    After reviewing the comments received, we are finalizing our 
hospice high-risk screening proposal without modification.

[[Page 77846]]

4. 36-Month Rule for Changes in Majority Ownership--Hospices
a. Background
    The general purpose of a state survey or accreditation review for 
any Medicare provider or supplier type subject thereto is to determine 
whether the provider or supplier is in compliance with its regulatorily 
prescribed conditions of participation or conditions of coverage 
(hereafter collectively referenced as CoPs). CoPs are federal 
requirements that a provider or supplier must meet to participate in 
the Medicare program, and they generally focus on health and safety 
protections.
    Though it is a provider enrollment provision, Sec.  424.550(b)(1) 
recognizes the importance of the HHA survey and accreditation processes 
(hereafter sometimes jointly referenced as the ``survey process''), 
which help confirm the HHA's compliance with the CoPs and the quality 
and safety requirements they entail. Section 424.550(b)(1) states that 
if an HHA undergoes a change in majority ownership (occasionally 
referenced as a ``CIMO'') by sale within 36 months after the effective 
date of the HHA's initial enrollment in Medicare or within 36 months 
after the HHA's most recent CIMO, the provider agreement and Medicare 
billing privileges do not convey to the HHA's new owner. The 
prospective provider/owner of the HHA must instead: (1) enroll in 
Medicare as a new (initial) HHA; and (2) obtain a state survey or an 
accreditation from an approved accreditation organization. As defined 
in 42 CFR 424.502, a ``change in majority ownership'' occurs when an 
individual or organization acquires more than a 50 percent direct 
ownership interest in an HHA during the 36 months following the HHA's 
initial enrollment or most recent CIMO; this includes an acquisition of 
majority ownership through the cumulative effect of asset sales, stock 
transfers, consolidations, or mergers. Under Sec.  424.550(b)(1), a 42 
CFR 489.18-level change of ownership and/or 100 percent ownership 
transfer is not necessary to trigger this ``36-month rule.'' Only 
crossing the 50 percent ownership threshold is required.
    Section 424.550(b)(1) was promulgated in 2009 and modified in 2010. 
There were two principal objectives behind its establishment.
    First, there was a trend in the HHA community whereby an HHA 
applied for Medicare certification, underwent a survey, and became 
enrolled in Medicare, but then immediately sold the HHA without having 
seen a Medicare beneficiary or hired an employee. These brokers, in 
other words, enrolled in Medicare exclusively to sell the HHA rather 
than to provide services to beneficiaries. This practice enabled a 
purchaser of an HHA from the broker to enter Medicare with no survey, 
which, in turn, sometimes led that owner to soon sell the business to 
another party. The ``flipping'' or ``turn-key'' mechanism, in short, 
was used to circumvent the survey process.
    Second, we were more broadly concerned about the lack of scrutiny 
of new owners as a whole, not merely in cases of flipping. If an HHA 
undergoes a change of ownership, CMS--at the current time--generally 
does not perform a survey pursuant thereto. Consequently, CMS has no 
sure way of knowing whether the HHA, under its new ownership and 
management, is in compliance with the HHA CoPs. Unless CMS can make 
this determination, there is a risk that the newly purchased HHA, 
without having been appropriately vetted, will bill for services when 
it is non-compliant with the CoPs.\219\
---------------------------------------------------------------------------

    \219\ Ibid.
---------------------------------------------------------------------------

    We previously outlined in this final rule our growing concerns 
about improper behavior within the hospice community. Yet, as we 
explained in the proposed rule and restate here, we are equally 
concerned about the quality of care furnished in some of these 
facilities. Indeed, we have seen an increase in the number of hospice 
changes of ownership (including the types of CIMOs described in 42 CFR 
424.550(b)(1)) in recent years, and a number of these ownership changes 
have occurred within the applicable 36-month timeframe. In fact, some 
such changes have taken place within only a few months after enrollment 
or the previous CIMO, akin to what we saw with the ``flipping'' 
practice outlined in the CY 2010 HH PPS proposed and final rules; 
specifically, we have received reports that hospices are being sold 
quickly after enrollment or purchase so that the new owner can avoid 
any survey. This is because, as had been our concern with HHAs, hospice 
ownership changes generally do not result in a state survey or 
accreditation review.
    Without knowing whether the facility under its new ownership and 
leadership is compliant with the hospice CoPs, we cannot determine 
whether the hospice will furnish proper care to its patients. 
Beneficiary lives can be endangered if the newly purchased hospice is 
not committed to furnishing quality services.
    For all these reasons, we proposed to expand the scope of Sec.  
424.550(b)(1) to include hospice CIMOs within its purview. (We also 
proposed to expand the aforementioned definition of ``change in 
majority ownership'' in Sec.  424.502 to include hospices.) We believed 
that our previously detailed concerns about hospices, such as fraud 
schemes, patient abuse, improper billing, and potential substandard 
care require the level of scrutiny that a survey can furnish.
    We noted in the proposed rule that Sec.  424.550(b)(2) contains 
four exceptions to the 36-month rule. Specifically, even if an HHA 
undergoes a CIMO, the requirement in Sec.  424.550(b)(1) that the HHA 
enroll as a new HHA and undergo a survey or accreditation is 
inapplicable if one of the exceptions applies. (For example, Sec.  
424.550(b)(2)(iv) exempts an HHA from Sec.  424.550(b)(1)'s 
requirements if the HHA's CIMO was due to the owner's death.) We 
promulgated these exceptions because the HHA community had expressed 
concerns that the 36-month rule could inhibit bona fide HHA ownership 
transactions; for example, prospective new owners may not wish to have 
to enroll as a new HHA and will therefore decline to purchase the 
entity. We believed that our exceptions struck a solid balance between 
the need for more scrutiny of new owners via the survey process while 
not inadvertently obstructing legitimate transactions involving 
legitimate parties. Thus, we deemed it appropriate to also apply these 
exceptions to hospices.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposal to expand Sec.  
424.550(b)(1) to include hospices.
    Response: We appreciate the commenters' support.
    Comment: While expressing support for our proposal, a commenter 
suggested that CMS strengthen it by requiring the hospice to maintain 
an active census during the 36-month period in question. The commenter 
believed this would help facilitate ongoing monitoring of the care the 
hospice furnishes.
    Response: We appreciate this comment, will consider the suggestion 
in the future, and always welcome recommendations from concerned 
stakeholders regarding means of strengthening Medicare program 
integrity and improve patient care.
    Comment: A commenter referenced existing Sec.  424.550(b)(2)(i), 
which contains an exception to the 36-month rule if the provider 
submitted 2 consecutive years of full cost reports since initial 
enrollment or the last CIMO, whichever is later. (For purposes of this 
exception, low utilization or no utilization cost reports do not 
qualify as

[[Page 77847]]

full cost reports.) The commenter asked whether: (1) a full cost report 
can cover a period of less than 12 months if the cost report is not low 
utilization or no utilization; and (2) if the provider receives less 
than $200,000 and files a full cost report instead of a low utilization 
cost report, that cost report is considered a full cost report under 
Sec.  424.550(b)(2)(i).
    Response: We appreciate this comment but believe it is outside the 
scope of this rule.
    After reviewing the comments received, we are finalizing our 
hospice 36-month rule proposal without modification.
5. Deactivation for 12-Months of Non-Billing
a. Background
    Regulatory policies regarding the provider enrollment concept of 
deactivation are addressed in Sec.  424.540. Deactivation means that 
the provider's or supplier's billing privileges are stopped but can be 
restored (or ``reactivated'') upon the submission of information 
required under Sec.  424.540. A deactivated provider or supplier is not 
revoked from Medicare and remains enrolled. Per Sec.  424.540(c), 
deactivation does not impact the provider's or supplier's existing 
provider or supplier agreement; the deactivated provider or supplier 
may also file a rebuttal to the action in accordance with Sec.  
424.546. Nonetheless, the provider's or supplier's ability to bill 
Medicare is halted pending its compliance with Sec.  424.540's 
requirements for reactivation.
    One of the grounds for deactivating a provider or supplier 
(outlined in Sec.  424.540(a)(1)) is that the provider or supplier has 
not submitted any Medicare claims for 12 consecutive months. This 
provision is designed to help prevent, for instance: (1) questionable 
businesses from deliberately obtaining multiple numbers so they could 
keep one `in reserve' [for future use] if their active billing number 
is revoked or subject to a payment suspension; and (2) fraudulent 
entities from obtaining information about discontinued providers or 
suppliers and then, for example, using the Medicare billing number of a 
deceased physician.\220\
---------------------------------------------------------------------------

    \220\ Ibid. (68 FR 22072).
---------------------------------------------------------------------------

    In the July 10, 2023 proposed rule, we proposed to reduce the 12-
month timeframe currently in Sec.  424.540(a)(1) to 6 months. We noted 
that we have recently detected fraud schemes involving extended periods 
of non-billing. A common situation involves a provider that: (1) 
establishes multiple enrollments with multiple billing numbers; (2) 
abusively or inappropriately bills under one billing number; (3) 
receives an overpayment demand letter or becomes the subject of 
investigation; (4) voluntarily terminates the billing number in 
question; and then (5) begins to bill via another of its billing 
numbers that is dormant (for example, 6 consecutive months without 
billing) but nevertheless active, repeating the same improper conduct 
as before. The problem in this case is that we cannot deactivate the 
dormant billing number (hence rendering it unusable and inaccessible 
pending a reactivation) under Sec.  424.540(a)(1) because the 
applicable 12-month period has not yet expired. We do not believe we 
can or should wait for a year to elapse before taking deactivation 
action against these providers and suppliers. To protect the Trust 
Funds against improper payments, we must be able to move more promptly 
to deactivate these ``spare'' billing numbers so the latter cannot be 
inappropriately used or accessed.
    However, our concerns in the proposed rule were not limited to 
these fraud schemes. A lack of billing for an extended period can 
indicate that the provider or supplier has ceased operations without 
notifying CMS. Deactivating the number enables us to not only prevent 
it from being accessed by other parties but also confirm via the 
deactivation process whether the provider or supplier is in fact 
operational--specifically, whether the provider or supplier responds 
with a Form CMS-855 application to reactivate their enrollment. In 
other words, action under Sec.  424.540(a)(1) helps protect the 
Medicare program by deactivating the number while verifying whether the 
provider or supplier remains in existence; if it does, and it 
subsequently submits a reactivation application, CMS can validate the 
data thereon to ensure the provider's or supplier's continued 
credentials and compliance with Medicare requirements. This protective 
process, we believe, should be available to us upon the expiration of a 
6-month non-billing timeframe, for our earlier-referenced concerns 
exist whenever any extensive period of non-billing occurs. The sooner 
we can address these non-billing cases, the better we can protect the 
Trust Funds. For these reasons, we proposed to revise Sec.  
424.540(a)(1) to change the 12-month timeframe to 6 months.
    We recognized in the proposed rule that certain lengthy periods of 
non-billing do not involve any improper provider activity. To 
illustrate, some providers must be enrolled in Medicare to enroll in 
another health care program; as the provider does not intend to bill 
Medicare but only the other program, an extended period of Medicare 
non-billing can result. While CMS retains the discretion, as it always 
has, to deactivate a provider or supplier if the contingency in Sec.  
424.540(a)(1) is triggered, providers and suppliers that are not 
typically deactivated for 12 months of non-billing should not assume 
they are more likely to be deactivated under our proposed change to 6 
months.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposed reduction in 
Sec.  424.540(a)(1) of the non-billing period from 12 months to 6 
months. A commenter stated that the impact of the reduction on good-
faith providers will be limited because they are very unlikely to go 6 
months without billing Medicare.
    Response: We appreciate the commenters' support.
    Comment: A commenter did not believe Sec.  424.540(a)(1)'s concept 
of deactivating providers for non-billing enhances program integrity; 
rather, it merely penalizes legitimate providers. Using HHAs as an 
example, the commenter explained that many state Medicaid programs 
require HHAs to be enrolled in Medicare in order to enroll in and bill 
Medicaid, even though the HHA does not intend to bill Medicare. This 
means the Medicare enrollment is often deactivated for 12 consecutive 
months of non-billing, which requires the HHA to reactivate its 
Medicare enrollment. The commenter believes: (1) this change unfairly 
burdens good-faith HHAs without reducing fraud; and (2) HHAs will be 
further burdened by our proposed reduction from 12 to 6 months. (These 
two concerns were shared by another commenter.) The commenter 
recommended that CMS, in lieu of deactivation, take other steps to 
confirm that the non-billing HHA is operational, such as confirming the 
HHA's licensure and ensuring that the HHA is actively billing Medicaid. 
In a similar vein, another commenter encouraged CMS to establish 
provisions that allow a provider or supplier to explain why it has not 
submitted claims to Medicare for an extended period before CMS 
deactivates the provider or supplier for non-billing.
    Response: We appreciate these concerns and address them as follows:
    First, we respectfully disagree that Sec.  424.540(a)(1) does not 
strengthen program integrity. As we explained in

[[Page 77848]]

the proposed rule, deactivating dormant billing numbers helps prevent 
unscrupulous parties from: (1) improperly accessing and utilizing 
another provider's billing number to bill Medicare; and (2) utilizing a 
``spare'' (though previously unused) billing number to effectively 
circumvent a CMS-imposed adverse action applied to the provider's 
principal billing number. This latter consideration is especially 
critical given, as previously mentioned, the increase in fraud schemes 
involving providers acquiring multiple billing numbers for such 
nefarious purposes.
    Second, we acknowledged in the proposed and this final rule that 
some providers must enroll in Medicare (without intending to bill 
Medicare) as a prerequisite for enrolling in another federal program, 
such as Medicaid. Yet any deactivation of a provider's billing number 
is in no manner intended to burden the provider. It is to instead 
protect the provider and Medicare from the parties described previously 
that may seek to access the provider's unused billing number and 
inappropriately bill on the provider's behalf.
    Third, we thank the commenters for their recommendations concerning 
alternative forms of verifying the active status of a non-billing 
Medicare provider, including affording the provider an opportunity to 
explain why it has not billed Medicare before deactivation occurs. 
However, the purposes of Sec.  424.540(a)(1) go well beyond the need to 
confirm that the provider is operational and compliant with Medicare 
requirements. We have to ensure that inactive billing numbers cannot be 
utilized by parties intent on committing fraud and, principally for 
this reason, we cannot delay action pending the completion of, as the 
final commenter appears to recommend, a type of pre-deactivation 
appeals process. We must move as swiftly as possible to protect the 
Trust Funds from such parties.
    After reviewing the comments received, we are finalizing our 
proposed change to Sec.  424.540(a)(1) without modification.
6. Definition of ``Managing Employee''
a. Background
    Consistent with sections 1124 and 1124A of the Act, providers and 
suppliers are required to report their managing employees via the 
applicable Medicare enrollment application to enroll in Medicare. We 
currently define a ``managing employee'' in Sec.  424.502 as a 
``general manager, business manager, administrator, director, or other 
individual that exercises operational or managerial control over, or 
who directly or indirectly conducts, the day-to-day operation of the 
provider or supplier (either under contract or through some other 
arrangement), whether or not the individual is a W-2 employee of the 
provider or supplier.'' In a proposed rule published in the February 
15, 2023 Federal Register titled ``Medicare and Medicaid Programs; 
Disclosures of Ownership and Additional Disclosable Parties Information 
for Skilled Nursing Facilities and Nursing Facilities'' (88 FR 9820), 
we proposed to revise this definition under our proposed implementation 
via that rule of section 1124(c) of the Act. We specifically proposed 
that, for purposes of 42 CFR 424.516(g) and with respect to a SNF, a 
managing employee also includes a general manager, business manager, 
administrator, director, or consultant, who directly or indirectly 
manages, advises, or supervises any element of the practices, finances, 
or operations of the facility. As proposed, this SNF-exclusive 
definition would be in a new paragraph (2) of the managing employee 
definition in Sec.  424.502; the existing version of the definition 
would be included within new paragraph (1).
    We proposed to further revise this definition in the July 10, 2023 
proposed rule. We noted that we have received questions from the 
hospice and SNF communities regarding whether hospice and SNF facility 
administrators and medical directors must be disclosed as managing 
employees on the enrollment application. It has been our experience in 
overseeing the Medicare provider enrollment process that such 
individuals indeed exercise managing control over the hospice or SNF. 
We have long required that they be reported as managing employees.
    Accordingly, we proposed adding the following language immediately 
after (and in the same paragraph as) the current managing employee 
definition: ``For purposes of this definition, this includes, but is 
not limited to, a hospice or skilled nursing facility administrator and 
a hospice or skilled nursing facility medical director.'' We proposed 
that this change would be reflected in the first paragraph of the 
revised definition of this term as proposed in the February 15, 2023, 
proposed rule. That is, the revision described in this section 
VIII.B.6. of this rule would be added to the end of new paragraph (1) 
as the latter was proposed in the February 15, 2023 proposed rule.
    We stressed that this clarification regarding hospice and SNF 
facility administrators and medical directors should not be construed 
as CMS' establishment of a minimum threshold for reporting managing 
employees of hospices, SNFs, or any other provider or supplier type. 
Put otherwise, simply because an individual has less managing control 
within a particular organization than a facility administrator or 
medical director does not mean that the person need not be disclosed. 
Any individual who meets the definition of managing employee in Sec.  
424.502 must be reported irrespective of the precise amount of managing 
control the person has. The exclusive purpose of our proposed 
elucidation was to address specific questions raised by hospices and 
SNFs concerning whether the individuals at issue must be reported. It 
was not meant to change existing reporting requirements regarding 
managing employees and who must be disclosed as such.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposed revision of the 
``managing employee'' definition.
    Response: We appreciate the commenters' support.
    After reviewing the comments received, we are finalizing our change 
to this definition as proposed with one exception. Because the 
previously mentioned February 15, 2023, proposed rule has not been 
finalized, the revision to this definition we proposed in the July 10, 
2023, proposed rule will be applied to the current definition of 
managing employee in Sec.  424.502. Should our proposed revision to the 
managing employee definition in the February 15, 2023, be finalized, 
said revision will be applied to the managing employee definition we 
are finalizing in the present rule.
7. Previously Waived Fingerprinting of High-Risk Providers and 
Suppliers
a. Background
    During the recent COVID-19 public health emergency (PHE), CMS 
temporarily waived the requirement for fingerprint-based criminal 
background checks (FBCBCs) for 5 percent or greater owners of newly 
enrolling providers and suppliers falling within the high-risk 
screening category in Sec.  424.518(c). The principal purpose was to 
facilitate beneficiary access to services by potentially increasing the 
number of health care providers and suppliers. Given the scope of the 
emergency, we believed this had to take priority. Nevertheless, we 
remained concerned during the waiver period about the lack of FBCBCs 
being performed, since we believe FBCBCs are the surest means of

[[Page 77849]]

detecting felonious behavior by the owners of high-risk providers and 
suppliers. With this in mind, we noted our desire in the July 10, 2023, 
proposed rule to perform FBCBCs for high-risk providers and suppliers 
that initially enrolled during the PHE upon their revalidation once the 
PHE ends. Yet we explained that this was not possible under our 
existing regulations because the revalidation applications will only be 
screened at the moderate-risk level. To remedy this, we proposed to add 
new Sec.  424.518(c)(1)(viii) that would incorporate within the high-
screening category revalidating DMEPOS suppliers, HHAs, OTPs, MDPPs, 
and SNFs for which CMS waived the FBCBC requirement when they initially 
enrolled in Medicare. However, considering the potential for future 
emergencies for which CMS might waive FBCBCs under applicable legal 
authority (such as that for the PHE), we more specifically proposed in 
new Sec.  424.518(c)(1)(viii) that this high-risk category (which would 
include hospices with respect to future waivers) would apply to 
situations where CMS waived FBCBCs, in accordance with applicable legal 
authority, due to a national, state, or local emergency declared under 
existing law. We emphasized that our proposal would not obligate CMS to 
waive the FBCBC requirement in any such emergency.
    Along with adding new Sec.  424.518(c)(1)(viii), we proposed to 
delete current Sec.  424.518(b)(1)(iv), (ix), (x), (xi), (xiii), and 
(xiv), which individually identify the six previously discussed 
provider and supplier types (including hospices) as moderate-risk if 
they are revalidating their enrollment. We would redesignate existing 
paragraphs (b)(1)(v) through (b)(1)(viii) as revised paragraphs 
(b)(1)(iv) through (b)(1)(vii). We would also redesignate existing 
paragraph (b)(1)(xii) as revised (b)(1)(viii), with the former 
paragraph being deleted.
    Revised paragraph (b)(1)(viii) would include both prospective and 
revalidating OTPs that have been fully and continuously certified by 
SAMHSA since October 23, 2018. Furthermore, we would establish a 
revised paragraph (b)(1)(ix) that would include within the moderate-
risk category revalidating DMEPOS suppliers, HHAs, OTPs, MDPPs, SNFs, 
and hospices that underwent FBCBCs: (1) when they initially enrolled in 
Medicare; or (2) upon revalidation after CMS waived the FBCBC 
requirement (under the circumstances described in paragraph 
(c)(1)(viii)) when the provider or supplier initially enrolled in 
Medicare.
    We noted in the proposed rule that CMS under Sec.  424.515(d) can 
perform off-cycle revalidations; that is, we can revalidate a provider 
or supplier at any time and need not wait until the arrival of their 
applicable periodic revalidation cycle. We emphasized that if our 
proposals regarding fingerprinting waivers were finalized, CMS would 
reserve the right to conduct off-cycle revalidations of the waived 
high-risk providers and suppliers.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposed revisions 
regarding the fingerprinting of previously waived providers and 
suppliers in the ``high'' screening category.
    Response: We appreciate the commenters' support.
    After reviewing the comments received, we are finalizing our 
proposed changes without modification.
8. Expansion of Reapplication Bar
    Section 424.530(f) permits CMS to prohibit a prospective provider 
or supplier from enrolling in Medicare for up to 3 years if its 
enrollment application is denied because the provider or supplier 
submitted false or misleading information on or with (or omitted 
information from) its application in order to enroll. The purpose of 
Sec.  424.530(f) is to prevent dishonest providers and suppliers from 
submitting false information on their initial application and, after 
being denied enrollment on this ground under Sec.  424.530(a)(4), 
simply submitting a new application with correct data.
    The existing maximum length of a reapplication bar under Sec.  
424.530(f) is 3 years. In the proposed rule, we proposed to expand this 
to 10 years to account for provider or supplier conduct of particular 
severity. We explained that we must be able to prevent such problematic 
parties from repeatedly submitting applications over many years with 
the goal of somehow getting into the program.
    Comment: Several commenters supported our proposed reapplication 
bar expansion.
    Response: We appreciate the commenters' support.
    Comment: Although supportive of our proposed change, a commenter 
expressed concern that a 10-year reapplication bar would be imposed 
against honest providers and suppliers that inadvertently submitted 
incorrect information.
    Response: We note two things. First, a 10-year reapplication bar 
would only be used when an analysis using the factors described in 
Sec.  424.530(f)(2) indicates that it is warranted. Second, we do not 
apply Sec.  424.530(f) and an associated reapplication bar as a matter 
of course. Only after a very careful review of the facts and 
circumstances of the case in question would CMS take this step.
    After reviewing the comments received, we are finalizing our 
reapplication bar proposal without modification.
9. Ordering, Referring, Certifying, and Prescribing Restrictions
a. Background
    We discussed previously: (1) the need to increase the maximum 
reapplication bar to keep dishonest providers and suppliers out of 
Medicare for longer than 3 years; and (2) our concerns about felonious 
provider and supplier activity. We believe such provider and supplier 
behavior should result in restrictions regarding the ordering, 
referring, certifying, or prescribing of Medicare services, items, and 
drugs, too. Indeed, such ordering, referring, certifying, or 
prescribing can involve improper conduct that is as harmful to Medicare 
beneficiaries as the actual furnishing of services; this includes, for 
example, the over-prescribing of opioids and the unnecessary ordering 
of potentially dangerous tests. Consequently, and using our general 
rulemaking authority under sections 1102 and 1871 of the Act, in the 
proposed rule we proposed the following two provisions.
    First, we proposed to add a new paragraph (3) to Sec.  424.530(f) 
stating that a provider or supplier that is currently subject to a 
reapplication bar under paragraph (f) may not order, refer, certify, or 
prescribe Medicare-covered services, items, or drugs. To enforce this 
policy, we further proposed in new Sec.  424.530(f)(3) that Medicare 
does not pay for any otherwise covered service, item, or drug that is 
ordered, referred, certified, or prescribed by a provider or supplier 
that is currently under a reapplication bar.
    Second, we proposed in paragraph (a) of new Sec.  424.542 that a 
physician or other eligible professional (regardless of whether he or 
she is or was enrolled in Medicare) who has had a felony conviction 
within the previous 10 years that CMS determines is detrimental to the 
best interests of the Medicare program and its beneficiaries may not 
order, refer, certify, or prescribe Medicare-covered services, items, 
or drugs. Akin to Sec.  424.530(f)(3), we proposed in new Sec.  
424.542(b) that Medicare does not pay for any otherwise

[[Page 77850]]

covered service, item, or drug that is ordered, referred, certified, or 
prescribed by a physician or other eligible professional (as that term 
is defined in section 1848(k)(3)(B) of the Act) who has had a felony 
conviction within the previous 10 years that CMS determines is 
detrimental to the best interests of the Medicare program and its 
beneficiaries.
    We stated in the proposed rule that these provisions would apply 
regardless of whether the provider or supplier has opted-out of 
Medicare. This is because the conduct associated with a reapplication 
bar and a felony conviction presents risks irrespective of the 
provider's or supplier's opt-out status.
b. Comments Received and Final Provisions
    Comment: Several commenters supported our proposals regarding 
prohibitions against ordering, referring, certifying, and prescribing.
    Response: We appreciate the commenters' support.
    Comment: A commenter stated that in potentially applying proposed 
Sec.  424.542, CMS should: (1) use a consistent, defined list of felony 
convictions that CMS has deemed detrimental to Medicare; or (2) defer 
to the states' professional licensure boards for convictions that would 
bar an individual from practicing medicine. The commenter believed this 
would reduce subjectivity in CMS' determinations.
    Response: We list certain federal and state felony convictions in 
42 CFR 424.530(a)(3) and 424.535(a)(3) for which CMS may, respectively, 
deny or revoke a provider's or supplier's enrollment under those two 
provisions. Yet this list is not exhaustive because of the hundreds of 
additional and more specific types of felonies under federal and state 
law of which individuals can be convicted. Hence, we must retain our 
flexibility to consider each felony case on its own facts and 
circumstances rather than restrict ourselves to a small list of felony 
offenses. Insofar as the commenter's second suggestion, CMS is 
ultimately responsible for overseeing the Medicare program and 
protecting its beneficiaries and the Trust Funds.
    After reviewing the comments received, we are finalizing new Sec.  
424.542 without modification.
10. Miscellaneous Comments
    We also received the following miscellaneous comments.
    Comment: A commenter expressed support for CMS' proposed revision 
to the Form CMS-855A (Medicare Enrollment Application--Institutional 
Providers; OMB Control No.: 0938-0685) to require providers and 
suppliers completing that application to disclose whether any of their 
owning or managing organizations are private equity companies or real 
estate investment trusts.\221\
---------------------------------------------------------------------------

    \221\ 87 FR 76626
---------------------------------------------------------------------------

    Response: While we appreciate the commenter's support, we believe 
this comment is outside the scope of this final rule.
    Comment: A commenter referenced our February 15, 2023, proposed 
rule that would require Medicare and Medicaid nursing homes to report 
the data outlined in section 1124(c) of the Act regarding their owners, 
operators, and associated parties. The commenter recommended that CMS 
apply the policies in the February 15, 2023, proposed rule to hospices. 
This could include, for example, requiring hospices to disclose similar 
data, auditing this data for accuracy (to which the hospice should 
attest), and analyzing hospice ownership trends to ascertain 
correlations to the quality of hospice patient care. Other hospice 
program integrity suggestions the commenter raised included: (1) 
imposing a temporary moratorium on the enrollment of new hospices in 
areas where there is an overabundance of hospices compared to 
established needs; (2) greater frequency of state surveys of high-risk 
hospices; (3) tighter restrictions on non-operational hospices; and (4) 
a greater CMS focus on the quality of hospice services and program 
integrity and less on innocuous technical errors, which the commenter 
stated risks alienating high-performing hospices.
    Response: We appreciate these recommendations and share the 
commenter's concerns regarding hospice program integrity and quality of 
care. We will continue to closely monitor the hospice sector, as well 
as the progress of our new hospice provisions once implemented, and 
may, as needed, consider additional measures as the commenter suggests.
    Comment: A commenter believed that our proposals merely add 
administrative burden without truly addressing program integrity. The 
commenter recommended a more targeted approach and for CMS to 
reconsider its proposals.
    Response: We respectfully disagree with the commenter. In both the 
proposed rule and this final rule, we outlined the reasons for each of 
our proposals and how they will strengthen program integrity. To 
illustrate, in our discussion of the 36-month rule, we explained that 
requiring hospices under new majority ownership to undergo a state 
survey and enroll as new applicant will help ensure that the hospice is 
compliant with the CoPs and all enrollment requirements. Moreover, we 
believe that our provisions are targeted to address specific problems 
in a manner that will not unduly burden the provider community at 
large. Consider the following examples:
     Our ``high'' screening level proposals were restricted to: 
(1) initially enrolling hospices and those submitting applications to 
report any new owner; and (2) those high-risk providers and suppliers 
that were previously waived from fingerprinting. We did not, for 
instance, propose to move all provider and supplier types currently in 
the ``moderate'' screening category--such as community mental health 
centers, ambulance suppliers, and independent diagnostic testing 
facilities--into the ``high'' screening category.
     We limited our expansion of the 36-month rule to hospices. 
No other provider or supplier type is affected by this change.
     We believe that the regulations at Sec.  424.542 that 
pertain to ordering, referring, certifying, and prescribing 
restrictions would only apply to the very limited number of persons and 
entities: (1) subject to a reapplication bar; or (2) that have 
committed a felony that CMS deems detrimental to the best interests of 
Medicare and its beneficiaries.
    In short, we are confident that our provisions strike a proper 
equilibrium between the need to address certain payment safeguard 
issues with the need to avoid, to the maximum extent possible, overly 
burdening the many legitimate Medicare providers and suppliers. This 
has always been, and always will be, a fundamental aim of our provider 
enrollment rulemaking efforts.

IX. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995, we are required to 
provide a 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:

[[Page 77851]]

     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.

B. Information Collection Requirements (ICRs)

    In the CY 2024 HH PPS rule, we solicited public comment on each of 
these issues for the following sections of this document that contain 
information collection requirements (ICRs).
1. ICRs for HH QRP
    As discussed in section III. of this final rule, we are finalizing 
our proposal that HHAs will collect data for one new quality measure, 
the Discharge Function Score (DC Function) measure, beginning with 
assessments completed on April 1, 2024 used for public reporting. 
However, the DC Function measure utilizes data items that HHAs already 
report to CMS for quality reporting purposes, and therefore, the burden 
is accounted for in the PRA package approved under OMB control number 
0938-1279 (expiration November 30, 2025).
    As discussed in section III.C.2. of this final rule, we proposed to 
remove a measure from the HH QRP, the Application of Percent of Long-
Term Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan That Addresses Function (Application of 
Functional Assessment/Care Plan) measure, beginning with admission 
assessments completed on January 1, 2025. We also proposed to remove 
OASIS items for Self-Care Discharge Goals (that is, GG0130, Column 2) 
and Mobility Discharge Goals (that is, GG0170, Column 2) at the start 
of care and resumption of care timepoints with the next release of the 
OASIS in 2025. This amounts to a net reduction in 2 data elements. We 
assumed that each data element requires 0.3 minutes of clinician time 
to complete. Therefore, we estimated that there will be a reduction in 
clinician burden per OASIS assessment of 0.3 minutes at start of care 
and 0.3 minutes at resumption of care.
    As stated in section III.C.3. of this final rule, we will adopt the 
COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date 
(Patient/Resident COVID-19 Vaccine) measure beginning with the CY 2025 
HH QRP. This proposed assessment-based quality measure will be 
collected using the OASIS. The OASIS-E is currently approved under OMB 
control number 0938-1279 (CMS-10387). One data element will need to be 
added to the OASIS at the transfer of care, death at home, and 
discharge time points in order to allow for the collection of the 
Patient/Resident COVID-19 Vaccine measure. We assume this will result 
in an increase 0.3 minutes of clinician staff time at the transfer of 
care, death at home, and discharge time points starting with the CY 
2025 HH QRP.
    As stated in section III.E.3. of this final rule, will remove the 
M0110--Episode Timing and M2200--Therapy Need OASIS items, effective 
January 1, 2025. These items are no longer used by the HH QRP, nor are 
they intended for use by CMS payment, survey or the expanded HHVBP 
model. The removal of these two items will result in the removal of two 
data elements at start of care, two at resumption of care, and one data 
element at follow-up for a total reduction of five data elements.
    The net effect of the proposals outlined in this final rule is a 
reduction in four data elements collected across all time points for 
the OASIS implemented on January 1, 2025. Table G1 outlines the net 
change in data elements.
[GRAPHIC] [TIFF OMITTED] TR13NO23.072

    The OASIS is completed by RNs or PTs, or very occasionally by 
occupational therapists (OT) or speech language pathologists (SLP/ST). 
Data from 2021 show that the SOC/ROC OASIS is completed by RNs 
(approximately 77.14 percent of the time), PTs (approximately 22.16 
percent of the time), and other therapists, including OTs and SLP/STs 
(approximately 0.7 percent of the time). Based on this analysis, we 
estimated a weighted clinician average hourly wage of $87.52, inclusive 
of fringe benefits, using the hourly wage data in Table G2. Individual 
providers determine the staffing resources necessary.
    For purposes of calculating the costs associated with the 
information collection requirements, we obtained mean hourly wages for 
these from the U.S. Bureau of Labor Statistics' May 2022 National 
Occupational Employment and Wage Estimates (https://www.bls.gov/oes/current/oes_nat.htm). To account for other indirect costs such as 
overhead and fringe benefits (100 percent), we have doubled the hourly 
wage. These amounts are detailed in Table G2.
BILLING CODE 4120-01-P

[[Page 77852]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.073

    For purposes of estimating burden, we utilize item-level burden 
estimates for OASIS-E that will be released on January 1, 2025 compared 
to the OASIS-E as currently implemented as of January 1, 2023. Table G3 
shows the total number of OASIS assessments that HHAs actually 
completed in CY 2021, as well as how those numbers will have decreased 
if non-Medicare and non-Medicaid OASIS assessments had been required at 
that time.
[GRAPHIC] [TIFF OMITTED] TR13NO23.074

    Table G4 summarizes the estimated clinician hourly burden for the 
current OASIS and the OASIS in 2025 with the net removal of four data 
elements for each OASIS assessment type using CY 2021 assessment 
totals. We estimated a net reduction of 58,540.1 hours of clinician 
burden across all HHAs or 5 hours for each of the 11,700 active HHAs.
[GRAPHIC] [TIFF OMITTED] TR13NO23.075

BILLING CODE 4120-01-C
    Table G5 summarizes the estimated clinician costs for the current 
OASIS and the OASIS in 2025 with the net removal of four data elements 
for each OASIS assessment type using CY 2021 assessment totals. We 
estimated a reduction in costs of $5,123,430 related to the 
implementation of the proposals outlined in this final rule across all 
HHAs or a $438 reduction for each of the 11,700 active HHAs. This 
reduction in burden will begin with January 1, 2025 HHA discharges.

[[Page 77853]]

[GRAPHIC] [TIFF OMITTED] TR13NO23.076

    We received no comments on the burden calculations related to the 
HH QRP proposals and therefore are finalizing this provision without 
modification.
2. ICRs for HHVBP
    The provisions for the expanded HHVBP Model included in this final 
rule do not result in an increase in costs to HHAs. Section 1115A(d)(3) 
of the Act exempts Innovation Center model tests and expansions, which 
include the expanded HHVBP Model, from the provisions of the PRA. 
Specifically, this section provides that the provisions of the PRA do 
not apply to the testing and evaluation of Innovation Center models or 
to the expansion of such models.
    We received no comments on these statements and therefore are 
finalizing without modification.
3. ICRs for Hospice Information Dispute Resolution (IDR) and Hospice 
Special Focus Program (SFP)
    In accordance with 5 CFR 1320.4(a)(2) and (c), the following 
information collection activities are exempt from the requirements of 
the Paperwork Reduction Act since they are associated with 
administrative actions: (1) proposed Sec.  488.1130 Hospice IDR; and 
(2) proposed Sec.  488.1135 Hospice SFP.
    We did not receive any comments on these statements regarding the 
information collection requirements and therefore are finalizing 
without modification.
4. ICRs for DMEPOS Refills
    In section VII.E. of this final rule, we are finalizing our 
proposal to codify our refill policy, with some changes. The policy 
originally arose in response to concerns related to auto-shipments and 
delivery of DMEPOS products that may no longer be needed or not needed 
at the same level of frequency/volume. The policy has been historically 
maintained in the Medicare Program Integrity Manual, sporadically 
mentioned in certain Local Coverage Determinations (LCDs) and detailed 
in articles. We proposed to require documentation indicating that the 
beneficiary confirmed the need for the refill within the 30-day period 
prior to the end of the current supply. We proposed to codify our 
requirement that delivery of DMEPOS items (that is, date of service) 
must be no sooner than 10 calendar days before the expected end of the 
current supply.
    We did not receive any comments on the information collection 
requirements.
5. ICRs for Provider Enrollment Provisions
    Except as explained in this section IX. of this final rule, none of 
our proposed provider enrollment provisions implicate an ICR burden.
a. High-Risk Screening and Fingerprinting
    We proposed to revise Sec.  424.518 to: (1) move initially 
enrolling hospices (and those undergoing an ownership change as 
described in Sec.  424.518) into the high-risk screening category; and 
(2) include within the high-risk screening category revalidating DMEPOS 
suppliers, HHAs, OTPs, MDPPs, and SNFs for whom CMS legally waived the 
fingerprint-based criminal background check requirement in Sec.  
424.518 when they initially enrolled in Medicare. These changes will 
result in an increase in the annual number of providers and suppliers 
that must submit the fingerprints for a national criminal background 
check (via FBI Applicant Fingerprint Card FD-258) of all individuals 
with a 5 percent or greater direct or indirect ownership interest in 
the provider or supplier. The burden is currently approved by OMB under 
control number 1110-0046. We are not scoring the burden under this ICR 
section since the fingerprint card is not owned by CMS. However, an 
analysis of the impact of this requirement can be found in the RIA 
section of this final rule.
b. Hospice 36-Month Rule
    We proposed to expand Sec.  424.550(b) to apply the 36-month rule 
provisions therein to hospices. This will require a hospice undergoing 
a change in majority ownership (as defined in Sec.  424.502 and 
assuming no exceptions apply) to: (1) enroll in Medicare as a new 
hospice; and (2) undergo a state survey or accreditation. The principal 
ICR burden of this requirement will involve the completion of an 
initial Form CMS-855A (OMB control number: 0938-0685) application 
rather than a Form CMS-855A change of ownership (CHOW) application or a 
Form CMS-855A change of information application. Consistent with the 
general time estimates for these three categories of applications, it 
typically takes a provider approximately 4 hours to complete an initial 
Form CMS-855A, 4 hours for a CHOW application, and 1 hour for a change 
of information application. The key ICR burden difference, therefore, 
will be between submitting an initial application and submitting a 
change of information (since there is no burden difference between an 
initial application and a CHOW application).
    Based on internal CMS data, we estimate that each year 
approximately 50 hospices will be required to initially enroll in 
Medicare due to a change in majority ownership as opposed to simply 
reporting the sale via a change of information. This will result in an 
additional Form CMS-855A hour burden of 150 hours (50 x 3 hours), with 
the 3-hour figure reflecting the difference between initial 
applications and changes of information. In terms of cost, it has been 
our experience that Form CMS-855A applications are completed by the 
provider's office staff. Consequently, we will use the following wage 
category and hourly rate from the U.S. Bureau of Labor Statistics' 
(BLS) May 2022 National Occupational Employment and Wage Estimates for 
all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm):

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[GRAPHIC] [TIFF OMITTED] TR13NO23.077

    This results in an additional Form CMS-855A annual cost burden of 
$6,225 (150 hours x $41.50).
    We anticipate the following additional costs associated with our 
36-month rule expansion:
     Fingerprinting: As we proposed that hospices will be 
subject to high-risk level screening under Sec.  424.518, hospices that 
must initially enroll under Sec.  424.550(b) will have to submit a set 
of fingerprints for a national criminal background check (via FBI 
Applicant Fingerprint Card FD-258) from each individual with a 5 
percent or greater direct or indirect ownership interest in the 
hospice. An analysis of the impact of this requirement can be found in 
section X.C.8.of this final rule.
     Application Fee: Under Sec.  424.514, an institutional 
provider (as that term is defined in Sec.  424.502) that is initially 
enrolling in Medicare must pay the required application fee. Hospices 
that are initially enrolling in accordance with the 36-month rule will 
accordingly have to pay this fee. The application fee does not meet the 
definition of a ``collection of information'' and, as such, is not 
subject to the requirements of the PRA. However, the cost is scored 
under section X.C.8. of this final rule.
     Provider Agreement: A hospice that is initially enrolling 
in Medicare (which will include those doing so in accordance with Sec.  
424.550(b)) must also sign a provider agreement per 42 CFR part 489 
(Health Insurance Benefits Agreement--CMS Form 1561 (OMB control number 
0938-0832)). The applicable May 2022 BLS categories and hourly wage 
rates for completing this form are as follows:
[GRAPHIC] [TIFF OMITTED] TR13NO23.078

    We anticipated that 100 hospices per year will have to sign this 
provider agreement due to our revision to Sec.  424.550(b): the 50 
previously referenced hospices that will otherwise have reported the 
ownership change via a Form CMS-855A change of information and another 
50 that will have done so via a Form CMS-855A CHOW application. We 
anticipate that it will take the hospice 5 minutes at $236.96/hr for a 
chief executive to review and sign the Form CMS-1561 and an additional 
5 minutes at $39.68/hr for a medical secretary to file the document 
when fully executed. This results in an annual hour burden of 17 hours 
(100 x 0.166 hours) and a cost of $2,305 (or (($236.96 x 0.0833) + 
($39.68 x 0.0833)) x 100).
    Combining these initial enrollment application and provider 
agreement ICR costs associated with a hospice's change in majority 
ownership results in an annual burden of 167 hours (150 + 17) and a 
cost of $8,530 ($6,225 + $2,305).
    We solicited comments from stakeholders, including hospices, 
regarding any other ICR costs that may be associated with our proposed 
expansion of the 36-month rule to incorporate hospices. This could 
include ICR costs incurred during the survey, accreditation, or 
certification processes.
c. Remaining Provider Enrollment Provisions
    With one exception, we do not believe our other provider enrollment 
provisions will result in an information collection burden. Concerning 
the proposal in revised Sec.  424.540(a)(1) to reduce the timeframe in 
which CMS can deactivate a provider or supplier for non-billing from 12 
months to 6 months, an increase in the number of deactivations on this 
basis could result. However, we are unable to establish an estimate of 
this number or any associated burden for two reasons. First, fraud 
schemes and patterns of non-compliance can change and fluctuate, 
meaning that CMS cannot predict the number of instances in which it 
will apply Sec.  424.540(a)(1) to address such situations. Second, a 
deactivation is a purely discretionary action by CMS; that is, CMS can, 
but is not required to, impose a deactivation if a basis for doing so 
exists. Accordingly, we are unable to quantify the increase, if any, of 
cases where we will invoke revised Sec.  424.540(a)(1).
    We did not receive comments on our proposed ICR estimates and are 
accordingly finalizing them without modification.

C. Submission of PRA-Related Comments

    We have submitted a copy of this final rule to OMB for its review 
of the rule's information collection requirements. The requirements are 
not effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections, as previously discussed, please visit the 
CMS website

[[Page 77855]]

at https://www.cms.hhs.gov/PaperworkReductionActof1995, or call the 
Reports Clearance Office at 410-786-1326.
    We invited public comments on these potential information 
collection requirements.
    We did not receive any comments on the information collection 
requirements.

X. Regulatory Impact Analysis

A. Statement of Need

1. HH PPS
    Section 1895(b)(1) of the Act requires the Secretary to establish a 
HH PPS for all costs of home health services paid under Medicare. In 
addition, section 1895(b) of the Act requires: (1) the computation of a 
standard prospective payment amount include all costs for home health 
services covered and paid for on a reasonable cost basis and that such 
amounts be initially based on the most recent audited cost report data 
available to the Secretary; (2) the prospective payment amount under 
the HH PPS to be an appropriate unit of service based on the number, 
type, and duration of visits provided within that unit; and (3) the 
standardized prospective payment amount be adjusted to account for the 
effects of case-mix and wage levels among HHAs. Section 1895(b)(3)(B) 
of the Act addresses the annual update to the standard prospective 
payment amounts by the home health applicable percentage increase. 
Section 1895(b)(4) of the Act governs the payment computation. Sections 
1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act requires the standard 
prospective payment amount be adjusted for case-mix and geographic 
differences in wage levels. Section 1895(b)(4)(B) of the Act requires 
the establishment of appropriate case-mix adjustment factors for 
significant variation in costs among different units of services. 
Lastly, section 1895(b)(4)(C) of the Act requires the establishment of 
wage adjustment factors that reflect the relative level of wages, and 
wage-related costs applicable to home health services furnished in a 
geographic area compared to the applicable national average level.
    Section 1895(b)(3)(B)(iv) of the Act provides the Secretary with 
the authority to implement adjustments to the standard prospective 
payment amount (or amounts) for subsequent years to eliminate the 
effect of changes in aggregate payments during a previous year or years 
that were the result of changes in the coding or classification of 
different units of services that do not reflect real changes in case-
mix. Section 1895(b)(5) of the Act provides the Secretary with the 
option to make changes to the payment amount otherwise paid in the case 
of outliers because of unusual variations in the type or amount of 
medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires 
HHAs to submit data for purposes of measuring health care quality and 
links the quality data submission to the annual applicable percentage 
increase.
    Sections 1895(b)(2) and 1895(b)(3)(A) of the Act, as amended by 
section 51001(a)(1) and 51001(a)(2) of the BBA of 2018 respectively, 
required the Secretary to implement a 30-day unit of service, for 30-
day periods beginning on and after January 1, 2020. Section 
1895(b)(3)(D)(i) of the Act, as added by section 51001(a)(2)(B) of the 
BBA of 2018, requires the Secretary to annually determine the impact of 
differences between assumed behavior changes, as described in section 
1895(b)(3)(A)(iv) of the Act, and actual behavior changes on estimated 
aggregate expenditures under the HH PPS with respect to years beginning 
with 2020 and ending with 2026. Section 1895(b)(3)(D)(ii) of the Act 
requires the Secretary, at a time and in a manner determined 
appropriate, through notice and comment rulemaking, to provide for one 
or more permanent increases or decreases to the standard prospective 
payment amount (or amounts) for applicable years, on a prospective 
basis, to offset for such increases or decreases in estimated aggregate 
expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. 
Additionally, 1895(b)(3)(D)(iii) of the Act requires the Secretary, at 
a time and in a manner determined appropriate, through notice and 
comment rulemaking, to provide for one or more temporary increases or 
decreases to the payment amount for a unit of home health services for 
applicable years, on a prospective basis, to offset for such increases 
or decreases in estimated aggregate expenditures, as determined under 
section 1895(b)(3)(D)(i) of the Act. The HH PPS wage index utilizes the 
wage adjustment factors used by the Secretary for purposes of sections 
1895(b)(4)(A)(ii) and (b)(4)(C) of the Act for hospital wage 
adjustments.
2. HH QRP
    Section 1895(b)(3)(B)(v) of the Act authorizes the HH QRP, which 
requires HHAs to submit data in accordance with the requirements 
specified by CMS. Failure to submit data required under section 
1895(b)(3)(B)(v) of the Act with respect to a program year would result 
in the reduction of the annual home health market basket percentage 
increase otherwise applicable to an HHA for the corresponding calendar 
year by 2 percentage points.
3. Expanded HHVBP Model
    In the CY 2022 HH PPS final rule (86 FR 62292 through 62336) and 
codified at 42 CFR part 484 subpart F, we finalized our policy to 
expand the HHVBP Model to all Medicare certified HHAs in the 50 States, 
territories, and District of Columbia beginning January 1, 2022. CY 
2022 was a pre-implementation year. CY 2023 is the first performance 
year in which HHAs individual performance on the applicable measures 
would affect their Medicare payments in CY 2025. In this final rule, we 
will remove five quality measures from the current applicable measure 
set and add three quality measures to the applicable measure set. Along 
with the final revisions to the current measure set, we will revise the 
weights of the individual measures within the OASIS-based measure 
category and within the claims-based measure category starting in the 
CY 2025 performance year. In addition, we will update the Model 
baseline year from CY 2022 to CY 2023 starting in the CY 2025 
performance year to enable CMS to measure competing HHAs performance on 
benchmarks and achievement thresholds that are more current for the 
final applicable measure set. Additionally, we will amend the appeals 
process such that reconsideration decisions may be reviewed by the 
Administrator. We are including an update to the RFI, Future Approaches 
to Health Equity in the Expanded HHVBP Model, that was published in the 
CY 2023 HH PPS rule. We also include an update that reminds interested 
parties that we will begin public reporting of HHVBP performance data 
on or after December 1, 2024.
4. Home IVIG Items and Services
    Division FF, section 4134 of the CAA, 2023 (CAA, 2023) (Pub. L. 
117-328) mandated that CMS establish a permanent, bundled payment for 
items and services related to administration of IVIG in a patient's 
home. The permanent, bundled home IVIG items and services payment is 
effective for home IVIG infusions furnished on or after January 1, 
2024. Payment for these items and services is required to be a separate 
bundled payment made to a supplier for all items and services furnished 
in the home during a calendar day. This payment amount may be based on 
the amount established under the Demonstration. The standard Part B 
coinsurance and the Part B deductible apply. The separate bundled 
payment does not apply for individuals receiving

[[Page 77856]]

services under the Medicare home health benefit. The CAA, 2023 
provision clarifies that a supplier who furnishes these services meet 
the requirements of a supplier of medical equipment and supplies.
5. Informal Dispute Resolution (IDR) and Hospice Special Focus Program 
(SFP)
    The hospice IDR will be an administrative process offered to 
hospice programs that is conducted by CMS, the SAs, or the accrediting 
organizations (AOs) as applicable, as part of their survey activities 
to provide an informal opportunity to address survey findings. The 
Hospice SFP will be implementing a part of the hospice provisions 
required under the CAA, 2021 codified in section 1822(b) of the Act, 
directing the Secretary to create an SFP for poor-performing hospice 
programs.
6. DMEPOS CAA, 2023-Related Requirements
a. Conforming Changes to Regulations To Codify Change Mandated by 
Section 4139 of the Consolidated Appropriations Act, 2023
    The purpose of the provision related to adjusted fees is to extend 
the 75/25 blend in non-rural, non-CBAs as described in 42 CFR 
414.210(g)(9)(v). The statutory language for this provision is found in 
section 4139 of the CAA, 2023.
b. Scope of the Benefit and Payment for Lymphedema Compression 
Treatment Items
    The purpose of the provision related to lymphedema compression 
treatment items is to define in regulation section 4133 of the CAA, 
2023 that adds section 1861(s)(2)(JJ) to the Act establishing a 
Medicare Part B benefit for lymphedema compression treatment items. 
This provision addresses the scope of the new benefit by defining what 
constitutes a standard or custom fitted gradient compression garment 
and determining what other compression items may exist that are used 
for the treatment of lymphedema and would fall under the new benefit. 
This rule also implements section 1834(z) of the Act in establishing 
payment amounts for items covered under the new benefit and frequency 
limitations for lymphedema compression treatment items.
c. Definition of Brace
    The purpose of the provision related to the definition of a brace 
is to codify in regulations the longstanding definition of brace that 
exists in Medicare program instructions.
7. Requirements for Refillable DMEPOS
    This rule finalizes the documentation requirements to indicate that 
the beneficiary has confirmed their need for the refill within the 30-
day period prior to the end of the current supply. It also codifies our 
requirement that the delivery of DMEPOS items (that is, date of 
service) must be no sooner than 10 calendar days before the expected 
end of the current supply.
8. Provider Enrollment Provisions
    Our provider enrollment provisions are needed to strengthen 
Medicare program integrity. These provisions focus on but are not 
limited to: (1) subjecting a greater number of providers and suppliers, 
such as hospices, to the highest level of screening, which includes 
fingerprinting all 5 percent or greater owners of these providers and 
suppliers; and (2) applying the change in majority ownership (CIMO) 
provisions in 42 CFR 424.550(b) to hospices. These changes will help 
ensure that payments are made only to qualified providers and suppliers 
and that owners of these entities are carefully screened. As explained 
in section VIII. of this final rule, we believe that fulfilling these 
objectives would assist in protecting the Trust Funds and Medicare 
beneficiaries.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), Executive Order 14094 on Modernizing Regulatory 
Review (April 6, 2023), the Regulatory Flexibility Act (RFA) (September 
19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of 
the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-
4), Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 (as amended by E.O. 14094) and 13563 direct 
agencies to assess all costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 14094 amends section 3(f) of Executive 
Order 12866 to define a ``significant regulatory action'' as an action 
that is likely to result in a rule: (1) having an annual effect on the 
economy of $200 million or more in any 1 year, or adversely affect in a 
material way the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local or tribal 
governments or communities; (2) creating a serious inconsistency or 
otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raising legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) of $200 million or more in any 1 year. Based on our 
estimates, OMB'S Office of Information and Regulatory Affairs has 
determined this rulemaking significant under section 3(f)(1) of E.O. 
12866. Accordingly, we have prepared an RIA that to the best of our 
ability presents the costs and benefits of the rulemaking.

C. Detailed Economic Analysis

1. Effects of the Changes for the CY 2024 HH PPS
    This rule finalizes our proposals to update Medicare payments under 
the HH PPS for CY 2024. The net transfer impact related to the changes 
in payments under the HH PPS for CY 2024 is estimated to be $140 
million (0.8 percent). The $140 million increase in estimated payments 
for CY 2024 reflects the effects of the final CY 2024 home health 
payment update percentage of 3.0 percent ($525 million increase), an 
estimated 2.6 percent decrease that reflects the effects of the 
permanent behavior adjustment ($455 million decrease), and an estimated 
0.4 percent increase that reflects the effects of an updated FDL ($70 
million increase).
    We use the latest data and analysis available. However, we do not 
adjust for future changes in such variables as number of visits or 
case-mix. This analysis incorporates the latest estimates of growth in 
service use and payments under the Medicare home health benefit, based 
primarily on Medicare claims data for periods that ended on or before 
December 31, 2022. We note that certain events may combine to limit the 
scope or accuracy of our impact analysis, because such an analysis is 
future-oriented and, thus, susceptible to errors resulting from

[[Page 77857]]

other changes in the impact time period assessed. Some examples of such 
possible events are newly-legislated general Medicare program funding 
changes made by the Congress or changes specifically related to HHAs. 
In addition, changes to the Medicare program may continue to be made as 
a result of new statutory provisions. Although these changes may not be 
specific to the HH PPS, the nature of the Medicare program is such that 
the changes may interact, and the complexity of the interaction of 
these changes could make it difficult to predict accurately the full 
scope of the impact upon HHAs.
    Table GG 1 represents how HHA revenues are likely to be affected by 
the finalized policy changes for CY 2024. For this analysis, we used an 
analytic file with linked CY 2022 OASIS assessments and home health 
claims data for dates of service that ended on or before December 31, 
2022. The first column of Table GG 1 classifies HHAs according to a 
number of characteristics including provider type, geographic region, 
and urban and rural locations. The second column shows the number of 
agencies in the impact analysis. The third column shows the payment 
effects of the permanent behavior assumption adjustment on all 
payments. The aggregate impact of the CY 2024 permanent BA adjustment 
reflected in the third column does not equal the final -2.890 percent 
permanent BA adjustment because the adjustment only applies to the 
national, standardized 30-day period payments and does not impact 
payments for 30-day periods which are LUPAs. The fourth column shows 
the payment effects of the recalibration of the case-mix weights offset 
by the case-mix weights budget neutrality factor. The fifth column 
shows the payment effects of updating the CY 2024 wage index with a 5-
percent cap on wage index decreases. The sixth column shows the effect 
of the final CY 2024 labor-related share. The aggregate impact of the 
changes in the fifth and sixth columns is zero percent, due to the wage 
index budget neutrality factor and the labor-related share budget 
neutrality factor. The seventh column shows the payment effects of the 
final CY 2024 home health payment update percentage. The eighth column 
shows the payment effects of the revised FDL, and the last column shows 
the combined effects of all the final provisions.
    Overall, it is projected that aggregate payments in CY 2024 would 
increase by 0.8 percent which reflects the 2.6 percent decrease from 
the permanent behavior adjustment, the 3.0 payment update percentage 
increase, and the 0.4 percent increase from decreasing the FDL. As 
illustrated in Table GG 1, the combined effects of all of the changes 
vary by specific types of providers and by location. We note that some 
individual HHAs within the same group may experience different impacts 
on payments than others due to the distributional impact of the CY 2024 
wage index, the percentage of total HH PPS payments that were subject 
to the LUPA or paid as outlier payments, and the degree of Medicare 
utilization.
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2. Effects of the Changes for the HH QRP for CY 2024
    Failure to submit HH QRP data required under section 
1895(b)(3)(B)(v) of the Act with respect to a program year results in 
the reduction of the annual home health market basket percentage 
increase otherwise applicable to an HHA for the corresponding calendar 
year by 2 percentage points. For the CY 2023 program year, 820 of the 
11,549 active Medicare-certified HHAs, or approximately 7.1 percent, 
did not receive the full annual percentage increase because they did 
not meet assessment submission requirements. The 820 HHAs that did not 
satisfy the reporting requirements of the HH QRP for the CY 2023 
program year represent $149 million in home health claims payment 
dollars during the reporting period out of a total $16.4 billion for 
all HHAs.
    This final rule finalizes the adoption of the ``COVID-19 Vaccine: 
Percent of Patients/Residents Who Are Up to Date'' (Patient/Resident 
COVID-19 Vaccine) measure to the HH QRP beginning with the CY 2025 HH 
QRP. CMS also proposed to adopt the ``Functional Discharge Score'' (DC 
Function) measure for the HH QRP beginning with the CY 2025 HH QRP. 
Along with the addition of the Discharge Function measure, we proposed 
to remove the ``Application of Percent of Long-Term Care Hospital 
(LTCH) Patients with an Admission and Discharge Functional Assessment 
and a Care Plan That Addresses Function'' (Application of Functional 
Assessment/Care Plan) measure from the HH QRP beginning with the CY 
2025 HH QRP. We additionally proposed the removal of two OASIS items no 
longer necessary for collection, the M0110--``Episode Timing'' and 
M2200--``Therapy Need'' items. The net effect of the finalization these 
proposals is a reduction of four data elements across all OASIS data 
collection time points and a net reduction in burden.
    Section IX.B.1. of this final rule provides a detailed description 
of the net decrease in burdens associated with the final changes. We 
proposed that additions and removal of data elements associated with 
the HH QRP proposals would begin with January 1, 2025 discharges. The 
cost impact of these proposed changes was estimated to be a net 
decrease of $5,123,430 in annualized cost to HHAs, discounted at 7 
percent relative to year 2021, over a perpetual time horizon beginning 
in CY 2025. We described the estimated burden and cost reductions for 
these measures in section IX of this final rule. In summary, the 
implementation of the proposals outlined in this final rule for the HH 
QRP is estimated to decrease the burden on HHAs by $437 per HHA 
annually, or $5,123,430 for all HHAs annually.
    We received no comments on the burden calculations related to the 
HH QRP proposals and therefore are finalizing this provision without 
modification.
3. Effects of the Changes for the Expanded HHVBP Model
    In the CY 2023 HH PPS final rule (87 FR 66883), we estimated that 
the expanded HHVBP Model would generate a total projected 5-year gross 
FFS savings for CYs 2023 through 2027 of $3,376,000,000. Finalization 
of the changes to the applicable measure set and the Model baseline 
year in this rule will not change those estimates because they do not 
change the number of HHAs in the Model or the payment methodology.
    Based on policies discussed in this final rule, Tables GG 2A and GG 
2B display the distribution of possible payment adjustments using CY 
2021 data as the performance year and CY 2019 for the baseline year. 
Note that due to limited data availability, this impact analysis does 
not account for improvement points for the PPH measure because this 
measure is not available based on CY 2022 data at the time of the 
release of this final rule.
    Table GG 2A and GG 2B shows the value-based incentive payment 
adjustments for the estimated 6,750 HHAs that would qualify to compete 
in the expanded Model based on CY 2021 performance data stratified by 
volume-based cohort, as defined in section III.F. of the CY 2022 HH PPS 
final rule (86 FR 62312). This impact analysis used CY 2019 to 
determine HHA size instead of the calendar year prior to the 
performance year (that is, CY 2020) to avoid using data impacted by the 
Public Health Emergency (PHE). Using CY 2021 performance year data and 
the finalized payment adjustment of 5 percent, based on the 10 final 
quality measures, the 6,504 HHAs in the larger-volume cohort would have 
an average payment adjustment of positive 0.164 percent (+0.164 
percent). Furthermore, 246 HHAs have fewer than 60 unique beneficiaries 
in CY 2019 and are, therefore, included in the smaller-volume cohort. 
Overall, smaller-volume HHAs would have an average payment adjustment 
of negative 0.114 percent (-0.114 percent). Twenty-four states/
territories do not have any HHAs in the smaller-volume cohort, 
including Alabama, District of Columbia, and Georgia. The remaining 
states/territories have HHAs in both volume-based cohorts. Florida, for 
example, has 622 HHAs in the larger-volume cohort with an average 
payment adjustment of positive 1.154 percent (+1.154 percent) and 17 
HHAs in the smaller-volume cohort with an average payment adjustment of 
positive 0.102 percent (+0.102 percent). The next columns provide the 
distribution of payment adjustment by percentile. Specifically, 10 
percent of HHAs in the larger-volume cohort would receive payment 
adjustments of more than negative 3.851 percent (-3.851 percent). Among 
smaller-volume HHAs, 10 percent of HHAs would receive payment 
adjustments of more than negative 4.120 percent (-4.120 percent). For 
larger-volume HHAs in Florida, the payment adjustments range from 
negative 3.161 percent (-3.161 percent) at the 10th percentile to 
positive 5.000 percent (+5.000 percent) at the 90th percentile, while 
the median (50th percentile) payment adjustment is positive 1.160 
percent (+1.160 percent).
    Table GG 3 provides the payment adjustment distribution based on 
the proportion of dual-eligible beneficiaries, average case mix using 
Hierarchical Condition Category (HCC) scores, proportion of 
beneficiaries that reside in rural areas, and HHA organizational 
status. To define cutoffs for the ``percentage of dual eligible 
beneficiaries,'' low through high percentage dual-eligible are based on 
the 20th, 40th, 60th, and 80th percentiles of percent dual eligible 
beneficiaries, respectively, across HHAs in CY 2021. To define case mix 
cutoffs, low, medium, or high acuity are based on less than the 25th 
percentile, between the 25th and 75th percentiles, and greater than the 
75th percentile of average HCC scores, respectively, across HHAs in CY 
2021. To define cutoffs for percentage of rural beneficiaries, all non-
rural, up to 50 percent rural, and over 50 percent rural are based on 
the home health beneficiaries' core-based statistical area (CBSA) urban 
versus rural designation. Based on CY 2021 data, HHAs with the highest 
proportion of dual-eligible beneficiaries served have a positive 
average payment adjustment (+0.035 percent). In addition, a higher 
proportion of rural beneficiaries served is associated with better 
performance. Specifically, HHAs serving over 50 percent rural 
beneficiaries have an average payment adjustment of positive 0.728 
percent (+0.728 percent), compared to HHAs

[[Page 77861]]

serving only rural beneficiaries or HHAs serving up to 50 percent rural 
beneficiaries. Among organizational type, proprietary HHAs have a 
slightly negative average payment adjustment of 0.092, whereas HHAs in 
other organizational type categories have a positive average payment 
adjustment.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
    We did received comments on this impact analysis and therefore are 
finalizing this without modification.
4. Impacts of Home IVIG Items and Services
    The following analysis applies to the home IVIG items and services 
payment rate as set forth in section V.D.1. of this rule as added by 
section 4134 of the CAA, 2023 and accordingly, describes the impact for 
CY 2024 only. Table GG 4 represents the estimated costs of home IVIG 
users for CY 2024. We used CY 2022 data to identify beneficiaries 
actively enrolled in the IVIG demonstration (that is, beneficiaries 
with Part B claims that contain the Q2052 HCPCS code) to estimate the 
number of potential CY 2024 active enrollees in the new benefit, which 
are shown in column 2. In column 3, CY 2022 claims for IVIG visits 
under the Demonstration were again used to estimate potential 
utilization under the new benefit in CY 2024. Column 4 shows the final 
CY 2024 home IVIG items and services rate. The fifth column estimates 
the cost to Medicare for CY 2024 ($8,661,888). The estimated cost for 
CY 2023 under the Demonstration is $8,409,538 (not shown in chart) 
resulting in an increase of $252,350 in payments to providers under the 
permanent benefit. Table GG 5 represents the estimated impacts of the 
home IVIG items and services payment for CY 2024 by census region.
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5. Effects of the Changes for Hospice IDR and SFP
    The hospice IDR is an administrative process to be conducted by 
CMS, SAs, or AOs as part of their survey activities, and is separate 
from the SFP. SAs and AOs may already have existing IDR processes in 
place for the HHA IDR requirements. The hospice IDR requirements will 
align with HHA. the IDR process currently in place for HHAs. The 
Congress has already allocated $10 million annually to CMS to implement 
the CAA, 2021 hospice survey and enforcement provisions, which includes 
the SFP. Additionally, CMS obligates monies to the SAs to carry out 
survey and certification responsibilities under their agreement with 
the Secretary under section 1864 of the Act. Therefore, no additional 
burden will be incurred by CMS, SAs, or AOs.
    We did not receive comments on our burden estimate and are 
therefore finalizing without this without modification.
6. Effects of the Changes for DMEPOS CAA, 2023-Related Provisions
a. Conforming Changes to Regulations To Codify Change Mandated by 
Section 4139 of the Consolidated Appropriations Act, 2023
    One benefit of this provision is that it provides additional 
revenue to DMEPOS suppliers. One cost of this provision is that it 
increases the copayments of the Medicare beneficiaries. The transfer 
from the Medicare program to the DMEPOS suppliers of $100 million for 
CY 2023 will be paid in CY 2023 and CY 2024. The amount of copayments 
from Medicare beneficiaries over the same period is expected to be $30 
million. The Federal share of Medicaid for the copayments for dual 
eligibles is expected to be $5 million and the State share of the 
Medicare payments for this populations is expected to be $4 million.
    We received no comments on the impact analysis of this provision.
b. Scope of the Benefit and Payment for Lymphedema Compression 
Treatment Items
    The benefits of this provision are that Medicare enrollees 
suffering from lymphedema will have Medicare pay 80 percent of the cost 
of the lymphedema compression treatment items. This

[[Page 77868]]

Medicare payment should enable more Medicare enrollees suffering from 
lymphedema to access treatment items in the home, reducing both the 
financial burden of lymphedema and, by encouraging earlier treatment, 
the frequency of institutional care for infections or other 
complications of lymphedema. The transfer from the Medicare program to 
the lymphedema compression treatment suppliers is estimated to be $150 
million from CY 2024 to CY 2028. The amount of copayments from Medicare 
beneficiaries over the same period is expected to be $30 million. The 
Federal share of Medicaid expenditures for the copayments of dual 
eligibles is expected to be $5 million and the State share for this 
population is expected to be $4 million.
    We received no comments on the impact analysis of this provision.
c. Definition of Brace
    The benefit of this provision is to add the definition of brace in 
regulation to clearly identify what is included in the definition of a 
brace. This is purely an administrative effort with no impact on 
Medicare coverage or expenditure, and, for this reason, has no cost or 
transfer associated with it.
    We did not received any comments on the impact analysis of this 
provision.
7. Effects of the Changes to the Requirements for Refillable DMEPOS
    This rule codifies and clarifies our requirements for refillable 
DMEPOS items. The fiscal impact of these requirements cannot be 
estimated as claims often deny for multiple reasons, which may include 
non-compliance with our refill requirements; creating an inability for 
us to accurately demonstrate a causal relationship. In addition, to 
demonstrate impacts we would have to be able to predict behaviors and 
anticipated non-compliance in future claim submissions, which are 
unknown variables to us.
    We did not receive any public comments regarding the financial 
impact of our proposals.
8. Effects of the Changes Regarding for Provider Enrollment 
Requirements
    There are four principal impacts of the provider enrollment 
provisions outlined in section VIII. of this final rule.
    The first was addressed in section IX. of this final rule. It 
involves the ICR burden associated with a hospice's completion of an 
initial Form CMS-855A application and Form CMS-1561 provider agreement 
per a Sec.  424.550(b) change in majority ownership for which an 
exception does not apply. The combined annual burden was estimated to 
be 167 hours at a cost of $8,530.
    The second involves moving hospices from the ``moderate'' screening 
category to the ``high'' screening level.
    The third involves incorporating within the high screening category 
revalidating DMEPOS suppliers, HHAs, OTPs, MDPP suppliers, and SNFs for 
which CMS waived the fingerprint-based criminal background check 
requirement when they initially enrolled in Medicare.
    The fourth pertains to the fingerprinting and application fee 
requirements (referenced in section IX. of this final rule) associated 
with a Sec.  424.550(b) change in majority ownership.
    We address the second, third, and fourth impacts as follows:
a. Moving Hospices to High-Risk
    With this change to Sec.  424.518, hospices that are initially 
enrolling in Medicare or reporting any new owner would have to submit 
the fingerprints of their 5 percent or greater direct or indirect 
owners for a Federal Bureau of Investigation criminal background check. 
Based on enrollment statistics and our experience, we projected in the 
proposed rule that 1,782 hospices per year (425 initially enrolling + 
1,357 reporting a new 5 percent or greater owner) would be required to 
submit these fingerprints. (This figure does not include hospices 
initially enrolling pursuant to Sec.  424.550(b); this matter is 
addressed in section X.C.8.c. of this final rule). Using an estimate of 
one owner per hospice (which aligns with previous fingerprinting 
projections we have made), 1,782 sets of fingerprints per year would be 
submitted.
    Consistent with prior burden estimates, we projected that it would 
take each owner approximately 2 hours to be fingerprinted. According to 
the most recent BLS wage data for May 2022, the mean hourly wage for 
the general category of ``Top Executives'' (the most appropriate BLS 
category for owners) is $62.04. With fringe benefits and overhead, the 
figure is $124.08. This would result in an estimated annual burden of 
this final change of 3,564 hours (1,782 x 2) at a cost of $442,221 
(3,564 x $124.08).
b. Providers and Suppliers Previously Waived From Fingerprinting
    Approximately 6,388 high-risk level providers and suppliers were 
waived from fingerprinting when they initially enrolled in Medicare 
during the PHE. We proposed that these providers and suppliers, upon 
their revalidation, would be subject to the ``high'' level of screening 
and, consequently, fingerprinting. Using the fingerprinting burden 
estimates from section X.C.8.a. of this final rule, we project the 
total burden of this proposal to be 12,776 hours (6,388 x 2 hr) and 
$1,585,246 (12,776 x $124.08). Calculated as annual figures over a 3-
year period, this results in a burden of 4,259 hours and $528,415.
c. Hospice Changes in Majority Ownership
    Hospices that are initially enrolling in Medicare due to a change 
in majority ownership under Sec.  424.550(b) will be subject to 
fingerprinting and must pay an application fee in accordance with Sec.  
424.514. Using the fingerprinting estimates already referenced in 
section X.C.8. of this final rule, we estimate an annual fingerprinting 
burden to hospices per Sec.  424.550(b) of 200 hours (100 x 2 hr) at a 
cost of $24,816 (200 hr x $124.08).
    The application fees for each of the past 3 calendar years were or 
are $599 (CY 2021), $631 (CY 2022), and $688 (CY 2023). Consistent with 
Sec.  424.514, the differing fee amounts were predicated on changes/
increases in the CPI for all urban consumers (all items; United States 
city average, CPI-U) for the 12-month period ending on June 30 of the 
previous year. While we cannot predict future changes to the CPI, the 
fee amounts between 2021 and 2023 increased by an average of $45 per 
year. As stated in the proposed rule, we believe this is a reasonable 
barometer with which to establish estimates (strictly for purposes of 
this final rule) of the fee amounts in the first 3 calendar years of 
the final provision (that is, 2024, 2025, and 2026). Thus, we project a 
fee amount of $733 in 2024, $778 for 2025, and $823 for 2026.
    Applying these prospective fee amounts to the annual number of 
projected hospices impacted by our change in majority ownership 
proposal, this results in a cost of $73,300 (or 100 x $733) in the 
first year, $77,800 in the second year, and $82,300 in the third year.
d. Totals
    The following table outlines the total annual costs associated with 
our enrollment provisions addressed in section X.C.8. of this final 
rule for each of the first 3 years.

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[GRAPHIC] [TIFF OMITTED] TR13NO23.089

    We solicited comment from stakeholders, including hospices, 
regarding any other RIA costs that may be associated with our proposed 
expansion of the 36-month rule to incorporate hospices. This could 
include costs incurred during the survey, accreditation, and/or 
certification processes.
e. Comments Received
    We did not receive comments on our RIA estimates and are 
accordingly finalizing them as proposed.

D. Regulatory Review Cost Estimation

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
should estimate the cost associated with the regulatory review. Due to 
the uncertainty involved with accurately quantifying the number of 
entities that will review the rule, we assume that the total number of 
unique commenters on this year's proposed rule will be the number of 
reviewers of this final rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters reviewed this year's proposed rule in 
detail, and it is also possible that some reviewers chose not to 
comment on the proposed rule. For these reasons we thought that the 
number of commenters would be a fair estimate of the number of 
reviewers of this rule. We also recognize that different types of 
entities are in many cases affected by mutually exclusive sections of 
this rule, and therefore for the purposes of our estimate we assume 
that each reviewer reads approximately 50 percent of the rule.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $123.06 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 5.76 hours 
for the staff to review half of this final rule. For each entity that 
reviews the rule, the estimated cost is $708.83 (5.76 hours x $123.06). 
Therefore, we estimate that the total cost of reviewing this regulation 
is $671,971 ($708.83 x 948) [948 is the number of estimated reviewers, 
which is based on the total number of unique commenters from this 
year's proposed rule].

E. Alternatives Considered

1. HH PPS
    For the CY 2024 HH PPS final rule, we considered alternatives to 
the provisions articulated in section II.C.1. of this final rule. As 
described in section II.C.1. of this rule, to help prevent future over 
or underpayments, we calculated a permanent prospective adjustment by 
determining what the 30-day base payment amount should have been in CYs 
2020, 2021, and 2022 in order to achieve the same estimated aggregate 
expenditures as obtained from the simulated 60-day episodes. One 
alternative to the final -2.890 percent permanent payment adjustment 
included taking the full adjustment of -5.779. Another alternative 
would be to take the remaining permanent adjustment not taken in the CY 
2023 HH PPS final rule, which resulted in -4.085 percent. Another 
alternative would be a phase-in approach, where we could reduce the 
permanent adjustment, by spreading out the CY 2024 permanent adjustment 
over a specified period of years, rather than halving the adjustment in 
CY 2024 and adjusting the CY 2025 rate by the rest of that amount. 
Another alternative would be to delay the permanent adjustment to a 
future year. However, we believe that the full permanent reduction in a 
single year may be too burdensome for certain HHA providers at this 
time. Additionally, we believe that a phase-in approach or delay in the 
permanent adjustment would not be appropriate as it would further 
impact budget neutrality and likely lead to a compounding effect 
creating the need for a larger permanent reduction to the payment rate 
in future years. Therefore, we are finalizing a -2.890 percent (half of 
the permanent -5.779 adjustment) permanent adjustment to the CY 2024 
30-day payment rate.
    Additionally, we considered alternatives to rebasing and revising 
the home health market basket to reflect a 2021 base year. We 
considered continuing to use the 2016-based home health market basket 
without rebasing to determine the market basket increase factor for CY 
2024. However, we typically rebase and revise the market baskets for 
the various PPS every 4 to 5 years so that the cost weights and price 
proxies reflect more recent data. Therefore, we believe it is more 
technically appropriate to use a 2021-based home health market basket 
and labor-related share since it allows for the CY 2024 market basket 
increase factor to reflect a more up-to-date cost structure experienced 
by HHAs.
    Division FF, section 4136 of the CAA, 2023 (Pub. L. 117-328) 
amended section 1834 of the Act (42 U.S.C. 1395m(s)) and mandates 
several amendments to the Medicare separate payment for dNPWT devices 
beginning in CY 2024. Therefore, we do not have the discretion to delay 
or eliminate the implementation of the changes to the separate payment 
amount for dNPWT and thus we did not consider any alternatives 
regarding this policy.
2. HH QRP
    We considered alternative measures to the Discharge Function 
measure and determined this measure was the strongest. No appropriate 
alternative was available for the COVID-19 Patient Vaccination measure.
3. Expanded HHVBP Model
    We discuss the alternatives we considered to the final weights of 
the individual measures within the OASIS-based measure category and 
within the claims-based measure category starting in the CY 2025 
performance year for the expanded HHVBP Model in section IV.B.2. of 
this final rule.

[[Page 77870]]

4. Home IVIG Items and Services
    For the CY 2024 HH PPS final rule, we did not consider alternatives 
to implementing the home IVIG items and services payment for CY 2024 
because section 1842(o)(8) of the Act requires the Secretary to 
establish a separate bundled payment to the supplier for all items and 
services related to the administration of intravenous immune globulin 
to an individual in the patient's home during a calendar day effective 
January 1, 2024. We did consider alternatives to annually updating this 
payment rate, as articulated in section II.V.D. of this final rule. We 
considered updating the annual rate using the LUPA rate for skilled 
nursing in accordance with the demonstration program update. However, 
as the IVIG services payment is not geographically wage adjusted, and 
the LUPA rate incorporates a wage index budget neutrality factor, we 
believe it is more appropriate to annually adjust the IVIG items and 
services payment rate only by the home health payment update 
percentage. We also considered annually updating the rate by the CPI-U 
percentage increase in accordance with the annual update to the home 
infusion therapy services payment rate. However, the Demonstration has 
never used the CPI-U percentage increase to update the payment rate, 
and we believe it is more beneficial to keep the permanent payment as 
closely aligned with the Demonstration rate as possible. Therefore, we 
are finalizing these policies as proposed.
5. IDR and Hospice SFP
    We did not consider any alternatives in this final rule for either 
proposal. An initial alternative proposal was published in CY 22 Home 
Health PPS final rule (86 FR 35874) but was not finalized due to public 
comments and requests that CMS establish a Technical Expert Panel (TEP) 
to inform the development of the SFP. We believe the new final 
methodology, based on feedback provided by the TEP, is the best way to 
identify and remedy the issue of poor -performing hospices. We received 
no comments on the consideration of no alternatives proposed.
6. DMEPOS CAA, 2023-Related Provisions
a. Scope of the Benefit and Payment for Lymphedema Compression 
Treatment Items
    As this provision is statutorily mandated, CMS needed to consider 
no alternatives for implementation. Similarly, the statutory language 
provided a definition for the lymphedema compression treatment items to 
be covered by this benefit, so CMS did not consider any alternative to 
coverage of a list of items meeting the statutory requirements. 
Regarding the payment methodology, CMS considered numerous sources for 
prices as suggested in statute. Different combinations of internet and 
insurer prices were alternatives considered. Ultimately, CMS decided on 
a payment methodology that CMS considered reasonable given the market 
for these items.
    We received no comments on the consideration of no alternatives to 
regulatory action to implement the Lymphedema Compression Treatment 
Item benefit required by the CAA, 2023.
b. Conforming Changes to Regulations To Codify Change Mandated by 
Section 4139 of the Consolidated Appropriations Act, 2023
    This is a conforming change to a statutory mandate and therefore 
required no alternatives be considered.
    We did not receive comments about this provision's impact. We are 
finalizing our proposed conforming changes to Sec.  414.210(g)(9), 
consistent with requirements in section 4139(a) and 4139(b) of the CAA, 
2023.
c. Definition of Brace
    This is a codification of an existing definition and therefore 
required no alternatives be considered.
    We received no comments on the consideration of no alternatives to 
codifying the definition in regulation.
7. Refillable DMEPOS
    We did not consider alternatives as this is existing policy that is 
being codified with additional leniencies based on prior experiences. 
We welcomed but did not receive any comments.
8. Provider Enrollment Provisions
    We considered several alternatives for addressing our provider 
enrollment-related concerns regarding hospice program integrity and 
quality of care. We concluded that moving hospices to the high-risk 
screening category and expanding Sec.  424.550(b) to include hospices 
were the most appropriate provider enrollment regulatory means of 
addressing these issues.
    Except as discussed in section VIII. of this final rule, we 
received no comments on possible alternatives to our hospice 
provisions.

F. Accounting Statements and Tables

1. HH PPS
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf, in Table GG 8, we have prepared an accounting 
statement showing the classification of the transfers and benefits 
associated with the CY 2024 HH PPS provisions of this rule.
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2. HH QRP
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table GG 9, we have prepared an accounting statement showing 
the classification of the expenditures associated with this final rule 
as they relate to HHAs. Table GG 9 provides our best estimate of the 
increase in burden for OASIS submission.

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3. Expanded HHVBP Model
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table GG 10 we have prepared an accounting statement Table 
GG 10 provides our best estimate of the decrease in Medicare payments 
under the expanded HHVBP Model.
[GRAPHIC] [TIFF OMITTED] TR13NO23.092

4. Home IVIG Items and Services
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf, in Table GG 11, we have prepared an accounting 
statement showing the classification of the transfers and benefits 
associated with the CY 2024 IVIG provisions of this rule.
[GRAPHIC] [TIFF OMITTED] TR13NO23.093

5. DMEPOS
a. Conforming Changes to Regulations To Codify Change Mandated by 
Section 4139 of the Consolidated Appropriations Act, 2023
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table GG 12, we have prepared an accounting statement 
showing the classification of the expenditures associated with this 
provision. Table GG 12 provides our best estimate of the transfers.

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b. Scope of the Benefit and Payment for Lymphedema Compression 
Treatment Items
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table GG 13, we have prepared an accounting statement 
showing the classification of the expenditures associated with this 
provision. Table GG 13 provides our best estimate of the transfers.
[GRAPHIC] [TIFF OMITTED] TR13NO23.095

G. Regulatory Flexibility Act (RFA)

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. In addition, HHAs are small entities, as 
that is the term used in the RFA. Individuals and States are not 
included in the definition of a small entity.
    The NAICS was adopted in 1997 and is the current standard used by 
the Federal statistical agencies related to the U.S. business economy. 
We utilized the NAICS U.S. industry title ``Home Health Care Services'' 
and corresponding NAICS code 621610 in determining impacts for small 
entities. The NAICS code 621610 has a size standard of $19 million 
\222\ and approximately 96 percent of HHAs are considered small 
entities. Table GG 14 shows the number of firms, revenue, and estimated 
impact per home health care service category.
---------------------------------------------------------------------------

    \222\ https://www.sba.gov/sites/sbagov/files/2023-03/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023.xlsx.

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[GRAPHIC] [TIFF OMITTED] TR13NO23.096

    The economic impact assessment is based on estimated Medicare 
payments (revenues) and HHS's practice in interpreting the RFA is to 
consider effects economically ``significant'' only if greater than 5 
percent of providers reach a threshold of 3 to 5 percent or more of 
total revenue or total costs. The majority of HHAs' visits are Medicare 
paid visits and therefore the majority of HHAs' revenue consists of 
Medicare payments. Based on our analysis, we conclude that the policies 
finalized in this rule would result in an estimated total impact of 3 
to 5 percent or more on Medicare revenue for greater than 5 percent of 
HHAs. Therefore, the Secretary has determined that this HH PPS final 
rule would have significant economic impact on a substantial number of 
small entities. We estimate that the net impact of the policies in this 
rule is approximately $140 million in increased payments to HHAs in CY 
2024. The $140 million in increased payments are reflected in the last 
column of the first row in Table GG 14 as a 0.8 percent increase in 
expenditures when comparing CY 2024 payments to estimated CY 2023 
payments. The 0.8 percent increase is mostly driven by the impact of 
the permanent behavior assumption adjustment reflected in the third 
column of Table GG 1. Further detail is presented in Table GG 1, by HHA 
type and location.
    With regards to options for regulatory relief, we note that section 
1895(b)(3)(D)(i) of the Act requires CMS to annually determine the 
impact of differences between the assumed behavior changes finalized in 
the CY 2019 HH PPS final rule with comment period (83 FR 56455) and 
actual behavior changes on estimated aggregate expenditures under the 
HH PPS with respect to years beginning with 2020 and ending with 2026. 
Additionally, section 1895(b)(3)(D)(ii) and (iii) of the Act requires 
us to make permanent and temporary adjustments to the payment rate to 
offset for such increases or decreases in estimated aggregate 
expenditures through notice and comment rulemaking. While we find that 
the -2.890 percent permanent payment adjustment, described in section 
II.C.1.g. of this final rule, is necessary to offset the increase in 
estimated aggregate expenditures for CYs 2020 through 2022 based on the 
impact of the differences between assumed behavior changes and actual 
behavior changes, we would also continue to reprice claims, per the 
finalized methodology, and make any additional adjustments at a time 
and manner deemed appropriate in future rulemaking. We solicited 
comments on the overall HH PPS RFA analysis and received no comments.
    Guidance issued by HHS interpreting the Regulatory Flexibility Act 
considers the effects economically `significant' only if greater than 5 
percent of providers reach a threshold of 3 to 5 percent or more of 
total revenue or total costs. Among the over 7,500 HHAs that are 
estimated to qualify to compete in the expanded HHVBP Model, we 
estimate that the percent payment adjustment resulting from this rule 
would be larger than 3 percent, in magnitude, for about 28 percent of 
competing HHAs (estimated by applying the final 5-percent maximum 
payment adjustment under the expanded Model to CY 2019 data). As a 
result, more than the RFA threshold of 5-percent of HHA providers 
nationally would be significantly impacted. We refer readers to Tables 
43 and 44 in the CY 2022 HH PPS final rule (86 FR 62407 through 62410) 
for our analysis of payment adjustment distributions by State, HHA 
characteristics, HHA size, and percentiles.
    Thus, the Secretary has certified that this final rule would have a 
significant economic impact on a substantial number of small entities. 
Though the RFA requires consideration of alternatives to avoid economic 
impacts on small entities, the intent of the rule, itself, is to 
encourage quality improvement by HHAs through the use of economic 
incentives. As a result, alternatives to mitigate the payment 
reductions would be contrary to the intent of the rule, which is to 
test the effect on quality and costs of care of applying payment 
adjustments based on HHAs' performance on quality measures.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 603 of RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a metropolitan statistical area and has fewer 
than 100 beds. This rule is not applicable to hospitals. Therefore, the 
Secretary has certified that this final rule would not have a 
significant

[[Page 77874]]

economic impact on the operations of small rural hospitals.

H. Unfunded Mandates Reform Act (UMRA)

    Section 202 of UMRA of 1995 UMRA also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose mandates 
require spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. In 2023, that threshold is approximately $177 
million. This final rule would not impose a mandate that would result 
in the expenditure by State, local, and Tribal Governments, in the 
aggregate, or by the private sector, of more than $177 million in any 
one year.

I. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule (and subsequent final 
rule) that imposes substantial direct requirement costs on State and 
local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this final rule under these criteria of 
Executive Order 13132 and have determined that it would not impose 
substantial direct costs on State or local governments.

J. Conclusion

    In conclusion, we estimate that the provisions in this final rule 
would result in an estimated net increase in home health payments of 
0.8 percent for CY 2024 ($140 million). The $140 million increase in 
estimated payments for CY 2024 reflects the effects of the CY 2024 home 
health payment update percentage increase of 3.0 percent ($525 million 
increase), a 0.4 percent increase in payments due to the new lower FDL 
ratio, which would increase outlier payments in order to target to pay 
no more than 2.5 percent of total payments as outlier payments ($70 
million increase) and an estimated 2.6 percent decrease in payments 
that reflects the effects of the permanent behavior adjustment ($455 
million decrease).

K. Waiver Fiscal Responsibility Act Requirements

    The Director of OMB has waived the requirements of section 263 of 
the Fiscal Responsibility Act of 2023 (Pub. L. 118-5) pursuant to 
sections 265(a)(1) and (a)(2) of Public Law 118-5.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on October 25, 2023.

List of Subjects

42 CFR Part 409

    Health facilities, Medicare.

42 CFR Part 410

    Diseases, Health facilities, Health professions, Laboratories, 
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.

42 CFR Part 414

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare, Reporting and recordkeeping requirements.

42 CFR Part 484

    Administrative practice and procedure, Grant programs-health, 
Health facilities, Health professions, Home health care, Medicare, 
Reporting and recordkeeping requirements.

42 CFR Part 488

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

    For the reasons stated in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR Chapter IV as follows:

PART 409--HOSPITAL INSURANCE BENEFITS

0
1. The authority citation for part 409 continues to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.


Sec.  409.50  [Amended]

0
2. In Sec.  409.50 amend paragraph (b) by removing the phrase ``for 
furnishing the Negative Pressure Wound Therapy (NPWT) using a 
disposable device'' and adding in its place the phrase ``for the 
disposable Negative Pressure Wound Therapy (NPWT) device''.

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
3. The authority citation for part 410 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.

0
4. Amend Sec.  410.2 by adding the definitions of ``Brace'', ``Custom 
fitted gradient compression garment'', ``Gradient compression'', and 
``Lymphedema compression treatment item'' in alphabetical order to read 
as follows:


Sec.  410.2  Definitions.

* * * * *
    Brace means a rigid or semi-rigid device used for the purpose of 
supporting a weak or deformed body member or restricting or eliminating 
motion in a diseased or injured part of the body.
* * * * *
    Custom fitted gradient compression garment means a garment that is 
uniquely sized and shaped to fit the exact dimensions of the affected 
extremity or part of the body, of an individual to provide accurate 
gradient compression to treat lymphedema.
* * * * *
    Gradient compression means the ability to apply a higher level of 
compression or pressure to the distal (farther) end of the limb or body 
part affected by lymphedema with lower, decreasing compression or 
pressure at the proximal (closer) end of the limb or body part affected 
by lymphedema.
    Lymphedema compression treatment item means standard and custom 
fitted gradient compression garments and other items specified under 
Sec.  410.36(a)(4) that are--
    (1) Furnished on or after January 1, 2024, to an individual with a 
diagnosis of lymphedema for treatment of such condition;
    (2) Primarily and customarily used to serve a medical purpose and 
for the treatment of lymphedema; and
    (3) Prescribed by a physician (or a physician assistant, nurse 
practitioner, or a clinical nurse specialist (as those terms are 
defined in section 1861(aa)(5) of the Act)) to the extent authorized 
under State law.
* * * * *


Sec.  410.10  [Amended]

0
5. In Sec.  410.10 amend paragraph (y) by removing the phrase 
``globulin administered'' and adding in its place the phrase 
``globulin, including items and services, administered''.

0
6. Amend Sec.  410.36 by revising paragraph (a)(3) and adding paragraph 
(a)(4) to read as follows:


Sec.  410.36  Medical supplies, appliances, and devices: Scope.

* * * * *
    (a) * * *
    (3)(i) Leg, arm, back, and neck braces.

[[Page 77875]]

    (A) A leg brace may include a shoe if it is an integral part of the 
brace (necessary for the leg brace to function properly) and its 
expense is included as part of the cost of the brace.
    (ii) Artificial legs, arms, and eyes; and
    (iii) Replacements for the devices specified in paragraphs 
(a)(3)(i) and (ii) if required because of a change in the individual's 
physical condition.
    (4) Lymphedema compression treatment items, including the 
following:
    (i) Standard and custom fitted gradient compression garments.
    (ii) Gradient compression wraps with adjustable straps.
    (iii) Compression bandaging systems.
    (iv) Other items determined to be lymphedema compression treatment 
items under the process established under Sec.  414.1670.
    (v) For the purposes of paragraphs (i) and (ii) of this paragraph, 
the scope of the benefit for lymphedema compression treatment items 
includes accessories such as zippers in garments, liners worn under 
garments or wraps with adjustable straps, and padding or fillers that 
are necessary for the effective use of a gradient compression garment 
or wrap with adjustable straps.
* * * * *

0
7. Section 410.38 is amended by adding paragraph (d)(4) to read as 
follows:


Sec.  410.38  Durable medical equipment, prosthetics, orthotics and 
supplies (DMEPOS): Scope and conditions.

* * * * *
    (d) * * *
    (4) Refills--(i) Definitions. As used in this paragraph (d):
    Date of service (for refilled items) means either--
    (1) The date of delivery for the DMEPOS item; or
    (2) For items rendered via delivery or shipping service, the 
shipping date.
    Refills mean DMEPOS products that are provided on a recurring basis 
secondary to a medically necessary DMEPOS order.
    Shipping date means--
    (1) The date the delivery/shipping service label is created; or
    (2) The date that the item is retrieved for delivery. These dates 
must not demonstrate significant variation.
    (ii) Documentation. The DMEPOS supplier must document contact with 
the beneficiary or their representative to verify the refill is needed. 
This documentation must include both of the following:
    (A) Evidence of the beneficiary or their representative's 
affirmative response of the need for supplies, which should be obtained 
as close to the expected end of the current supply as possible. Contact 
and affirmative response must be within 30 calendar days from the 
expected end of the current supply.
    (B)(1) For shipped items, the beneficiary name, date of contact, 
the item requested, and an affirmative response from the beneficiary, 
indicative of the need for refill, prior to dispensing the product; or
    (2) For items obtained in-person from a retail store, the delivery 
slip signed by the beneficiary or their representative or a copy of the 
itemized sales receipt is sufficient documentation of a request for 
refill.
    (iii) Delivery of DMEPOS items provided on a recurring basis. The 
date of service for DMEPOS items provided on a recurring basis must be 
no earlier than 10 calendar days before the expected end of the current 
supply.
* * * * *

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
8. The authority citation for part 414 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).


0
9. Section 414.210 is amended by--
0
a. In paragraph (g)(2)(ii) introductory text, removing the phrase ``(42 
U.S.C. 1320b-5(g)(1)(B)), whichever is later'' and adding in its place 
the phrase ``(42 U.S.C. 1320b-5(g)(1)(B)), or December 31, 2023, 
whichever is later'';
0
b. In paragraph (g)(2)(iii) introductory text, removing the phrase 
``(42 U.S.C. 1320b-5(g)(1)(B)), whichever is later'' and adding in its 
place the phrase ``(42 U.S.C. 1320b-5(g)(1)(B)), or December 31, 2023, 
whichever is later'';
0
c. In paragraph (g)(9)(iii) removing the phrase ``from June 1, 2018 
through December 31, 2020 or through the duration'' and adding in its 
place the phrase ``from June 1, 2018 through the duration of the 
emergency period described in section 1135(g)(1)(B) of the Act (42 
U.S.C. 1320b-5(g)(1)(B)) or December 31, 2023'';
0
d. Revising paragraph (g)(9)(v); and
0
e. In paragraph (g)(9)(vi), removing the date ``February 28, 2022'' and 
adding in its place the date ``January 1, 2024''.
    The revision reads as follows:


Sec.  414.210  General payment rules.

* * * * *
    (g) * * *
    (9) * * *
    (v) For items and services furnished in areas other than rural or 
noncontiguous areas with dates of service from March 6, 2020, through 
the remainder of the duration of the emergency period described in 
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)) or 
December 31, 2023, whichever is later, based on the fee schedule amount 
for the area is equal to 75 percent of the adjusted payment amount 
established under this section and 25 percent of the unadjusted fee 
schedule amount.
* * * * *

0
10. Amend Sec.  414.402 by revising the definition of ``Item'' to read 
as follows:


Sec.  414.402  Definitions.

* * * * *
    Item means a product included in a competitive bidding program that 
is identified by a HCPCS code, which may be specified for competitive 
bidding (for example, a product when it is furnished through mail 
order), or a combination of codes with or without modifiers, and 
includes the services directly related to the furnishing of that 
product to the beneficiary. Items that may be included in a competitive 
bidding program are as follows:
    (1) DME other than class III devices under the Federal Food, Drug 
and Cosmetic Act, as defined in Sec.  414.402, group 3 complex 
rehabilitative power wheelchairs, complex rehabilitative manual 
wheelchairs, manual wheelchairs described by HCPCS codes E1235, E1236, 
E1237, E1238, and K0008, and related accessories when furnished in 
connection with such wheelchairs, and further classified into the 
following categories:
    (i) Inexpensive or routinely purchased items, as specified in Sec.  
414.220(a).
    (ii) Items requiring frequent and substantial servicing, as 
specified in Sec.  414.222(a).
    (iii) Oxygen and oxygen equipment, as specified in Sec.  
414.226(c)(1).
    (iv) Other DME (capped rental items), as specified in Sec.  
414.229.
    (2) Supplies necessary for the effective use of DME other than 
inhalation and infusion drugs.
    (3) Enteral nutrients, equipment, and supplies.
    (4) Off-the-shelf orthotics, which are orthotics described in 
section 1861(s)(9) of the Act that require minimal self-adjustment for 
appropriate use and do not require expertise in trimming, bending, 
molding, assembling or customizing to fit a beneficiary.
    (5) Lymphedema compression treatment items.
* * * * *

0
11. Amend Sec.  414.408 by adding paragraph (g)(5) to read as follows:

[[Page 77876]]

Sec.  414.408  Payment rules.

* * * * *
    (g) * * *
    (5) Lymphedema compression treatment items.
* * * * *

0
12. Amend Sec.  414.412 by revising paragraph (b)(2) to read as 
follows:


Sec.  414.412  Submission of bids under a competitive bidding program.

* * * * *
    (b) * * *
    (2) The bid submitted for each lead item and product category 
cannot exceed the payment amount that would otherwise apply to the lead 
item under--
    (i) Subpart C of this part, without the application of Sec.  
414.210(g);
    (ii) Subpart D of this part, without the application of Sec.  
414.105; or
    (iii) Subpart Q of this part, without the application of Sec.  
414.1690.
* * * * *

0
13. Add subpart Q, consisting of Sec. Sec.  414.1600 through 414.1690, 
to read as follows:
Subpart Q--Payment for Lymphedema Compression Treatment Items
Sec.
414.1600 Purpose and definitions.
414.1650 Payment basis for lymphedema compression treatment items.
414.1660 Continuity of pricing when HCPCS codes are divided or 
combined.
414.1670 Procedures for making benefit category determinations and 
payment determinations for new lymphedema compression treatment 
items.
414.1680 Frequency limitations.
414.1690 Application of competitive bidding information.

Subpart Q--Payment for Lymphedema Compression Treatment Items


Sec.  414.1600  Purpose and definitions.

    (a) Purpose. This subpart implements section 1834(z) of the Act and 
establishes procedures for making benefit category determinations and 
payment determinations for lymphedema compression treatment items.
    (b) Definitions. For purposes of this subpart the following 
definitions apply:
    Benefit category determination means a national determination 
regarding whether an item or service meets the Medicare definition of 
lymphedema compression treatment item at section 1861(mmm) of the Act 
and the rules of this subpart and is not otherwise excluded from 
coverage by statute.
    Lymphedema compression treatment item means an item as described in 
Sec.  410.2.


Sec.  414.1650  Payment basis for lymphedema compression treatment 
items.

    (a) General payment rule. For items furnished on or after January 
1, 2024, Medicare pays for lymphedema compression treatment items on 
the basis of 80 percent of the lesser of--
    (1) The actual charge for the item; or
    (2) The payment amount for the item, as determined in accordance 
with paragraph (b) of this section.
    (b) Payment amounts. The payment amounts for covered lymphedema 
compression treatment items paid for under this subpart are established 
based on one of the following:
    (1) If payment amounts are available from Medicaid state plans, 
then 120 percent of the average of the Medicaid payment amounts.
    (2) If payment amounts are not available from Medicaid state plans, 
then 100 percent of the average of average internet retail prices and 
payment amounts from TRICARE (Department of Defense).
    (3) If payment amounts are not available from Medicaid state plans 
or TRICARE, then 100 percent of average internet retail prices.
    (c) Updates to payment amounts. The payment amounts for covered 
lymphedema compression treatment items established in accordance with 
paragraph (b) of this section are increased on an annual basis 
beginning on January 1 of the year subsequent to the year in which the 
payment amounts are initially established based on the percent change 
in the Consumer Price Index for all Urban Consumers (CPI-U) for the 12-
month period ending with June of the previous year.


Sec.  414.1660  Continuity of pricing when HCPCS codes are divided or 
combined.

    (a) General rule. If HCPCS codes for lymphedema compression 
treatment items are divided or combined, the payment amounts for the 
old codes are mapped to the new codes to ensure continuity of pricing.
    (b) Mapping of payment amounts. (1) If there is a single code that 
describes two or more distinct complete items (for example, two 
different but related or similar items), and separate codes are 
subsequently established for each item, then the payment amounts that 
applied to the single code continue to apply to each of the items 
described by the new codes.
    (2) If the codes for several different items are combined into a 
single code, then the payment amounts for the new code are established 
using the average (arithmetic mean), weighted by allowed services, of 
the payment amounts for the formerly separate codes.


Sec.  414.1670  Procedures for making benefit category determinations 
and payment determinations for new lymphedema compression treatment 
items.

    The procedures for determining whether new items and services 
addressed in a request for a HCPCS Level II code(s) or by other means 
meet the definition of items and services paid for in accordance with 
this subpart are as follows:
    (a) At the start of a HCPCS coding cycle, CMS performs an analysis 
to determine if the item is statutorily excluded from coverage under 
Medicare under section 1862 of the Act.
    (1) If not excluded by statute, then CMS determines whether the 
item is a lymphedema compression treatment item as defined under 
section 1861(mmm) of the Act.
    (2) If excluded by statute, the analysis is concluded.
    (b) If a preliminary determination is made that the item is a 
lymphedema compression treatment item, CMS makes a preliminary payment 
determination for the item or service.
    (c) CMS posts preliminary benefit category determinations and 
payment determinations on CMS.gov approximately 2 weeks prior to a 
public meeting.
    (d) After consideration of public consultation provided at a public 
meeting on preliminary benefit category determinations and payment 
determinations for items, CMS establishes the benefit category 
determinations and payment determinations for items through program 
instructions.


Sec.  414.1680  Frequency limitations.

    (a) General rule. With the exception of replacements of items that 
are lost, stolen, or irreparably damaged, or if needed due to a change 
in the patient's medical or physical condition, no payment may be made 
for gradient compression garments or wraps with adjustable straps 
furnished other than at the frequencies established in paragraphs (b) 
and (c) of this section.
    (b) Initial furnishing of lymphedema compression treatment items. 
The following frequency limitations apply to items initially furnished 
to the beneficiary if determined to be reasonable and necessary for the 
treatment of lymphedema:
    (1) Three units of daytime gradient compression garments or wraps 
with adjustable straps per affected extremity or part of the body.
    (2) Two garments for nighttime use per affected extremity or part 
of the body.
    (c) Replacements of lymphedema compression treatment items. The

[[Page 77877]]

following frequency limitations apply to replacements of lymphedema 
compression treatment items if determined to be reasonable and 
necessary for the treatment of lymphedema:
    (1) Payment for the replacement of gradient compression garments or 
wraps with adjustable straps per each affected extremity or part of the 
body can be made once every 6 months.
    (2) Payment for the replacement of nighttime garments per each 
affected extremity or part of the body can be made once every 2 years.
    (d) Replacements of lymphedema compression bandaging systems or 
supplies. Specific frequency limitations are not established for these 
items. Determinations regarding the quantity of compression bandaging 
supplies needed by each beneficiary are made by the DME MAC that 
processes the claims for the supplies.


Sec.  414.1690  Application of competitive bidding information.

    The payment amounts for lymphedema compression treatment items 
under Sec.  414.1650(b) may be adjusted using information on the 
payment determined as part of implementation of the programs under 
subpart F using the methodologies set forth at Sec.  414.210(g).

0
14. Add subpart R, consisting of Sec.  414.1700, to read as follows:

Subpart R--Home Intravenous Immunoglobulin (IVIG) Items and 
Services Payment


Sec.  414.1700  Basis of payment.

    (a) General rule. For home intravenous immunoglobulin (IVIG) items 
or services furnished on or after January 1, 2024, Medicare payment is 
made on the basis of 80 percent of the lesser of the following:
    (1) The actual charge for the item or service.
    (2) The fee schedule amount for the items and services, as 
determined in accordance with the provisions of this section.
    (b) Per visit amount. A single payment amount is made for items and 
services furnished by a DME supplier per visit.
    (c) Initial establishment of the payment amount. In establishing 
the initial per visit IVIG items and services payment amount for CY 
2024, CMS used the CY 2023 bundled payment rate under the IVIG 
Demonstration updated by the home health payment percentage update for 
CY 2024.
    (d) Annual payment adjustment. The per visit payment amount 
represents payment in full for all costs associated with the furnishing 
of home IVIG items and services and is subject to the following 
adjustment:
    (1) Beginning in 2025, an annual increase in the per-visit payment 
amount from the prior year by the home health update percentage 
increase for the current calendar year.
    (2) [Reserved]

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
15. The authority for part 424 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh.

Subpart P--Requirements for Establishing and Maintaining Medicare 
Billing Privileges

0
16. Amend Sec.  424.502 by--
0
a. In the definition of ``Change in majority ownership''--
0
(i) Removing the term ``HHA'' and in its place adding the phrase ``HHA 
or hospice'' wherever it appears; and
0
(ii) Removing the term ``HHA's'' and in its place adding the phrase 
``HHA's or hospice's'' wherever it appears.
0
b. Revising the definition of ``Managing employee''.
    The revision reads as follows:


Sec.  424.502  Definitions.

* * * * *
    Managing employee means a general manager, business manager, 
administrator, director, or other individual that exercises operational 
or managerial control over, or who directly or indirectly conducts, the 
day-to-day operation of the provider or supplier, either under contract 
or through some other arrangement, whether or not the individual is a 
W-2 employee of the provider or supplier. For purposes of this 
definition, this includes, but is not limited to, a hospice or skilled 
nursing facility administrator and a hospice or skilled nursing 
facility medical director.
* * * * *

0
17. Amend Sec.  424.518 by--
0
a. Removing paragraph (b)(1)(iv);
0
b. Redesignating paragraphs (b)(1)(v) through (b)(1)(viii) as 
paragraphs (b)(1)(iv) through (b)(1)(vii);
0
c. Redesignating paragraph (b)(1)(xii) as paragraph (b)(1)(viii);
0
d. Revising newly redesignated paragraphs (b)(1)(viii) and (b)(1)(ix);
0
e. Removing paragraphs (b)(1)(x) through (b)(1)(xiv);
0
f. Revising (c)(1)(vi); and
0
g. Adding paragraphs (c)(1)(vii) and (viii).
    The revisions and additions read as follows:


Sec.  424.518  Screening levels for Medicare providers and suppliers.

* * * * *
    (b) * * *
    (1) * * *
    (viii) Prospective (newly enrolling) and revalidating opioid 
treatment programs that have been fully and continuously certified by 
the Substance Abuse and Mental Health Services Administration (SAMHSA) 
since October 23, 2018.
    (ix) Revalidating opioid treatment programs that have not been 
fully and continuously certified by SAMHSA since October 23, 2018, 
revalidating DMEPOS suppliers, revalidating MDPP suppliers, 
revalidating HHAs, revalidating SNFs, and revalidating hospices to 
which CMS applied the fingerprinting requirements outlined in paragraph 
(c)(2)(ii) of this section upon the provider's or supplier's--
    (A) New/initial enrollment; or
    (B) Revalidation after CMS waived the fingerprinting requirements, 
under the circumstances described in paragraph (c)(1)(viii) of this 
section, when the provider or supplier initially enrolled in Medicare.
* * * * *
    (c) * * *
    (1) * * *
    (vi) Prospective (newly enrolling) hospices.
    (vii) Enrolled opioid treatment programs that have not been fully 
and continuously certified by SAMHSA since October 23, 2018, DMEPOS 
suppliers, MDPP suppliers, HHAs, SNFs, and hospices that are submitting 
a change of ownership application pursuant to 42 CFR 489.18 or 
reporting any new owner (regardless of ownership percentage) pursuant 
to a change of information or other enrollment transaction under title 
42.
    (viii) Except as stated in paragraph (b)(1)(ix) of this section, 
revalidating opioid treatment programs that have not been fully and 
continuously certified by SAMHSA since October 23, 2018, revalidating 
DMEPOS suppliers, revalidating MDPP suppliers, revalidating HHAs, 
revalidating SNFs, and revalidating hospices for which, upon their new/
initial enrollment, CMS waived the fingerprinting requirements outlined 
in paragraph (c)(2)(ii) of this section in accordance with applicable 
legal authority due to a national, state, or local emergency declared 
under existing law.
* * * * *

0
18. Add Sec.  424.527 to read as follows:

[[Page 77878]]

Sec.  424.527  Provisional period of enhanced oversight.

    (a) New provider or supplier. Exclusively for purposes of both 
section 1866(j)(3) of the Act and this Sec.  424.527, the term ``new 
provider or supplier'' is defined as any of the following:
    (1) A newly enrolling Medicare provider or supplier. (This includes 
providers that are required to enroll as a new provider in accordance 
with the change in majority ownership provisions in Sec.  424.550(b).)
    (2) A certified provider or certified supplier undergoing a change 
of ownership consistent with the principles of 42 CFR 489.18. (This 
includes providers that qualify under Sec.  424.550(b)(2) for an 
exception from the change in majority ownership requirements in Sec.  
424.550(b)(1) but which are undergoing a change of ownership under 42 
CFR 489.18).
    (3) A provider or supplier (including an HHA or hospice) undergoing 
a 100 percent change of ownership via a change of information request 
under Sec.  424.516.
    (b) Effective date. The effective date of a provisional period of 
enhanced oversight that is commenced under section 1866(j)(3) of the 
Act is the date on which the new provider or supplier submits its first 
claim.

0
19. Amend Sec.  424.530 by--
0
a. In paragraph (f) introductory text removing the phrase ``3 years'' 
and adding in its place ``10 years''.
0
b. Adding paragraph (f)(3).
    The revision and additions read as follows:


Sec.  424.530  Denial of enrollment in the Medicare program.

* * * * *
    (f) * * *
    (3)(i) A provider or supplier that is currently subject to a 
reapplication bar under paragraph (f) of this section may not order, 
refer, certify, or prescribe Medicare-covered services, items, or 
drugs.
    (ii) Medicare does not pay for any otherwise covered service, item, 
or drug that is ordered, referred, certified, or prescribed by a 
provider or supplier that is currently under a reapplication bar.


Sec.  424.540  [Amended]

0
20. Section 424.540(a)(1) is amended by removing the number ``12'' and 
adding in its place the number ``6'' wherever it appears.

0
21. Add Sec.  424.542 to read as follows:


Sec.  424.542  Prohibition on ordering, certifying, referring, or 
prescribing based on felony conviction.

    (a) General prohibition. A physician or other eligible professional 
(regardless of whether he or she is or was enrolled in Medicare) who 
has had a felony conviction within the previous 10 years that CMS 
determines is detrimental to the best interests of the Medicare program 
and its beneficiaries may not order, refer, certify, or prescribe 
Medicare-covered services, items, or drugs.
    (b) Payment. Medicare does not pay for any otherwise covered 
service, item, or drug that is ordered, referred, certified, or 
prescribed by a physician or other eligible professional (as that term 
is defined in section 1848(k)(3)(B) of the Act) who has had a felony 
conviction within the previous 10 years that CMS determines is 
detrimental to the best interests of the Medicare program and its 
beneficiaries.

0
22. Amend Sec.  424.550 by--
0
a. Revising paragraph (b)(1) introductory text;
0
b. In paragraph (b)(1)(i) removing the term ``HHA'' and adding in its 
place the phrase ``HHA or hospice'';
0
c. In paragraph (b)(2)(i) removing the phrase ``The HHA submitted two 
consecutive years'' and adding in its place the phrase ``The HHA or 
hospice submitted 2 consecutive years'';
0
d. In paragraph (b)(2)(ii), removing the term ``HHA's'' and adding in 
its place the phrase ``HHA's or hospice's'';
0
e. In paragraph (b)(2)(iii), removing the phrase ``The owners of an 
existing HHA are changing the HHA's'' and adding in its place the 
phrase ``The owners of an existing HHA or hospice are changing the 
HHA's or hospice's'';
0
f. In paragraph (b)(2)(iv) removing the term ``HHA'' and adding in its 
place the phrase ``HHA or hospice''.
    The revision reads as follows:


Sec.  424.550  Prohibitions on the sale or transfer of billing 
privileges.

* * * * *
    (b) * * *
    (1) Unless an exception in paragraph (b)(2) of this section 
applies, if there is a change in majority ownership of a home health 
agency (HHA) or hospice by sale (including asset sales, stock 
transfers, mergers, and consolidations) within 36 months after the 
effective date of the HHA's or hospice's initial enrollment in Medicare 
or within 36 months after the HHA's or hospice's most recent change in 
majority ownership, the provider agreement and Medicare billing 
privileges do not convey to the new owner. The prospective provider/
owner of the HHA or hospice must instead do both of the following:
* * * * *

PART 484--HOME HEALTH SERVICES

0
23. The authority citation for part 484 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh.


0
24. Section 484.202 is amended by revising the definition of 
``Furnishing Negative Pressure Wound Therapy (NPWT) using a disposable 
device'' to read as follows:


Sec.  484.202  Definitions.

* * * * *
    Furnishing Negative Pressure Wound Therapy (NPWT) using a 
disposable device means the device is paid separately (specified by the 
assigned CPT[supreg] code) and does not include payment for the 
professional services. The nursing and therapy services are to be 
included as part of the payment under the home health prospective 
payment system.
* * * * *

0
25. Section 484.245 is amended by--
0
a. Redesignating paragraph (b)(2) as paragraph (b)(2)(i);
0
b. In newly redesignated paragraph (b)(2)(i), removing the phrase ``The 
data submitted'' and adding in its place the phrase ``Data submission 
requirements. The data submitted''; and
0
c. Adding paragraph (b)(2)(ii).
    The addition reads as follows:


Sec.  484.245  Data submission requirements under the home health 
quality reporting program

* * * * *
    (b) * * *
    (2) * * *
    (ii) Data completion thresholds. (A) A home health agency must meet 
or exceed the data submission threshold for each submission year (July 
1 through June 30) set at 90 percent of all required OASIS or successor 
instrument records submitted through the CMS designated data submission 
systems.
    (B) A home health agency must meet or exceed the data submission 
compliance threshold described in paragraph (b)(2)(ii)(A) of this 
section to avoid receiving a 2-percentage point reduction to its annual 
payment update for a given fiscal year described under Sec.  
484.225(b).
* * * * *

0
26. Add Sec.  484.358 to read as follows:


Sec.  484.358  HHVBP Measure removal factors.

    CMS may remove a quality measure from the expanded HHVBP Model 
based on one or more of the following factors:
    (a) Measure performance among HHAs is so high and unvarying that 
meaningful distinctions in

[[Page 77879]]

improvements in performance can no longer be made (that is, topped 
out).
    (b) Performance or improvement on a measure does not result in 
better patient outcomes.
    (c) A measure does not align with current clinical guidelines or 
practice.
    (d) A more broadly applicable measure (across settings, 
populations, or conditions) for the particular topic is available.
    (e) A measure that is more proximal in time to desired patient 
outcomes for the particular topic is available.
    (f) A measure that is more strongly associated with desired patient 
outcomes for the particular topic is available.
    (g) Collection or public reporting of a measure leads to negative 
unintended consequences other than patient harm.
    (h) The costs associated with a measure outweigh the benefit of its 
continued use in the program.

0
27. Amend Sec.  484.375 by revising paragraph (b)(5) to read as 
follows:


Sec.  484.375  Appeals process for the Expanded Home Health Value-Based 
Purchasing (HHVBP) Model.

* * * * *
    (b) * * *
    (5) Reconsideration decision. (i) CMS reconsideration officials 
issue a written decision that is final and binding upon issuance unless 
the CMS Administrator--
    (A) Renders a final determination reversing or modifying the 
reconsideration decision; or
    (B) Does not review the reconsideration decision within 14 days of 
the request.
    (ii) An HHA may request that the CMS Administrator review the 
reconsideration decision within 7 calendar days of the decision.
    (iii) If the CMS Administrator receives a request to review, the 
CMS Administrator must do one of the following:
    (A) Render a final determination based on his or her review of the 
reconsideration decision.
    (B) Decline to review a reconsideration decision made by CMS.
    (C) Choose to take no action.
    (iv) If the CMS Administrator does not review an HHA's request 
within 14 days (as described in paragraph (b)(5)(iii)(B) or (C) of this 
section), the reconsideration official's written reconsideration 
decision is final.

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
28. The authority citation for part 488 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh.

Subpart M--Survey and Certification of Hospice Programs

0
29. Amend Sec.  488.1105 by adding the definitions of ``Hospice Special 
Focus Program (SFP)'', ``IDR'', ``SFP status'', and ``SFP survey'' in 
alphabetical order to read as follows:


Sec.  488.1105  Definitions.

* * * * *
    Hospice Special Focus Program (SFP) means a program conducted by 
CMS to identify hospices as poor performers, based on defined quality 
indicators, in which CMS selects hospices for increased oversight to 
ensure that they meet Medicare requirements. Selected hospices either 
successfully complete the SFP program or are terminated from the 
Medicare program.
    IDR stands for informal dispute resolution.
* * * * *
    SFP status means the status of a hospice provider in the SFP with 
respect to the provider's progress in the SFP, which is indicated by 
one of the following status levels:
    (1) Level 1--in progress.
    (2) Level 2--completed successfully.
    (3) Level 3--terminated from the Medicare program.
    SFP survey means a standard survey as defined in this section and 
is performed after a hospice is selected for the SFP and is conducted 
every 6 months, up to 3 occurrences.
* * * * *

0
30. Add Sec.  488.1130 to read as follows:


Sec.  488.1130  Informal dispute resolution (IDR).

    (a) Opportunity to refute survey findings. Upon the provider's 
receipt of an official statement of deficiencies, hospice programs can 
request an informal opportunity to dispute condition-level survey 
findings.
    (b) Failure to conduct IDR timely. Failure of CMS, the State, or 
the AO, as appropriate, to complete IDR must not delay the effective 
date of any enforcement action.
    (c) Revised statement of deficiencies as a result of IDR. If any 
findings are revised or removed by CMS, the State, or the AO based on 
IDR, the official statement of deficiencies is revised accordingly, and 
any enforcement actions imposed solely as a result of those cited 
deficiencies are adjusted accordingly.
    (d) Notification. (1) If the survey findings indicate a condition-
level deficiency, the hospice program is notified in writing of its 
opportunity for participating in an IDR process at the time the 
official statement of deficiencies is issued.
    (2) The request for IDR must--
    (i) Be submitted in writing;
    (ii) Include the specific deficiencies that are disputed; and
    (iii) Be made within the same 10 calendar day period that the 
hospice program has for submitting an acceptable plan of correction.


0
31. Add Sec.  488.1135 to read as follows:


Sec.  488.1135  Hospice Special Focus Program (SFP).

    (a) Applicability. (1) The provisions of this section are effective 
on or after January 1, 2024. ; and
    (2) SFP selection begins in CY 2024.
    (b) Selection criteria. (1) Selection of hospices for the SFP is 
made based on the highest aggregate scores based on the algorithm used 
by CMS.
    (2) Hospice programs with accrediting organization deemed status 
placed in the SFP--
    (i) Do not retain deemed status; and
    (ii) Are placed under CMS or State survey agency jurisdiction until 
completion of the SFP or termination.
    (c) Survey and enforcement criteria. A hospice in the SFP--
    (1) Is surveyed not less than once every 6 months by CMS or the 
State agency; and
    (2) With condition level deficiencies on any survey is subject to 
standard enforcement actions and may be subject to progressive 
enforcement remedies at the discretion of CMS.
    (d) Completion criteria. A hospice in the SFP that has two SFP 
surveys within 18 months with no condition-level deficiencies, and that 
has no pending complaint survey triaged at an immediate jeopardy or 
condition level, or that has returned to substantial compliance with 
all requirements may complete the SFP.
    (e) Termination criteria. (1) A hospice in the SFP that does not 
meet the SFP completion requirements in paragraph (d) of this section 
is considered for termination from the Medicare program in accordance 
with 42 CFR 489.53.
    (2) CMS may consider termination from the Medicare program in 
accordance with Sec.  488.1225 if any survey results in an immediate 
jeopardy citation while the hospice is in the SFP.
    (f) Public reporting. CMS posts all of the following at least 
annually on a CMS public-facing website:
    (1) A subset of 10 percent of hospice programs based on the highest 
aggregate scores as determined by the algorithm used by CMS.
    (2) Hospice SFP selection from the list in paragraph (f)(1) of this 
section as determined by CMS.

[[Page 77880]]

    (3) SFP status as defined in Sec.  488.1105.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

0
32. The authority citation for part 489 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395i-3, 1395x, 1395aa(m), 1395cc, 
1395ff, and 1395(hh).


0
33. Section 489.52 is amended by adding paragraph (b)(4) to read as 
follows:


Sec.  489.52  Termination by the provider.

* * * * *
    (b) * * *
    (4) A provider may request a retroactive termination date if no 
Medicare beneficiary received services from the facility on or after 
the requested termination date.
* * * * *

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-24455 Filed 11-1-23; 4:15 pm]
BILLING CODE 4120-01-P