[Federal Register Volume 90, Number 125 (Wednesday, July 2, 2025)]
[Proposed Rules]
[Pages 29108-29339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12347]
[[Page 29107]]
Vol. 90
Wednesday,
No. 125
July 2, 2025
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 414, et al.
Medicare and Medicaid Programs; Calendar Year 2026 Home Health
Prospective Payment System (HH PPS) Rate Update; Requirements for the
HH Quality Reporting Program and the HH Value-Based Purchasing Expanded
Model; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Competitive Bidding Program Updates; DMEPOS Accreditation
Requirements; Provider Enrollment; and Other Medicare and Medicaid
Policies; Proposed Rule
Federal Register / Vol. 90 , No. 125 / Wednesday, July 2, 2025 /
Proposed Rules
[[Page 29108]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 414, 424, 455, 484, and 498
[CMS-1828-P]
RIN 0938-AV53
Medicare and Medicaid Programs; Calendar Year 2026 Home Health
Prospective Payment System (HH PPS) Rate Update; Requirements for the
HH Quality Reporting Program and the HH Value-Based Purchasing Expanded
Model; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Competitive Bidding Program Updates; DMEPOS Accreditation
Requirements; Provider Enrollment; and Other Medicare and Medicaid
Policies
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would set forth routine updates to the
Medicare home health payment rates in accordance with existing
statutory and regulatory requirements. In addition, this proposed rule
proposes permanent and temporary behavior adjustments and proposes to
recalibrate the case-mix weights and update the functional impairment
levels; comorbidity subgroups; and low-utilization payment adjustment
(LUPA) thresholds for CY 2026. Lastly, this proposed rule proposes
policy changes to the face-to-face encounter policy. It also proposes
changes to the Home Health Quality Reporting Program (HH QRP) and the
expanded Health Value-Based Purchasing (HHVBP) Model requirements. In
addition, it would update the Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP).
Lastly it proposes: a technical change to the HH conditions of
participation; updates to DMEPOS supplier conditions of payment;
updates to provider and supplier enrollment requirements; and changes
to DMEPOS accreditation requirements.
DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on September 2, 2025.
ADDRESSES: In commenting, please refer to file code CMS-1828-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1828-P, P.O. Box 8013, Baltimore, MD
21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1828-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
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].
For more information about the expanded Home Health Value-Based
Purchasing Model, please visit the Expanded HHVBP Model web page at
https://www.cms.gov/priorities/innovation/innovation-models/expanded-home-health-value-based-purchasing-model or send your inquiry via email
to [email protected].
Frank Whelan (410) 786-1302, for Medicare provider and supplier
enrollment and DMEPOS accreditation inquiries.
Katie Parker (410) 786-0537, Emily Calvert (410) 786-4277, or
Jessica Martindale (410) 786-1558 for DMEPOS Prior Authorization
inquiries.
Alexander Ullman at (410) 786-9671 or [email protected], for
DMEPOS Competitive Bidding Program inquiries.
For information about the Home Health Conditions of Participation,
send your inquiry via email to [email protected].
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov/. Follow the search instructions on that website to
view public comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
Deregulation Request for Information (RFI): On January 31, 2025,
President Trump issued Executive Order (E.O.) 14192 ``Unleashing
Prosperity Through Deregulation,'' which states the Administration
policy to significantly reduce the private expenditures required to
comply with Federal regulations to secure America's economic prosperity
and national security and the highest possible quality of life for each
citizen. We would like public input on approaches and opportunities to
streamline regulations and reduce administrative burdens on providers,
suppliers, beneficiaries, and other stakeholders participating in the
Medicare program. CMS has made available a Request for Information
(RFI) at: (https://www.cms.gov/medicare-regulatory-relief-rfi). Please
submit all comments in response to this request for information through
the provided weblink.
Table of Contents
I. Executive Summary
A. Purpose and Legal Authority
B. Summary of the Provisions of This Proposed Rule
C. Summary of the Regulatory Impact Analysis
II. Home Health Prospective Payment System
A. Overview of the Home Health Prospective Payment System
B. Monitoring the Effects of the Implementation of the PDGM
C. Proposed CY 2026 Payment Adjustments Under the HH PPS
D. Proposed CY 2026 Home Health Low Utilization Payment
Adjustment (LUPA) Thresholds, Functional Impairment Levels,
Comorbidity Sub-Groups, and Case-Mix Weights
E. Proposed CY 2026 Home Health Payment Rate Updates
F. Proposed Regulation Change to Face-to-Face Encounter
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III. Home Health Quality Reporting Program (HH QRP)
A. Background and Statutory Authority
B. Summary of the Provisions of This Proposed Rule
C. Quality Measures Currently Adopted for the CY 2026 HH QRP
D. Proposed Removal of the COVID-19 Vaccine: Percent of
Patients/Residents Who Are Up to Date (Patient/Resident COVID-19
Vaccine) Measure Beginning With the CY 2026 HH QRP
E. Proposed Removal of Four Standardized Patient Assessment Data
Elements Beginning With the CY 2027 HH QRP
F. Amending the Data Non-Compliance Reconsideration Request
Policy and Process Beginning With the FY 2027 HH QRP
G. Updates to Requirements for OASIS All-Payer Data Submission
H. Proposed HHCAHPS Survey Updates
I. HH QRP Quality Measure Concepts Under Consideration for
Future Years--Request for Information
J. Potential Revision of the Final Data Submission Deadline
Period From 4.5 Months to 45 Days--Request for Information (RFI)
K. Advancing Digital Quality Measurement in the HH QRP--Request
for Information
L. Form, Manner, and Timing of Data Submission Under the HH QRP
M. Policies Regarding Public Display of Measure Data for the HH
QRP
IV. The Expanded Home Health Value-Based Purchasing (HHVBP) Model
A. Background
B. Proposed Changes to HHVBP Measure Removal Factors
C. Proposed Changes to the Expanded HHVBP Model's Applicable
Measure Set
D. HHVBP Quality Measure Concepts Under Consideration for Future
Years--Request for Information
V. Updates to the Home Health Agency CoPs To Align With the OASIS
All-Payer Submission Requirements
A. Statutory Authority and Background
B. Updates to the Home Health Agency CoPs To Align With the
OASIS All-Payer Submission Requirements (Sec. Sec. 484.45(a) and
484.55(d)(1)(i))
VI. Provider Enrollment, Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Accreditation
Policies, and DMEPOS Prior Authorization
A. Provider Enrollment
B. DMEPOS Supplier Accreditation Process
C. Proposed Exemption Process for Prior Authorization of Certain
DMEPOS Items (Sec. 414.234(c)(1) and (c)(1)(ii))
VII. DMEPOS Competitive Bidding Program
A. Background
B. Determining Payment Amounts and the Number of Contracts
Awarded for the DMEPOS CBP
C. Adjustments to SPAs
D. Bid Limits and Conditions for Awarding Contracts if Savings
Are Not Expected
E. Revising the Definition of Item Related to Medical Supplies
F. Remote Item Delivery (RID) CBP
G. Payment for Continuous Glucose Monitors and Insulin Infusion
Pumps
H. Revising the Submission of Financial Document Requirements
for the DMEPOS CBP
I. Revising the CDRD Evaluation and Notification Process for the
DMEPOS CBP
J. Bid Surety Bond Review Process
K. Tribal Exemption From Participating in the DMEPOS CBP
L. Addition of a Termination Clause for the Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive
Bidding Program (CBP) Supplier Contracts
M. Technical Change to Sec. 414.408(h)(8)
N. Definitions of Competition and Adjusted and Unadjusted Fee
Schedule Amounts Under Sec. 414.402
VIII. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. Information Collection Requirements (ICRs)
IX. 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. Unleashing Prosperity Through Deregulation
K. Conclusion
X. Response to Comments
I. Executive Summary
A. Purpose and Legal Authority
1. Home Health Prospective Payment System (HH PPS)
As required under section 1895(b) of the Social Security Act (the
Act), this proposed rule would update the CY 2026 Medicare payment
rates for home health agencies (HHAs). In this proposed rule, we
include an analysis of home health utilization, as well as analysis of
the difference between assumed versus actual behavior change on
estimated aggregate expenditures for home health payments as a result
of the change in the unit of payment to 30 days and the implementation
of the Patient Driven Groupings Model (PDGM) case-mix adjustment
methodology. This rule analyzes the difference between assumed versus
actual behavior change on estimated aggregate expenditures and proposes
permanent and temporary adjustments to the CY 2026 home health base
payment rate. In addition, this rule proposes to recalibrate the PDGM
case-mix weights and to update the low-utilization payment adjustment
(LUPA) thresholds, functional impairment levels, and comorbidity
adjustment subgroups under sections 1895(b)(4)(A)(i) and (b)(4)(B) of
the Act for 30-day periods of care in CY 2026. This proposed rule
proposes to update the CY 2026 fixed-dollar loss (FDL) ratio for
outlier payments (so that outlier payments as a percentage of estimated
total payments are projected not to exceed 2.5 percent, as required by
section 1895(b)(5)(A) of the Act). Additionally, this rule proposes
changes to the face-to-face encounter policy at 42 CFR 424.22(a)(1)(v)
to align with section 3708 of the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act).
2. 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 proposing updated quality reporting
policies. We are proposing to remove the COVID-19 Vaccine: Percent of
Patients Who Are Up to Date measure and the item related to the measure
and corresponding data element. CMS is proposing the removal of four
assessment items: one Living Situation item, two Food items, and one
Utilities item. We are also proposing to revise the policy to allow for
providers to submit a request for reconsideration of an initial
determination of noncompliance if they can demonstrate full compliance.
In very limited circumstances, HHAs can request an extension to file a
reconsideration request if the HHA was affected by an extraordinary
circumstance beyond the control of the HHA (that is, a natural or man-
made disaster such as a cyber-attack, hurricane, tornado, or
earthquake) during the 30-day reconsideration period. CMS is also
proposing to implement a revised Home Health Consumer Assessment of
Healthcare Providers and Systems (HHCAHPS) Survey beginning with the
April 2026 sample month. This rule would also update regulatory text to
account for all-payer data submission of OASIS data. We are seeking
information on a change to the final data submission deadline period
from 4.5 months to 45 days. We are also seeking feedback on the digital
quality measurement (dQM) transition for HHAs. We aim to solicit
feedback from the public on the current adoption of health information
technology (IT) and standards including Fast Healthcare
Interoperability Resources (FHIR), including related challenges or
barriers HHAs are facing. Finally, we are seeking input on future HH
QRP quality measure (QM) concepts of interoperability, cognitive
function, nutrition, and patient well-being.
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3. Expanded Home Health Value-Based Purchasing (HHVBP) Model
In accordance with the statutory authority at section 1115A of the
Act, we are doing the following for the expanded HHVBP Model: (1)
proposing a new measure removal factor for the expanded HHVBP Model
applicable measure set; (2) proposing changes to the expanded HHVBP
Model applicable measure set; and (3) including a request for
information (RFI) related to potential future performance measure
concepts.
We propose to add a new measure removal factor for the expanded
HHVBP Model applicable measure set for measures that are not feasible
to implement. We propose to remove three HHCAHPS Survey-based measures,
to align with proposed changes to the HHCAHPS survey. We also propose
the addition of four new measures. These additions include the claims-
based Medicare Spending Per Beneficiary Post-Acute Care (MSPB-PAC)
measure, and three OASIS-based function measures: Improvement in
Bathing, Improvement in Upper Body Dressing, and Improvement in Lower
Body Dressing. Due to these proposed changes to the applicable measure
set, we also propose to revise the weights of the individual HHVBP
measures as well as the measure categories. We also include an RFI
related to potential future measure concepts for the expanded HHVBP
Model.
4. Updates to the Home Health Agency CoPs To Align With the OASIS All-
Payer Submission Requirements
We propose technical regulation text changes to the Home Health
Conditions of Participation (CoP). These technical changes update
terminology in the Home Health CoPs to further clarify that the
requirement for reporting OASIS information applies to all HHA patients
receiving skilled services.
5. Medicare and Medicaid Provider Enrollment
Consistent with section 1866(j) of the Act, we are proposing
several Medicare provider enrollment provisions to strengthen and
clarify certain aspects of the provider enrollment process. These
include but are not limited to: (1) modifying grounds for denying,
revoking, or deactivating a provider's or supplier's Medicare
enrollment; and (2) expanding the reasons for which CMS can apply a
retroactive effective date for provider and supplier revocations. These
changes are necessary to help ensure that payments are made only to
qualified providers and suppliers, which we believe would assist in
protecting the Trust Funds and Medicare beneficiaries.
We are also proposing a technical correction to one of our Medicaid
provider enrollment provisions in 42 CFR 455.416 to further clarify the
scope of Sec. 455.416(c).
6. DMEPOS Supplier Accreditation Organizations
Consistent with provisions in section 1834(a)(20) of the Act, we
are proposing to revise and supplement a number of our regulations
regarding DMEPOS supplier accreditation and, in particular,
requirements that an organization must meet to become and remain a CMS-
approved DMEPOS accrediting organization (AO). Our proposed revisions
include but are not limited to: (1) requiring DMEPOS suppliers to be
surveyed and reaccredited every year (as opposed to the current 3-year
cycle); (2) eliminating inconsistencies among AOs in how they oversee
DMEPOS suppliers; and (3) strengthening our ability to take action
against poorly performing DMEPOS AOs. We believe these changes would
help better ensure that DMEPOS AOs closely oversee DMEPOS suppliers for
compliance with the DMEPOS quality standards.
7. DMEPOS Prior Authorization
Consistent with provisions in section 1834(a)(15) of the Act and
final rule provisions published in the November 8, 2019 Federal
Register 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) Fee Schedule Amounts, DMEPOS Competitive Bidding
Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS
Order, and Master List of DMEPOS Items Potentially Subject to a Face-
to-Face Encounter and Written Order Prior to Delivery and/or Prior
Authorization Requirements'' (84 FR 60648), hereinafter referred to as
the ``2019 ESRD PPS & DMEPOS final rule,'' we propose to clarify
authority at Sec. 414.234(c)(1)(ii) to exempt compliant suppliers,
while also establishing notice guidelines for establishing an exemption
and withdrawal of an exemption. The 2019 ERSD PPS & DMEPOS final rule
created the authority at Sec. 414.234(c)(1)(ii) to exempt suppliers
from required prior authorization of DMEPOS items upon compliance with
Medicare coverage, coding, and payment requirements. However, to
clarify this process for exemption from prior authorization
requirements, CMS is proposing to establish guidelines for granting and
withdrawing exemptions. Furthermore, we are proposing to establish
notification requirements to put suppliers on notice that the exemption
has either been granted or withdrawn.
8. DMEPOS Competitive Bidding Program
We are proposing changes to regulations at subpart C of 42 CFR 414
we believe are necessary for the effective implementation of the DMEPOS
Competitive Bidding Program (CBP) mandated by section 1847(a) of the
Act.
a. Determining Payment Amounts and the Number of Contracts Awarded for
the DMEPOS CBP
The purpose of this proposal is to revise both how single payment
amounts (SPAs) are calculated and how CMS determines the number of
contracts to award in each ``competition,'' which is a term that we use
under the DMEPOS CBP to refer to a competitive bidding area (CBA) and
product category combination.
b. Adjustments to SPAs
The purpose of this proposal is to acknowledge the challenge and
uncertainty a bidder may face when factoring inflation into its bid. We
believe that adding an annual increase to the SPAs to account for
inflation would be consistent with Medicare making annual covered item
updates for other DMEPOS items and services. This would account for
inflation in the cost of doing business for suppliers submitting bids
for furnishing items under a multiyear contract.
c. Bid Limits and Conditions for Awarding Contracts if Savings Are Not
Expected
The purpose of this proposal is to revise the methodology used to
establish bid limits and establish the conditions for determining when
contracts cannot be awarded in accordance with section
1847(b)(2)(A)(iii) of the Act because the total amounts to be paid to
contract suppliers in a CBA are expected to be less than the total
amounts that would otherwise be paid. We believe these proposed changes
would better ensure the DMEPOS CBP is responsive to rising costs over
time while still ensuring alignment with the statutory requirement for
achieving savings.
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d. Revising the Definition of ``Item'' Related to Medical Supplies
The purpose of this proposal is to specify that ostomy,
tracheostomy, and urological supplies are medical equipment items
mandated for inclusion under the DMEPOS CBP by section 1847(a)(2)(A) of
the Act.
e. Remote Item Delivery (RID) CBP
The purpose of this proposal is to create two new definitions under
Sec. 414.402 for ``Remote item delivery CBP'' and ``Remote item
delivery item'' for the purpose of establishing one or more RID CBPs
wherein contract suppliers would be responsible for furnishing the
items and services under the product category primarily on a mail order
basis to all Medicare beneficiaries regardless of where they live in
the CBA, but could also furnish the items on a non-mail order basis.
Any competitively bid item furnished on a non-mail order basis would
also need to be furnished by a contract supplier. We are proposing that
for a given product category, we could implement one nationwide RID CBP
that would include all areas (all States, territories, and the District
of Columbia) or we could implement multiple RID CBPs covering different
regions of the country. Items included in a nationwide or regional RID
CBP would be those that are typically furnished to beneficiaries from
remote supplier locations that are hundreds of miles on average from
the beneficiary residence where the items are delivered.
f. Payment for Continuous Glucose Monitors and Insulin Infusion Pumps
The purpose of this proposal is to make payment under the DMEPOS
CBP for certain continuous glucose monitors and insulin infusion pumps
and all necessary supplies and accessories on a bundled monthly rental
basis. The technology of products used by beneficiaries to help manage
diabetes continues to change rapidly, and without frequent and
substantial servicing to ensure that the devices continue to function
correctly, the beneficiary might not receive information they need to
make correct diabetes treatment decisions or the dosage of insulin
administered by the insulin pump could be incorrect, putting the
beneficiary in imminent danger. This proposal would eliminate the need
to wait 5 years to replace equipment, allowing beneficiaries to use the
latest technologically updated items. Payment for continuous glucose
monitors and insulin infusion pumps and all necessary supplies and
accessories that are not furnished under the DMEPOS CBP would also be
made on a bundled monthly rental basis in the same amounts established
for continuous glucose monitors and insulin infusion pumps under the
DMEPOS CBP.
g. Revising the Submission of Financial Documents for the DMEPOS CBP
The purpose of this proposal is to streamline the requirements and
evaluation of the DMEPOS CBP financial standards, while still ensuring
that suppliers that are offered contracts are financially stable enough
to participate in the Medicare DMEPOS CBP for the duration of the
contract performance period.
h. Revising the Covered Document Review Date Evaluation and
Notification Process for the DMEPOS CBP
The purpose of this proposal is to streamline the process for
evaluating and notifying a bidder who submitted a covered document by
the covered document review date if a covered document(s) is missing.
i. Bid Surety Bond Review Process
The purpose of this proposal is to codify the bid surety bond rider
process that occurred during the DMEPOS CBP round in 2021 and to
correct a regulatory citation error from previous rulemaking.
j. Tribal Exemption From Participating in the DMEPOS CBP
The purpose of this proposal is to add a Tribal exception to the
DMEPOS CBP regulations.
k. Addition of a Termination Clause for the DMEPOS CBP Supplier
Contracts
The purpose of this proposal is to add a termination clause to the
DMEPOS CBP contracts that could be utilized during a public health
emergency (PHE), when CMS determines that credible evidence exists of
an access problem for beneficiaries, and when CMS believes the
termination of an entire DMEPOS CBP contract, the termination of a
competition on a DMEPOS CBP contract, or the termination of a defined
area(s) within a CBA could improve the situation for the applicable
competition(s) or defined areas (for example, ZIP codes) within a CBA.
l. Technical Change to Sec. 414.408(h)(8)
The purpose of this proposal is to make a technical change to Sec.
414.408(h)(8) so that it correctly refers to paragraph (h)(8)(ii)
instead of paragraph (h)(7)(ii).
m. Adding Definitions of Adjusted Fee Schedule, Amount Competition, and
Unadjusted Fee Schedule Amount to Sec. 414.402
The purpose of this proposal is to add definitions of ``Adjusted
fee schedule amount,'' ``Competition,'' and ``Unadjusted fee schedule
amount'' to Sec. 414.402 for the purpose of simplifying the regulation
text for subpart F.
B. Summary of the Provisions of This Proposed Rule
1. Home Health Prospective Payment System (HH PPS)
In section II.B.1. of this proposed rule, we provide monitoring and
data analysis on the PDGM utilization.
In section II.C.1. of this proposed rule, we propose a permanent
adjustment and a temporary adjustment to the base payment rate under
the HH PPS.
In section II.D. of this proposed rule, we propose to recalibrate
the CY 2026 PDGM case-mix weights and to update the low-utilization
payment adjustment (LUPA) thresholds, functional impairment levels, and
comorbidity adjustment subgroups.
In section II.E. of this proposed rule, we propose to update the
home health wage index. We also propose to update the CY 2026 national,
standardized 30-day period payment rates and the CY 2026 national per-
visit payment amounts by the home health payment update percentage. The
proposed home health payment update percentage for CY 2026 is 2.4
percent. Additionally, this rule proposes the CY 2026 fixed dollar loss
(FDL) ratio to ensure that aggregate outlier payments are projected not
to exceed 2.5 percent of the total aggregate payments, as required by
section 1895(b)(5)(A) of the Act.
In section II.F. of this proposed rule, we propose changes to the
face-to-face encounter policy at 42 CFR 424.22(a)(1)(v).
2. Home Health Quality Reporting Program (HH QRP)
In section III. of this proposed rule, we are proposing to remove
the COVID-19 Vaccine: Percent of Patients Who Are Up to Date measure
and the item related to the measure. CMS is proposing the removal of
four assessment items: one Living Situation item, two Food items, and
one Utilities item. CMS is also proposing to implement a revised
HHCAHPS Survey beginning with the April 2026 sample month. We are also
proposing to revise the policy to allow for providers to submit a
request for reconsideration of an initial determination of non-
compliance with the HH QRP data submission
[[Page 29112]]
requirements. They can request this if they believe that they can
demonstrate full compliance. We are also proposing that, in very
limited circumstances, the HHA could request an extension to file a
reconsideration request if the HHA was affected by an extraordinary
circumstance beyond the control of the HHA, (that is, a natural
disaster or man-made disaster such as a cyber-attack, hurricane,
tornado, or earthquake) during the 30-day period for requesting
reconsideration of the initial determination. We are also seeking
information on a change to the final data submission deadline period
from 4.5 months to 45 days. We are also seeking feedback on the digital
quality measurement (dQM) transition for HHAs. We aim to solicit
feedback from the public on current adoption of health information
technology (IT) and standards, including Fast Healthcare
Interoperability Resources (FHIR), and what related challenges or
barriers HHAs are facing. Finally, we are seeking input on future HH
QRP quality measure (QM) concepts of interoperability, cognitive
function, nutrition, and patient well-being.
3. Expanded Home Health Value Based Purchasing (HHVBP) Model
In section IV. of this proposed rule, we propose to add a new
measure removal factor for the expanded HHVBP Model applicable measure
set. This ninth measure removal factor would allow CMS to propose
removal of a measure when it is no longer feasible to implement the
measure specifications. We also propose changes to the expanded HHVBP
Model applicable measure set and changes to measure weights. We propose
to remove three HHCAHPS Survey-based measures, to align with proposed
changes to the HHCAHPS survey. We also propose the addition of four new
measures. These additions include the claims-based Medicare Spending
Per Beneficiary Post-Acute Care (MSPB-PAC) measure, and three OASIS-
based function measures: Improvement in Bathing, Improvement in Upper
Body Dressing, and Improvement in Lower Body Dressing. Due to these
proposed changes to the applicable measure set, we also propose to
revise the weights of the individual HHVBP measures and the measure
categories.
We also include an RFI related to potential future measure concepts
for the expanded HHVBP Model.
4. Updates to the Home Health Agency CoPs To Align With the OASIS All-
Payer Submission Requirements
In section V. of this proposed rule, we propose technical
regulation text changes to the Home Health Conditions of Participation
(CoP) to align with the OASIS all-payer submission requirements. These
technical changes update terminology in the Home Health CoPs to further
clarify that the requirement for reporting OASIS information applies to
all HHA patients receiving skilled services.
5. Medicare and Medicaid Provider Enrollment
We are proposing several Medicare provider enrollment provisions to
strengthen and clarify certain aspects of the provider enrollment
process. These include, but are not limited to, the following:
Modifying grounds for denying, revoking, or deactivating a
provider's or supplier's Medicare enrollment.
Expanding the reasons for which CMS can apply a
retroactive effective date for provider and supplier revocations.
Expanding the reasons for which CMS can apply a stay of
enrollment.
Requiring providers and suppliers to report any adverse
legal actions imposed against them, their owners, their managers, etc.
within 30 days instead of the current 90 days.
We believe these revisions would help keep unqualified providers
and suppliers out of the Medicare program, which, in turn would prevent
improper Medicare payments to such parties.
6. DMEPOS Supplier Accreditation Organizations
DMEPOS suppliers are required to be accredited by a CMS-approved
accrediting organization to enroll in and bill Medicare. The purpose of
accreditation is to confirm, typically through an on-site survey of the
supplier, that the supplier meets the DMEPOS quality standards.
Regulations promulgating our accreditation requirements were enacted in
2006 but have not been updated since then. We are concerned there may
be instances where: (1) AOs are accrediting DMEPOS suppliers that do
not meet the quality standards; and (2) DMEPOS suppliers are falling
out of compliance with the quality standards (sometimes for extended
periods) after becoming accredited. To enhance our ability to ensure
that AOs are performing DMEPOS accreditation functions effectively and
thoroughly, including verifying suppliers' compliance with the quality
standards, we are proposing to add a number of provisions to our DMEPOS
accreditation regulations. Among our proposed provisions are:
Requiring DMEPOS suppliers to be surveyed and reaccredited
every year (as opposed to the current 3-year cycle).
Reducing inconsistencies among AOs in how they oversee
DMEPOS suppliers.
Requiring AOs to furnish more detailed information to CMS
when applying or reapplying for approval to become or remain a DMEPOS
AO.
Facilitating greater CMS oversight of the DMEPOS AOs.
We believe these and other changes to the DMEPOS accreditation
process would help ensure that unqualified DMEPOS suppliers are not
accredited and do not, in turn, receive Medicare payments.
7. DMEPOS Prior Authorization
In section V.C. of this proposed rule, we propose to establish
guidelines for granting and withdrawing exemptions from mandatory prior
authorization requirements for certain DMEPOS suppliers.
8. DMEPOS Competitive Bidding
a. Determining Payment Amounts and the Number of Contracts Awarded for
the DMEPOS CBP
Currently SPAs for the lead item (defined under Sec. 414.402 as
the item in the product category with the highest total allowed charges
nationwide) are calculated using the maximum winning bid submitted by
bidders whose composite bids for the product category that includes the
lead item are equal to or below the pivotal bid for that product
category. We are proposing to revise this calculation to use the 75th
percentile of winning bids for the lead item by bidders whose composite
bids for the product category that includes the lead item are equal to
or below the pivotal bid for that product category. We are also
proposing to change the way the SPAs are calculated for the non-lead
items in a product category in certain CBAs. Currently, the ratio
multiplied by the SPA for the lead item to calculate the SPA for the
non-lead item is based on the average of the 2015 fee schedule amounts
for all areas (that is, all states, the District of Columbia, Puerto
Rico, and the United States Virgin Islands) for the non-lead item
divided by the average of the 2015 fee schedule amounts for all areas
for the lead item. This formula uses average fee schedule amounts
rather than fee schedule amounts for specific areas, which results in
cases where the SPA for a
[[Page 29113]]
non-lead item can be higher than the fee schedule amount that would
otherwise be paid. To address this situation in CBAs other than remote
item delivery CBAs, we are proposing to calculate the ratio based on
the 2015 fee schedule amounts for each specific area rather than the
average of the 2015 fee schedule amounts for all areas. Additionally,
the proposed rule would revise how CMS determines the number of DMEPOS
CBP contracts to award to DMEPOS suppliers by using contract supplier
utilization information from previous rounds of the DMEPOS CBP for
product categories previously included under the CBP as well as
information on current supplier utilization for new product categories.
b. Adjustments to SPAs
We are proposing to apply an annual update factor to SPAs, starting
with year two of the DMEPOS CBP contracts.
c. Bid Limits and Conditions for Awarding Contracts if Savings Are Not
Expected
We are proposing to amend 42 CFR 414.414(f) so contracts could be
awarded in a CBA if the amounts to be paid are no greater than 110
percent of the amounts that would otherwise be paid for the items. This
rule clarifies that the amounts that would otherwise be paid include
payment amounts adjusted in accordance with Sec. 414.210(g). This rule
also proposes to modify 42 CFR 414.412(b) to establish bid limits both
for items included in the CBP for the first time and for items that
have previously been included in the CBP. For items included in the CBP
for the first time, the bid limits would be the amounts otherwise paid
for the items. For items that have previously been included in the CBP,
the bid limits would be the most recent SPA for the items plus 10
percent, or if it has been more than a year since the SPA was last in
effect, the inflation-adjusted SPA plus 10 percent. However, we are
proposing that in no event would the bid limit be allowed to exceed the
unadjusted fee schedule amount. In addition, this rule proposes a
technical correction to add reference to subpart Q (``Payment for
Lymphedema Compression Treatment Items'') to 42 CFR 414.414(f).
d. Payment for Continuous Glucose Monitors and Insulin Infusion Pumps
We are proposing to make payment under the DMEPOS CBP for certain
continuous glucose monitors and insulin infusion pumps and all
necessary supplies and accessories on a bundled monthly rental basis.
We are proposing that payment for continuous glucose monitors and
insulin infusion pumps and all necessary supplies and accessories that
are not furnished under the DMEPOS CBP would also be made on a bundled
monthly rental basis with payments limited to the amounts established
for continuous glucose monitors and insulin infusion pumps under the
DMEPOS CBP.
e. Revising the Definition of ``Item'' as Related to Medical Supplies
We are proposing to revise the definition of ``item'' at Sec.
414.402 to clarify that section 1847(a)(2) of the Act includes ostomy,
tracheostomy, and urological supplies as ``items'' subject to the
DMEPOS CBP. We are proposing that ``medical supplies'' under this
section is a category of items separate from durable medical equipment
that includes ostomy, tracheostomy, and urological supplies.
f. Remote Item Delivery (RID) CBP
We are proposing to create two new definitions under Sec. 414.402
for the purpose of establishing a RID CBP(s) wherein contract suppliers
would be required to furnish the items primarily on a mail order basis
under the product category to all Medicare beneficiaries regardless of
where they live in the CBA. While we expect that the majority of items
would be furnished on a mail order basis, a RID competition would not
exclude items in the product category that are furnished on a non-mail
order basis. Items included in a RID CBP would be those that are
typically furnished to beneficiaries from remote supplier locations
that are hundreds of miles on average from the beneficiary residence
where the items are delivered.
g. Revising the Submission of Financial Document Requirements for the
DMEPOS CBP
We are proposing to no longer require the submission of a tax
return extract, income statement, balance sheet, or statement of cash
flows for the purpose of implementing the financial standards mandated
by section 1847(b)(2)(A)(ii) of the Act. This proposal would reduce
burden for suppliers submitting bids under the DMEPOS CBP. However, we
are proposing to continue requiring suppliers to submit a credit report
with a numerical credit score and/or rating from one of the four
approved credit reporting agencies during the bid window, and by the
CDRD if the supplier wants to be eligible for the process for reviewing
covered documents. Additionally, we are proposing to continue using a
five-tier scoring system in the evaluation of the credit report with a
numerical credit score and/or rating, which will be utilized to
establish a financial score that will indicate if a supplier is
financially stable enough to participate in the Medicare DMEPOS CBP for
the duration of the contract performance period. We are also proposing
to no longer use a supplier's financial score to assist in determining
the capacity to assign to each supplier to meet projected beneficiary
demand. Furthermore, we are proposing to have suppliers attest to the
fact that they meet the small supplier threshold in the DMEPOS Bidding
System (DBidS), or any successor system, if applicable.
h. Revising the CDRD Evaluation and Notification Process for the DMEPOS
CBP
Since the inception of the DMEPOS CBP, when a bidder has submitted
at least one covered document by the CDRD, CMS has notified the bidder
within 90 days after the CDRD if they were missing a covered document
by the close of the bid window or if a covered document was missing by
the CDRD. We are proposing that when a bidder has submitted at least
one covered document by the CDRD, CMS will notify the bidder within 90
days after the CDRD if they have any missing covered document(s) by the
close of the bid window. The supplier would have 10 days after such
notification to provide the missing covered document(s).
i. Bid Surety Bond Review Process
CMS applied a bid surety bond rider process during bid evaluation
for the DMEPOS CBP round in 2021, and we are now proposing to codify
this process in regulation for all future rounds. Additionally, we are
proposing to correct a technical error in 42 CFR 414.412(g) that
happened as a result of a paragraph redesignation in 83 FR 57072.
j. Tribal Exemption From Participating in the DMEPOS CBP
We are proposing to add an exception to the DMEPOS CBP that would
allow Medicare payment to Indian Health Service (IHS) and tribally
operated facilities and suppliers as noncontract suppliers to furnish
competitively bid items and services to American Indian/Alaska Native
(AI/AN) Medicare beneficiaries who reside in a CBA during a round of
the DMEPOS CBP.
[[Page 29114]]
k. Addition of a Termination Clause for the DMEPOS CBP Supplier
Contracts
We are proposing in Sec. 414.422 to have the option to
unilaterally terminate or modify each applicable DMEPOS CBP supplier
contract to allow any Medicare enrolled DMEPOS supplier to furnish the
applicable items and services to Medicare beneficiaries if CMS
determines that due to a PHE, contract suppliers are unable to furnish
certain items and services to beneficiaries in certain areas impacted
by a PHE (PHE-impacted area) as required under their respective DMEPOS
CBP supplier contracts.
CMS is proposing in Sec. 414.422 to have the option to remove
items and services furnished in a PHE-impacted areas from the DMEPOS
CBP when all of the following qualifying criteria are met: (1) he
Secretary declares a PHE; (2) CMS determines that verifiable evidence
exists of a DMEPOS access problem for beneficiaries for a certain
competition or defined area(s) within the competition's CBA; (3) CMS
determines that awarding additional DMEPOS CBP supplier contracts, per
Sec. 414.414(i), would not address the access concerns; and (4) CMS
determines terminating or modifying each impacted DMEPOS CBP supplier
contract to exclude certain competition(s) or defined area(s) within
the competition's CBA from the DMEPOS CBP would alleviate access
concerns.
After termination and/or modification of all applicable DMEPOS CBP
supplier contracts, CMS is proposing in Sec. 414.422 to revert back to
the general fee-for-service program requirements set forth in 42 CFR
part 414 Subpart D for the applicable competition(s) or defined area(s)
within a CBA.
l. Technical Change to Sec. 414.408(h)(8)
We are proposing to make a technical change to Sec. 414.408(h)(8)
so that it correctly refers to paragraph (h)(8)(ii) instead of
paragraph (h)(7)(ii).
m. Adding Definitions of Adjusted Fee Schedule Amount, Competition, and
Unadjusted Fee Schedule Amount to Sec. 414.402
The purpose of this proposal is to add definitions of ``Adjusted
fee schedule amount,'' ``Competition,'' and ``Unadjusted fee schedule
amount'' to Sec. 414.402 for the purpose of simplifying the regulation
text for subpart F.
C. Summary of the Regulatory Impact Analysis
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
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)(A) of the Act
requires that, in defining a prospective payment amount, the Secretary
shall 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), 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. Pursuant to section
1895(b)(3)(B)(v)(I) of the Act, if an HHA does not submit quality data,
the home health market basket percentage increase is reduced by 2
percentage points. In the November 9, 2006, Federal Register (71 FR
65935), we issued a final rule 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) (Pub. L. 117-328) 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) 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 was required to be equal to the
supply price used to determine the relative value for the service under
the Medicare Physician Fee Schedule (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 reduced by the productivity adjustment as described
in section 1886(b)(3)(B)(xi)(II) of the Act 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-day
period payment rate includes
[[Page 29118]]
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)(5) 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
disposable negative pressure wound therapy (dNPWT) devices, but such
drugs and devices must be billed by the HHA while a patient is under a
home health plan of care, as the law requires separate consolidated
billing of certain osteoporosis drugs and dNPWT devices.
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, including the removal of therapy thresholds, 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) instrument. These 432 HHRGs represent the
different payment groups based on five main case-mix categories under
the PDGM, as shown in figure 1. 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) for further information.
BILLING CODE 4120-01-P
Figure 1: Case-Mix Variables in the PDGM
[[Page 29119]]
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BILLING CODE 4120-01-C
B. Monitoring the Effects of the Implementation of the PDGM
1. Routine PDGM Monitoring
CMS routinely analyzes 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; the proportion of 30-day
periods of care with and without any therapy visits, nursing visits,
and/or aide/social worker visits, and monitoring of home health visits
using telecommunications technology and remote patient monitoring. For
the monitoring included in this rule, we examine simulated data for CYs
2018 and 2019 and actual data for CYs 2020, 2021, 2022, 2023, and 2024
for 30-day periods of care. We refer readers to the CY 2022 HH PPS
final rule (86 FR 35881) for discussion about simulated data for CYs
2018 and 2019.
(a) Utilization
Table 2 shows the overall utilization of home health services. This
data indicates the average number of 30-day periods of care per unique
HHA beneficiary is higher in CY 2024 compared to CYs 2021, 2022, and
2023. The data also indicates that the number of 30-day periods of care
decreased between CY 2018 and CY 2024. Table 3 shows the average
utilization of visits per 30-day period of care by home health
discipline. Table 4 shows the proportion of 30-day periods of care that
are LUPAs and the average number of visits per discipline of those LUPA
30-day periods of care over time. The data show a decreasing trend in
the average number of visits per 30-day period and average number of
visits per discipline for LUPA 30-day periods of care between CY 2018
and CY 2024.
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(b) Analysis of 2023 Cost Report Data for 30-Day Periods of Care
In the CY 2025 HH PPS proposed rule (89 FR 55320), we provided a
summary of analysis on FY 2022 HHA cost report data, as this was the
most recent and complete cost report data at the time of rulemaking,
and CY 2023 claims to estimate 30-day period of care costs. Our
analysis showed that the CY 2023 national, standardized 30-day period
payment rate of $2,010.69 was approximately 32 percent more than the
estimated CY 2023 estimated 30-day period cost of $1,527.23.
Using this same process in this proposed rule to compare home
health payment to costs, we examined 2023 HHA Medicare cost reports
(CMS Form 1728-20, OMB No. 0938-0222), as this is the most recent and
complete cost report data at the time of rulemaking. We also examined
CY 2024 home health claims to estimate 30-day period of care costs. We
excluded LUPAs and partial payment adjustments when calculating the
average number of visits. The 2023 average NRS costs per visit is
$4.58. To update the estimated 30-day period of care costs, we begin
with the 2023 average costs per visit with NRS for each discipline and
multiply that amount by the CY 2024 home health payment update
percentage of 3.0 percent (or a home health payment update factor of
1.03). That amount for
[[Page 29121]]
each discipline is then multiplied by the 2024 average number of visits
by discipline to determine the 2024 estimated 30-day period costs.
Table 5 shows the estimated average costs for 30-day periods of care by
discipline with NRS and the total 30-day period of care costs with NRS
for CY 2024.
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The CY 2024 national standardized 30-day period payment rate was
$2,057.35, which is approximately 33 percent more than the CY 2024
estimated 30-day period cost of $1,548.39. Moreover, as shown in table3
in this proposed rule, HHAs have reduced visits under PDGM in CY 2024.
(c) Clinical Groupings and Comorbidities
Each 30-day period of care is grouped into one of 12 clinical
groups, which describes the primary reason for which a patient is
receiving home health services under the Medicare home health benefit.
The clinical grouping is based on the principal diagnosis reported on
the home health claim. Table 6 shows the distribution of the 12
clinical groups over time.
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Thirty-day periods of care receive a comorbidity adjustment
category based on 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. We refer readers to section II.D. of this
proposed rule and the CY 2020 HH PPS final rule with comment period (84
FR 60493) for further information on the comorbidity adjustment
categories. Home health 30-day periods of care can receive a low or a
high comorbidity adjustment, or no comorbidity adjustment. Table 7
shows the distribution of 30-day periods of
[[Page 29122]]
care by comorbidity adjustment category for all 30-day periods.
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(d) Admission Source and Timing
Each 30-day period of care is classified into one of two admission
source categories--community or institutional, depending on what
healthcare setting was utilized in the 14 days prior to receiving home
health care. Thirty-day periods of care for beneficiaries with any
inpatient acute care hospitalizations, inpatient psychiatric facility
(IPF) stays, skilled nursing facility (SNF) stays, inpatient
rehabilitation facility (IRF) stays, or long-term care hospital (LTCH)
stays within 14-days prior to a home health admission are designated as
institutional admissions. The institutional admission source category
also includes patients that had an acute care hospital stay during a
previous 30-day period of care and within 14 days prior to the
subsequent, contiguous 30-day period of care and for which the patient
was not discharged from home health and readmitted. All other 30-day
periods of care would be designated as community admissions.
Thirty-day periods of care are classified as ``early'' or ``late''
depending on when they occur within a sequence of 30-day periods of
care. The first 30-day period of care is classified as early and all
subsequent 30-day periods of care in the sequence (second or later) are
classified as late. A subsequent 30-day period of care would not be
considered early unless there is a gap of more than 60 days between the
end of one previous period of care and the start of another.
Information regarding the timing of a 30-day period of care comes from
Medicare home health claims data and not the OASIS assessment to
determine if a 30-day period of care is ``early'' or ``late''. Table8
shows the distribution of 30-day periods of care by admission source
and period timing.
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(e) Functional Impairment Level
Each 30-day period of care is placed into one of three functional
impairment levels (low, medium, or high) based on responses to certain
OASIS functional items associated with grooming, bathing, dressing,
ambulating, transferring, and risk for hospitalization. The specific
OASIS items that are used for the functional impairment level are found
in table 7 in the CY 2020 HH PPS final rule with comment period (84 FR
60490). Responses to these OASIS items are grouped together into
response categories with similar resource use and each response
category has associated points. A more detailed description as to how
these response categories were established can be found in the
technical report, ``Overview of the Home Health Groupings Model''
posted on the HHA web page.\1\ The sum of these points results in a
functional impairment score used to group 30-day periods of care into a
functional impairment level with similar resource use. The scores
associated with the functional impairment levels vary by clinical group
to account for differences in resource utilization. A patient's
functional impairment level remains the same for the first and second
30-day periods of care unless there is a significant change in
condition that warrants an ``other follow-up'' assessment prior to the
second 30-day
[[Page 29123]]
period of care. For each 30-day period of care, the Medicare claims
processing system looks for occurrence code 50 on the claim to
correspond to the M0090 date of the applicable assessment. Table 9
shows the distribution of 30-day periods by functional impairment
level.
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\1\ https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model.
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(f) Therapy and Non-Therapy Visits
Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act
eliminated the use of therapy thresholds in calculating payments for CY
2020 and subsequent years. Prior to implementation of the PDGM, HHAs
could receive an adjustment to payment based on the number of therapy
visits provided during a 60-day episode of care. We examined the
proportion of actual 30-day periods of care with and without therapy
visits. To be covered as skilled therapy, the services must require the
skills of a qualified therapist (that is, PT, OT, or SLP) or qualified
therapist assistant and must be reasonable and necessary for the
treatment of the patient's illness or injury. As shown in table 3, we
monitor the number of visits per 30-day period of care by each home
health discipline. Any 30-day period of care can include both therapy
and non-therapy visits. If any 30-day period of care consisted of only
visits for PT, OT, or SLP, then this 30-day period of care is
considered ``therapy only''. If any 30-day period of care consisted of
only visits for skilled nursing, home health aide, or social worker,
then this 30-day period of care is considered ``no therapy''. If any
30-day period of care consisted of at least one therapy visit and one
non-therapy, then this 30-day period of care is considered ``therapy +
non-therapy''. Table 10 shows the proportion of 30-day periods of care
with only therapy visits, at least one therapy visit and one non-
therapy visit, and no therapy visits. Figure 2 shows the proportion of
30-day periods of care by the number of therapy visits (excluding zero)
provided during 30-day periods of care.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP02JY25.017
[[Page 29124]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.028
Figures 2 and 3 indicate there have been changes in the
distribution of both therapy and non-therapy visits in CY 2024 compared
to CY 2023. For example, the proportion of 30-day periods with one
through five therapy visits during a 30-day period increased in CY 2024
compared to prior years. Comparing therapy utilization from before the
PDGM (CYs 2018 and 2019) to after the implementation of the PDGM (CYs
2020-2024), we also see an overall decline in therapy visits across all
clinical groups, as shown in Figure 3.
[[Page 29125]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.018
BILLING CODE 4120-01-C
We also examined the proportion of 30-day periods of care with and
without skilled nursing, social work, or home health aide visits. Table
11 shows the number of 30-day periods of care with only skilled nursing
visits, at least one skilled nursing visit and one other visit type
(therapy or non-therapy), and no skilled nursing visits. Table 12 shows
the number of 30-day periods of care with and without home health aide
or social worker visits.
[GRAPHIC] [TIFF OMITTED] TP02JY25.019
[[Page 29126]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.020
(g) Home Health Services Using Telecommunications Technology
As discussed in the CY 2023 final rule (87 FR 66858), we began
collecting data on the use of telecommunications technology used during
a home health period using three G-codes reported on home health
claims. Collecting data on services furnished via telecommunications
technology on claims allows CMS to analyze the characteristics of
patients using services provided remotely. The monitoring discussion
illustrates which services are most frequently furnished via
telecommunication technology and generally how long remote patient
monitoring is utilized.
We began collecting this information from HHAs on a voluntary basis
on January 1, 2023, and have required this information to be reported
on claims starting on July 1, 2023 (87 FR 66858). The three G-codes
help identify when home health services are furnished using synchronous
telemedicine rendered via a real-time two-way audio and video
telecommunications system (G0320); synchronous telemedicine rendered
via telephone or other real-time interactive audio-only
telecommunications systems (G0321); and the collection of physiologic
data digitally stored and/or transmitted by the patient to the home
health agency, that is, remote patient monitoring (G0322). We capture
the usage and length of remote patient monitoring using the start date
of the remote patient monitoring and the number of days of monitoring
indicated on the claim. We also looked at the disciplines most often
providing remote patient monitoring. We examined the utilization of
telecommunications technology devices during a home health period and
remote patient monitoring by looking at home health claims that
included the three G-codes. Tables 13 and 14 shows that the use of
telecommunications services reported on CY 2024 home health claims are
low (roughly 2 percent of all CY 2024 claims) and are mainly associated
with skilled nursing.
[GRAPHIC] [TIFF OMITTED] TP02JY25.021
[[Page 29127]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.022
We will continue to monitor the provision of home health services,
including any changes in the number and duration of home health visits,
composition of the disciplines providing such services,
telecommunications technology used during home health periods, and
overall home health payments to determine if refinements to the case-
mix adjustment methodology or other policies may be needed in the
future.
C. Proposed CY 2026 Payment Adjustments Under the HH PPS
1. Proposed Behavior Adjustments Under the HH PPS
a. Background
As discussed in section II.A.1. of this proposed rule, starting in
CY 2020, the Secretary was 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 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 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 for
CYs 2021 and 2022 related to the behavior change assumptions finalized
in the CY 2019 HH PPS final rule with comment period, or to the
negative 4.36 percent behavior change assumption adjustment, finalized
in the CY 2020 HH PPS final rule with comment period.
In the CY 2023 HH PPS final rule (87 FR 66796), we stated that we
had concluded, based on our annual monitoring at that time, that the
three expected behavior changes did in fact occur as a result of the
implementation of the PDGM and that other behaviors, such as changes in
the provision of therapy and changes in functional impairment levels,
had also occurred. We also reminded readers that in the CY 2020 HH PPS
final rule with comment period (84 FR 60513), we stated we interpret
actual behavior changes to encompass behavior changes that were
previously outlined as assumed by CMS, and other behavior changes not
identified at the time we established the budget-neutral 30-day payment
rate for CY 2020. In the CY 2023 HH PPS final rule (87 FR 66796), we
provided supporting evidence that indicated 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 2025 HH PPS proposed rule (89 FR 55318),
our analysis continued to show the actual 30-day periods are similar
overall to the simulated 30-day periods as well as a continued decline
in therapy visits, indicating that HHAs changed their behavior to
reduce therapy visits. Although the analysis demonstrates evidence of
individual behavior changes (for example, in the volume of visits for
LUPAs, therapy sessions, etc.), we use the entirety of the behaviors in
order to calculate estimated aggregate expenditures. The law instructs
us 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.
Section 4142(a) of the CAA, 2023 required CMS to present, to the
extent practicable, a description of the actual behavior changes
occurring under the HH PPS from CYs 2020 through 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 on and ask questions about the payment rate
development for CY 2023. CMS complied with these requirements by
posting online both the supplemental limited data set (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
[[Page 29128]]
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/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model.
b. Method to Annually Determine the Impact of Differences Between
Assumed Behavior Changes and Actual Behavior Changes on Estimated
Aggregate Expenditures
In the CY 2023 HH PPS final rule (87 FR 66804), we finalized the
methodology to evaluate the impact of the differences between assumed
and actual behavior changes on estimated aggregate expenditures. In the
CY 2024 HH PPS final rule (88 FR 77687 through 77688), we provided an
overview of the methodology with detailed instructions for each step.
Under the prior 153-group system (and the first three years for
assessments associated with the PDGM completed prior to CY 2023), HHAs
submitted the Outcome and Assessment Information Set (OASIS) instrument
version D. However, OMB approved an updated version of the OASIS
instrument, OASIS-E under OMB control number 0938-1279,\2\ on November
30, 2022, effective January 1, 2023. Therefore, in the CY 2025 HH PPS
final rule (89 FR 88364), we finalized two additional methodological
assumptions related to mapping and imputation of OASIS-D responses from
OASIS-E. We refer readers to the CY 2024 and CY 2025 HH PPS final rules
for further information about the methodology.
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\2\ The current expiration date for this information collection
request is December 31, 2027.
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c. Calculating Permanent and Temporary Payment Adjustments
To adjust the base payment rate based on increases or decreases in
estimated aggregate expenditures that result from differences between
assumed behavior changes and actual behavior changes for 2020 through
2026, we calculate one or more permanent prospective adjustments 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 an adjustment factor and applied in the annual rate
update process.
To account for increases or decreases in estimated aggregate
expenditures that result from differences between assumed behavior
changes and actual behavior changes from 2020 through 2026, we
calculate one or more temporary prospective adjustments 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 each of those years once
data is available (87 FR 66804). In other words, when determining the
dollar amount of aggregate expenditures in prior years that we must
offset in future years, 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, each
temporary adjustment applies prospectively but, as its name suggests,
only with respect to the year for which such temporary increase or
decrease is made. Therefore, after we determine the dollar amount we
plan to reconcile in a 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, controls for any 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 since the adjustment applies only to the
respective year. That is, the temporary adjustment is not permanently
fixed into future base payment rates. We refer readers to the CY 2024
HH PPS final rule (88 FR 77689 through 77694) for analysis of CYs 2020
through 2022 claims and the CY 2025 HH PPS final rule (89 FR 88366
through 88369) for analysis of CY 2023 claims. Additionally, at the end
of this section we provide a summary table for the permanent adjustment
and temporary dollar amounts calculated for each year.
d. CY 2024 Preliminary Claims Results
We will continue the practice of using the most recent complete
home health claims data available at the time of rulemaking. While the
CY 2024 analysis presented in this proposed rule uses the most complete
data available at the time, it is considered preliminary and, as more
data become available from the latter half of CY 2024, we would update
our analysis in the final rule. The CY 2026 final rule would use the
complete CY 2024 data for determining any permanent and temporary
adjustments needed to the CY 2026 payment rate. However, while the
claims data and the permanent and temporary adjustments results would
be considered complete for CY 2026, any adjustments to future payment
rates may be subject to additional considerations such as permanent
adjustments taken in previous years.
The claims data used in rulemaking is released twice each year in
the HH PPS LDS file, one for the proposed and one for the final.
Accordingly, the HH PPS LDS file released with this proposed rule
includes two files: the actual CY 2024 30-day periods and the CY 2024
simulated 60-day episodes.
We remind readers a data use agreement (DUA) is required to
purchase the CY 2026 proposed HH PPS LDS file using the CMS-R-0235A
form under OMB control number 0938-0734. Access would 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.\3\ In
addition, the proposed CY 2026 Home Health Descriptive Statistics from
the LDS Files spreadsheet is available on the HH PPS Regulations and
Notices web page,\4\ 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
2024 that were used to determine the adjustments. The spreadsheet also
provides information such as the number of episodes and periods by
case-mix group, case-mix weights, and simulated payments.
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\3\ https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds.
\4\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.
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e. Applying the Methodology to CY 2024 Data To Determine the CY 2026
Permanent and Temporary Adjustments
Using the methodology finalized in the CY 2023 HH PPS final rule to
apply for all the years in which an adjustment is appropriate, and
described most recently in the CY 2024 HH PPS final rule (88 FR 77687
through 77688), as well as the two new assumptions related to the
OASIS-E mapping in the CY 2025 HH PPS final rule (89 FR 88360 through
88365), we simulated 60-day episodes using actual CY 2024 30-day
periods to
[[Page 29129]]
determine what the proposed 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.
Using the preliminary CY 2024 dataset, we began with 8,118,120 30-
day periods of care and dropped 446,458 30-day periods of care that had
a claim occurrence code 50 date after October 31, 2024. We also
excluded 842,735 30-day periods of care that had a claim occurrence
code 50 date before January 1, 2025, to ensure the 30-day period will
not be part of a simulated 60-day episode that began in CY 2024.
Applying the additional exclusions and assumptions as described in the
finalized methodology (87 FR 66804), an additional 4,017 30-day periods
were excluded.
Additionally, we excluded 211,772 simulated 60-day episodes, which
consist of 391,799 30-day periods of care where no OASIS information
was available in the Chronic Conditions Warehouse (CCW) Virtual
Research Data Center (VRDC), a recent start of care/resumption of care
(SOC/ROC) OASIS was not available, a wage index was not available, or
the episode could not be grouped to a Health Insurance Prospective
Payment System (HIPPS) code 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 (69.5 percent) and single 30-day periods
of care (30.5 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
for this proposed rule included 6,433,111 actual 30-day periods of care
and 3,794,744 simulated 60-day episodes of care for CY 2024.
Using the preliminary dataset for CY 2024 (6,433,111 actual 30-day
periods which made up the 3,794,744 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 15, aggregate expenditures under the
PDGM were higher than if the 153-group payment system were still in
place in CY 2024 and therefore, we determined the CY 2024 30-day base
payment rate should have been $1,916.77 based on actual behavior
changes.
As stated in the CY 2025 HH PPS final rule (89 FR 88367) we
determined for CYs 2020 through CY 2023 a total of -3.95 percent
permanent adjustment was needed (after accounting for the -3.925
percent applied to the CY 2023 payment rate and the -2.890 applied to
the CY 2024 payment rate). In order to determine behavior changes only
to CY 2024, we simulated what the CY 2024 base payment rate would have
been if the -3.95 percent adjustment that we determined using CY 2023
claims data had been implemented.
To do so, we started with the recalculated CY 2023 base payment of
$1,875.46 (as published in the CY 2025 HH PPS final rule (89 FR 88366))
and applied the CY 2024 case-mix weights recalibration neutrality
factor (1.0124), the CY 2024 wage index budget neutrality factor
(1.0012), the CY 2024 labor-related share budget neutrality factor
(0.9998), and the CY 2024 home health payment update factor (1.030). We
determined the CY 2024 base payment rate for assumed behavior would
have been $1,957.63.
For the CY 2024 annual permanent adjustment, we calculated the
percent change between the two payment rates for only CY 2024. For the
CY 2024 annual temporary adjustment we calculated the difference in
aggregate expenditures in dollars for all CY 2024 PDGM 30-day claims
using the two payment rates. This difference is shown as the
retrospective dollar amount we will need to offset payment using one or
more temporary adjustments in future years. Our results for the CY 2024
annual (single year) permanent and temporary adjustment calculations
using CY 2024 preliminary claims data is shown in table 15.
[GRAPHIC] [TIFF OMITTED] TP02JY25.023
As shown in table 15, a permanent prospective adjustment of -2.087
percent to the CY 2026 30-day payment rate (assuming all adjustments
from prior years were applied) for CY 2024 would be required to offset
for such increases in estimated aggregate expenditures in future years.
We remind readers, the permanent prospective adjustment of -2.087
percent is for illustrative purposes only and the annual (single year)
permanent adjustment cannot be added to previous annual adjustments.
As shown in table 15, we determined that our initial estimate of
the CY 2024 base payment rate ($2,038.13) resulted in excess
expenditures of approximately $840 million in CY 2024.
Section 1895(b)(3)(D)(ii) of the Act requires us to annually
analyze data from CY 2020 through CY 2026. We now have five years of
claims data (CYs 2020 through 2024) under the PDGM,
[[Page 29130]]
and we have applied three partial permanent adjustments to the 30-day
payment rate (CYs 2023 through 2025), which we summarize in table 16.
We remind readers these annual adjustments cannot be added or
multiplied together to determine the total permanent adjustment needed
for CY 2026 because each individual year requires an assumption that
all prior adjustments were taken. We remind readers that equation may
result in slightly different results due to the underlying assumptions
(for example, all prior year adjustments were taken) each year and
rounding.
[GRAPHIC] [TIFF OMITTED] TP02JY25.024
f. CY 2026 Proposed Permanent Adjustment and Temporary Adjustment
Calculations
In the preceding section we describe how we annually analyzed CY
2024 preliminary claims data to determine the effects of actual
behavior change on estimated aggregate expenditures. Again, that
analysis included simulations that assumed the full -3.95 percent
payment adjustment was already taken. We note that CMS implemented a
payment adjustment of -1.975 percent for CY 2024, rather than the -3.95
percent we calculated (89 FR 88373), so the calculations set forth
later in this section reflect the remaining adjustments that are still
needed.
Therefore, the calculation in this section includes any of the
remaining adjustments not applied in previous years (that is, CYs 2020
through 2023 claims data), as well as the adjustment needed to account
for CY 2024 claims. In calculating the full permanent adjustment needed
to the CY 2026 30-day payment rate, we compare estimated aggregate
expenditures under the PDGM and the prior system. Unlike the annual
adjustments described in table 16, we do not assume the full adjustment
from prior years had been taken.
As discussed in section II.C.1.d. of this proposed rule, using the
preliminary dataset for CY 2024 (6,433,111 actual 30-day periods which
made up the 3,794,744 simulated 60-day episodes) we determined the CY
2024 30-day base payment rate should have been $1,916.77 based on
actual behavior. We then compared the $1,916.77 CY 30-day base payment
rate based on actual behavior to the CY 2024 30-day base payment rate
of $2,038.13 we paid based on assumed behaviors. The percent change, as
summarized in table 17, between the actual CY 2024 base payment rate of
$2,038.13 (based on assumed behaviors) and the CY 2024 recalculated
base payment rate of $1,916.77 (based on actual behaviors) is the total
permanent adjustment reflecting CYs 2020 through 2024 claims.
[GRAPHIC] [TIFF OMITTED] TP02JY25.025
As shown in table 17 a permanent prospective adjustment of -5.954
percent to the CY 2026 30-day payment rate would be required to offset
for such increases in estimated aggregate expenditures in future years.
To illustrate this calculation:
[GRAPHIC] [TIFF OMITTED] TP02JY25.026
[[Page 29131]]
As we stated in the CY 2025 HH PPS final rule (89 FR 88373),
applying a -1.975 percent (half of the proposed -3.95 percent)
permanent adjustment to the CY 2025 30-day payment rate would not
adjust the rate fully to account for differences in behavior changes on
estimated aggregate expenditures in CYs 2020, 2021, 2022, and 2023.
Using CY 2024 claims data, as shown in table 17, a permanent
prospective adjustment of -5.954 percent to the CY 2026 30-day payment
rate would be required to offset for such increases in estimated
aggregate expenditures for CYs 2020 through 2024. We remind readers
adjustment factors are multiplied in this payment system and,
individual numbers (that is, percentages) cannot be added or subtracted
together to determine the final adjustment. Therefore, we cannot
determine the CY 2026 proposed permanent adjustment, which would
include estimated aggregate expenditures in CY 2024, by simply
subtracting the -1.975 percent applied in CY 2025 from the total
permanent adjustment of -5.954 percent as shown in table 17.
Instead, we account for the permanent adjustment applied in CY 2025
of -1.975 percent when we calculate the CY 2026 permanent adjustment by
solving the following equation (1-0.01975) x (1 x -) = (1-0.05954). To
illustrate this calculation we used the following approach.
[GRAPHIC] [TIFF OMITTED] TP02JY25.027
x = 1-0.95941
x = 0.04059 (that is, 4.059 percent)
Accounting for the previous permanent adjustments applied to the
30-day payment rate in CYs 2023, 2024, and 2025, we can simulate the
permanent adjustment calculation with the simulated annual permanent
adjustment percentage shown previously for CY 2026:
Annual Permanent Adjustments Calculated: 5
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\5\ The annual permanent adjustments are for illustrative
purposes only and the annual (single year) permanent adjustments
cannot be combined to calculate the total permanent adjustment
proposed and finalized in rulemaking.
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CY 2020 Claims = -6.52% (87 FR 66805)
CY 2021 Claims = -1.42% (87 FR 66806)
CY 2022 Claims = -1.767% (88 FR 77692)
CY 2023 Claims = -1.004% (89 FR 88366)
CY 2024 Claims = -2.087% (Table 16)
Permanent Adjustments Applied:
CY 2023 Rate = -3.925% (88 FR 66808)
CY 2024 Rate = -2.890% (88 FR 77697)
CY 2025 Rate = -1.975% (89 FR 88373)
Illustrative equation.
(1-0.0652)(1-0.0142)(1-0.01767)(1-0.01004)(1-0.02087) = (1-0.03925)(1-
0.0289)(1-0.01975)(1-x)
Solving, x = 4.059%.
In table 18, we provide the base payment rate for assumed behaviors
(what CMS actually paid), the recalculated base payment rate for actual
behaviors (what CMS should have paid), the total permanent adjustments
calculated from the base payment rates (accounts for any adjustments
taken prior), and the permanent adjustment applied.
[GRAPHIC] [TIFF OMITTED] TP02JY25.056
In the CY 2023, 2024, and 2025 HH PPS final rules (87 FR 66790, 88
FR 77696, 89 FR 88373), we acknowledged that the full permanent
adjustment in a single year may be burdensome for some providers. As
shown in table 18, we finalized only half of the permanent adjustment
percentages in CYs 2023 through 2025 final rules. However, we explained
in the CY 2023, 2024, and 2025 HH PPS final rules (87 FR 66808, 88 FR
77697, 89 FR 88373) that when we apply a reduced permanent adjustment,
we may need to continue to implement a reduction in future years to
satisfy the statutory requirements. However, we recognize that only
applying half of the calculated permanent adjustments in previous years
has contributed to the significant growth of the temporary adjustment.
Therefore, we believe it to be appropriate to propose the full
permanent adjustment to help mitigate
[[Page 29132]]
this continued accrual of the temporary adjustment. Therefore, we are
proposing to apply the full permanent adjustment of -4.059 percent to
the CY 2026 home health base payment rate, noting that we expect to
make minor adjustments to this percentage in the final rule using more
complete claims data. Proposing the full permanent adjustment would
satisfy the statutory requirements at section 1895(b)(3)(D)(ii) of the
Act to offset any increases or decreases on the impact of differences
between assumed behavior and actual behavior changes on estimated
aggregate expenditures, reduce the need for any future large permanent
adjustments, and help slow the accrual of the temporary payment
adjustment amount.
As described previously in this proposed rule, to account 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 from 2020 to 2026, we
calculate one or more temporary prospective adjustments 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 that year. In other
words, when determining the temporary retrospective dollar amount, we
used 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. We refer readers
to the CY 2024 HH PPS final rule (88 FR 77689 through 77694) for
analysis of CYs 2020 through 2022 claims, the CY 2025 HH PPS final rule
(89 FR 88366 through 88369) for analysis of CY 2023 claims, and section
II.C.1.d. of this proposed rule for the analysis of CY 2024 claims.
Table 19 provides a summary of the temporary adjustment dollar amount
for CYs 2020 through 2026.
[GRAPHIC] [TIFF OMITTED] TP02JY25.029
Our analysis continues to show estimated aggregate expenditures are
higher under the PDGM than if those same claims were paid under the
prior 153-group system, though the data also show that the behavioral
adjustment we implemented in CY 2023 and CY 2024 successfully brought
estimated aggregate expenditures closer to the statutorily required
budget neutrality. In the CY 2022 HH PPS proposed rule (86 FR 65884),
the CY 2023 HH PPS proposed rule (87 FR 37608), the CY 2024 HH PPS
proposed rule (88 FR 43664), the CY 2025 HH PPS proposed rule (89 FR
55320), and as shown in section II.B.1.b. of this proposed rule, our
analysis has shown that the annual national standardized 30-day period
payment rate has exceeded the average estimated 30-day period cost. In
addition, MedPAC has continued to find that FFS Medicare's payments for
home health care are substantially in excess of costs.\6\
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\6\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch7_MedPAC_Report_To_Congress_SEC.pdf.
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Given these facts, we believe that it is an appropriate time to
begin recoupment of the temporary dollar amounts. Even though we have
not yet calculated the temporary dollar amounts for CYs 2025 through
2026, we have done so for CYs 2020 through 2024, and the amounts are
substantial. Beginning to adjust the base payment rate now to account
for the calculated temporary dollar amount to date may help reduce the
need for a larger reduction in future years. We estimate that
collecting the full temporary dollar amount of $5,301,103,945 in a
single year (as shown in table 19) would require an approximate 34
percent reduction to the CY 2026 base payment rate. And we anticipate
that we would need to make additional adjustments for CYs 2025 and
2026, once data for those years are available.
We have stated in past rules that implementing both the permanent
and temporary adjustments in the same year may be burdensome to HHAs;
however, we propose only to implement a small temporary adjustment
(rather than the estimated 34 percent) along with the permanent
adjustment, which should lessen any hardship to HHAs, as well as reduce
larger temporary adjustments in future years. Beginning to apply a
[[Page 29133]]
temporary adjustment in CY 2026 balances the underlying statutory goal
of budget neutrality against any hardship to HHAs.
Therefore, we exercise our authority under section
1895(b)(3)(D)(iii) of the Act to apply ``one or more'' temporary
adjustments to begin recoupment of the retrospective overpayments for
CYs 2020 through 2024. Specifically, we propose to implement a 5.0
percent reduction in CY 2026, that is equivalent to a 0.9500 temporary
adjustment factor, to the CY 2026 national, standardized payment rate.
Using historical trends, we estimated 7,723,632 number of 30-day
periods would occur in CY 2026. Using this estimated utilization, a 5.0
percent reduction to the CY 2026 30-day payment rate would begin to
collect approximately $786 million of the total temporary adjustment
dollar amount, equating to about 14.8 percent of the total $5.3 billion
shown in table 19. In doing so, however, we would need to account for
the remaining temporary adjustment dollar amount for CYs 2020 through
2024, plus any possible adjustments for CY 2025 and 2026, in future
years. It is important to note that the estimated $786 million dollar
amount anticipated to be collected by the implementation of the
temporary adjustment factor is based on an estimate of the number of
30-day periods that would occur in CY 2026. It may not reflect the
actual dollar amount to be collected if the actual number of 30-day
periods and other utilization trends in CY 2026 differ from what was
estimated. In other words, CMS will calculate the actual amount
collected from the temporary adjustment in CY 2026 and credit it to the
overall cumulative temporary dollar amount.
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. We interpret this to mean we would not include the
-5.0 percent temporary adjustment applied for CY 2026 when calculating
the CY 2027 base payment rates. However, to continue recoupment of the
retrospective overpayments we may propose additional temporary
adjustments in future rulemaking and are not proposing that the -5.0
percent temporary adjustment would be applied each year after CY 2026.
Rather, we will continue to analyze the data each year through CY 2026
claims as required by law, and in a time and manner deemed appropriate
we will propose one or more temporary adjustments to account for
retrospective overpayments. We refer readers to section II.E.3.b. for
the CY 2026 base payment rates with and without the temporary
adjustment.
We solicit comments on the proposals to apply the permanent
adjustment of -4.059 percent and the -5.0 percent temporary adjustment
to the CY 2026 home health base payment rate.
D. Proposed CY 2026 Home Health Low Utilization Payment Adjustment
(LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub-
Groups, and Case-Mix Weights
1. Proposed CY 2026 PDGM LUPA Thresholds
Under the HH PPS, LUPAs are paid when a certain numerical minimum
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 setting the LUPA thresholds at the 10th
percentile of visits or two visits, whichever is higher, for each
payment group. This means the LUPA threshold for each 30-day period of
care varies 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 would 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 would be made using
the per-visit payment amounts as described in section II.E.3.c. of this
proposed 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 fewer
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 our policy that the LUPA thresholds for each PDGM payment
group will be reevaluated 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 with comment period (86 FR 62249),
we finalized the 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 believe the COVID-19 public health
emergency (PHE) will have impacted utilization within all case-mix
groups similarly. Therefore, the impact of any reduction in resource
use caused by the PHE on the calculation of the case-mix weight will be
minimized since the impact will 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 will 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 2024, we proposed to update the LUPA thresholds using CY
2022 Medicare home health claims (as of March 17, 2023) linked to OASIS
assessment data. We believed that CY 2022 data would be more indicative
of visit patterns in CY 2024 rather than continuing to use the LUPA
thresholds derived from the CY 2018 pre-PDGM data. Therefore, we
finalized a policy to update the LUPA thresholds for CY 2024 using data
from CY 2022.
For CY 2026, we are proposing to update the LUPA thresholds using
CY 2024 home health claims utilization data (as of March 13, 2025), in
accordance with our policy to annually recalibrate the case-mix weights
and update the LUPA thresholds, functional impairment levels, and
comorbidity
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subgroups. After reviewing the CY 2024 home health claims utilization
data, we determined that LUPA visit patterns in 2024 were similar to
visits in 2023 and a total of 15 case-mix groups have a decline in
their LUPA threshold of a single visit and 4 case-mix groups have their
LUPA threshold increase by a single visit. The proposed LUPA thresholds
for the CY 2026 PDGM payment groups with the corresponding Health
Insurance Prospective Payment System (HIPPS) codes and the case-mix
weights are listed in table 25.
We are soliciting public comments on the proposed updates to the
LUPA thresholds for CY 2026. The proposed LUPA thresholds will be
updated based on more complete CY 2024 claims data in the final rule.
2. Proposed CY 2026 Functional Impairment Levels
Under the PDGM, the functional impairment level is determined by
responses to certain OASIS items associated with activities of daily
living 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 all these points results in a
functional impairment score which is used to group home health periods
into a functional level with similar resource use. That is, the higher
the points, the more the response is associated with increased resource
use, or increased impairment. The three functional impairment levels of
low, medium, and high were designed so that approximately one-third of
home health periods from each clinical group falls 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 2026, we are proposing to use CY 2024 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 the functional impairment levels using the OASIS items.
We are proposing to use the same methodology previously finalized to
update the functional impairment levels for CY 2026. The proposed
updated OASIS functional points table and the table of functional
impairment levels by clinical group for CY 2026 are listed in tables 20
and 21, respectively.
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We are soliciting public comments on the proposed updates to
functional points and the functional impairment levels by clinical
group.
3. Proposed CY 2026 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:
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.
Low comorbidity adjustment: There is a reported secondary
diagnosis on the
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home health-specific comorbidity subgroup list that is associated with
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 will 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 2026, we are proposing to use the same
methodology used to establish the comorbidity subgroups to update the
comorbidity subgroups using CY 2024 home health data with linked OASIS
data (as of March 13, 2025).
For CY 2026, we are proposing to update the comorbidity subgroups
to include 20 low comorbidity adjustment subgroups and 100 high
comorbidity adjustment interaction subgroups. The proposed CY 2026 low
comorbidity adjustment subgroups and the high comorbidity adjustment
interaction subgroups including those diagnoses within each of these
comorbidity adjustments are shown in tables 22 and 23. The proposed CY
2026 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/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.
We invite comments on the proposed updates to the low comorbidity
adjustment subgroups and the high comorbidity adjustment interactions
for CY 2026.
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4. Proposed CY 2026 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 annually
recalibrate the PDGM case-mix weights using a fixed effects model with
the most recent
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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 2026 case-mix weights, we used CY
2024 home health claims data with linked OASIS data (as of March 13,
2025). These data are the most current and complete data available at
the time of rulemaking. We believe that recalibrating the case-mix
weights using data from CY 2024 would be reflective of PDGM utilization
and patient resource use for CY 2026. The proposed recalibrated case-
mix weights will be updated in the final rule based on more complete CY
2024 claims data.
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 20 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 2023
home health cost reports. We use 2023 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 24 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 proposed case-mix weights for CY 2026 are listed in table 25
and will also be posted on the HHA Center web page \7\ upon display of
this proposed rule.
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\7\ HHA Center web page: https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.
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Changes to the PDGM case-mix weights are implemented in a budget
neutral manner by multiplying the CY 2026 national standardized 30-day
[[Page 29163]]
period payment rate by a case-mix budget neutrality factor. Typically,
the case-mix weight recalibration neutrality factor is also calculated
using the most recent, complete home health claims data available. For
CY 2026, we would continue the practice of using the most recent
complete home health claims data at the time of rulemaking, which is CY
2024 data. The case-mix budget neutrality factor is calculated as the
ratio of 30-day base payment rates such that total payments when the CY
2026 PDGM case-mix weights (developed using CY 2024 home health claims
data) are applied to CY 2024 utilization (claims) data are equal to
total payments when CY 2025 PDGM case-mix weights (developed using CY
2023 home health claims data) are applied to CY 2024 utilization data.
This produces a case-mix budget neutrality factor for CY 2026 of
1.0051.
We invite public comments on the CY 2026 proposed case-mix weights
and proposed case-mix weight budget neutrality factor.
E. Proposed CY 2026 Home Health Payment Rate Updates
1. Proposed CY 2026 Home Health Market Basket Update for HHAs
Section 1895(b)(3)(B) of the Act requires that the standard
prospective payment amounts for home health 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. In the CY 2024
HH PPS final rule (88 FR 77726), we finalized a rebasing of the home
health market basket to reflect 2021 cost report data. We also
finalized a policy for CY 2024 and subsequent years that the labor-
related share will be 74.9 percent, and the non-labor-related share
will be 25.1 percent. A detailed description of how we rebased the home
health market basket and labor-related share is available in the CY
2024 HH PPS final rule (88 FR 77726 through 77742).
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 as 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 Bureau of Labor
Statistics (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 IHS Global Inc.'s (IGI) TFP projection
methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information.
The proposed home health update percentage for CY 2026 is based on
the estimated home health market basket percentage increase, specified
at section 1895(b)(3)(B)(iii) of the Act, of 3.2 percent (based on IHS
Global Inc.'s first quarter 2025 forecast with historical data through
fourth quarter 2024). The estimated CY 2026 proposed home health market
basket percentage increase of 3.2 percent would then be reduced by a
productivity adjustment, in accordance with section 1895(b)(3)(B)(vi)
of the Act. Based on IGI's first quarter 2025 forecast, the proposed
productivity adjustment is currently estimated to be 0.8 percentage
point for CY 2026. Therefore, the proposed productivity-adjusted CY
2026 home health market basket update is 2.4 percent (3.2 percent
market basket percentage increase, reduced by a 0.8 percentage point
productivity adjustment). Furthermore, we are proposing that if more
recent data become available (for example, a more recent estimate of
the market basket percentage increase and/or productivity adjustment),
we would use such data, if appropriate, to determine the CY 2026 market
basket percentage increase and productivity adjustment in the final
rule.
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 for CY 2026, the proposed
home health payment update percentage is 0.4 percent (2.4 percent minus
2 percentage points).
We invite public comments on the proposed CY 2026 home health
market basket percentage increase and productivity adjustment.
2. Proposed CY 2026 Home Health Wage Index
a. Background
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 are proposing to continue this practice for CY
2026, as it is our belief that, in the absence of home health-specific
wage data that accounts for area differences, using inpatient hospital
wage data, including any changes made by the Office of Management and
Budget (OMB) to Metropolitan Statistical Area (MSA) definitions, is
appropriate and reasonable for the HH PPS.
In general, OMB issues major revisions to statistical areas every
10 years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses. 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
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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. 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 in CY 2021.
On July 21, 2023, OMB issued Bulletin No. 23-01, which updates and
supersedes OMB Bulletin No. 20-01, issued on March 6, 2020. OMB
Bulletin No. 23-01 establishes revised delineations for the MSAs,
Micropolitan Statistical Areas, Combined Statistical Areas, and
Metropolitan Divisions, collectively referred to as Core Based
Statistical Areas (CBSAs). According to OMB, the delineations reflect
the 2020 Standards for Delineating Core Based Statistical Areas (CBSAs)
(the ``2020 Standards''), which appeared in the Federal Register (86 FR
37770 through 37778) on July 16, 2021, and application of those
standards to Census Bureau population and journey-to-work data (for
example, 2020 Decennial Census, American Community Survey, and Census
Population Estimates Program data). A copy of OMB Bulletin No. 23-01 is
available online at https://www.bls.gov/bls/omb-bulletin-23-01-revised-delineations-of-metropolitan-statistical-areas.pdf.
In the CY 2025 HH PPS final rule (89 FR 88354), we finalized our
proposal to adopt the revised OMB delineations from OMB Bulletin 23-01
with a 5 percent cap on wage index decreases at the CBSA level as well
as at the county level. In that final rule we stated that we believe it
is important for the HH PPS wage index to use the latest OMB
delineations available in order to maintain a more accurate and up-to-
date payment system that reflects the reality of population shifts and
labor market conditions. We also stated that we believe using the most
current OMB delineations will increase the integrity of the HH PPS wage
index by creating a more accurate representation of geographic
variation in wage levels.
b. Five Percent Cap on Wage Index Decreases
In the CY 2023 HH PPS final rule (87 FR 66851 through 66853), we
finalized a policy that the CY HH PPS wage index will include a
permanent 5 percent cap on wage index decreases for CY 2023 and each
subsequent year. 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 a policy requiring that a geographic area's wage index for CY
2023 will 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
will not be less than 95 percent of its wage index calculated in the
prior CY.
Previously this methodology was applied to all counties that make
up a CBSA or statewide rural area. However, in the CY 2025 HH PPS final
rule (89 FR 88418 through 88421), because of the adoption of the
revised OMB delineations from OMB Bulletin 23-01, we finalized a policy
applying this methodology to individual counties. Specifically, we
finalized a policy applying the 5 percent cap to counties that moved
from a CBSA or statewide rural area with a higher wage index value into
a new CBSA or rural area with a lower wage index value, so that the
county's CY 2025 wage index would not be less than 95 percent of the
county's CY 2024 wage index value under the old delineation despite
moving into a new delineation with a lower wage index.
Due to the way that we proposed calculating the 5 percent cap for
counties that experienced an OMB designation change, some CBSAs and
statewide rural areas could have had more than one wage index value.
Specifically, some counties that changed OMB designations had a wage
index value that was different than the wage index value assigned to
the other constituent counties that made up that CBSA or statewide
rural area that they moved into after the application of the 5 percent
cap. However, for home health claims processing, each CBSA or statewide
rural area can have only one wage index value assigned to that CBSA or
statewide rural area. Therefore, we finalized a policy, beginning in CY
2025, that counties that have a different wage index value than the
CBSA or rural area into which they are designated after the application
of the 5 percent cap will use a wage index transition code. These
special codes are five digits in length and begin with ``50'' and the
remaining digits are unique for that code. The 50XXX wage index
transition codes are used only in specific counties; counties located
in CBSAs and rural areas that do not correspond to a different
transition wage index value will still use the CBSA number.
We also finalized a policy applying the 5 percent cap to these
specific counties that correspond to a different wage index value due
to a delineation change until the county's new wage index is more than
95 percent of the wage index from the previous calendar year. In order
to capture the correct wage index value, an HHA will continue to use
the assigned 50XXX transition code on home health claims for services
in these counties until the county's wage index value calculated for
that calendar year using the new OMB delineations is not less than 95
percent of the county's capped wage index from the previous calendar
year.
For CY 2026, the 5 percent cap on wage index decreases will
continue to be calculated at the county level as well as the CBSA and
statewide rural area level. While some counties that required a
transition code for CY 2025 will continue to use the same transition
code for CY 2026, other counties that required a transition code in CY
2025 will no longer require a transition code in CY 2026. In the
counties that will no longer require a transition code beginning in CY
2026 wage index, the CY 2026 wage index of the CBSA or rural area that
the county was redesignated into has a wage index value higher than 95
percent of the county's CY 2025 wage index. Therefore, these counties
will use the CBSA or rural county code of the area they were
redesignated into based on OMB Bulletin No. 23-01.
The complete list of counties and corresponding transition codes
can be found as a separate tab in the calendar year's wage index file
located on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health-pps/home-health-pps-wage-index.
c. Proposed CY 2026 HH PPS Wage index
The appropriate wage index value is applied to the labor portion of
the HH PPS rates based on the site of service for the beneficiary
(defined in section 1861(m) of the Act as the beneficiary's place of
residence). For CY 2026, we are proposing to base the HH PPS wage index
on the FY 2026 hospital pre-floor, pre-reclassified wage index for
hospital cost reporting periods beginning on or after October 1, 2021,
and before October 1, 2022 (FY 2022 cost report data). The proposed CY
2026 HH PPS wage index would not take into account any geographic
reclassification of hospitals, including those in accordance with
sections 1886(d)(8)(B) or 1886(d)(10) of the Act but would include the
5 percent cap on wage index decreases as discussed previously.
There exist some geographic areas where there are no hospitals, and
thus,
[[Page 29165]]
no hospital wage data on which to base the calculation of the HH PPS
wage index. 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 2026 HH PPS wage index, we are proposing 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 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 2026, 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 a proxy,
we are proposing the CY 2026 wage index value for Hinesville, GA, would
be 0.8800.
For rural areas that do not have inpatient hospitals, we use the
average wage index from all contiguous Core Based Statistical Areas
(CBSAs) as a reasonable proxy. The term ``contiguous'' means sharing a
border (72 FR 49859). In the CY 2025 HH PPS final rule (89 FR 88422),
we finalized a policy that rural North Dakota would become a rural area
without a hospital from which hospital wage data can be derived.
Therefore, in order to calculate the wage index for rural area 99935,
North Dakota, we finalized using as a proxy, the average pre-floor,
pre-reclassified hospital wage data from the contiguous CBSAs: CBSA
13900-Bismark, ND, CBSA 22020-Fargo, ND-MN, CBSA 24220-Grand Forks, ND-
MN, and CBSA 33500, Minot, ND. Using this methodology, we are proposing
that the CY 2026 HH PPS wage index for rural North Dakota would be
0.8346.
Previously, the only rural area without a hospital from which
hospital wage data could be derived was rural Puerto Rico. However, for
rural Puerto Rico, we did not apply this methodology due to the
distinct economic circumstances that exist there (for example, due to
the 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 that in half of its urban
areas). Instead, we used the most recent wage index previously
available for that area, which was 0.4047. Beginning in CY 2025, due to
the adoption of the revised OMB delineations, there is now a hospital
in rural Puerto Rico from which hospital wage data can be derived.
Therefore, we finalized a policy that the wage index for rural Puerto
Rico would now be based on the hospital wage data for the area instead
of the previously available wage index of 0.4047. The CY 2025 final
unadjusted wage index value for rural Puerto Rico was 0.2510. However,
because 0.2510 is more than a 5 percent decline in the area's CY 2024
wage index, the 5 percent cap was applied and the final CY 2025 5
percent cap adjusted wage index for rural Puerto Rico was set equal to
95 percent of the CY 2024 wage index, which resulted in a final wage
index value of 0.3845.
The unadjusted CY 2026 proposed wage index for rural Puerto Rico is
0.2452. However, because 0.2452 is more than a 5 percent decline in the
CY 2025 wage index, we are proposing that the CY 2026 5 percent cap
adjusted wage index for rural Puerto Rico be set equal to 95 percent of
the CY 2025 wage index, which would result in a proposed wage index
value of 0.3653.
Additionally, due to the adoption of the revised OMB delineations
in the CY 2025 HH PPS final rule, Delaware, which was previously an
all-urban state, now has one rural area with a hospital from which
hospital wage data can be derived. As such, we are proposing that the
CY 2026 wage index for rural Delaware would be 1.0133.
Finally, the Northern Mariana Islands and American Samoa are rural
areas with no hospital data from which a wage index can be calculated.
Consistent with our established methodology, we compute an appropriate
wage index for rural areas with no hospital using the average wage
index values from contiguous CBSAs, to represent a reasonable proxy.
Therefore, we are proposing that HHAs that provide services in the
Northern Mariana Islands and American Samoa would use CBSA 99965 (Guam)
and receive the wage index assigned to CBSA 99965 (Guam) of 0.9611.
While we appreciate that the islands of the Pacific Rim are not
actually contiguous, we believe that same principle applies here, and
that Guam is a reasonable proxy for American Samoa and the Northern
Mariana Islands. We believe that CBSA 99965 (Guam) represents a
reasonable proxy because the islands are located within the Pacific Rim
and share a common status as United States Territories.
The proposed HH PPS wage index file applicable for CY 2026 (January
1, 2026, through December 31, 2026) is available on the CMS website at
https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.
3. Proposed CY 2026 Home Health Payment Update
a. 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 2024 HH PPS final rule (88 FR 77676), we finalized the
rebasing of the home health market basket to reflect 2021 Medicare cost
report data. We also finalized a policy that, for CY 2024 and
subsequent years, the labor-related share 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 2026:
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
[[Page 29166]]
percentage, minus two percentage points. Any reduction of the
percentage change will apply only to the calendar year involved and
will 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 would 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.
b. Proposed CY 2026 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 2026 national, standardized
30-day period payment rate, we would continue our practice of using the
most recent, complete utilization data at the time of rulemaking; that
is, we are using CY 2024 claims data for CY 2026 payment rate updates.
We apply a permanent adjustment factor, a case-mix weights
recalibration budget neutrality factor, a wage index budget neutrality
factor, the home health payment update percentage, and a temporary
adjustment factor to update the CY 2026 payment rate. As discussed in
section II.C.1. of this proposed rule, we are proposing the
implementation of a permanent adjustment of -4.059 percent to ensure
that estimated aggregate expenditures under the PDGM are equal to the
estimated aggregate expenditures that otherwise would have been under
the 153-group payment system as required by law. The proposed permanent
adjustment factor is 0.95941. 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 2026 national, standardized 30-day period payment rate. The
proposed case-mix weight budget neutrality factor for CY 2026 is
1.0051.
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 2026 wage index (with the 5 percent cap) so those
total payments are equivalent to the total payments for non-LUPA 30-day
periods using the CY 2025 wage index (with the 5 percent cap) and the
CY 2025 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 2026 wage
index with the 5 percent cap on wage index decreases) by the payment
rate for non-LUPA 30-day periods using the CY 2025 wage index (with the
5 percent cap on wage index decreases), we obtain a wage index budget
neutrality factor of 1.0019. We then apply the wage index budget
neutrality factor of 1.0019 to the 30-day period payment rate.
Next, we update the 30-day period payment rate by the proposed CY
2026 home health payment update percentage of 2.4 percent. As discussed
in section II.C.1. of this proposed rule, we are also proposing the
implementation of a temporary 5.0 percent reduction to the CY 2026 base
payment rate. The proposed temporary adjustment factor is 0.95000. Per
section 1895(b)(3)(D)(iii) of the Act a temporary adjustment is to be
applied for the applicable year and not included when computing a
payment rate for a subsequent year. In other words, the temporary
adjustment factor for CY 2026 should not be included in the starting
payment rate for CY 2027. Therefore, we have calculated the CY 2026
national, standardized 30-day period payment with and without the
temporary adjustment factor. The CY 2026 national standardized 30-day
period payment rate without a temporary adjustment is only for
illustrative purposes. The actual CY 2026 national standardized 30-day
period payment rate includes the proposed temporary adjustment and is
calculated in table 26.
[GRAPHIC] [TIFF OMITTED] TP02JY25.057
The CY 2026 national standardized 30-day period payment rate for an
HHA that does not submit the required quality data would be updated by
0.4 percent (the proposed CY 2026 home health payment update percentage
of 2.4 percent minus 2 percentage points) and is shown in table 27.
[[Page 29167]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.058
c. Proposed CY 2026 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 proposed CY 2026 national per-visit rates, we
started with the CY 2025 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 2026 wage index with the 5 percent cap on wage index
decreases and comparing it to simulated total payments for LUPA 30-day
periods of care using the CY 2025 wage index with the 5 percent cap. By
dividing the total payments for LUPA 30-day periods of care using the
CY 2026 wage index by the total payments for LUPA 30-day periods of
care using the CY 2025 wage index, we obtained a wage index budget
neutrality factor of 1.0004. As a reminder, the wage index budget
neutrality factors for the national, standardized 30-day period amount
and the national LUPA per-visit rates are not equal because they are
calculated differently. The wage index budget neutrality factor for the
LUPA per-visit payments is calculated by simulating total payments for
LUPA 30-day periods while the 30-day period budget neutrality factor is
calculated by simulating payments for non-LUPA 30-day periods.
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 or the temporary 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 proposed CY 2026 home health payment update percentage
of 2.4 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 periods that occur as the only period or initial
period in a sequence of adjacent periods. The proposed CY 2026 national
per-visit rates for HHAs that submit the required quality data are
updated by the proposed CY 2026 home health payment update percentage
of 2.4 percent and are shown in table 28.
[GRAPHIC] [TIFF OMITTED] TP02JY25.059
The CY 2026 per-visit payment rates for HHAs that do not submit the
required quality data would be updated by 0.4 percent, which is the
proposed CY 2026 home health payment update percentage of 2.4 percent
minus 2 percentage points and are shown in table 29.
[[Page 29168]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.060
We are soliciting comments on the proposed CY 2026 30-day home
health payment rates and the per-visit payment rates.
d. 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
described 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, whereby we
finalized the approach of multiplying the per-visit payment amount for
the first skilled nursing (SN), physical therapy (PT), or speech
language pathology (SLP) visit in LUPA episodes that occur as the only
episode or an initial episode in a sequence of adjacent episodes by 1 +
the proportional increase in minutes for an initial visit over non-
initial visits. Specifically, we updated the analysis using 100 percent
of LUPA episodes and a 20 percent sample of non-LUPA first episodes
from CY 2012 claims data. At that time, we finalized add-on factors:
1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. 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 SN, PT, or SLP
visit in LUPA periods that occur as the only period of 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 (using the already established
LUPA add-on factors of 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.
In the CY 2025 HH PPS final rule (89 FR 88426 through 88427), in an
effort to enhance the accuracy and relevance of LUPA add-on factors to
reflect current healthcare practices and costs, we finalized updates to
the LUPA add-on factors for PT, SN, and SLP, which had not been revised
since the CY 2014 HH PPS final rule (using CY 2012 claims data). We
finalized the proposal to use the same methodology to establish the
LUPA add-on amount for CY 2014, using updated claims data.
Specifically, we updated the LUPA add-on factors by using 100
percent of LUPA periods and a 100 percent sample of non-LUPA first
periods from CY 2023 claims data (as of September 11, 2024). Our
analysis found that the average excess of minutes for the first visit
in LUPA periods that were the only period or an initial LUPA in a
sequence of adjacent periods are 29.91 minutes for the first visit if
SN, 28.08 minutes for the first visit if PT, and 31.57 minutes for the
first visit if SLP. The average minutes for all non-first visits in
non-LUPA episodes are 41.54 minutes for SN, 45.11 minutes for PT, and
47.15 minutes for SLP. To determine the LUPA add-on factors for each
discipline, we calculated the ratio of the average excess minutes for
the first visits in LUPA claims to the average minutes for all non-
first visits in non-LUPA claims. We then added one to these ratios to
obtain the final add on factors. Therefore, beginning in CY 2025 the
final LUPA add on factors for SN, PT, and SLP are 1.7200 for SN; 1.6225
for PT; and 1.6696 for SLP.
Additionally, as outlined in the CY 2025 HH PPS proposed rule (89
FR 55378), in order to implement Division CC, section 115, of the
Consolidation Appropriations Act (CAA), 2021, CMS finalized changes to
the regulations at Sec. [thinsp]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 included OT, as well as either PT or SLP (86 FR
62351). This change necessitated the establishment of a LUPA add-on
factor for calculating the LUPA add-on payment amount for the first
skilled OT visit in LUPA periods that occur as the only period of care
or the initial 30-day period of care in a sequence of adjacent 30-day
periods of care. However, at the time of the implementation, we stated
in the CY 2022 HH PPS final rule (86 FR 62289), there was not
sufficient data regarding the average excess minutes for the first
visit in LUPA periods when the initial and comprehensive assessments
are conducted by occupational therapists. Therefore, we finalized a
policy using the PT LUPA add-on factor as a proxy. We also stated in
the CY 2022 final rule that we will 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). Ultimately,
we refrained from using CY 2022 data (and instead utilized the PT LUPA
add-on factor as a proxy for the OT LUPA add-on factor), as we marked
the first year that occupational
[[Page 29169]]
therapists were permitted to conduct the initial assessment. We wanted
to extend our analysis to ensure we had sufficient data to reflect OT
time spent conducting initial assessments to establish a discrete OT
LUPA add-on factor (86 FR 62240).
In the CY 2025 HH PPS final rule (89 FR 88427), we finalized a
proposal to discontinue use of the PT LUPA add-on factor as a proxy and
established a definitive LUPA add-on factor for occupational therapy.
We used the same methodology used to establish the LUPA add-on amount
for CY 2014, as described previously for the SN, PT, and SLP add-on
factors. Specifically, we updated the analysis using 100 percent of
LUPA periods and a 100 percent sample of non-LUPA first periods from CY
2023 claims data. Using updated analysis (as of September 11, 2024), we
found that the average excess of minutes for the first OT visit in LUPA
periods that were the only period or an initial LUPA in a sequence of
adjacent periods is 33.28 minutes for the first visit. The average
number of minutes for all non-first visits in non-LUPA periods is 45.98
minutes for OT. To determine the LUPA add-on factor for OT to account
for the excess minutes during the first visit in a LUPA period, we
finalized calculating the ratio of the average excess minutes for the
first visits in LUPA claims to the average minutes for all non-first
visits in non-LUPA claims. We then added one to this ratio to obtain
the final add on factor of 1.7238 for OT. Therefore, the OT LUPA factor
of 1.7238 is used when occupational therapy is the first skilled visit
in a LUPA period that occurs as the only period or an initial period in
a sequence of adjacent periods.
4. 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 PEP
adjustment is defined as the 60-day episode payment or PEP 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 as 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 would
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 cost-per-unit used to
determine the cost of an episode of care (81 FR 76727). We would
continue to monitor the visit length by discipline as more recent data
becomes available and may propose updating 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-
[[Page 29170]]
day periods of care in CY 2020. In the CY 2025 HH PPS final rule (89 FR
88354), using CY 2023 claims data (as of July 11, 2024) we finalized
the FDL ratio of 0.35 for CY 2025.
b. Proposed FDL Ratio for CY 2026
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 CY 2024 claims data (as of March 13, 2025) 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 proposing an FDL ratio of 0.46 for CY 2026. CMS would update the
FDL, if needed, in the final rule once we have more complete CY 2024
claims data.
F. Proposed Regulation Change to Face-to-Face Encounter
As a condition for payment, section 6407(a) of the Affordable Care
Act (Pub. L. 111-148, March 23, 2010) requires that prior to certifying
a patient's eligibility for the home health benefit, the physician must
document that the physician himself or herself or a non-physician
practitioner (NPP) has had a face-to-face encounter with the patient.
In the Home Health Prospective Payment System Rate Update for Calendar
Year 2011; Changes in Certification Requirements for Home Health
Agencies and Hospices final rule (75 FR 70427) (hereinafter referred to
as the CY 2011 HH PPS final rule), we established that the certifying
physician must document the face-to-face encounter regardless of
whether the physician himself or herself or one of the permitted NPPs
performed the face-to-face encounter. Sections 6407(a)(1)(B) and
6407(a)(2)(B) of the Affordable Care Act further describes NPPs who may
perform this face-to-face patient encounter.
In the Medicare Program, Home Health Prospective Payment System
Rate Update for Calendar Year 2012 final rule (hereinafter referred to
as the CY 2012 HH PPS final rule), we stated that the Medicare home
health benefit relies on the patient's physician to determine
eligibility for home health services (76 FR 68596), noting that this
type of physician involvement is critical from both a quality of care
and program integrity perspective. Prior to enactment of section
6407(a) of the Affordable Care Act regarding the home health face-to-
face encounter provision, the patient's physician often relied on
information provided by an HHA when making decisions about patient
care. In the CY 2012 HH PPS final rule (76 FR 68597), we stated that,
in addition to the certifying physician and allowed NPPs, the physician
who cared for the patient in an acute or post-acute care facility, and
who had privileges in such facility, could also perform the face-to-
face encounter and inform the certifying physician, who would document
the encounter as part of the certification of eligibility, and that
encounter supported the patient's homebound status and need for skilled
services. During the CY 2012 HH PPS rulemaking comment period,
stakeholders requested that CMS allow any physician to complete the
face-to-face encounter, rather than limiting it to the certifying
physician or allowed NPP; however, CMS referred commenters to the CY
2011 HH PPS final rule where we stated we did not believe that we had
the statutory authority to allow for this additional flexibility (76 FR
68596). The Affordable Care Act established the requirement for a
physician face-to-face encounter prior to certifying a patient's
eligibility for home health services, along with other program
integrity provisions, to address concerns surrounding ineligible
patients receiving home health services and concerns that physicians
who had no firsthand knowledge of the patient's clinical condition were
certifying the patient's eligibility for home health. In the CY 2011 HH
PPS final rule, we described research that showed fewer re-
hospitalizations when the home health patient had a recent encounter
with the physician responsible for the home health care plan. As such,
42 CFR 424.22(a)(1)(v)(A) requires that a face-to-face encounter be
performed by the certifying physician; the certifying allowed
practitioner (for example, nurse practitioner, clinical nurse
specialist, physician assistant); or a certified nurse midwife.
Additionally, 42 CFR 424.22(a)(1)(v)(C) requires that a face-to-face
encounter be performed by the certifying physician or allowed
practitioner unless the encounter is performed by a certified nurse
midwife or a physician, physician assistant, nurse practitioner, or
clinical nurse specialist with privileges who cared for the patient in
an acute or post-acute care facility from which the patient was
directly admitted to home health and who is different from the
certifying practitioner.
Section 3708 of the Coronavirus Aid, Relief, and Economic Security
Act, 2020 (CARES Act) (Pub. L.116-136, March 27, 2020) amended sections
1814(a) and 1835(a) of the Act to allow nurse practitioners (NPs),
clinical nurse specialists (CNSs), and physician assistants (PAs) (as
those terms are defined in section 1861(aa) of the Act), to order and
certify patients for eligibility under the Medicare home health benefit
and establish a plan of care. Since its implementation in the March 31,
2020 COVID-19 interim final rule with comment period (85 FR 27550), CMS
has received requests from stakeholders to change the current face-to-
face encounter policy to allow any practitioner to perform the face-to-
face encounter and not limit this regulation to the certifying
practitioner, a permitted NPP, or a physician or allowed practitioner
with privileges who cared for the patient in an acute or post-acute
care facility from which the patient was directly admitted to home
health, as set out at Sec. 424.22(a)(1)(v)(C). Commenters have stated
that the CARES Act language allows this additional flexibility.
Additionally, commenters have stated, and CMS agrees, that the current
regulation text at Sec. 424.22(a)(1)(v)(A)(1) through(4) can be read
to allow NPs, CNSs, and PAs to perform the face-to-face encounter
regardless of whether they certify the patient for home health
services, but limits the provision of the face-to-face encounter to the
certifying physician or a physician, with privileges, who cared for the
patient in an acute or post-acute care facility from which the patient
was directly admitted to home health. Therefore, stakeholders have
requested that any physician, in addition to NPs, CNSs, and PAs, be
allowed to perform the face-to-face encounter regardless of whether
they are the certifying practitioner or whether they cared for the
patient in the acute or post-acute facility from which the patient was
directly admitted to home health and who is different from the
certifying practitioner. Some commenters have
[[Page 29171]]
referenced situations in which a patient sees a physician in the same
practice as the patient's primary care physician (PCP), but where the
patient's PCP was unavailable to see the patient on a particular date.
We agree that it would be reasonable for the patient's PCP to
certify eligibility under the Medicare home health benefit and
establish the plan of care even though a different physician or allowed
practitioner in the same practice conducted the face-to-face encounter.
However, we note that it would not be appropriate for a practitioner
who specializes in optometry to certify a patient for home health
services that are needed due to orthopedic reasons. These are only a
couple of examples of circumstances that could occur, and we do not
plan to enumerate in this rulemaking all situations in which the
certifying provider may be different than the provider who conducted
the face-to-face encounter.
Regarding our original concern in limiting the face-to-face
encounter to the certifying provider (or the provider who cared for the
patient in the inpatient facility), we still believe physician or
allowed practitioner involvement is critical from both a quality of
care and program integrity perspective. However, we note that
additional program integrity protections exist currently in the
certification policies. To be eligible for Medicare home health
services, in accordance with Sec. 424.22(a)(1)(iv) a patient must be
under the care of a physician or an allowed practitioner. Additionally,
in accordance with Sec. 424.22(a)(1)(v), the face-to-face encounter
documentation must be related to the primary reason the patient
requires home health services, occur in the required time frame by an
allowed provider type, and the certifying practitioner must include a
signature and the date of the encounter as part of the certification.
Furthermore, our subregulatory guidance in the Medicare General
Information, Eligibility and Entitlement Manual (Pub. 100-01, chapter
4, section 30.1) provides that physicians and allowed practitioners
should complete the certification when the plan of care is established,
or as soon as possible thereafter, and that it is not acceptable to
wait until the end of the required time frame to complete the
requirements. As such, the certification also cannot be completed after
a patient is discharged from home health services.
Additionally, our subregulatory guidance in the Medicare General
Information, Eligibility and Entitlement Manual (Pub. 100-01, chapter
4, section 30.1), the Medicare Benefit Policy Manual (Pub. 100-02,
chapter 7, section 30.5), and the Medicare Program Integrity Manual
(Pub. 100-08, chapter 6 section 6.2.1 and 6.2.3) also supports our
program integrity and quality goals. Specifically, the subregulatory
guidance provides additional details on requirements that include the
following: specific signature and date requirements; a requirement for
an actual clinical note from the certifying practitioners for the face-
to-face encounter visit; specific information that must be present in
face-to-face encounter documentation; a requirement that a new face-to-
face encounter is required if the patient's condition has changed; a
requirement that home health eligibility must be supported by other
medical entries in the certifying provider's medical record for the
patient and this documentation must be available for medical reviews as
needed; and a requirement that documentation of the face-to-face
encounter can only be from physicians or allowed NPPs who do not have a
financial relationship with the HHA.
We believe the regulations at 42 CFR 424.22(a)(1), in conjunction
with the Medicare home health eligibility requirements at 42 CFR
424.22(c), finalized in the CY 2019 final rule (83 FR 56627), provide
sufficient preservation of our original intent of ensuring that the
home health benefit relies on the patient's physician (or subsequently,
the allowed practitioner) to determine eligibility for home health
services, and that the physician or NPP performing the face-to-face
encounter should be a practitioner who is most knowledgeable and has
firsthand information of the patient's current clinical condition when
certifying the patient's eligibility for home health services and
establishing a patient's plan of care.
As such, we propose to revise Sec. 424.22(a)(1)(v)(A) to state
that the face-to-face encounter must be performed by one of the
following: a physician, a nurse practitioner, a clinical nurse
specialist, or a physician assistant as defined at 42 CFR 484.2; or a
certified nurse-midwife as defined in section 1861(gg)) of the Act as
authorized by State law. We also propose to remove Sec.
424.22(a)(1)(v)(C), which limits the face-to-face encounter to the
certifying physician or allowed practitioner unless the encounter is
performed by either of the following:
A certified nurse midwife as described in paragraph
(a)(1)(v)(A)(4) of this section.
A physician, physician assistant, nurse practitioner, or
clinical nurse specialist with privileges who cared for the patient in
the acute or post-acute facility from which the patient was directly
admitted to home health and who is different from the certifying
practitioner.
The proposed additional flexibility should decrease ambiguity
regarding which providers are able to complete the face-to-face
encounter and potentially improve access to home health services by
increasing the number of providers allowed to perform the face-to-face
encounter. These proposed revisions would also address concerns that
the current regulations do not align with the CARES Act language. We
solicit comments on these proposed revisions to 42 CFR 424.22(a)(1)(v).
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 pursuant to section 1895(b)(3)(B)(v)(I) of
the Act. As provided at section 1895(b)(3)(B)(vi) of the Act, depending
on the 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 HH 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.
[[Page 29172]]
B. Summary of the Provisions of This Proposed Rule
In accordance with the statutory authority at section
1895(b)(3)(B)(v) of the Act, we are proposing the following policies
and requests for information: We are proposing to remove the ``COVID-19
Vaccine: Percent of Patients Who Are Up to Date'' measure and the item
related to the measure and corresponding data element. CMS is proposing
the removal of four assessment items: one Living Situation item, two
Food items, and one Utilities item. We are also proposing to revise the
policy to allow for providers that fail to provide complete, timely
data to CMS to submit a request for reconsideration if they can
demonstrate full compliance. In very limited circumstances, we would
permit the HHA to request an extension to file a reconsideration
request if the HHA was affected by an extraordinary circumstance beyond
the control of the HHA (that is, a natural disaster such as a hurricane
tornado or earthquake) during the 30-day reconsideration period. CMS is
also proposing to implement a revised HHCAHPS Survey beginning with the
April 2026 sample month. This rule also includes a proposal to update
regulatory text to account for all-payer data submission of OASIS data.
We are seeking feedback on a potential change to the final data
submission deadline from 4.5 months to 45 days after the close of the
period. We are also seeking feedback on the digital quality measurement
(DQM) transition for HHAs. We aim to solicit feedback from the public
on the current adoption of health information technology (IT) and
standards including Fast Healthcare Interoperability Resources (FHIR),
what related challenges or barriers HHAs are facing. Finally, we are
seeking input on future HH QRP quality measure (QM) concepts of
interoperability, cognitive function, nutrition, and patient well-
being.
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 2026 HH QRP
The HH QRP currently includes 19 measures for the CY 2026 program
year, as described in table 30.
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP02JY25.061
[[Page 29174]]
BILLING CODE 4120-01-C
D. Proposed Removal of the ``COVID-19 Vaccine: Percent of Patients/
Residents Who Are Up to Date'' (Patient/Resident COVID-19 Vaccine
Measure) Beginning With the CY 2026 HH QRP
We refer readers to the CY 2024 HH PPS final rule, where we adopted
the ``COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to
Date'' (``Patient/Resident COVID-19 Vaccine measure'') into the HH QRP
(88 FR 77762 through 77764). For the HH QRP, we propose to remove the
Patient/Resident COVID-19 Vaccine measure beginning with the CY 2026 HH
QRP under removal Factor 8, the costs associated with a measure
outweigh the benefit of its continued use in the program (Sec.
484.245(b)(3)(viii)). The estimated burden of collecting this
information annually across all 11,904 active HHAs is 47,168 hours at a
cost of $4,326,249. We refer readers to section VII of this proposed
rule for more details on the estimated burden reduction related to this
proposal.
When we adopted the Patient/Resident COVID-19 Vaccine measure,
COVID-19 continued to be a major challenge for HHAs, with older adults
at a significantly higher risk of mortality, severe disease, and death
following infection (88 FR 77762). HHAs have expressed concerns about
data collection challenges and increased provider burden in collecting
patient immunization data.\8\ Providers were required to integrate the
required Patient/Resident COVID-19 Vaccine OASIS item into their
assessment instrument and ensure accurate assessment for all their
patients. While preventing the spread of COVID-19 remains a public
health goal, the number of COVID-19 cases and deaths \9\ is declining,
and we believe the continued costs and burden to providers of reporting
this measure outweigh the benefit of continued information collection
on COVID-19 vaccination coverage among patients in HHAs. For the COVID-
19 items collected at transfer of care, death at home, and discharge,
we estimate a decrease in clinician cost of $4,326,249 or $363
($4,326,249/11,904) for each of the 11,904 active HHAs. We refer
readers to section VII.A.3. of this proposed rule for more details on
this estimated burden reduction.
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\8\ Standing Technical Expert Panel for the Development,
Evaluation, and Maintenance of Post-Acute Care (PAC) and Hospice
Quality Reporting Program (QRP) Measurement Sets Summary Report
December 15, 2023. https://www.cms.gov/files/document/december-2023-pac-and-hospice-cross-setting-tep-summary-report.pdf-1.
\9\ Provisional COVID-19 Deaths, by Week, in The United States,
Reported to CDC. Accessed on March 18, 2025, via https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00.
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We propose that, effective with assessments completed on or after
the date of publication of the CY 2026 HH PPS final rule, the data from
the ``Patient/Resident COVID-19 Vaccination is Up to Date'' OASIS item
(O0350) would no longer be used in the calculation of the Patient/
Resident COVID-19 Vaccine measure, and the measure itself would be
withdrawn pursuant to measure removal factor eight (set out at 42 CFR
484.245(b)(3)(viii)). We propose to remove the Patient/ResidentCOVID-19
Vaccination is Up to Date item (O0350) from the OASIS effective April
1, 2026, since it is not technically feasible to remove this item
earlier. However, under our proposal, until this item could be removed
from the OASIS, HHAs may submit any valid response (0--No, 1--Yes or
dash) on a Transfer, Death at home, or Discharge OASIS assessment,
without any future quality measure implications. Note that the item
must be completed with one of these three valid responses (must not be
left blank) in order for the submitted assessment to not be rejected by
the iQIES under existing submission specification edits.
We invite public comment on our proposal to remove the COVID-19
Vaccine: Percent of Patients/Residents Who Are Up to Date measure from
the HH QRP beginning with the CY 2026 HH QRP.
E. Proposed Removal of Four Standardized Patient Assessment Data
Elements Beginning With the CY 2026 HH QRP
We refer readers to the CY 2025 HH PPS final rule (88 FR 88433
through 88439) where we finalized the adoption of four items as
standardized patient assessment data elements under the social
determinants of health (SDOH) category: one item for Living Situation
(R0310); two items for Food (R0320A and R0320B); and one item for
Utilities (R0330). As finalized in the CY 2025 HH PPS final rule, HHAs
would be required to report these data elements using the OASIS
beginning with patients discharged in the CY 2027 HH QRP and each
program year after (89 FR 88433 through 88439).
In this proposed rule, we are proposing to remove these four
standardized patient assessment data elements under the SDOH category
as we acknowledge the burden associated with these items at this time.
We continuously look for ways to balance the need for data collections
regarding quality care and the burden of data collection on health care
providers. CMS has a goal to facilitate improved health care delivery
by requiring different systems and software applications to communicate
and exchange data. Therefore, we would like to work towards the
workflow for these specific data elements being part of a low burden
interoperable electronic system. The focus would turn towards how these
data and associated recommendations exchanged can improve care
coordination, efficiency, reduction in errors and patient experience.
As health information technology (HIT) advances and
interoperability of data becomes more standardized, the burden to
collect and share clinical data on these and other relevant patient
information would become less burdensome allowing for better outcomes
for HH patients and their families. The objectives of the HH QRP
continue to be the improvement of care, quality and health outcomes for
all patients through transparency and quality measurement, while not
imposing undue burden on essential health providers. HHAs and providers
across the industry play a vital role in improving the health of all
patients, including those who may be experiencing unstable housing,
food insecurity or challenges paying utilities. At the same time, we
recognize the burden that the collection of these additional data would
impose on already overextended staff. We also acknowledge the
additional cost and resources HHAs would bear for training HH staff and
altering their workflows if they were required to collect and submit
these items. The objectives of the HH QRP continue to be the
improvement of care, quality and health outcomes for all patients
through transparency and quality measurement. The estimated savings
from not collecting this information annually across all 11,904 HHAs is
158,835 hours, with total savings of $13,484,033 (or $1,132 per HH). We
refer readers to section VII.A.3. of this proposed rule for more
details on this estimated burden reduction.
Under our proposal, HHAs would no longer be required to collect and
submit Living Situation (R0310), Food (R0320A and R0320B), and
Utilities (R0330) beginning with patients discharged on or after April
1, 2026. Under our proposal, these items would not be required to meet
HH QRP requirements beginning with the CY 2026 HH QRP.
We invite public comment on our proposal to remove four
standardized patient assessment data elements collected under the SDOH
category from
[[Page 29175]]
the HH QRP beginning with the CY 2026 HH QRP.
F. Amending the Data Non-Compliance Reconsideration Request Policy and
Process Beginning With the CY 2026 HH QRP
1. Background
The HH QRP reconsiderations and appeals process was finalized in
the CY 2013 HH PPS final rule (77 FR 67096). At the conclusion of the
required quality data reporting and submission period, we review the
data received from each HHA during that reporting period to determine
if the HHA met the HH QRP reporting requirements. HHAs that are found
to be non-compliant with the HH QRP reporting requirements for the
applicable calendar year will receive a 2-percentage point reduction to
its market basket percentage update for that calendar year. In the CY
2018 HH PPS final rule (82 FR 52738 through 51740), CMS finalized a
process for HHAs to request and for us to grant exceptions and
extensions for the reporting requirements of the HH QRP for one or more
quarters beginning with the CY 2019 HH QRP when there are certain
extraordinary circumstances outside the control of the HHA. When an
exception or extension is granted, we finalized that we would not
reduce the HHA's PPS payment for failure to comply with the
requirements of the HH QRP.
In that rule, we finalized a policy that, in very limited
circumstances, CMS could grant a request by an HHA to extend the
proposed deadline for their reconsideration requests (82 FR 52738
through 51740). We stated that, to extend the deadline, HHAs would have
to request an extension and demonstrate that ``extenuating
circumstances'' existed which prevented the filing of the
reconsideration request by the proposed 30-day deadline (82 FR 52738
through 51740).
In the CY 2018 HH PPS final rule (82 FR 51752), we codified the
reconsideration policy and process for HHAs at Sec. [thinsp]484.250.
As codified, our regulation at Sec. [thinsp]484.250 addressed how we
send our written notification of non-compliance to an HHA, the process
for an HHA to request reconsideration, what information an HHA must
include with its reconsideration request (for example, documentation
that demonstrates the HHA's compliance HH QRP requirements), and how we
would notify the HHA of our final decision regarding its
reconsideration request. In 2019, we moved the regulatory text to Sec.
[thinsp]484.245 and updated and clarified the regulatory text in the CY
2020 HH PPS final rule (84 FR 60645).
We have become aware that there are inconsistencies in our preamble
and regulation text regarding HHA requests for reconsideration. On this
basis, in this proposed rule, we seek to address these inconsistencies.
2. HH QRP Reconsideration Policy: Proposal To Amend and Codify
Requirements Related to Requests for Extension To File Reconsideration
Request Beginning With the CY 2027 HH QRP
As noted previously, in the CY 2018 HH PPS final rule (82 FR 51738
through 51740), we provided that, in very limited circumstances, we may
grant a request by an HHA to extend the deadline to submit its
reconsideration request, so long as the HHA requested the extension and
demonstrated that extenuating circumstances existed that prevented it
from filing a reconsideration request by the 30-day deadline (82 FR
51738 through 51740). However, we did not codify this policy--
permitting HHAs to request an extension to file their reconsideration
request--in our regulation text at Sec. 484.245(d).
In implementing this finalized policy, we have noted an area where
further clarity would be beneficial to HHAs. Specifically, we have
noted that HHAs may benefit from clearly demarcated deadlines. Although
we believe an HHA would have an interest in asking for an extension to
file a reconsideration request prior to the deadline, our policy
currently does not specify a deadline for an HHA to submit its request
for such an extension (82 FR 51738 through 51740), Our policy also
provides that, to support such request, the HHA must demonstrate that
extenuating circumstances existed that prevented filing the
reconsideration request by the 30-day deadline (82 FR 51738 through
51740). However, we have not specified a deadline from when the
extenuating circumstances occurred. We believe HHAs may benefit from
further specificity by setting a deadline for submitting a request to
extend the deadline to file a reconsideration request.
On this basis, we propose to amend our reconsideration policy as
codified at Sec. 484.245(d) to permit a HHA to request, and CMS to
grant, an extension to file a request for reconsideration of a non-
compliance determination if, during the period to request a
reconsideration as set forth in Sec. 484.245(d), the HHA was affected
by an extraordinary circumstance beyond the control of the HHA (for
example, a natural or man-made disaster such as a cyber-attack,
hurricane, tornado, or earthquake). We propose that the HHA submit its
request for an extension to file a reconsideration request to CMS via
email no later than 30 calendar days from the date of the written
notification of non-compliance. We propose that the HHA's extension
request, submitted to CMS, must contain all of the following
information: (1) the CCN for the HHA; (2) the business name of the HHA;
(3) the business address of the HHA; (4) certain contact information
for the HHA's chief executive officer or designated personnel; (5) a
statement of the reason for the request for the extension; and (6)
evidence of the impact of the extraordinary circumstances, including,
for example, photographs, newspaper articles, and other media. We
propose to codify this process at Sec. 484.245(d)(5).
We further propose that CMS would notify the HHA in writing of its
final decision regarding its request for an extension to file a
reconsideration of non-compliance request via an email from CMS. We
propose to notify the HHA in writing via email because this would allow
for more expedient correspondence with the HHA, given the 30-day
reconsideration timeframe. We propose to codify this process at Sec.
484.245(d)(6).
We note that we are considering proposing similar modifications
across all post-acute care setting quality reporting programs to more
closely align the reconsideration processes.
We invite comment on these proposals to amend the HH QRP
Reconsideration policy to permit HHAs to request an extension to file a
reconsideration request beginning with the CY 2027 HH QRP and to codify
this proposed policy and process at Sec. 412.634(d)(5) and (d)(6).
3. Proposal To Codify the Bases on Which CMS Can Grant a
Reconsideration Request
As discussed previously, in CY 2013 HH PPS final rule, we stated
that, after we review an HHA request for reconsideration, we may
reverse our initial finding of non-compliance if: (1) the HHA provides
proof of compliance with all requirements during the reporting period;
or (2) the HHA provides adequate proof of a valid or justifiable excuse
for non-compliance if the HHA was not able to comply with requirements
during the reporting period (77 FR 67096). We also stated that we will
uphold an initial finding of non-compliance if the HHA cannot show any
justification for non-compliance (77 FR 67096).
As previously discussed, we codified our reconsideration policy at
Sec. 484.245(d) in the CY 2013 HH PPS
[[Page 29176]]
final rule (77 FR 67096). Our regulation at Sec. 484.245(d)(3)
requires that an HHA's request for reconsideration include accompanying
documentation that demonstrates the HHA's compliance with the HH QRP
requirements. Then, we will notify the HHA in writing regarding our
final decision on its reconsideration request (Sec. 412.634(d)(4)).
We believe it would be beneficial for HHAs if we codify our
specific bases for granting a reconsideration request in our regulation
at Sec. 484.245(d). These have not been previously outlined in
regulatory text and CMS has outlined these details for clarity for any
HHA seeking an extension in the reconsideration process.
On these bases, we propose to modify our reconsideration policy to
provide that we will grant a timely request for reconsideration and
reverse an initial finding of non-compliance, only if CMS determines
that the HHA was in full compliance with the HH QRP requirements for
the applicable program year. We would consider full compliance with the
HH QRP requirements to include CMS granting an exception or extension
to HH QRP reporting requirements under our extraordinary circumstance
exception and extension (ECE) policy at Sec. 484.245(c). However, to
demonstrate full compliance with our ECE policy, the HHA would need to
comply with our ECE policy's requirements, including the specific scope
of the exception or extension as granted by CMS.
We propose to modify Sec. 484.245(d)(4) to codify this modified
policy in our regulation. We note that we are considering proposing
similar modifications across all post-acute care setting quality
reporting programs to more closely align the reconsideration processes.
We invite comment on these proposals to amend the bases by which we
grant a reconsideration request under the HH QRP reconsideration policy
and to codify this proposed policy at Sec. 484.245(d)(5).
G. Updates to Requirements for OASIS All-Payer Data Submission
1. Statutory Authority and Background
Section 1891(d) of the Act, cross-referencing section
1891(c)(2)(C)(i)(I) of the Act (section 4021(b) of Pub. L. 100-203
(December 22, 1987)) requires the Secretary to develop a comprehensive
assessment for Medicare-participating HHAs. In 1993, CMS (then known as
HCFA) developed an assessment instrument that identified each patient's
need for home care and the patient's medical, nursing, rehabilitative,
social and discharge planning needs. As part of this assessment,
Medicare-certified HHAs were required to use a standard core assessment
data set, the Outcome and Assessment Information Set (OASIS). As part
of the home health assessment, the statute requires a survey of the
quality of care and services furnished by the agency as measured by
indicators of medical, nursing, and rehabilitative care provided by the
HHA. OASIS is the designated assessment instrument for use by an HHA in
complying with the requirement and HHAs must submit the data collected
by the OASIS assessment to CMS as an HHA condition of participation (42
CFR part 484.45).
Section 704 of the Medicare Prescription Drug Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, December 12, 2003)
``suspended'' the legal authority of the Secretary to require HHAs to
report non-Medicare and non-Medicaid patient data to CMS until at least
two months after the Secretary published final regulations on CMS's
collection and use of OASIS data following the submission of a report
to Congress on the study required under section 704(c) of the MMA.
Subsequently, CMS conducted the study from 2004 to 2005 and submitted a
report \10\ to Congress in 2006 titled ``The OASIS Study: The Costs and
Benefits Associated with the Collection of Outcome and Assessment
Information Set (OASIS) Data on Private Pay Home Health Patients--
Report to Congress.'' While the 2006 report recommended that the
suspension continue, the passage of the Improving Medicare Post-Act
Care Transformation (IMPACT) Act (Pub. L. 113-115) in 2014 required CMS
to create a uniform quality measurement system that allows CMS to
compare outcomes across post-acute care (PAC) providers.
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\10\ https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf.
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The final rule \11\ titled, ``Medicare Program; Calendar Year (CY)
2023 Home Health Prospective Payment System Rate Update; Home Health
Quality Reporting Program Requirements; Home Health Value-Based
Purchasing Expanded Model Requirements; and Home Infusion Therapy
Services Requirements'' finalized the requirement for HHAs to report
OASIS data on all patients, regardless of payer, for the applicable 12-
month performance period (example July 1, 2025-June 30, 2026) (87 FR
66862). With the CY 2025 HH PPS final rule, CMS established that start
of care (SOC) is the first assessment that can be submitted for a non-
Medicare/non-Medicaid patient, either on or after January 1, 2025, for
the phase-in (voluntary) period or on or after July 1, 2025, for the
mandatory period. CMS would use the M0090 ``Date Assessment Completed''
date of the SOC assessment to identify nonMedicare/non-Medicaid patient
assessments in the phase-in and mandatory periods (89 FR 88439 through
88441). This ended the suspension of the OASIS data collection on non-
Medicare and non-Medicaid HHA patients. As discussed in the final rule,
the most accurate representation of the quality of care furnished by
HHAs is best captured by calculating the assessment-based measures
rates using OASIS data submitted on all HHA patients receiving skilled
care, regardless of payer.
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\11\ https://www.federalregister.gov/documents/2022/11/04/2022-23722/medicare-program-calendar-year-cy-2023-home-health-prospective-payment-system-rate-update-home.
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2. Updates to the Home Health Agency CoPs To Align With the OASIS All-
Payer Submission Requirements (Sec. Sec. 484.45(a) and
484.55(d)(1)(i))
Section 484.45(a) of the HHA CoPs currently requires an HHA to
encode and electronically transmit each completed OASIS assessment to
the CMS system, regarding each beneficiary with respect to which
information is required to be transmitted (as determined by the
Secretary), within 30 days of completing the assessment of the
beneficiary. To align with the transition to OASIS all-payer submission
requirements as outlined in the CY 2023 Home Health PPS final rule, we
are proposing at Sec. 484.45(a) to remove the term ``beneficiary'' and
replace it with the term ``patient.'' Thus, Sec. 484.45(a) would read,
if finalized as proposed, ``An HHA must encode and electronically
transmit each completed OASIS assessment to the CMS system, regarding
each patient with respect to which information is required to be
transmitted (as determined by the Secretary), within 30 days of
completing the assessment of the patient.''
Patients must receive, and an HHA must provide, a comprehensive
assessment no later than five calendar days after the start of care.
The comprehensive assessment not only examines patients' current
health, psychosocial, functional, and cognitive status, but also must
incorporate the most current version of the OASIS data items. This
includes clinical record items, patient history, supportive assistance,
etc. Currently, the comprehensive assessment, including administration
of OASIS, must be
[[Page 29177]]
updated and revised as frequently as the patient's condition warrants,
but not less frequently than the last five days of every 60 days
beginning with the start-date of care. Language at Sec.
484.55(d)(1)(i) references a ``beneficiary elected transfer'' in
reference to one scenario in which an OASIS assessment would be
updated. To support the transition to OASIS all-payer submission
requirements, we are also proposing to remove the term ``beneficiary''
at Sec. 484.55(d)(1)(i).
These technical changes to update terminology would further clarify
that the requirement for reporting OASIS information applies to all HHA
patients receiving skilled services and align the language in the CoPs
with the requirements finalized in the CY 2023 and CY 2025 Home Health
PPS final rules. We note that this policy does not change current
patient exemptions for OASIS, which are as follows: patients under the
age of 18; patients receiving maternity services; and patients
receiving only personal care, housekeeping, or chore services.
H. Proposed HHCAHPS Survey Updates
a. Survey and Measure Changes
Based on feedback from patients and interested parties, CMS
launched an effort to update and shorten the Home Health Consumer
Assessment of Healthcare Providers and Systems (HHCAHPS) survey. CMS
conducted a mode experiment with 100 HHAs in 2022. The experiment
tested a web-mail mode and a revised survey instrument. The revised
survey is shorter than the current survey and includes new questions on
topics suggested by interested parties. Specifically, changes to the
survey and the quality measures derived from testing include the
following:
Addition of three new questions to assess new topics of
importance to patients:
++ Whether the care provided helped the patient take care of their
health.
++ Whether the patient's family/friends were given sufficient
information and instructions.
++ Whether the patient felt the staff cared about them ``as a
person.''
Removal of questions or topics of less importance to
patients (that is, six questions about medications were reduced to two
questions).
The following 4 questions were removed:
++ Whether someone asked to see all the prescription and over-the-
counter medicines the patient was taking.
++ Whether the patient is taking any new prescription medicines or
whether the patient's medicines have changed.
++ Whether home health providers talked to the patient about the
purpose for taking new or changed prescription medicines.
++ Whether home health providers talked to the patient about when
to take the medicines.
Removal of questions not currently used in public
reporting composites (that is, three questions on which type of staff
served the patient--nurse, physical or occupational therapist, and home
care aide).
Removal of one question which did not perform well in
testing to stand alone or fit into one of the revised composite
measures:
Whether the patient got information about what care and
services they would get when they first started getting home health
care.
Minor text changes to selected existing questions to help
clarify the question or response options, based on feedback from
patients.
The revised HHCAHPS Survey, including the revised Care of Patients
and Communications between Providers and Patients measures, and the
three stand-alone measures that remain from the current Specific Care
Issues measure were reviewed as part of the 2025 Measures Under
Consideration list (MUC2024-054, -055, -061, -062, & -063) through the
Pre-Rulemaking Measure Review (PRMR) Post-Acute Care/Long-Term Care
(PAC/LTC) Committee. The PRMR PAC/LTC Committee recommended four out of
the five measures without any conditions and one of the measures with
conditions, such as stratifying the survey data for analysis and
including greater detail about the types of medications. For more
information, please see https://p4qm.org/sites/default/files/2025-02/PRMR-2024-2025-MUC-Recommendations-Report-Final.pdf. Due to the very
favorable recommendations from the PRMR, we are proposing to move
forward with the five measures. CMS is proposing to implement the
revised HHCAHPS Survey beginning with the April 2026 sample month.
Table 31 provides a comparison of the current and proposed HHCAHPS
Survey measures.
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b. Impact on Public Reporting and Star Ratings
HHCAHPS Survey measure scores are calculated across four rolling
quarters and are published quarterly for all HHAs over the reporting
period. The Summary Star Rating is currently based on the Overall
Rating of Care and the three composite measures that are equally
weighted. We are proposing to calculate the Summary Rating based on the
Overall Rating of Care, the two modified composite measures (Care of
Patients and Communications between Providers and Patients), and the
three new stand-alone measures related to talking about home safety,
reviewing prescribed and over-the-counter medicines, and talking about
medicine side effects. In the calculation of the Summary Star Rating,
we are proposing that the Overall Rating of Care and two modified
composite measures would each have a weight of 1 and each of the three
new stand-alone measures would have a weight of one-third. The Summary
Star Ratings would continue to be calculated using four rolling
quarters and would be publicly reported for all HHAs with 40 or more
completed surveys over the reporting period. Star Ratings are updated
every quarter. To determine what impact the changes to the survey
measures would have on public reporting, CMS considered the nature of
the measure change. As Talk About Home Safety, Review Medicines, and
Talk About Medicine Side Effects are new measures for the HHCAHPS
Survey, since they would be reported individually, we would have to
wait to introduce public reporting until we have four quarters of data.
Although the revised Care of Patients measure is conceptually similar
to the current Care of Patients measure, we believe the change (adding
two new questions and dropping one question) is substantive and the
revised measure should be treated as new for purposes of public
reporting and Star Ratings. Similarly, the revised Communications
Between Providers and Patients measure is also conceptually similar to
the current Communications Between Providers and Patients measure;
however, the change (dropping two questions and adding one new
question) is substantive and the revised measure should be treated as
new for purposes of public reporting and Star Ratings. As such, we
propose waiting to publicly report the new versions of Care of Patients
and Communications Between Providers and Patients until we have four
quarters of data. We anticipate that the first Care Compare refresh in
which publicly reported measures scores would be updated to include the
new measures would be October 2027, with scores calculated using data
from Q2 2026 through Q1 2027. In the interim period, measure scores
would be made available to HHAs confidentially via their Provider
Preview reports on the HHCAHPS Survey website after two full quarters
of data are submitted.
We believe the change to the Overall Rating measure (minor wording
change from ``provider'' to ``staff'') is non-substantive (i.e., does
not meaningfully change the measure) and along with the unchanged
Willingness to Recommend the Agency measure, both measures can continue
to be publicly reported in the transition period between the current
and new surveys. During the transition period, scores and Star Ratings
for the Overall Rating and Willingness to Recommend measures would be
calculated by combining scores from quarters using the current and new
survey and continue to be reported.
c. Survey Administration Changes
No survey administration changes are proposed with the new survey.
d. Case-Mix and Mode Adjustments
Prior to public reporting, HHAs' HHCAHPS Survey scores are adjusted
for the effects of case mix. Case mix refers to characteristics of the
patient that are not under control of the HHA that may affect reports
of home health experiences. Case-mix adjustment is performed within
each quarter of data after data cleaning. The current case-mix
adjustment model includes the following variables: patient age, patient
education, self-reported overall health, self-reported mental health,
diagnosis of schizophrenia or dementia, whether the patient lives
alone, whether the patient or a proxy answered the survey, and language
in which the survey was completed. The model used and adjustments are
updated quarterly and are available on the HHCAHPS website at this
link: https://homehealthcahps.org/General-Information/Archived-Publicly-Reported-Data Based on testing the revised survey in a 2022
Mode Experiment, CMS reviewed the variables included in the case-mix
adjustment models currently in use for the HHCAHPS Survey to determine
if any changes needed to be introduced along with the revised survey.
We found that while no case-mix variables need to be added, the
diagnosis adjustments were no longer significant. As such, CMS proposes
to drop the adjustment for diagnoses of schizophrenia or dementia with
the revised survey.
Using data from the 2022 Mode Experiment, CMS also tested for
whether there were impacts in how someone responds to the survey based
on the mode of survey administration. Mode effects were observed with
the 2022 Mode Experiment, so CMS is proposing to add a mode adjustment
in addition to the case-mix adjustment, with the revised survey. Case-
mix adjustment would be performed within each quarter of data after
data cleaning and before mode adjustment. When we make mode
adjustments, it is necessary to choose one mode as a reference mode.
One can then interpret all adjusted responses from all modes as if they
had been surveyed in the reference mode. CMS would use mail-only as the
reference mode for the HHCAHPS Survey, because it is the most used mode
for HHCAHPS. The choice of mail mode as the reference mode does not
indicate that mail mode is preferable to other approved modes in any
way. In the 2022 HHCAHPS Survey mode experiment, telephone-only
respondents were more negative in their evaluations of care relative to
mail-only respondents across the HHCAHPS measures. The mode adjustments
are generally small--most are around 2 percentage points.
Please see the HHCAHPS Revised Survey Mode Adjustments on https://homehealthcahps.org for the mode adjustments if these measures are
finalized through rulemaking.
We invite public comment on the HHCAHPS Survey proposals.
I. HH QRP Quality Measure Concepts Under Consideration for Future
Years--Request for Information
We are seeking input on the importance, relevance, appropriateness,
and applicability of each of the quality measure concepts under
consideration listed in Table 32 for future years of the HH QRP. In the
CY 2024 HH PPS proposed rule (88 FR 43738 through 43740), we included a
request for information (RFI) on a set of principles for selecting and
prioritizing HH QRP measures, identifying measurement gaps, and
suitable measures for filling these gaps. We refer readers to the CY
2024 HH PPS final rule (88 FR 77773 through 77774) for a summary of the
public comments received in response to the RFI.
We are seeking input on four concepts for future measures for the
HH QRP.
1. Interoperability
We are seeking input on the quality measure concept of
interoperability, focusing on information technology (IT) systems'
readiness and capabilities in the HH setting. Title XXX of the Public
[[Page 29181]]
Health Service Act defines ``interoperability'' in part, and with
respect to health IT, as health IT that enables the secure exchange of
electronic health information with, and use of electronic health
information from, other health IT without requiring special efforts by
the user.\12\ The definition further states that interoperability of
health IT allows for complete, including by providers and patients,
access, exchange, and use of electronically accessible health
information for authorized uses under applicable State or Federal
law.\13\ We request input and comment on approaches to assessing
interoperability in the HH setting, for instance, measures that address
or evaluate the level of readiness for interoperable data exchange, or
measures that evaluate the ability of data systems to securely share
information across the spectrum of care.
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\12\ 21st Century Cures Act, 42 U.S.C. 300jj(9) (2016).
\13\ 21st Century Cures Act, 42 U.S.C. 300jj(9) (2016).
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2. Cognitive Function
Illnesses associated with limitations in cognitive function, which
may include stroke, traumatic brain injuries, dementia, and Alzheimer's
disease, affect an individual's ability to think, reason, remember,
problem-solve, and make decisions. The IMPACT Act identifies cognitive
function as a key quality measure domain, and an area for inclusion as
a standardized assessment data element.
Two sources of information on cognitive function currently
collected in HHAs are the Brief Interview for Mental Status (BIMS) and
Confusion Assessment Method (CAM(copyright)).\14\ Both the
BIMS and CAM have been incorporated into the OASIS. Scored by providers
via direct observation, the BIMS is used to determine orientation and
the ability to register and recall new information. The CAM assesses
the presence of inattention, disorganized thinking, and level of
consciousness.
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\14\ Centers for Medicare & Medicaid Services. Long-Term Care
Hospital Continuity Assessment Record and Evaluation (CARE) Data Set
Version 5.0. Effective October 1, 2022. https://www.cms.gov/files/document/ltch-care-data-set-version-50-planned-discharge-final.pdf.
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The BIMS and CAM include items representing different aspects of
cognitive function, from which quality measures may be constructed.
Although these instruments have been subjected to feasibility,
reliability, and validity testing, additional development and testing
would be required prior to transforming the concepts reflected in the
BIMS and CAM (example temporal orientation, recall) into fully
specified measures for implementation in the HH QRP.
This RFI is requesting input on cognitive functioning measures that
may be available for immediate use, or that may be adapted or developed
for use in the HH QRP, using the BIMS or the CAM. In addition to
comment on specific measures and instruments, CMS seeks input on the
feasibility of measuring improvement in cognitive functioning during a
HH stay, which typically averages 56 days; \15\ the cognitive skills
(example executive functions) that are more likely to improve during an
HHA stay; conditions for which measures of maintenance--rather than
improvement in cognitive functioning--are more practical; and the types
of intervention that have been demonstrated to assist in improving or
maintaining cognitive functioning.
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\15\ Based on home health episodes ending in CY2021 (the most
recent year for which complete data are available).
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3. Well-Being
We are seeking input on a quality measure concept of well-being.
Well-being is a comprehensive approach to disease prevention and health
promotion, as it integrates mental, social, and physical health while
emphasizing preventative care to proactively address potential health
issues.\16\ This comprehensive approach emphasizes person-centered care
by promoting well-being of patients and their family members. We are
seeking comments on tools and measures that assess for overall health,
happiness, and satisfaction in life that could include aspects of
emotional well-being, social connections, purpose, fulfillment, and
self-care.
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\16\ Well-Being Concepts. CDC Archives. WHPL_Canon_WB_Well-
Being_Concepts___HRQOL___CDC_2017.pdf.
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4. Nutrition
Finally, we are seeking input on a quality measure concept of
nutrition. Assessment for nutritional status may include various
strategies, guidelines, and practices designed to promote healthy
eating habits and ensure individuals receive the necessary nutrients
for maintaining health, growth, and overall well-being. This also
includes aspects of health that support or mediate nutritional status,
such as physical activity and sleep. In this context, preventable care
plays a vital role by proactively addressing factors that may lead to
poor nutritional status or related health issues. These efforts not
only support optimal nutrition but also work to prevent conditions that
could otherwise hinder an individual's health and nutritional needs. We
are seeking feedback on tools and frameworks that promote healthy
eating habits, exercise, nutrition, or physical activity for optimal
health, well-being, and best care for all.
[GRAPHIC] [TIFF OMITTED] TP02JY25.064
[[Page 29182]]
We intend to use this input to inform our future measure
development efforts.
J. Potential Revision of the Final Data Submission Deadline Period From
4.5 Months to 45 Days--Request for Information (RFI)
Section 1895(b)(3)(B)(v)(I) of the Act states that for 2007 and
each subsequent year, the home health market basket percentage increase
applicable under such clause for such year shall be reduced by 2
percentage points if a home health agency does not submit quality data
to the Secretary in accordance with subclause (II) for such a year.
Section 1899B(f)(1) of the Act also requires the Secretary to provide
confidential feedback reports to PAC providers on the performance of
such PAC providers for quality, resource use, and other measures
required under sections 1899B(c)(1) and (d)(1) of the Act beginning 1
year after the applicable specified application date. Further, section
1899B(g) of the Act requires the Secretary to establish procedures for
making available to the public information regarding the performance of
individual PAC providers for quality, resource use, and other measures
required under sections 1899B(c)(1) and (d)(1) of the Act beginning not
later than 2 years after the applicable specified application date. The
procedures must ensure, including through a process consistent with the
process applied under section 1886(b)(3)(B)(viii)(VII) of the Act for
similar purposes, that each PAC provider has the opportunity to review
and submit corrections to the data and information that are to be made
public for the PAC provider prior to such data being made public.
Although assessment data submission, quarterly performance reports,
and public reporting are required by statute, timing of data submission
under the HH QRP is not specified. Thus, in the CY 2017 HHS PPS final
rule (81 FR 76784) we finalized our proposal, to comply with the
requirements of section 1899B(g) of the Act, that HHAs would have
approximately 4.5 months after the reporting quarter to correct any
errors of their assessment-based data to calculate the measures. During
the time of data submission for a given quarterly reporting period and
up until the quarterly submission deadline, HHAs could review and
perform corrections to errors in the assessment data used to calculate
the measures.
In the process of implementing the public reporting programs, CMS
has become concerned that the time between when data are collected and
when the measures are reported from those data may be too long to get
the desired results in a public reporting program. Public reporting
programs are designed to provide patients and their families with the
most current information so they can make quality-informed decisions
about where to receive their care. Currently, the largest contributing
factor to the 9-month lag between end of the data collection and when
measures are publicly reported is the current 4.5-month timeframe for
data submission. If the timeframe for data submission was reduced from
4.5 months to 45 days, the lag time between collection and reporting
could be reduced by up to 3 months. This would result in more timely
public reporting that would be more valuable for patients and families
as they make decisions about where they can receive the best care.
An important consideration in reducing the data submission
timeframe is the potential burden it may place on providers, which
could lead to lower quality data. CMS conducted analysis to evaluate
the potential impact of reducing the timeframe by determining how many
charts are being submitted by 60 days currently. Using 2022 data, CMS
found that only 1.3 percent of all OASIS assessments were submitted
after the 60-day timeframe. Of those submissions, only three-quarters
(or 0.9 percent of the total) were submitted between 60 days and 4.5
months and hence have potential to be impacted. Because assessments are
tied to payment, providers are likely to submit assessments close to
the date of service and to close out medical records once the patient
is discharged from service. Therefore, we believe that by reducing this
deadline from 135 days to 45 days, we can reduce the time between data
collection and public reporting resulting in the improvement in
timeliness with limited change in burden to providers.
We are requesting feedback on this potential future reduction of
the HH QRP data submission deadline from 4.5 months to 45 days.
Specifically, we are requesting comment on the following:
How this potential change could improve the timeliness and
actionability of HH QRP quality measures.
How this potential change could improve public display of
quality information.
How this potential change could impact HHA workflows or
require updates to Systems.
We intend to use this input to inform our program improvement
efforts.
K. Advancing Digital Quality Measurement in the HH QRP--Request for
Information
As part of our effort to advance the digital quality measurement
(dQM) transition, we are issuing this request for information (RFI) to
gather broad public input on the dQM transition in HHAs.
1. Background
We are committed to improving healthcare quality through
measurement, transparency, and public reporting of quality data, and to
enhancing healthcare data exchange by promoting the adoption of
interoperable health information technology (IT) that enables
information exchange using Fast Healthcare Interoperability
Resources[supreg] (FHIR[supreg]) standards. Proposing to require the
use of such technology within the HH QRP in the future could
potentially enable greater care coordination and information sharing,
which is essential for delivering high-quality, efficient care and
better outcomes at a lower cost. In the CYs 2022 and 2023 HH PPS
proposed rules,\17\ we outlined several HHS initiatives aimed at
promoting the adoption of interoperable health IT and facilitating
nationwide health information exchange. Further, to inform our digital
strategy, in the CY 2022 HH PPS proposed rule (86 FR 35980) we shared
and sought feedback on the following:
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\17\ ``Advancing Health Information Exchange'' in the CY 2022 HH
PPS proposed rule (86 FR 35979) and CY 2023 HH PPS proposed rule (87
FR 37602).
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Our intent to explore the use of FHIR[supreg]-based
standards to exchange clinical information through application
programming interfaces (APIs).
Enabling quality data submission to CMS through our
internet Quality Improvement and Evaluation System (QIES).
To work with healthcare standards organizations to ensure
their standards support our assessment tools.
We are considering opportunities to advance FHIR[supreg]-based
reporting of patient assessment data for the submission of the OASIS.
Our objective is to explore how HHAs typically integrate technologies
with varying complexity into existing systems and how this affects HH
workflows. In this RFI, we seek to identify the challenges and/or
opportunities that may arise during this integration, and determine the
support needed to complete and submit quality data in ways that protect
and enhance care delivery.
We are also seeking input on future measures under consideration
including applicability of interoperability as a
[[Page 29183]]
future measure concept in post-acute care settings. We refer readers to
section III.H.1. of this proposed rule for more information.
Any updates specific to the HH QRP program requirements related to
quality measurement and reporting provisions would be addressed through
separate and future notice-and-comment rulemaking, as necessary.
2. Solicitation of Comment
We seek feedback on the current state of health IT use, including
electronic health records (EHRs), in HHAs:
To what extent does your HHA use health IT systems to
maintain and exchange patient records?
If your agency has transitioned to using electronic
records, in part or in whole, what types of health IT does your HHA use
to maintain patient records? Are these health IT systems certified
under the Office of the National Coordinator for Health Information
Technology (ONC) Health IT Certification Program? If your agency uses
health IT products or systems that are not certified under the ONC
Health IT Certification Program, please specify. Does your agency use
EHRs or other health IT products or systems that are not certified
under the ONC Health IT Certification Program? If no, what is the
reason for not doing so? Do these other systems exchange data using
standards and implementation specifications adopted by HHS? Does your
agency maintain any patient records outside of these electronic
systems? If so, are the data organized in a structured format, using
codes and recognized standards, that can be exchanged with other
systems and providers?
Does your HHA submit patient assessment data to CMS
through your current health IT system? If a third-party intermediary is
used to report data, what type of intermediary service is used? How
does your agency currently exchange health information with other
healthcare providers or systems, specifically between HHAs and other
provider types? What about health information exchange with other
entities, such as public health agencies? What challenges do you face
with electronic exchange of health information?
Are there any challenges with your current electronic
devices (for example, tablets, smartphones, computers) that hinder your
ability to achieve interoperability, such as collecting, storing,
sharing, or submitting data? Please describe any specific issues you
encounter. Does limited internet or lack of internet connectivity
impact your ability to exchange data with other healthcare providers,
including community-based care services, or your ability to submit
patient assessment data to CMS? Please specify.
What steps does your HHA take with respect to the
implementation of health IT systems to ensure compliance with security
and patient privacy requirements such as HIPAA?
Does your HHA refer to the Safety Assurance Factors for
EHR Resilience (SAFER) Guides (see newly revised versions published in
January 2025 at https://www.healthit.gov/topic/safety/safer-guides) to
self-assess EHR safety practices?
What challenges or barriers does your agency encounter
when submitting quality measure data to CMS as part of the HH QRP? What
opportunities or factors could improve your agency's successful data
submission to CMS?
What types of technical support, guidance, workforce
trainings, and/or other resources would be most beneficial for the
implementation of FHIR[supreg]-based technology in your agency for the
submission of the OASIS to CMS? What strategies can CMS, HHS, or other
Federal partners take to ensure that technical assistance is both
comprehensive and user-friendly? How could Quality Improvement
Organizations (QIOs) or other entities enhance this support?
Is your agency using technology that utilizes APIs based
on the FHIR[supreg] standard to enable electronic data sharing? If so,
with whom are you sharing data using the FHIR[supreg] standard and for
what purpose(s)? For example, have you used FHIR[supreg] APIs to share
data with public health agencies? Does your agency use any
Substitutable Medical Applications and Reusable Technologies (SMART) on
FHIR[supreg] applications? If so, are the SMART on FHIR[supreg] \18\
applications integrated with your EHR or other health IT?
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\18\ https://smarthealthit.org/.
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How do you anticipate the adoption of technology using
FHIR[supreg]-based APIs to facilitate the reporting of patient
assessment data could impact provider workflows? What impact, if any,
do you anticipate it will have on quality of care?
Does your facility have any experience using technology
that shares electronic health information using one or more versions of
the United States Core Data for Interoperability (USCDI) standard? \19\
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\19\ For more information about USCDI see https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi.
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Would your HHA and/or vendors be interested in
participating in testing to explore options for transmission of
assessments, for example testing the transmission of a FHIR[supreg]-
based assessment to CMS?
The Trusted Exchange Framework and Common
AgreementTM (TEFCATM) framework supports
nationwide health information exchange by connecting health information
networks (HINs) across the country.\20\ Additionally,
TEFCATM facilitates FHIR exchange by requiring Qualified
HINs (QHINs) to perform patient discovery for those querying for data
and providing data holders with FHIR endpoints to enable point-to-point
exchange via FHIR APIs. How could the TEFCATM support CMS
quality programs' adoption of FHIR[supreg]-based assessment submissions
consistent with the FHIR[supreg] Roadmap (available here: https://rce.sequoiaproject.org/three-year-fhir-roadmap-for-tefca/)? How might
patient assessment data hold secondary uses for treatment or other
TEFCATM exchange purposes?
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\20\ For more information about TEFCATM, see https://www.healthit.gov/topic/interoperability/policy/trusted-exchange-framework-and-common-agreement-tefca.
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What other information should we consider that could
facilitate successful adoption and integration of FHIR[supreg]-based
technologies and standardized data for patient assessment instruments
like the OASIS? We invite any feedback, suggestions, best practices, or
success stories related to the implementation of these technologies.
While we would not be responding to specific comments in response
to this RFI in the CY 2026 HH PPS final rule, we invite any feedback,
suggestions, best practices, or success stories related to the
implementation of these technologies and would use this input to inform
our future dQM transition efforts.
L. Form, Manner, and Timing of Data Submission Under the HH QRP
We are not proposing any new policies regarding Form, Manner, and
Timing of Data Submission Under the HH QRP in this proposed rule.
M. Policies Regarding Public Display of Measure Data for the HH QRP
1. Proposal To End the Public Display of Patient/Resident COVID-19
Measure
In the CY 2024 HH PPS final rule (88 FR 77762 through 77764), we
finalized our proposal to begin publicly displaying data for the
Patient/Resident COVID-19 measure beginning with the January 2026 Care
Compare refresh. In section III.C.2, we are proposing to remove the
Patient/Resident COVID-19 Measure beginning with the CY 2026
[[Page 29184]]
HH QRP. However, if finalized as proposed, effective with assessments
completed on or after the date of publication of the CY 2026 HH final
rule, the data from O0350 Patient's COVID-19 Vaccination is Up to Date
may be submitted using any of the three valid responses (0--No, 1--Yes,
or dash) on a Transfer, Death at home, or Discharge OASIS assessment,
without any future quality measure implications.
We propose that the Patient/Resident COVID-19 measure rates would
be publicly reported for the last time with the January 2026 Care
Compare refresh on Medicare.gov, based on data from Q1 of 2025. We
invite public comments on our proposal to end the public display of
Patient/Resident COVID-19 Measure data after the January 2026 Care
Compare refresh on Medicare.gov.
IV. The Expanded Home Health Value-Based Purchasing (HHVBP) Model
A. Background
As authorized by section 1115A of the Act and finalized in the CY
2016 HH PPS final ule (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 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 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 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.\21\ 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 (the Secretary) determined that
expansion of the original Model will further reduce Medicare spending
and improve the quality of care. In October 2020, the CMS Chief Actuary
certified that expansion of the HHVBP Model will produce Medicare
savings if expanded to all states.\22\
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\21\ https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt.
\22\ https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf.
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On January 8, 2021, CMS announced the certification of the HHVBP
Model for expansion nationwide, as well as the intent to expand the
Model through notice and comment rulemaking.\23\ In the CY 2022 HH PPS
final rule (86 FR 62292 through 62336), we finalized 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. The first payment year is CY 2025
based on the first performance year which was CY 2023. Our codified
policies for the expanded HHVBP Model can be found in our regulations
at 42 CFR part 484, subpart F, Sec. Sec. 484.300 through 484.375.
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\23\ 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 2024 HH PPS final rule (88 FR 77676), we finalized
proposals to codify in the Code of Federal Regulations (CFR) the
measure removal factors finalized in the CY 2022 HH PPS final rule; to
replace the two Total Normalized Composite Measures (for Self-Care and
Mobility) with the Discharge Function Score measure effective January
1, 2025; to replace the OASIS-based Discharge to Community (DTC)
measure with the claims-based Discharge to Community-Post Acute Care
(PAC) Measure for Home Health Agencies, effective January 1, 2025; to
replace the claims-based Acute Care Hospitalization During the First 60
Days of Home Health Use and the Emergency Department Use without
Hospitalization During the First 60 Days of Home Health measures with
the claims-based Potentially Preventable Hospitalization measure
effective January 1, 2025; to change the weights of individual measures
due to the change in the total number of measures; and to update the
Model baseline year to CY 2023 for all applicable measures in the
finalized measure set beginning with performance year CY 2025.
B. Proposed Changes to HHVBP Measure Removal Factors
In the CY 2023 HH PPS final rule (88 FR 77776), CMS finalized the
codification of specific factors that CMS considers for measure
removal. Currently, there are eight measure removal factors that CMS
considers when determining whether to remove measures from the expanded
HHVBP Model's applicable measure set. We are proposing to add and
codify an additional measure removal factor at Sec. 484.358, Factor 9:
It is not feasible to implement the measure specifications.
This proposed new measure removal factor will enable CMS to address
situations in which it is no longer feasible to continue implementing a
quality measure, such as when a data collection instrument is revised
in a way that no longer collects the information required for the
quality measure specifications.
We invite public comments on this proposal.
C. Proposed Changes to the Expanded HHVBP Model's Applicable Measure
Set
We are proposing to remove three measures from the current
applicable measure set and add four measures starting in CY 2026. The
removal of the three measures is necessary due to revisions to the
HHCAHPS Survey that are proposed beginning with the April 2026 sample.
These proposed survey revisions prevent the three HHCAHPS Survey-based
measures from being calculated as currently specified. These measures
will only be removed if the proposed changes to the HHCAHPS Survey are
finalized.
1. Proposed Removal of Three HHCAHPS Survey-Based Measures From the
Expanded HHVBP Model Applicable Measure Set
The Home Health Consumer Assessment of Healthcare Providers and
System[supreg] (HHCAHPS) Survey, a nationally standardized and publicly
reported survey, is designed to measure the experiences of people
receiving home health care from Medicare-certified home health
agencies. It is conducted for home health agencies by approved HHCAHPS
Survey vendors. Currently, the expanded HHVBP Model includes five
HHCAHPS Survey-based measures:
Care of Patients
Communications between Providers and Patients
Specific Care Issues
Overall Rating of Home Health Care
Willingness to Recommend the Agency
The Care of Patients, Communications between Providers and
Patients, and Specific Care Issues measures are based on multiple items
from the HHCAHPS Survey while Overall Rating of Home Health Care and
Willingness to Recommend the Agency are single-item measures.
Elsewhere in this proposed rule, the Center for Medicare (CM) is
proposing
[[Page 29185]]
changes to the HHCAHPS survey. These proposed changes will affect the
survey questions used to calculate three measures that are used in the
expanded HHVBP Model. CM plans to make changes to the questions used
for two of the multi-item measures (Care of Patients and Communication
between Providers and Patients). In addition, the Specific Care Issues
measure will no longer exist as four of the seven items used for that
measure will be removed from the survey. These changes are described in
section III.H. of this proposed rule, and if finalized, will become
effective in beginning with the April 2026 sample month.
Given these proposed changes, we propose to remove the following
HHCAHPS Survey-based measures from the HHVBP applicable measure set
starting with CY 2026:
Care of Patients
Communications between Providers and Patients
Specific Care Issues
We propose to remove these three HHCAHPS Survey-based measures
using the proposed Removal Factor 9: It is not feasible to implement
the measure specifications. This proposed measure removal factor is
described in more detail above. The proposed removal of these measures
will be necessary if the proposed changes to the HHCAHPS Survey
instrument are finalized, as the current measure specifications cannot
be calculated using the proposed survey revisions. If the proposed
changes to the HHCAHPS Survey instrument are finalized, several of the
survey questions used to calculate the Care of Patients and
Communication Between Providers and Patients measures will be changed
and will no longer match the measure specifications. Also, four of the
seven survey items used to calculate the Specific Care Issues measure
would be removed if the survey changes are finalized, making it
impossible to calculate the measure as currently specified.
While CMS could revise the HHCAHPS measures to use the proposed
HHCAHPS Survey instrument changes, a full year of data with the revised
HHCAHPS measures will not be available until CY 2027. Data from
multiple quarters will be needed to establish benchmarks and
achievement thresholds for the revised HHCAHPS Survey-based measures.
Removing these three measures as part of this rulemaking cycle will
give CMS the time needed to collect the required data and potentially
develop updated benchmarks and achievement thresholds for revised or
new measures.
If CMS decides to propose the addition of the new versions of the
Care of Patients and Communications between Providers and Patients
measures and individual item measures to replace the Specific Care
Issues measure, CMS will do so through future rulemaking.
2. Proposed Addition of Medicare Spending Per Beneficiary Post-Acute
Care (MSPB-PAC) to the Expanded HHVBP Model Applicable Measure Set
We propose to add the claims-based MSPB-PAC measure to the HHVBP
applicable measure set starting in CY 2026. This cross-setting 2-year
measure was required by the Improving Post-Acute Care Transformation
Act of 2014 (IMPACT Act) and was added to the Home Health Quality
Reporting Program on January 1, 2017.
Public comments on the CY 2025 HH PPS proposed rule (89 FR 88354)
in support of adding this measure to the expanded HHVBP Model suggested
that the MSPB-PAC measure could help to identify the costs associated
with the delivery of high-quality home health services, which could
identify areas for improved efficiencies in resource usage.
The MSPB-PAC measure is intended to incentivize providers to
redesign care systems to provide coordinated, high-quality, and cost-
efficient care. It holds HHAs accountable for Medicare payments for an
episode of care that includes the period during which a patient is
directly under HHA care, as well as a defined period after the end of
HHA treatment, which may be reflective of and influenced by the
services provided by the HHA. Evaluating Medicare payments during an
episode creates a continuum of accountability between providers and has
the potential to improve post-treatment care planning and coordination.
In conjunction with the other performance measures used in the expanded
HHVBP Model, explicit measurement of costs of care will allow
recognition of HHAs that provide high quality care at a lower cost.
We anticipate that adding the MSPB-PAC measure will create
incentives for greater care coordination to deliver high-quality care
at a lower cost to Medicare and incentivize providers to find efficient
ways to address patients' care needs. Incentivizing efficient resource
utilization aligns with the pay-for-performance approach used in the
expanded HHVBP Model. The MSPB-PAC measure would ensure that HHVBP
payment adjustments consider not only patient outcomes but also HHA's
ability to produce those outcomes at a lower cost.
The MSPB-PAC measure is a claims-based measure that includes price-
standardized payments for Part A and Part B services. It measures
Medicare spending during an episode of care relative to the Medicare
spending for other home health agencies. The Medicare spending measure
is payment standardized and risk adjusted. The MSPB-PAC measure
captures Medicare spending for most Part A and B services during the
episode of care, excluding services that are clinically unrelated to
post-acute care treatment or services over which home health agencies
may have limited to no influence (for example, routine management of
certain preexisting chronic conditions). The episode of care window
consists of a treatment period and an associated services period (from
the admission to the home health services up to 30 days after the end
of the home health treatment period). The episode includes the period a
patient is directly under HHA care, as well as a defined period after
the end of the HHA's treatment which may be reflective of and
influenced by the services rendered by the HHA.\24\
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\24\ See https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/2016_07_20_mspb_pac_ltch_irf_snf_measure_specs.pdf for more details
on the specifications for the MSPB-PAC measure.
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If this measure is finalized as proposed, we anticipate reporting
preliminary benchmarks, achievement thresholds, and improvement
thresholds for the MSPB-PAC measure in the October 2025 Interim
Performance Reports (IPR). The MSPB-PAC measure will use 2 years of
data covering CY 2022 and CY 2023 as baseline data. Because the MSPB-
PAC measure is a two-year measure, CY 2026 performance for the measure
will be calculated based on 2 years of performance data (CY 2025/2026).
The MSPB-PAC measure was designed as a 2-year measure to optimize
reliability. In addition, each performance year will consist of 1 year
of data that does not overlap with data from the prior performance
year, which provides sufficient opportunity to capture quality
improvement over time.
Adding the MSPB-PAC and function measures described below will
increase the number of HHAs that have sufficient data for at least five
measures, the minimum required to have a payment adjustment for the
expanded HHVBP Model. Increasing the number of HHAs that receive
payment adjustments will allow the Model to better incentivize high-
quality home health care across the country.
[[Page 29186]]
3. Proposed Addition of OASIS-Based Function Measures to the Expanded
HHVBP Model Applicable Measure Set
We propose adding three OASIS-based function measures to the HHVBP
applicable measure set beginning with CY 2026:
Improvement in Bathing (based on OASIS item M1830)
Improvement in Upper Body Dressing (based on OASIS item M1810)
Improvement in Lower Body Dressing (based on OASIS item M1820)
These measures are intended to complement the Discharge (DC)
Function Score measure added to the HHVBP applicable measure set
starting with CY 2025 to provide a more holistic picture of patients'
functional status. The DC Function Score measure uses a cross-setting
function item set which does not include items related to bathing or
dressing.
These three measures have already been tested, validated, and
implemented for other purposes within CMS models and programs.
Improvement in Bathing is used in the Home Health Quality Reporting
Program, the Home Health Quality of Patient Star Rating system, and
reported on Care Compare. All three of the OASIS items underlying these
measures were also used in the Total Normalized Change (TNC) in Self-
Care measure that were part of the CY 2023 and CY 2024 expanded HHVBP
Model applicable measure set. Additionally, the underlying OASIS M1800
items are used in the Home Health Patient-Driven Groupings Model that
is used for Medicare home health payments. Therefore, adding these
measures to the expanded HHVBP Model would align with existing quality
measurement and payment practices. Adding these measures would not
create additional burden to HHAs, as the data for these measures is
already collected on OASIS assessments.
In the CY 2024 HH PPS final rule (88 FR 77676), CMS finalized the
decision to add the DC Function Score measure to replace the previous
OASIS-based TNC measures (TNC Self-Care and TNC Mobility). That change
aligned the expanded HHVBP Model with other PAC quality programs. The
DC Function Score measure is an OASIS-based measure that is used in the
HH QRP and the expanded HHVBP Model starting in CY 2025. This measure
reports the percentage of patients who meet or exceed an expected
discharge function score during the reporting period. The DC Function
Score measure considers two dimensions of patient function--self-care
and mobility activities--using 13 OASIS items.\25\
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\25\ These OASIS items and activities include GG0130 Self-Care,
GG0130A Eating, GG0130B Oral hygiene, GG0130C Toileting hygiene,
GG0170 Mobility, GG0170A Roll left and right, GG0170C Lying to
sitting on side of bed, GG0170D Sit to stand, GG0170E Bed-to-chair
transfer, GG0170F Toilet transfer, GG0170I Walk 10 feet, GG0170J
Walk 50 feet with two turns, GG0170R Wheel 50 feet with two turns.
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The Model's Technical Expert Panel (TEP) has raised concerns that
the DC Function Score measure does not consider bathing or dressing
abilities, as these items are not available across all PAC settings
covered by this cross-setting measure. TEP members identified the
ability to bathe and dress as being critically important for home
health patients. Many patients who receive home health care are
recovering from an injury or illness and may have difficulty performing
the tasks of bathing and dressing, requiring help from another person
or special equipment to accomplish these activities. Improving
patients' ability to bathe themselves contributes to patient comfort
and quality of life and is often a rehabilitative goal for home health
patients. These metrics also promote safer discharges from home care.
Improvement in both upper and lower body dressing are important
indicators of usefulness and improvement for patients, as well as
indicators of being able to stay home, care for themselves, and be
independent.
In 2024, TEP members supported CMS moving ahead as quickly as
possible to add bathing and dressing function measures to the Model's
applicable measure set to complement the DC Function measure. The TEP
recommended using existing measures based on the OASIS M1800 items,
which could be added sooner than future measures based on Section GG
items.\26\
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\26\ The Section GG items were added to patient assessment tools
for home health, skilled nursing facilities, inpatient
rehabilitation facilities, and long-term care hospitals to support
alignment of measurement of functional abilities and goals across
post-acute care assessment instrument.
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The baseline data for these three measures will cover CY 2023,
which was specified as the Model baseline year in the CY 2024 HH PPS
final rule. This baseline data will be used to calculate benchmarks and
achievement thresholds for the proposed OASIS-based function measures.
If these three measures are finalized as proposed, we anticipate
providing HHAs with the benchmarks, achievement thresholds, and
improvement thresholds for the OASIS-based function measures in the
October 2025 IPRs.
Adding these three measures would increase the number of OASIS-
based measures used in the Model, allowing for more robust measurement
of HHA performance. The change will also allow more HHAs to have
sufficient data for at least five measures, the minimum required to
calculate a payment adjustment. HHAs that receive payment adjustments
will have greater incentives to improve or maintain quality of care.
4. Updates to Individual Measure Weights and Category Weights
Along with the proposed revisions to the current HHVBP applicable
measure set, we propose to revise the weights of the individual
measures starting with the CY 2026 performance year as well as to the
measure category weights. Table 34 has current and proposed individual
measure weights and category weights.
Changes to the measure weights are necessary given the proposed
changes to the expanded HHVBP Model applicable measure set. Reflecting
the reduction in the number of HHCAHPS Survey-based measures, the
proposed weights include a lower total weight for the HHCAHPS Survey-
based measures and a higher weight for the OASIS-based and claims-based
measures. In addition, some of the weight for the current claims-based
measures is shifted to the MSPB-PAC measure and some weight for the
OASIS-based measures is shifted to the additional function measures. As
with the current measure weights, higher weight is given to claims-
based measures because they may have a greater impact on reducing
Medicare expenditures. For example, HHAs with better performance scores
on the claims-based PPH measure have lower rates of potentially
preventable hospitalizations for their patients, reducing Medicare
expenditures.
Currently, the OASIS-based, claims-based, and HHCAHPS Survey-based
measures contribute 35 percent, 35 percent, and 30 percent,
respectively, to the Total Performance Score (TPS) for HHAs in the
larger-volume cohort. We propose adjusting the measure category weights
for the larger-volume cohort such that the OASIS-based and claims-based
measure categories each contribute 40 percent, and the HHCAHPS Survey-
based measure category contributes 20 percent to the TPS due to the
reduction in the number of individual HHCAHPS Survey-based measures.
For HHAs in the smaller-volume cohort, the OASIS-based and claims-based
measures both contribute 50 percent to the TPS. We do not propose
changing the measure category weights for the smaller-volume cohort
[[Page 29187]]
as the HHCAHPS measures are not used for the smaller-volume cohort.
As proposed, changes to the applicable measure set would increase
the number of OASIS-based measures from three measures to six and
increase the number of claims-based measures from two to three. The
number of individual measures for the HHCAHPS Survey-based measures
would decrease from five to two. Note that we have changed weights for
measures and measure categories in the past due to changes to the
applicable measure set (for example, replacing the two TNC measures
with the DC Function Score measure).
[GRAPHIC] [TIFF OMITTED] TP02JY25.065
5. Alternatives Considered
We considered two alternative options for revising the HHVBP
measure weights prior to choosing the previously discussed proposals.
Table 35 describes these alternative options for HHAs in the larger-
volume cohort, including maintaining measure category weights
consistent with current measure set weights and adjusting within-
category measure weights (Option 1), reducing the HHCAHPS-based measure
category weight to 20 percent (Option 2), and maintaining HHCAHPS-based
measure weights consistent with current measure set weights, adjusting
measure category weights accordingly (Option 3). 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.
[[Page 29188]]
[GRAPHIC] [TIFF OMITTED] TP02JY25.066
We determined that these alternatives would be less consistent with
previous decisions about applying differential weights to measures, and
therefore these alternatives were not proposed.
We seek comments on these proposals.
D. HHVBP Quality Measure Concepts Under Consideration for Future
Years--Request for Information
The expanded HHVBP Model provides an opportunity to examine a broad
array of quality measures that address critical gaps in care. A
comprehensive review of the Value-Based Purchasing (VBP) experience,
conducted by the Office of the Assistant Secretary for Planning and
Evaluation (ASPE), identified several objectives for HHVBP
measures.\27\ The recommended objectives emphasize measuring patient
outcomes and functional status; appropriateness of care; and incentives
for providers to build infrastructure to facilitate measurement within
the quality framework. The study identified the following seven
objectives which served as guiding principles for the development of
performance measures used in the original Model:
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\27\ U.S. Department of Health and Human Services. Office of the
Assistant Secretary for Planning and Evaluation (ASPE) (2014).
Measuring Success in Health Care Value-Based Purchasing Programs.
Cheryl L. Damberg et al. on behalf of RAND Health.
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Use a broad measure set that captures the complexity of
the HHA service provided.
Incorporate the flexibility to include Improving Medicare
Post-Acute Care Transformation (IMPACT) Act of 2014 measures that are
cross-cutting amongst post-acute care settings.
Develop second-generation measures of patient outcomes,
health and functional status, shared decision making, and patient
activation.
Include a balance of process, outcome, and patient
experience measures.
Advance the ability to measure cost and value.
Add measures for appropriateness or overuse.
Promote infrastructure investments.
A central driver of the process used to select measures for the
original Model was incorporating innovative thinking from the field
while simultaneously drawing on evidence-based literature and
documented best practices. Broadly, measures were selected based on
their impact on care delivery and to support the goal of improving
health outcomes, quality, safety, efficiency, and experience of care
for patients.
As we continue to leverage our value-based purchasing initiatives
to improve the quality of care furnished across healthcare settings, we
are interested in considering new performance measures for inclusion in
the expanded HHVBP Model. We specifically request public comments on
one specific performance measure as well as general comments on other
potential future model concepts that may be considered for inclusion in
the expanded HHVBP Model. We encourage stakeholders to consider how to
reduce burden on HHVBP Model participants without compromising the
quality of care when responding to the Deregulation RFI in the
SUPPLEMENTARY INFORMATION section of this proposed rule.
1. Falls With Major Injury Measure (OASIS-Based and Claims-Based)
Within the home health population, approximately one third of
individuals over the age of 65 experience one or more falls each year
\28\ \29\). Since 2022, CMS has reported rates for the Falls with Major
Injury (FMI) measure on Care Compare. This measure is based on OASIS
data.
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\28\ Avin KG, Hanke TA, Kirk-Sanchez N, McDonough CM, Shubert
TE, Hardage J, Hartley G; Academy of Geriatric Physical Therapy of
the American Physical Therapy Association. Management of falls in
community-dwelling older adults: clinical guidance statement from
the Academy of Geriatric Physical Therapy of the American Physical
Therapy Association. Phys Ther. 2015 Jun;95(6):815-34. doi: 10.2522/
ptj.20140415. Epub 2015 Jan 8. PMID: 25573760; PMCID: PMC4757637.
\29\ Carande-Kulis V, Stevens JA, Florence CS, Beattie BL, Arias
I. A cost-benefit analysis of three older adult fall prevention
interventions. J Safety Res. 2015 Feb;52:65-70. doi: 10.1016/
j.jsr.2014.12.007. Epub 2015 Jan 6. PMID: 25662884; PMCID:
PMC6604798.
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A recent study \30\ found that more than half of falls with a major
injury (identified using Medicare claims data) were not reported on
OASIS assessments. OIG observed that a low fall rate reported on Care
Compare may
[[Page 29189]]
reflect a provider's lack of falls reporting, rather than a low
incidence of falls among its patients. OIG further observed that HHAs
with low falls with major injury rates on Care Compare were more likely
than other HHAs not to report falls among patients enrolled in
Medicare. These findings raised concerns about the accuracy of this
measure. In response to this OIG study, CMS is currently working on a
respecified version of the FMI measure that uses fee-for-service
claims, encounter data, and OASIS data. Using multiple data sources
will produce a more robust and complete data set, allowing the
respecified FMI measure to be more accurate and include more providers.
Members of the Post-Acute Care (PAC) and Home Health Cross-Setting TEP
also broadly agreed that data accuracy is vitally important for the
measure's aim of making cross-provider comparisons.
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\30\ https://oig.hhs.gov/reports/all/2023/home-health-agencies-failed-to-report-over-half-of-falls-with-major-injury-and-hospitalization-among-their-medicare-patients/.
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In addition, the respecified FMI measure includes other injuries
not explicitly covered in the OASIS-based FMI measure, which uses a
specific measure of falls with major injury that includes only bone
fractures, joint dislocations, closed head injuries with altered
consciousness, and subdural hematomas.
We request comments related to the potential addition of the
respecified FMI measure to the measure set for the expanded HHVBP
Model.
2. Potential Future Changes to HHCAHPS Scoring Rules and Applicable
Measure Set
We seek public comments regarding two potential changes to the
HHCAHPS Survey-based measures scoring rules and applicable measure set
as they relate to the expanded HHVBP Model:
a. Measuring HHA Performance on Forthcoming HHCAHPS Items Based Only on
HHA Achievement
As discussed previously within this proposed rule, CMS anticipates
proposing new HHCAHPS Survey-based measures to replace the Care of
Patients, Communication Between Providers and Patients, and Specific
Care Issues measures through future rulemaking. These revised HHCAHPS
Survey-based measures will be based on data collected from the revised
HHCAHPS Survey instrument. Data for these revised measures will be
required to establish benchmarks and achievement thresholds. CMS will
require 1 year of data to establish appropriate benchmarks and
achievement thresholds for measuring HHAs' level of performance. By
contrast, CMS will require 2 years of data to measure improvement over
time and establish improvement thresholds.
Therefore, CMS seeks public comments on the possibility of
initially measuring HHA performance on the future HHCAHPS Survey-based
measures based solely on achievement, rather than both achievement and
improvement. This would allow CMS to potentially begin using the
revised HHCAHPS measures in the expanded HHVBP Model starting with the
CY 2028 performance year. If CMS proposes adding the achievement-based
HHCAHPS Survey-based measures to the expanded HHVBP Model starting with
the 2028 performance year, then benchmarks and achievement thresholds
would be published in 2027, using data from 2026.
After sufficient data are available to develop appropriate
improvement thresholds, CMS anticipates measuring HHA performance on
these HHCAHPS Survey-based measures based on both achievement and
improvement. This change would be proposed through future rulemaking.
b. Adding to the Applicable Measure Set for the Expanded HHVBP Model
the Three Remaining Items in the Specific Care Issues Measure as Single
Item Measures
As discussed previously, CM proposes to modify the HHCAHPS Survey
instrument. Among other changes, this proposal would remove several
items used in the multi-item Specific Care Issues measure. Three of the
items used in the Specific Care Issues measure will remain in the
HHCAHPS Survey instrument. The three items from the Specific Care
Issues measure included in the revised HHCAHPS Survey instrument are as
follows:
When you first started getting home health care from this
agency, did someone from the agency talk about ways to help make your
home safer? For example, they may have suggested adding grab bars in
the shower or removing tripping hazards.
Has someone from the agency ever reviewed the prescribed
and over-the-counter medicines you were taking? For example, they might
have asked you to show them your medicines and talked with you about
how and when to take each one.
In the last 2 months of care, did home health staff from
this agency talk with you about any side effects of your medicines?
CMS seeks public comments on the possibility of adding these three
remaining HHCAHPS Survey items to the expanded HHVBP Model as single-
item measures. We also seek public comments on the possibility of
giving each of these single item measures a weight of one third the
weight of the other HHCAHPS items, thus maintaining the same relative
weight of the Specific Care Issues measure.
V. Updates to the Home Health Agency Conditions of Participation (CoPs)
To Align With the OASIS All-Payer Submission Requirements
A. Statutory Authority and Background
Section 1891(d) of the Act, cross-referencing section
1891(c)(2)(C)(i)(I) of the Act (section 4021(b) of Pub. L. 100-203
(December 22, 1987)) required the Secretary to develop a comprehensive
assessment for Medicare-participating HHAs. In 1993, CMS (then known as
Health Care Financing Administration (HCFA)) developed an assessment
instrument that identified each patient's need for home care and the
patient's medical, nursing, rehabilitative, social and discharge
planning needs. As part of this assessment, Medicare-certified HHAs
were required to use a standard core assessment data set, the Outcome
and Assessment Information Set (OASIS). As part of the home health
assessment, the statute requires a survey of the quality of care and
services furnished by the agency as measured by indicators of medical,
nursing, and rehabilitative care provided by the HHA. OASIS is the
designated assessment instrument for use by an HHA in complying with
the requirement and HHAs must submit the data collected by the OASIS
assessment to CMS as an HHA CoP (42 CFR part 484.45).
Section 704 of the Medicare Prescription Drug Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, December 12, 2003)
``suspended'' the legal authority of the Secretary to require HHAs to
report non-Medicare and non-Medicaid patient data to CMS until at least
two months after the Secretary published final regulations on CMS's
collection and use of OASIS data following the submission of a report
to Congress on the study required under section 704(c) of the MMA.
Subsequently, CMS conducted the study from 2004 to 2005 and submitted a
report to Congress in 2006 titled ``The OASIS Study: The Costs and
Benefits Associated with the Collection of Outcome and Assessment
Information Set (OASIS) Data on Private Pay Home Health Patients--
Report to Congress.'' While the 2006 report recommended that the
suspension continue, the passage of the Improving Medicare Post-Act
Care Transformation
[[Page 29190]]
(IMPACT) Act (Pub. L. 113-115) in 2014 required CMS to create a uniform
quality measurement system that allows CMS to compare outcomes across
post-acute care (PAC) providers.
The final rule titled, ``Medicare Program; Calendar Year (CY) 2023
Home Health Prospective Payment System Rate Update; Home Health Quality
Reporting Program Requirements; Home Health Value-Based Purchasing
Expanded Model Requirements; and Home Infusion Therapy Services
Requirements'' finalized the requirement for HHAs to report OASIS data
on all patients, regardless of payer, for the applicable 12-month
performance period (for example, July 1, 2025-June 30, 2026) (87 FR
66862). With the CY 2025 HH PPS final rule, CMS established that start
of care (SOC) is the first assessment that can be submitted for a non-
Medicare/non-Medicaid patient, either on or after January 1, 2025, for
the phase-in (voluntary) period or on or after July 1, 2025, for the
mandatory period. CMS will use the M0090 ``Date Assessment Completed''
date of the SOC assessment to identify non-Medicare/non-Medicaid
patient assessments in the phase-in and mandatory periods (89 FR 88439
through 88441). This ended the suspension of the OASIS data collection
on non-Medicare and non-Medicaid HHA patients. As discussed in the CY
2025 HH PPS final rule (89 FR 88439-88441), the most accurate
representation of the quality of care furnished by HHAs is best
captured by calculating the assessment-based measures rates using OASIS
data submitted on all HHA patients receiving skilled care, regardless
of payer.
B. Updates to the Home Health Agency CoPs To Align With the OASIS All-
Payer Submission Requirements (Sec. Sec. 484.45(a) and
484.55(d)(1)(i))
Section 484.45(a) of the HHA CoPs currently requires an HHA to
encode and electronically transmit each completed OASIS assessment to
the CMS system, regarding each beneficiary with respect to which
information is required to be transmitted (as determined by the
Secretary), within 30 days of completing the assessment of the
beneficiary. To align with the transition to OASIS all-payer submission
requirements as outlined in the CY 2023 HH PPS final rule (87 FR
66790), we are proposing at Sec. 484.45(a) to remove the term
``beneficiary'' and replace it with the term ``patient.'' Thus, Sec.
484.45(a) would state, if finalized as proposed, that an HHA must
encode and electronically transmit each completed OASIS assessment to
the CMS system, regarding each patient with respect to which
information is required to be transmitted (as determined by the
Secretary), within 30 days of completing the assessment of the patient.
All patients must receive, and an HHA must provide, a comprehensive
assessment no later than 5 calendar days after the start of care. The
comprehensive assessment not only examines patients' current health,
psychosocial, functional, and cognitive status, but also must
incorporate the most current version of the OASIS data items. This
includes clinical record items, patient history, supportive assistance,
etc. Currently, the comprehensive assessment, including administration
of OASIS, must be updated and revised as frequently as the patient's
condition warrants, but not less frequently than the last 5 days of
every 60 days beginning with the start-date of care. Language at Sec.
484.55(d)(1)(i) describes a ``beneficiary elected transfer'' in
reference to one scenario in which an OASIS assessment would be
updated. To support the transition to OASIS all-payer submission
requirements, we are also proposing to remove the term ``beneficiary''
at Sec. 484.55(d)(1)(i).
These technical changes to update terminology would further clarify
that the requirement for reporting OASIS information applies to all HHA
patients receiving skilled services and align the language in the CoPs
with the requirements finalized in the CY 2023 and CY 2025 HH PPS final
rules. These updates to the CoPs do not propose any revisions to the
specific requirements for submitting data to OASIS and does not have
any bearing on the change to expand the data collected that was
finalized in the CY 2023 HH PPS final rule (87 FR 66862). We note that
this policy does not change current patient exemptions for OASIS, which
are as follows: patients under the age of 18; patients receiving
maternity services; and patients receiving only personal care,
housekeeping, or chore services.
VI. Provider Enrollment, Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Accreditation Policies,
and DMEPOS Prior Authorization
A. Provider Enrollment
1. Medicare Enrollment
a. Background
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 (hereafter collectively
``providers'' unless otherwise noted) 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 must meet
to obtain and maintain Medicare billing privileges.
As outlined in Sec. 424.510, one such requirement is that the
provider must complete, sign, and submit to its assigned Medicare
Administrative Contractor (MAC) the appropriate enrollment form,
typically the Form CMS-855 (for example, the Form CMS-855A (OMB control
number 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. Such data includes,
but is not limited to, general identifying information (for instance,
legal business name), licensure and/or certification data, and practice
locations. The application is used for a variety of provider enrollment
transactions, including all of the following:
Initial enrollment--The provider 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 is reporting a change in
its ownership;
Revalidation--The provider 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 is seeking to reactivate its
Medicare billing privileges after it was deactivated in accordance with
Sec. 424.540;
[[Page 29191]]
Change of information--The provider is reporting a change
in its existing enrollment information in accordance with Sec.
424.516.
After receiving the provider's initial enrollment application, CMS
or the MAC reviews and confirms the information thereon and determines
whether the provider 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 by
keeping unqualified providers out of the Medicare program.
As previously mentioned, 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 further action against
providers: (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 this section VI.A.1.c of this proposed rule,
we propose several changes to our existing Medicare provider enrollment
regulations.
(We note that section VI.A.2 of this proposed rule addresses a
proposed change to one of our Medicaid provider enrollment provisions.)
b. 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; and
Sections 1102 and 1871 of the Act provide general
authority for the Secretary to prescribe regulations for the efficient
administration of the Medicare program.
c. Medicare Provider Enrollment Provisions
(1) Revocation and Denial Reasons and Revisions to Other Revocation
Policies
(a) Revocations and Denials
Under Sec. 424.535(a), CMS may revoke a Medicare provider's
enrollment for any of the reasons specified in that paragraph. These
reasons include, for instance, the provider's: (i) failure to adhere to
Medicare enrollment requirements; (ii) exclusion by the HHS Office of
Inspector General (OIG); (iii) felony conviction within the previous 10
years; (iv) pattern of improper or abusive billing; and (v) termination
by another Federal health care program. A revocation is designed to
safeguard the Medicare program, the Trust Funds, and beneficiaries by
removing (and preventing payment to) Medicare providers that have
engaged in problematic or otherwise non-compliant behavior. When a
provider is revoked, it is generally barred from reenrolling in
Medicare for a period of 1 to 10 years. The length of this
``reenrollment bar'' is determined based upon the severity of the basis
of the revocation.
CMS also has numerous reasons in Sec. 424.530(a) for which it can
deny a provider's enrollment application, some of which duplicate our
revocation grounds in Sec. 424.535(a) (for instance, OIG exclusion,
felony conviction, termination by another federal health care program).
The general rationale for a denial is akin to that for a revocation: to
protect the Medicare program and its beneficiaries from potentially
fraudulent or abusive activity.
We have previously finalized a number of regulations adding new
revocation and denial reasons to subpart P to address particular
program integrity vulnerabilities and types of provider conduct. We
have also used rulemaking to refine other policies regarding
revocations, such as the effective dates of certain revocations. Given
our continuing obligation to establish effective payment safeguards, we
believe that several additions and revisions to our revocation and
denial policies in subpart P are needed at this time.
(i) False or Misleading Information Revocation and Denial Ground
(Sec. Sec. 424.535(a)(4) and 424.530(a)(4))
Existing Sec. Sec. 424.535(a)(4) and 424.530(a)(4) permit
revocation or denial, respectively, if the provider or supplier
certified as ``true'' misleading or false information on the enrollment
application to be enrolled or maintain enrollment in Medicare. We
propose to update Sec. 424.510, which addresses certain general
enrollment requirements, by adding new paragraph (d)(10). It would
emphasize that all providers and suppliers are legally responsible for
the accuracy, completeness, and truthfulness of all information they
provide on or with their applications, regardless of whether another
party completed the application. We have encountered situations where a
provider has another individual complete an enrollment application on
the provider's behalf (for example, officer manager). The individual
furnishes false or misleading information, and the provider (or, if
applicable, the provider's authorized official) signs the application.
The provider then later states it was not responsible for the submitted
false data because the other person, not the provider, had furnished
it. Such an assertion is incorrect. Our proposed revision would
reiterate longstanding CMS policy that the enrolling provider bears
ultimate legal responsibility for the accuracy and thoroughness of all
data on the application. The provider cannot transfer this
responsibility to another party even if the latter completed the
application. To illustrate, the certification statement on the Form
CMS-855I enrollment application (Medicare Enrollment Application--
Physicians and Non-Physician Practitioners (NPP) (OMB control number
0938-1355)) requires the enrolling physician or NPP to attest and
certify, under penalty of perjury, to meeting a number of Medicare
requirements. These include, but are not limited to, that the physician
or NPP--
Has read the contents of the application, and that the
information contained therein is true, correct, and complete;
Has read and understands the Penalties for Falsifying
Information, as printed in the application, and also understands that
any omission, misrepresentation, or falsification of any information
contained in the application or contained in any communication
supplying information to Medicare may be punishable by criminal, civil,
or administrative penalties; and
Is indeed the physician or NPP applying for Medicare
billing privileges and that the signature on the application is the
physician's or NPP's.
Nothing in these attestations, nor anything in the enrollment
applications or subpart P, indicates that a party other than the
provider is responsible for the data in the application. It is, in the
end, the provider's information, and the provider is certifying to its
correctness, hence the reason for our proposed clarification.
(ii) Authority To Prescribe Drugs (Sec. Sec. 424.535(a)(13)(ii) and
424.530(a)(11)(ii))
Sections 424.535(a)(13)(ii) and 424.530(a)(11)(ii) permit CMS to
revoke or deny a physician's or eligible professional's enrollment if
the licensing or administrative body for any state where the individual
practices suspends or revokes the person's ability to prescribe drugs.
We have received questions regarding the term ``prescribe
[[Page 29192]]
drugs''--specifically, whether the state's prohibition: (1) must be for
all drugs for Sec. 424.535(a)(13)(ii) or Sec. 424.530(a)(11)(ii) to
potentially apply; or (2) need only apply to one drug. Our position has
long been the latter, and we accordingly propose to revise Sec. Sec.
424.535(a)(13)(ii) and 424.530(a)(11)(ii) to change ``prescribe drugs''
to ``prescribe one or more drugs.'' Considering the seriousness of any
state suspension or revocation action regarding an individual's
prescribing authority, we believe a prohibition involving even one drug
is sufficient to warrant revocation or denial if we deem it necessary
to protect beneficiaries and the Trust Funds.
(iii) Pattern or Practice of Prescribing (Sec. 424.535(a)(14))
We currently may revoke a physician's or practitioner's enrollment
under Sec. 424.535(a)(14) if the individual has a pattern or practice
of prescribing Part B or D drugs that is abusive, threatens the health
and safety of Medicare beneficiaries, or fails to meet Medicare
requirements. The purpose of this authority is to protect Medicare
beneficiaries and the Trust Funds against harmful and non-compliant
prescribing practices, and since the provision's inception we have
revoked the enrollments of a number of practitioners who have engaged
in such conduct.
Drugs associated with services covered under Part A presently do
not fall within the purview of Sec. 424.535(a)(14). This is of
increasing concern to us. Although Part A does not cover many drugs
that beneficiaries take at home or in outpatient facilities, it can
cover drugs administered as part of an inpatient covered stay, such as
at a hospital or a skilled nursing facility. We do not believe the
important protections that Sec. 424.535(a)(14) affords must be
dependent on the setting in which the drugs were furnished. That is, it
is the abusive or non-compliant prescribing itself, rather than the
beneficiary's location or inpatient or outpatient status, that is most
critical for purposes of program integrity. Beneficiaries can be
endangered by such prescribing during inpatient stays no less than in
other environments. For these reasons, we believe that only by
expanding Sec. 424.535(a)(14) to include drugs associated with Part A
services can we be better able to address all instances of abusive
Medicare prescribing--irrespective of the type of Medicare coverage or
setting involved--to help shield beneficiaries and taxpayer monies from
such conduct. We accordingly propose to revise Sec. 424.535(a)(14) to
change ``Part B or D drugs'' to ``Medicare-covered drugs'' to encompass
Medicare Parts B, D, and now A.
(iv) Certain Modifications to Provider Enrollment Paragraph References
(Sec. Sec. 424.535(a)(23) and 424.530(a)(18)) and Enrollment
Provisions (Sec. 424.205))
Sections 424.535(a)(23) and 424.530(a)(18) allow CMS to revoke or
deny, respectively, a provider's or supplier's enrollment if the
provider or supplier violates certain conditions and standards
pertaining to its provider or supplier type. One such supplier type is
Medicare Diabetes Prevention Programs (MDPP). Aforementioned paragraphs
(a)(23) and (a)(18) state, in part, that revocation or denial is
permissible if an MDPP violates an enrollment condition or standard in
Sec. 424.205(b) or (d), respectively. Although paragraphs (a)(23) and
(a)(18) only apply to enrollment conditions and standards, Sec.
424.205 (which was established in 2017) contains several other
enrollment-related provisions, such as grounds for revocation. Yet we
have not updated the enrollment requirements in Sec. 424.205 post-
2017, since which time: (1) paragraphs (a)(23) and (a)(18) were
promulgated (in 2023); and (2) there have been revisions to the
organizational structure of Sec. 424.205. To ensure that (a)(23),
(a)(18), and Sec. 424.205 accurately reflect current policy and
paragraph designations, we propose changes to all three.
First, the MDPP enrollment standards are now in Sec. 424.205(c)
rather than Sec. 424.205(d). We accordingly propose that references to
paragraph (d) would be changed to paragraph (c) in the following
regulatory provisions:
Sec. 424.535(a)(23)(v).
Sec. 424.530(a)(18)(v).
Definition of ``Coach eligibility end date'' in Sec.
424.205(a) (reference to (d)(5) would change to (c)(5)).
Sec. 424.205(b)(4) (reference to (d)(5) would change to
(c)(5)).
Sec. 424.205(b)(6).
Sec. 424.205(c)(3) (reference to (d)(5) would change to
(c)(5)).
Sec. 424.205(c)(6) (reference to (d)(4) would change to
(c)(4)).
Sec. 424.205(c)(8) (reference to (d)(8)(i) would change
to (c)(8)(i)).
Sec. 424.205(c)(8)(ii) (references to (d)(8)(i)(B) and
(d)(8)(i)(C) would change to (c)(8)(i)(B) and (c)(8)(i)(C),
respectively).
Sec. 424.205(c)(10) (reference to (d)(8) would change to
(c)(8)).
Sec. 424.205(c)(11)(iii).
Sec. 424.205(d)(2) (reference to (d)(5) would change to
(c)(5)).
Sec. 424.205(g)(1)(ii).
Sec. 424.205(g)(1)(v)(A) (reference to (d)(3) would
change to (c)(3)).
Second, the following references in Sec. 424.205 would be revised
to reflect that section's present structure.
In paragraph (c)(3), (e)(1) would change to (d)(1).
In paragraph (c)(12), (g) would change to (f).
In paragraph (c)(15), (g) would change to (f).
In paragraph (d)(2), (e)(1) would change to (d)(1).
In paragraphs (g)(1)(i)(A) and (B), (h)(1)(i) would change
to (g)(1)(i).
In paragraphs (g)(1)(ii)(A) and (B), (h)(1)(ii) would
change to (g)(1)(ii).
In paragraphs (g)(1)(v)(B) and (B)(2), (h)(1)(v) would
change to (g)(1)(v).
Third, current Sec. 424.205(g)(1)(i)(A) and (B) state that the
MDPP supplier's failure to meet the conditions in paragraph (b) is
considered an enrollment denial or revocation, respectively, under
Sec. Sec. 424.530(a)(1) or 424.535(a)(1). Likewise, Sec.
424.205(g)(1)(ii)(A) and (B) state that a failure to meet the standards
in paragraph (d) is considered a denial or revocation, respectively,
under Sec. Sec. 424.530(a)(1) or 424.535(a)(1). We propose to add ``or
Sec. 424.530(a)(18)'' after paragraph references to Sec.
424.530(a)(1) and ``or Sec. 424.535(a)(23)'' after references to Sec.
424.535(a)(1). This is because we can deny or revoke under either
(a)(1) or (a)(18)/(23) in such situations. Our authority is not limited
to (a)(1).
(v) Abuse of Billing Privileges (Sec. 424.535(a)(8)(i))
Section 424.535(a)(8) permits revocation based on the provider's
abuse of billing privileges. The latter term includes either of the
following as outlined respectively in paragraphs (a)(8)(i) and (ii):
The provider or supplier submits a claim or claims for
services that could not have been furnished to a specific individual on
the date of service; and
CMS determines that the provider has a pattern or practice
of submitting claims that fail to meet Medicare requirements.
Paragraph (a)(8)(i) states that situations falling within its
purview include but are limited to (and are enumerated as paragraphs
(a)(8)(i)(A) through (C)):
The beneficiary is deceased.
The directing physician or beneficiary is not in the state
or country when services were furnished.
When the equipment necessary for testing is not present
where the testing is stated to have occurred.
We propose to add new paragraph (i)(D) to Sec. 424.535(a)(8) to
include
[[Page 29193]]
another potential paragraph (a)(8) situation: specifically, the
beneficiary attests that the item(s) or service(s) identified on the
provider's or supplier's claim or claims was not or were not rendered
or furnished. We have recently seen cases where providers have
submitted claims for payment involving services or items that the
beneficiary states were never provided. Although paragraph (a)(8)(i)
has a ``but are not limited to'' caveat, meaning paragraphs
(a)(8)(i)(A) through (C) are not exclusive, we believe the seriousness
of the attestation cases we have seen and the potential fraud, waste,
and abuse that has resulted therefrom warrant a specific mention of
this situation in new paragraph (a)(8)(i)(D). This would make clear
that Sec. 424.535(a)(8)(i) applies to such cases.
(b) Retroactive Revocations Bases
Section 424.535(g) addresses revocation effective dates. Paragraph
(g)(1) states that except as described in paragraphs (g)(2) and (g)(3),
a revocation becomes effective 30 days after CMS or the CMS contractor
mails notice of its determination to the provider. That is, the
revocation effective date is prospective. However, paragraph (2) lists
a number of situations where the revocation effective date is
retroactive, meaning, generally, that the revocation becomes effective
back to the date on which the provider's non-compliance with Medicare
requirements commenced. To illustrate, paragraphs (g)(2)(ii) and (iii)
outline the following retroactive revocation grounds and their
corresponding effective dates:
For revocations based on a felony conviction, the date of
the felony conviction.
For revocations based on a state license suspension or
revocation, the date of the license suspension or revocation.
The aim of these and other exceptions in paragraph (g)(2) is to
prevent payment to a provider while it is non-compliant. Assume a
provider's license is revoked by the state on September 1. CMS learns
of this and sends a revocation notice to the provider on September 15.
If we applied paragraph (g)(1)'s prospective ``30 days after mailing''
timeframe, the provider could bill and be paid for services furnished
between September 1 and October 15 while unlicensed, resulting in
potentially thousands of dollars in improper Medicare payments.
Preventing improper payments is a cornerstone of provider enrollment,
and we believe that retroactive revocation effective dates are crucial
means of ensuring that taxpayer monies are paid only to legitimate,
compliant providers. Indeed, it is for this reason that we added
several new grounds for retroactive revocations (current paragraphs
(g)(2)(v) through (viii)) in the Calendar Year (CY) 2024 Physician Fee
Schedule (PFS) final rule (88 FR 78818).\31\ Yet because of our
continuing serious concerns about improper payments to non-adherent
providers and our responsibility to protect the Trust Funds, we propose
to further expand the bases for which we can apply a retroactive
revocation effective date. Our new grounds and effective dates, which
would be designated as paragraphs (g)(2)(viii) through (xiv) (the
requirement in current paragraph (g)(2)(viii) would be removed, as
later explained), would respectively be as follows:
---------------------------------------------------------------------------
\31\ ``Medicare and Medicaid Programs; CY 2024 Payment Policies
Under the Physician Fee Schedule and Other Changes to Part B Payment
and Coverage Policies; Medicare Shared Savings Program Requirements;
Medicare Advantage; Medicare and Medicaid Provider and Supplier
Enrollment Policies; and Basic Health Program''.
---------------------------------------------------------------------------
For revocations based on a lapse in the IDTF's
comprehensive liability insurance under Sec. 410.33(g)(6), the date
the insurance lapsed.
For revocations based on the provider's or supplier's
submission of false or misleading information on the enrollment
application, the date the application's certification statement was
signed.
For revocations based on the provider's or supplier's
failure to timely report a change of ownership or adverse legal action,
or a change, addition, or deletion of a practice location, the day
after the date by which the provider or supplier was required to report
the change, addition, or deletion.
For revocations based on the surrender of the provider's
or supplier's Drug Enforcement Administration certificate of
registration in response to a show cause order, the date the
certificate was surrendered.
For revocations based on the State's suspension or
revocation of the physician's or practitioner's ability to prescribe
one or more drugs, the date of the suspension or revocation.
For revocations of any of the provider's or supplier's
other enrollments under Sec. 424.535(i), the effective date of the
revocation that triggered the revocation(s) of the other enrollment(s).
For revocations based on a DMEPOS supplier's non-
compliance with a condition or standard in Sec. 424.57(b) or (c),
respectively, the date on which the non-compliance began.
In the foregoing situations, the provider or supplier has engaged
in action or inaction resulting in non-compliance and/or otherwise
concerning conduct. Regarding proposed paragraph (g)(2)(viii), lapsed
IDTF liability insurance could have eliminated financial protection for
beneficiaries negligently harmed by a test the IDTF performed. We
believe such an insurance lapse and the risk it could have posed to
patients warrants a retroactive revocation effective date. Moreover,
because IDTF liability insurance is required per Sec. 410.33(g)(6),
failure to maintain it means the IDTF is non-compliant with enrollment
requirements; the supplier must therefore not receive payments for
services furnished on or after the date the non-compliance commenced.
Providing false or misleading data on the enrollment application,
meanwhile, in our view reflects dishonest behavior that could have
resulted in improper payments to the provider. To illustrate, assume an
enrolled provider had failed to report one of its practice locations on
its application, knowing that it was not a valid site. If the provider
furnished services from that site, it could have received payments to
which it was not entitled due to the location's non-compliance. We
believe the severity of such conduct justifies a retroactive
revocation.
The same concerns about potential improper payments are behind
proposed new paragraph (g)(2)(x). As an example, if a provider moves
its practice location without notifying CMS and the new location does
not meet the definition of ``operational'' in Sec. 424.502, Medicare
might have been paying for services while the provider was non-
compliant with enrollment requirements. Accordingly, we believe this
warrants application of the revocation retroactively to the date the
non-compliance began as described in proposed paragraph (g)(2)(x). As
for new paragraphs (g)(2)(xi) and (xii), meeting all applicable federal
and state requirements is necessary for enrollment. If an individual is
prescribing or dispensing drugs while non-compliant, we believe the
risk this presented to beneficiaries after the loss of DEA or state
authority justifies a revocation back to the date said loss occurred.
With respect to proposed paragraph (g)(2)(xiii), we believe it would be
inconsistent to apply one effective date to the triggering revocation
and a different, later one to others, for the same individual or
provider organization is involved in all these enrollments. Proposed
paragraph
[[Page 29194]]
(g)(2)(xiv), in our view, is appropriate because the supplier's non-
compliance may have resulted in payments (on or after the date of non-
compliance) to which the supplier was not entitled.
We previously noted our authority under Sec. 424.535(a)(8) to
revoke a provider for the abusive billing situations described in
paragraphs (a)(8)(i) and (ii). These situations are especially
disconcerting with regard to the question of improper payments. If a
provider is engaging in abusive billing, this, in our view, constitutes
a direct threat to the Medicare program. To allow a provider that was
revoked for submitting claims for unfurnished services to continue
billing Medicare for another 30 days would run entirely counter to our
role as steward of the Trust Funds. Consequently, we propose to include
revocation bases in Sec. 424.535(a)(8) as grounds for retroactive
applicability.
New paragraph (a)(8)(iii) would state that the revocation effective
date in paragraph (a)(8)(i) would be the earliest date of service on
the claim or claims that are triggering the revocation. For instance,
suppose CMS revokes the provider for submitting three claims for non-
furnished services; the claims' service dates were June 1, June 5, and
June 10. The revocation date would be the earliest of them, or June 1.
Considering the serious program integrity risks associated with such
claims, we do not believe the effective date must be the last claimed
service date, for the risk commenced with the first claim's submission.
The revocation effective date under paragraph (a)(8)(ii), meanwhile,
would be the last date of service on the claims in question; using our
prior example, this means the revocation effective date would be June
10. The reason for the different effective dates is that while
paragraph (a)(8)(i) requires only one claim submission, paragraph
(a)(8)(ii) requires a pattern or practice. . The last claim establishes
the pattern or practice, hence the need to use the date thereon as the
effective date.
To further accommodate new paragraph (a)(8)(iii), we would add
reference to it in the previously noted opening clause of Sec.
424.535(g)(1) as being excluded from application under paragraph
(g)(1).
There are several other technical changes involving retroactive
revocations we believe are necessary.
First, Sec. 405.800(b)(2) states that a revocation is effective 30
days after CMS or the CMS contractor mails notice of its determination
to the provider or supplier, the only exceptions being the revocations
referenced in current Sec. 424.535(g)(2)(i) through (iv), which are
retroactive. Given our significant changes to Sec. 424.535(g)(2) since
promulgation of Sec. 405.800(b)(2), we propose to replace the current
language in the latter provision with a statement that the effective
date of a revocation is as specified in Sec. 424.535 (which would
include Sec. 424.535(a)(8)(iii) and (g)).
Second, Sec. 424.57(e)(1) states that except as otherwise provided
in Sec. 424.57, a DMEPOS supplier's revocation for violating Sec.
424.57(b) or (c) is effective 30 days after the entity is sent notice
of the revocation, as specified in Sec. 405.874. Similar to our
proposed revision to Sec. 405.800(b)(2), we propose to modify Sec.
424.57(e)(1) to state that the revocation effective date would be as
specified in Sec. 424.535.
Third, current Sec. 424.535(g)(2)(viii) outlines effective dates
for revocations under Sec. 424.535(a)(23). Paragraphs Sec.
424.535(g)(2)(viii)(A) through (C) identify three situations where a
retroactive effective date applies. Section 424.535(g)(2)(viii)(D),
meanwhile, states that for all standard violations not addressed in
paragraphs (A) through (C), the prospective effective date in paragraph
(g)(1) applies if the effective date in paragraph (g)(3) does not. We
propose two changes involving Sec. 424.535(g)(2)(viii). One is that--
given proposed new Sec. 424.535(g)(2)(viii) through (xiv)--we propose
to redesignate existing Sec. 424.535(g)(2)(viii) as new Sec.
424.535(g)(2)(xv). The other change would involve replacing the
reference to ``paragraphs (A) and (C)'' in current Sec.
424.535(g)(2)(viii)(D) (proposed new Sec. 424.535(g)(2)(xv)(D)) with
``paragraph (g)(2)''. This is because we are proposing to add certain
standard violations to (g)(2) in paragraphs other than current
(g)(2)(viii)(A), (B), and (C) (for example, including DMEPOS supplier
standard violations in new Sec. 424.535(g)(2)(xiv)).
(2) New Deactivation Authority
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. While a deactivated provider or supplier
is not revoked from Medicare, the provider's or supplier's ability to
bill the program is halted pending its reactivation.
There are currently eight reasons under Sec. 424.540(a) for which
CMS can deactivate a provider or supplier, one of which is that the
provider or supplier has not submitted any Medicare claims for 6
consecutive months. In an April 25, 2003, proposed rule titled
``Medicare Program; Requirements for Establishing and Maintaining
Medicare Billing Privileges'' (68 FR 22064) that proposed this non-
billing deactivation ground, we outlined our program integrity concerns
related to inactive billing numbers. We noted our desire to prevent
dishonest parties from: (1) deliberately obtaining multiple numbers so
they could keep one `in reserve' [for future use] if their active
billing number is subject to a payment suspension; and (2) obtaining
information about discontinued providers or suppliers and then, for
example, using the Medicare billing number of a deceased physician.\32\
Although we established a 12-month (rather than a 6-month) non-billing
period in the subsequent final rule published in the Federal Register
on April 21, 2006,\33\ the need to shut down inactive billing numbers
for the reasons noted previously persisted.
---------------------------------------------------------------------------
\32\ Ibid. (68 FR 22072).
\33\ ``Medicare Program; Requirements for Providers and
Suppliers to Establish and Maintain Medicare Enrollment'' (71 FR
20754).
---------------------------------------------------------------------------
In the CY 2024 HH PPS final rule that appeared in the November 13,
2023, Federal Register (88 FR 77676)), we reduced this 12-month period
to 6 months.\34\ We detailed our rationale for this change in the CY
2024 HH PPS proposed rule \35\ by expounding upon the concerns we
expressed in the aforementioned April 25, 2003, proposed rule. We cited
an increasingly common example of a fraudulent, ``whack-a-mole''-type
scheme whereby a provider: (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
[[Page 29195]]
billing numbers that is dormant (for example, 6 consecutive months
without billing) but nonetheless active, repeating the same improper
conduct as before. We also further outlined the program integrity risks
of extended non-billing periods, noting that in some cases the provider
may have ceased operations without notifying CMS. Deactivating the
provider's billing number enables CMS 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 responds with a reactivation application. In other
words, action under Sec. 424.540(a)(1) helps protect the Medicare
program by deactivating the number while enabling verification as to
whether the provider remains in existence; if it does, and it
subsequently submits a reactivation application, CMS can validate the
data thereon to ensure the provider's continued credentials and
compliance with Medicare requirements.
---------------------------------------------------------------------------
\34\ ``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''.
\35\ ``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''. (88 FR 43654 (July 10, 2023)).
---------------------------------------------------------------------------
We recognize that the deactivation concept has only applied to
Medicare billing privileges rather than the ordering, certifying, and
referring (OCR) of Medicare services and items. Yet this does not mean
improper OCR poses a significantly less risk to the Medicare program
and its beneficiaries than billing for Medicare services. To the
contrary, we have established a number of provider enrollment
requirements to prevent inappropriate OCR. Several examples follow.
First, under Sec. 424.507(a) and (b), physicians and practitioners
who wish to order or certify certain Medicare services and items must
either opt-out of Medicare (pursuant to 42 CFR part 405, subpart D) or
enroll in Medicare. Even if the individual does not seek to bill
Medicare and only wants to order or certify the services and items
addressed in Sec. 424.507, the person must still enroll in Medicare by
submitting a Form CMS-855O application (Medicare Enrollment
Application--Registration for Eligible Ordering and Referring
Physicians and Non-Physician Practitioners (OMB control number. 0938-
1135)). Though a shorter, more abbreviated form than other CMS-855
applications, the Form CMS-855O requires the individual to furnish
important information regarding, for instance, licensure and final
adverse actions. This enables CMS to screen the person to ensure that
all Medicare requirements are met, hence reducing the payment safeguard
risk that an unvetted physician or practitioner intent on fraudulent or
abusive conduct can order or certify such services or items.
Second, pursuant to Sec. 424.535(a)(21) we may revoke a
physician's or eligible professional's enrollment if the individual has
a pattern or practice of ordering, certifying, or referring Medicare
Part A or B services or items that is abusive, represents a threat to
the health and safety of Medicare beneficiaries, or otherwise fails to
meet Medicare requirements. This provision was established in response
to instances of fraudulent or unnecessary ordering, certifying, and
referring of Medicare services and items, which resulted in: (1)
Medicare payment for services or items that beneficiaries did not
require; and (2) potential harm to beneficiaries from these unnecessary
services or items. We also believed the potential for revocation would
deter physicians and other eligible professionals from engaging in such
activity, thus reducing fraud and waste and enhancing beneficiary
safety.
Third, under Sec. 424.542(a) a physician or other eligible
professional who has had a felony conviction within the previous 10
years that CMS determines is detrimental to the best interests Medicare
and its beneficiaries may not order, refer, or certify Medicare
services or items. As with Sec. 424.535(a)(21), the aim of Sec.
424.542(a) is to prevent fraud, abuse, and beneficiary harm.
All the foregoing signifies that CMS takes improper and abusive
ordering, referring, and certifying no less seriously than improper and
abusive billing. The former can be just as harmful to Medicare and its
beneficiaries as the latter. For this reason, we do not believe that
important program integrity safeguards such as deactivation must be
limited to billing situations. A Form CMS-855O-enrolled physician or
practitioner's unused ordering, certifying, or referring number (which
CMS assigns to the individual upon enrollment) can be accessed by
nefarious parties to the same extent as an unused billing number. Our
obligation to protect beneficiaries and the Trust Funds, in our view,
requires us to prevent such improper access, and we accordingly propose
to do so in new Sec. 424.547.
In Sec. 424.547(a)(1)(i) and (ii), respectively, we propose that
CMS may deactivate a physician's or non-physician practitioner's
ability to order, certify, or refer the Medicare services or items
described in Sec. 424.507(a) and (b) if the individual:
Is enrolled via the Form CMS-855O application solely to
order, certify, or refer Medicare services or items; and
Has not been listed as the ordering, certifying, or
referring individual on a Medicare Part A or B claim received in the
previous 12 consecutive months.
We are comfortable with initially establishing a 12-month period.
This would be consistent with the 12-month timeframe we originally
established in 2006 for Sec. 424.540. Should we determine after
implementation that a shorter timeframe is warranted, we may consider
future rulemaking.
To distinguish deactivations of billing privileges from those of
ordering, referring, or certifying capabilities, we propose in new
Sec. 424.547(a)(2) that for purposes of Sec. 424.547 only, the term
``deactivate'' means that the physician's or non-physician
practitioner's ability to order, certify, or refer Medicare services or
items has been stopped but can be restored upon the submission of
updated information. In a similar vein, because the current definition
of deactivation in Sec. 424.502 is limited to billing privileges, we
propose to add the following language to the beginning of this
definition: ``Except in the situations described in Sec. 424.547''. We
also believe that some of the deactivation and reactivation procedures
and impacts in Sec. 424.540 must be included within new Sec. 424.547.
These have existed for numerous years and help us obtain updated
information on non-billing providers to ensure the latter are still
active and have not, for instance, ceased operations. We thus propose
the following, which would mirror, respectively, current Sec.
424.540(b)(1), (b)(2), (d)(2), and (e):
In Sec. 424.547(b)(1), we would state that for a
deactivated physician or practitioner to reactivate their ability to
order, certify, or refer Medicare services and items, the individual
must recertify that their enrollment information currently on file with
Medicare is correct, furnish any missing information as appropriate,
and be in compliance with all applicable enrollment requirements in
Title 42.
In Sec. 424.547(b)(2), we would state that
notwithstanding Sec. 424.547(b)(1), CMS may, for any reason, require a
deactivated physician or practitioner to, as a prerequisite for
reactivating the ability to order, certify, or refer, submit a complete
Form CMS-855O application.
In Sec. 424.547(c), we would state that the effective
date of a reactivation of the ability to order, certify, or refer
Medicare services and items under Sec. 424.547 is the date on which
the Medicare contractor received the individual's reactivation
submission that was processed to approval.
In Sec. 424.547(d), we would clarify that a physician or
practitioner may not order, certify, or refer the Medicare
[[Page 29196]]
services or items referenced in Sec. 424.507(a) and (b) while
deactivated under Sec. 424.547.
(c) Revisions to Stay of Enrollment Authority (Sec. 424.541)
As already noted, revocations and deactivations are two important
vehicles CMS uses to prevent Medicare fraud, waste, and abuse as well
as improper payments. In the CY 2024 PFS final rule, we promulgated a
third vehicle labeled a stay of enrollment, which is addressed in Sec.
424.541. Under Sec. 424.541(a)(1) and (2), we can impose a stay of
enrollment against a provider if the latter:
Is non-compliant with at least one enrollment requirement
in Title 42; and
Can remedy the non-compliance by submitting, as applicable
to the situation, a Form CMS-855, Form CMS-20134, or Form CMS-588
change of information or revalidation application.
We established the stay of enrollment concept based largely on our
concern that there were instances of provider non-compliance that did
not necessarily warrant a measure as significant as a deactivation,
much less a revocation. We believed that a more moderate CMS approach
in addressing such cases would ease the burden on such providers
without hindering our obligation to protect the Trust Funds. In further
explaining our rationale for the stay of enrollment, we outlined in the
CY 2024 PFS final rule several critical differences between this new
action and revocations and deactivations.
The first involves the length of the action. We previously noted
that a revoked provider is subject to a reenrollment bar typically
lasting between 1 to 10 years. Deactivations last until the provider
has reactivated its billing privileges under Sec. 424.540; if no
reactivation occurs, the deactivation remains effective indefinitely. A
stay of enrollment, however, lasts a maximum of 60 calendar days,
during which period the provider remains enrolled in Medicare, unlike
with a revocation. Described otherwise, a stay of enrollment represents
a comparatively brief ``pause'' in the provider's enrollment that
permits the provider to quickly resume compliance without the greater
burdens associated with deactivations and revocations.
The second pertains to payments. Section 424.541(a)(2)(ii)(A)
states that claims submitted by the provider with dates of service
within the stay period will be rejected. However, there is a critical
caveat. Under Sec. 424.541(a)(2)(ii)(B), claims submitted by the
aforementioned provider in this situation are, in fact, eligible for
payment (and may be resubmitted by the provider within applicable
timeframes specified in Title 42) if--
CMS or its contractor determines that the provider or
supplier has resumed compliance with all Medicare enrollment
requirements in Title 42; and
The stay ends on or before the 60th day of the stay
period.
This means that whereas revocations and deactivations prohibit
payment for services or items furnished during the revocation or
deactivation period with no possibility of retroactive payments, a stay
of enrollment permits the latter if the requirements of Sec.
424.541(a)(2)(ii)(B) are met.
A third involves the timing and mechanism for how the provider can
resume compliance. A revoked or deactivated provider cannot,
respectively, re-enroll in Medicare (after the reenrollment bar
expires) or reactivate its billing privileges until the applicable
provider enrollment application process is complete, which can take
considerable time. Under Sec. 424.541(a)(5), a stay of enrollment can
end on the date on which CMS or its contractor determines that the
provider has resumed compliance with all Medicare enrollment
requirements in Title 42. However, for purposes of Sec. 424.541(a)(5)
only, we have interpreted the term ``has resumed compliance'' as
meaning the provider has submitted the required application referenced
Sec. 424.541(a)(1)(ii) (for example, Form CMS-855 change of
information). With this, a stay could end within a few days, allowing
the provider to rapidly resume billing.
Considering the burden-reducing aspects of the stay concept, we
believe its scope must be expanded to cover other situations. While
this proposed rule has focused largely on preventing improper payments,
we also believe that providers must not be excessively or unfairly
penalized for minor instances of non-compliance that, in general, do
not pose or potentially pose significant threats to the Medicare
program. One such situation is where a provider submits a revalidation
or change of information application that is rejected under Sec.
424.525(a)(1) or (2). Per these provisions, rejection is permissible if
the provider does not furnish complete information on the application
(or required supporting documentation under (a)(2)) within 30 calendar
days of the date the Medicare contractor requested the missing or
incomplete data or documentation. A deactivation often follows the
rejection. Unlike cases where the provider did not submit the required
revalidation or change of information at all, the provider in Sec.
424.525(a)(1) cases did submit the application, albeit incompletely.
Accordingly, we do not believe the latter situations must be treated
more harshly via a deactivation than the former. It would be
inconsistent to allow the more concerning action of application non-
submission to be subject to a stay and not situations where the
provider actually submitted the form. To this end, and to further the
goal of reducing provider burden, we propose to expand Sec.
424.541(a)(1)(i) to include instances where the provider's change of
information or revalidation application is rejected under Sec.
424.525(a)(1) or (2)).
In addition, current Sec. 424.541(a)(3) states that a stay of
enrollment lasts no longer than 60 days from the postmark date of the
notification letter, which is the effective date of the stay. We
believe two changes to this section are necessary.
First, we propose to delete existing Sec. 424.541(a)(3) and, in
new Sec. 424.541(a)(3)(i), state that the effective date of a stay is,
as applicable: (1) the date on which the provider's or supplier's non-
compliance began; or (2) the date on which the provider's or supplier's
change of information or revalidation application was rejected under
Sec. 424.525. In light of our concerns about payments to providers
when they are non-compliant, we no longer believe commencing the stay
period upon the notification letter's postmark date is appropriate. As
an illustration, assume a provider became non-compliant on June 1 and
the stay notice was postmarked on June 6. This means that the
provider's claims for a 5-day period (June 1 to 6) can be paid even
though the provider is non-compliant. With our proposed change,
however, these claims would be rejected due to the stay's June 1
effective date. We believe the latter is a better approach for
preventing payments to non-compliant providers.
Second, we propose in new Sec. 424.541(a)(3)(ii) that CMS may
establish a stay of enrollment for any period up to a maximum of 60
days. This is consistent with current CMS policy, but we wish to make
clearer that the CMS-assigned stay period need not be 60 days but can
be any timeframe up to that point.
We previously noted the reference in Sec. 424.541(a)(2)(ii)(B)
regarding claim submission eligibility, with Sec.
424.541(a)(2)(ii)(B)(2) referencing the end of the stay on or before
the 60th day. We propose to revise paragraph (a)(2)(ii)(B)(2) to
replace the 60-day reference therein with the requirement that the stay
must end on or before the
[[Page 29197]]
expiration of the originally designated stay period. This would further
clarify that the stay period can be less than 60 days. Meanwhile, Sec.
424.541(a)(5) states that a stay of enrollment ends on the date on
which CMS or its contractor determines that the provider or supplier
has resumed compliance with all Medicare enrollment requirements in
Title 42 or the day after the 60-day stay period expires, whichever
occurs first. Since the stay period CMS has assigned may be less than
60 days, we propose to change ``60-day period'' to ``CMS-assigned stay
period''.
(d) Submission of Documentation
One of the many critical functions of MACs is to validate the
accuracy of the information the provider furnishes on its enrollment
application. If submitted data is incorrect, the potential exists for
improper payments based thereon. Consider the following: (1) an
individual practitioner indicates on the application that all licensure
and certification requirements have been met; and (2) a provider lists
a particular address as its practice location. If these providers'
respective applications were approved without verifying these data
elements and it turns out the individual did not, in fact, meet
licensure and certification requirements or had an invalid practice
location, many thousands of dollars could be inappropriately paid to
providers that did not meet Medicare requirements. Although MACs can
validate certain data via electronic means, verifying documentation
from the provider is sometimes needed. Sections 424.510(d)(2)(ii),
(iii)(A), and (iii)(B) therefore state that each submitted provider
enrollment application must include the following:
Documentation to identify the provider, such as proof of
the legal business name, practice location, social security number, tax
identification number (TIN), National Provider Identifier, and the
business' owners.
All applicable Federal and State licenses and
certifications including, but not limited to, Federal Aviation
Administration; and
Documentation associated with regulatory and statutory
requirements needed to establish a provider's eligibility to furnish
Medicare covered items or services.
Some of this documentation is also identified on the Form CMS-855
enrollment applications as materials the provider must submit with its
application. These include, for example, proof of licensure, sales
agreements for ownership changes, and Internal Revenue Service
documentation of the provider's TIN.
Notwithstanding existing Sec. 424.510 and the documents that
providers must currently submit, we remain concerned about the MACs'
ability to verify all information on the applications they receive.
This is especially true regarding the provider's ownership and
management. Consistent with sections 1124 and 1124A of the Act,
providers must report this data on their enrollment applications.
Inaccurate ownership and managerial information, like other reported
data, could result in improper payments. To illustrate, suppose a
provider has five owners it must report but only discloses four. The
fifth one was not listed because that owner is excluded by the OIG. If
this provider is subsequently enrolled because of an inability to
verify (1) the provider's current ownership and that (2) all owners are
reported, we would be paying a provider with an excluded owner in
violation of federal law.
To therefore strengthen our ability to validate ownership and
managerial data--as well as other information that CMS or the MAC may
be unable to verify through current means--we propose in new Sec.
424.510(d)(2)(iii)(C) that CMS may require the submission of any other
documentation needed to verify and confirm the information furnished on
the enrollment application; this includes, but is not limited to,
documentation regarding the provider's or supplier's ownership or
management. We emphasize that our proposal does not necessarily mean
that the amount of documentation providers must currently submit will
greatly increase. It only means CMS reserves the right to request
validating documents if needed to ensure the accuracy of the provider's
information.
(e) Reassignment Effective Dates
In the provider enrollment context, and consistent with 42 CFR
424.80, reassignment of benefits refers to the scenario in which an
individual physician or non-physician practitioner has granted another
Medicare-enrolled provider or supplier the right to receive payment for
the physician's or non-physician practitioner's services. Existing
Sec. 424.522(a) states that a reassignment is effective beginning 30
days before the Form CMS-855R (OMB control number 0938-1179) is
submitted if all applicable requirements during that period were
otherwise met. The CMS-855R (Medicare Enrollment Application for
Reassignment of Medicare Benefits) was long used by physicians and
practitioners to reassign their right to Medicare payment to another
party and for the latter to accept such reassignment. However, with the
Form CMS-855R now obsolete and the collection of reassignment
information currently facilitated via the Form CMS-855I (OMB control
number 0938-1355) and Form CMS-855B (OMB control number 0938-1377)
applications, we must revise Sec. 424.522(a) to reflect both the
elimination of the Form CMS-855R and the need to establish a new
reassignment effective date.
Under current Sec. 424.520(d)(1)(i) and (ii), the effective date
of billing privileges for physicians and non-physician practitioners is
the later of--
The date of filing of a Medicare enrollment application
that a MAC subsequently approved; or
The date the individual first began furnishing services at
a new practice location.
Notwithstanding Sec. 424.520(d)(1), physicians and non-physician
practitioners under Sec. 424.521(a)(1) may retroactively bill for
services when they have met all program requirements and services were
provided at the practice location for up to--
30 days before their effective date if circumstances
precluded enrollment in advance of providing services to Medicare
beneficiaries; or
90 days before their effective date if a Presidentially
declared disaster under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C. 5121 through 5206 (Stafford Act)
precluded enrollment in advance of furnishing services to Medicare
beneficiaries.
Because reassignments are often initiated at the same time a
physician or practitioner enrolls in Medicare via the Form CMS-855I, we
believe the effective dates of the two (that is, the initial enrollment
and the reassignment) should be determined in the same manner,
especially since, as noted, reassignments are now captured via the Form
CMS-855I. In our view, it would be confusing to physicians,
practitioners, and other stakeholders to have different regulatory
effective dates for two separate transactions reported on the same
form. Therefore, we propose to modify Sec. 424.522(a) such that the
reassignment's effective date and the ability to retroactively bill for
services mirror the provisions in Sec. 424.520(d)(1) and
424.521(a)(1). Specifically, new Sec. 424.522(a)(1) would state that
the reassignment's effective date is the later of the two dates
identified in Sec. 424.520(d)(1)(i) and (ii). New Sec. 424.522(a)(2)
would state that retrospective billing pursuant to a reassignment is
permissible if the circumstances in Sec. 424.521(a)(1) apply.
[[Page 29198]]
(f) DMEPOS Liability Insurance
Section 424.57(c) outlines a number of standards that DMEPOS
suppliers must meet to become or remained enrolled in Medicare. One
such standard, codified in Sec. 424.57(c)(10), requires the supplier
to have a comprehensive liability insurance policy of at least $300,000
that covers the supplier's place of business, customers, and employees.
We have seen instances where the insurance policy is signed by a
supplier employee who did not appear to have the authority to act on
the supplier's behalf. Considering the importance of the liability
insurance requirement, we must ensure that the supplier, through its
signature on the policy, is bound by its terms. Accordingly, we propose
to modify Sec. 424.57(c)(10) such that an ``authorized official'' of
the supplier (as that term is defined in Sec. 424.502) must sign the
liability insurance policy.
(g) Deactivation Reason Clarification
Section 424.550(b) addresses ``change(s) in majority ownership''
(CIMO) (as that term is defined in Sec. 424.502) involving home health
agencies (HHA) and hospices. Unless an exception applies, an HHA or
hospice undergoing a CIMO must enroll in Medicare as a new HHA or
hospice and undergo a state survey or accreditation. Since, in this
situation, the seller will be departing the Medicare program, Sec.
424.540(a)(8) permits CMS to deactivate the seller's billing
privileges. However, Sec. 424.540(a)(8) currently only references
sellers in an HHA CIMO and not those in a hospice CIMO. As a technical
clarification, we thus propose to include the latter within the scope
of Sec. 424.540(a)(8).
(h) Adverse Legal Actions
Consistent with Sec. 424.516(b) through (d), certain provider and
supplier types--such as physicians, non-physician practitioners, DMEPOS
suppliers, and independent diagnostic testing facilities--must report
any adverse actions (for example, felony convictions, misdemeanor
conviction related to health care, medical license revocation) imposed
against them, their owners, managing employees or organizations, or
corporate directors or officers within 30 calendar days of the action.
Other provider and supplier types, however, have 90 days to report this
information. Existing Sec. 424.516(e)(1) states that for all provider
and supplier types other than those in Sec. 424.516(b) through (d) (as
well as MDPPs), changes of ownership or control and practice location
changes, additions, and deletions must be reported within 30 days. We
propose to include adverse legal actions within Sec. 424.516(e)(1),
meaning all providers and suppliers, regardless of type, would have 30
days, rather than 90 in some instances, to disclose this data. We
believe this would establish more consistent reporting timeframes. More
importantly, a 30-day requirement would alert us much sooner when the
provider or an associated party poses a risk of fraud, waste, or abuse
or and better allow us to take corresponding measures to protect the
Medicare Trust Funds and Medicare beneficiaries.
2. Medicaid and CHIP Enrollment and Termination
The Medicaid program (title XIX of the Act) is a joint Federal and
State health care program that (as of October 2024) covers more than 72
million low-income individuals. States have considerable flexibility
when administering their Medicaid programs within a broad Federal
framework, and programs vary from State to State. The Children's Health
Insurance Program (CHIP) (title XXI of the Act) is a joint Federal and
State health care program that (as of October 2024) provides health
care coverage to over 7 million children in families with incomes too
high to qualify for Medicaid, but too low to afford private coverage.
In operating Medicaid and CHIP, and as required by sections
1902(a)(78) and 2107(e)(1)(D) of the Act, respectively, each State
requires providers to enroll in order to furnish, order, prescribe,
refer, or certify eligibility for Medicaid or CHIP items or services in
that State.\36\ States may also establish their own provider enrollment
requirements which must be met in addition to the applicable Federal
provider enrollment requirements. Similar to Medicare provider
enrollment, the purpose of the Medicaid and CHIP provider enrollment
processes is to ensure that providers: (1) meet all Medicaid or CHIP
requirements (and any other State-specific or Federal requirements);
(2) are qualified to furnish, order, prescribe, refer, or certify
Medicaid and CHIP services, items, and drugs; and (3) are eligible to
receive payment, where applicable.
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\36\ Section 1902(kk)(7) of the Act also requires physicians and
other eligible professionals who order or refer Medicaid services
and items to be enrolled in Medicaid. This requirement is made
applicable to CHIP via section 2107(e)(1)(G) of the Act.
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Different States may have different provider enrollment processes
in operating their Medicaid and CHIP programs. However, all States must
comply with Federal Medicaid and CHIP provider enrollment statutory and
regulatory requirements, including those in part 455, subparts B and
E.\37\ One such requirement, outlined in section 1902(a)(39) of the Act
and which will be the subject of this section VI.A.2. of this proposed
rule, is that the State must deny or terminate a provider's Medicaid or
CHIP enrollment if the provider is--
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\37\ All of subpart E, and 42 CFR 455.107 in Subpart B, are
applicable to CHIP in accordance with Sec. 457.990.
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Terminated under the Medicare program, or the Medicaid
program or CHIP of any other State; and
Currently included in the termination database under Sec.
455.417.
CMS established this termination database pursuant to sections
1902(kk)(8) and 1902(ll) of the Act. These two sections are summarized
as follows:
Require the State to report the termination of a provider
under Medicaid or CHIP to the Secretary within 30 days after the
effective date of the termination. However, this reporting requirement
is limited to terminations for reasons specified in Sec. 455.101,
which, in turn, are restricted to terminations ``for cause''
(including, but not limited to, terminations for reasons relating to
fraud, integrity, or quality);
Provide that within 30 days of receiving notification of a
Medicaid or CHIP provider termination, the Secretary must review such
termination and, if the Secretary determines appropriate, include such
termination in any database or similar system developed under section
6401(b)(2) of the Affordable Care Act.
CMS has developed and currently operates such a database. It
contains information on Medicaid and CHIP terminations and Medicare
revocations. It enables a State to: (1) review Medicaid and CHIP
terminations in other States, as well as Medicare revocations; and (2)
to deny enrollment under Sec. 455.416(c) or take its own termination
action against a provider if the latter is also enrolled in the State.
The previously referenced provisions of section 1902(a)(39) of the
Act are currently incorporated in Sec. 455.416(c), though with one
inadvertent exception. Rather than stating that the provider--along
with being in the termination database--must be terminated under the
Medicare program or the Medicaid program or CHIP of any other State,
Sec. 455.416(c) states that the provider's termination must be from
Medicare and the Medicaid or CHIP program of any state. That is, the
word ``and'' is between the references to Medicare and
[[Page 29199]]
Medicaid when the word ``or'' should be there instead, consistent with
the statutory language. To correct this issue and to ensure compliance
with section 1902(a)(39) of the Act, we proposing to change the
aforementioned ``and'' reference to ``or.''
B. DMEPOS Supplier Accreditation Process
1. Introduction
a. Overview of DMEPOS Accreditation
(1) DMEPOS Suppliers
(A) Background
Among the types of providers and suppliers that must enroll in
Medicare to bill the Medicare program are DMEPOS suppliers. Such
suppliers include, but are not limited to, the following:
Medical supply companies that exclusively furnish DME like
wheelchairs, walkers, and canes.
Physicians and non-physician practitioners who provide
DMEPOS to their own patients.
Home health agencies (HHAs) and hospitals that provide
DMEPOS to their own patients
Oxygen and oxygen equipment suppliers.
Prosthetists and orthotists.
Pharmacies.
DMEPOS suppliers enroll in Medicare via the Form CMS-855S
application (Medicare Enrollment Application--Durable Medical
Equipment, Prosthetics, Orthotics and Supplies (DMEPOS); OMB Control
No. 0938-1056). Per 42 CFR 424.57(b)(1)--and excluding locations it
utilizes solely as warehouses or repair facilities--the supplier must
separately enroll each physical location it uses to furnish Medicare-
covered DMEPOS.
DMEPOS suppliers have long presented to the Medicare program an
elevated risk of fraud, waste, and abuse. In recognizing this threat,
CMS over the years has established particularly stringent requirements
that DMEPOS suppliers must meet to enroll and maintain enrollment in
Medicare. For example, DMEPOS suppliers under 42 CFR 424.518(c) are one
of only six provider and supplier types that are subject to the highest
and strictest level of screening during the enrollment process. (They
were also one of only two types (the other being HHAs) that were
originally assigned to the ``high-risk'' screening category when Sec.
424.518(c) was promulgated in 2011.) This screening includes: (1) a
site visit; and (2) submission of fingerprints of the supplier's 5
percent or greater owners for a Federal Bureau of Investigation (FBI)
criminal background check. There also are other regulatory provisions
besides the basic provider enrollment requirements in subpart P of 42
CFR part 424 (Sec. Sec. 424.500 through 424.575) that DMEPOS suppliers
must meet. With certain exceptions based on the type of DMEPOS supplier
involved, these requirements include, but are not limited, to the
following:
Compliance with the DMEPOS supplier standards outlined in
Sec. 424.57(c).
Acquisition and maintenance of a surety bond consistent
with Sec. [thinsp]424.57(d).
Compliance with DMEPOS quality standards.
Accreditation by a CMS-approved DMEPOS accrediting
organization.
Such has been our longstanding concerns about DMEPOS program
integrity that DMEPOS suppliers are also one of two only Medicare
provider or supplier types (the other being Medicare Diabetes
Prevention Programs) with an enrollment application (Form CMS-855S)
devoted exclusively to a single provider/supplier type.
(B) Continued Program Integrity Concerns With DMEPOS Suppliers
Despite these and other DMEPOS program integrity efforts we have
undertaken, serious concerns remain. Indeed, numerous Office of
Inspector General (OIG) reports since 1998 have noted such payment
safeguard issues associated with DMEPOS suppliers. Two recent OIG
reports are illustrative.
In May 2024, the OIG issued a report titled ``Medicare Remains
Vulnerable to Fraud, Waste, and Abuse Related to Off-the-Shelf Orthotic
Braces, Which May Result in Improper Payments and Impact the Health of
Enrollees'' (A-09-21-03019). The report noted that prior OIG reviews
identified vulnerabilities associated with orthotic braces, such as:
(1) questionable DMEPOS supplier billing practices; (2) improper
payments made for braces that were not medically necessary or were not
documented; and (3) fraud related to off-the shelf (OTS) braces.\38\
The May 2024 report also cited issues related to Medicare's oversight
of OTS braces, including the following:
---------------------------------------------------------------------------
\38\ https://oig.hhs.gov/reports/all/2024/medicare-remains-
vulnerable-to-fraud-waste-and-abuse-related-to-off-the-shelf-
orthotic-braces-which-may-result-in-improper-payments-and-impact-
the-health-of-enrollees/#:~:.
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Medicare paid for OTS braces that were--
++ Ordered by suppliers that did not have treating relationships
with beneficiaries.
++ Marketed to beneficiaries by telemarketers using prohibited
direct solicitation.
Payments to suppliers for fraudulently billed OTS braces
have cost Medicare millions of dollars.\39\
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\39\ Ibid. pp. 7-12.
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Given these issues, the OIG recommended that, among other things,
CMS analyze DMEPOS supplier billing patterns, identify emerging fraud
schemes related to OTS braces, and use CMS's authority to prevent
further losses to the Medicare program.\40\
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\40\ Ibid., p. 13.
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Another OIG report titled ``Medicare Improperly Paid Suppliers for
Intermittent Urinary Catheters'' (A-09-22-03019) was released in
February 2025. Citing the ongoing risk of improper payments, the OIG
performed a nationwide audit to determine whether Medicare paid
suppliers for catheters consistent with Medicare requirements for
catheters furnished to beneficiaries between July 2021 through June
2022.\41\ The OIG found that payments for 15 sample items did not
comply with Medicare requirements, in some cases because suppliers were
non-compliant with requirements for catheter refills, proof of
delivery, or a standard written order.\42\ This resulted in
approximately $35.1 million in improper payments.\43\ Even before this
report, however, CMS in early 2023 had identified a concerning rise in
urinary catheter billings attributed to a fraud scheme involving 15
DMEPOS companies that had recently changed ownership. CMS' own
investigation of this matter determined that: (1) Medicare
beneficiaries did not receive catheters from these DMEPOS companies and
were not billed directly; (2) physicians did not order these supplies;
and (3) the supplies were not needed.\44\ Although CMS took prompt
action to address this matter, including stopping payments from being
made to these suppliers and revoking the Medicare enrollments of all 15
suppliers, both the OIG report and our investigation underscored the
program integrity issues in the DMEPOS arena.\45\
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\41\ https://oig.hhs.gov/reports/all/2025/medicare-improperly-paid-suppliers-for-intermittent-urinary-catheters/.
\42\ Ibid.
\43\ Ibid.
\44\ https://www.cms.gov/files/document/cpi-urinary-catheter-case-study.pdf. See also https://oig.hhs.gov/fraud/consumer-alerts/consumer-alert-catheter-scam/.
\45\ Ibid.
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Yet these issues go far beyond the aforementioned OIG and CMS
reviews. There have been a considerable number of criminal convictions
and other findings over the years involving DMEPOS suppliers. Below is
a non-exhaustive list of several recent cases:
[[Page 29200]]
In May 2024, a Florida man was sentenced to 96 months in
prison for his role in a DMEPOS kickback scheme. He and others owned
and operated marketing call centers and telemedicine companies through
which they secured physicians' orders for DMEPOS for Medicare
beneficiaries without regard to medical necessity. They then furnished
the physicians' orders in exchange for bribes from DMEPOS companies
that provided the braces to beneficiaries, causing over $11 million in
losses to the Medicare program.\46\
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\46\ https://www.justice.gov/usao-nj/pr/florida-man-sentenced-96-months-prison-role-multimillion-dollar-health-care-kickback.
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A California woman was sentenced in December 2023 to 15
years in prison for billing Medicare for over $24 million by submitting
fraudulent claims for medically unnecessary DME--mostly power
wheelchairs (PWC)--and PWC repairs. As the de facto owner of two DMEPOS
supplier companies (both of which were Medicare-enrolled in the names
of her out-of-state relatives), the individual orchestrated a scheme in
which she paid marketers for patient referrals and then directed them
to take patients to physicians, who prescribed medically unnecessary
DME (including PWCs) that her companies used to submit fraudulent
claims to Medicare. Two other defendants were convicted in this case,
including one who worked at both DMEPOS companies as a repair
technician.\47\
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\47\ https://www.justice.gov/usao-cdca/pr/redondo-beach-woman-sentenced-15-years-prison-leading-24-million-scam-billed-medicare.
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A Texas man in March 2023 was sentenced to 66 months in
prison for conspiring to defraud Medicare of more than $2 million. The
individual, who owned and operated a Virginia DMEPOS supplier,
submitted thousands of fraudulent claims for DME, such as back and knee
braces. Working with other companies and individuals, the DMEPOS
supplier would unlawfully obtain the personal identification
information of Medicare beneficiaries, mail them braces that they never
wanted or needed, and then submit fraudulent claims to Medicare.\48\
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\48\ https://www.justice.gov/usao-edva/pr/texas-man-sentenced-2-million-medicare-fraud.
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In September 2023, a federal district court entered a
judgment against a Virginia DMEPOS supplier for damages and penalties
under the False Claims Act for over $12 million. In its complaint filed
in district court, the United States alleged that over a nearly 6-year
period, Medicare paid the supplier over $600,000 for medical braces
furnished to Medicare beneficiaries related to DMEPOS prescriptions
that the supplier illegally purchased from marketing companies. The
DMEPOS supplier paid a fee for each prescription that it purchased and
then used these prescriptions (along with personal and medical data
provided by the marketing companies) to submit 923 fraudulent Medicare
claims.\49\
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\49\ https://www.justice.gov/usao-edva/pr/virginia-medical-equipment-provider-ordered-pay-12-m-medicare-fraud-scheme-civil.
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A California father and son in March 2024 were sentenced
to prison for their roles in fraudulently receiving over $21 million in
Medicare payments. The pair, along with others, conspired to commit
Medicare fraud by billing for medically unnecessary DME, such as knee,
ankle, shoulder, wrist and back braces. They had established two DMEPOS
supplier companies; to find customers, they entered into sham
agreements with ``marketing'' companies that, instead of marketing,
provided information about Medicare beneficiaries for $125 to $350
each. The packets included, among other things, a signed prescription
from a physician (obtained via telemedicine) claiming that the brace
was medically necessary for the beneficiary. In almost all cases,
however, the physician signing the prescription had no previous doctor-
patient relationship with the beneficiary. The two men then billed
Medicare through their DMEPOS companies for the unnecessary items.\50\
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\50\ https://www.justice.gov/usao-sdca/pr/father-and-son-duo-sentenced-prison-21-million-dollar-medicare-scheme.
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A Texas man was sentenced to prison in February 2024 for
conspiring to pay health care kickback payments for unnecessary DME,
resulting in over $20 million in claims to--and $13 million in payments
from--the Medicare program. The individual owned and operated two
DMEPOS suppliers. Through another entity, the individual secured access
to thousands of Medicare beneficiaries' information by paying, on a
weekly basis, kickbacks in exchange for signed physician orders for the
braces.\51\
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\51\ https://www.justice.gov/usao-ndga/pr/operator-durable-medical-equipment-companies-sentenced-healthcare-kickback-scheme.
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In August 2023, a Florida man was sentenced to prison for
conspiring to defraud the Medicare program. The individual and another
person illegally paid kickbacks of over $565,000 to buy fraudulent
DMEPOS orders, including orders purportedly ``signed'' by physicians
who, in fact, never signed or authorized these orders and did not know
their names and identities were being used in this manner. They also
resold some of the fraudulent orders to other DMEPOS suppliers--
receiving more than $425,000 in proceeds--so that those suppliers, in
turn, could fraudulently bill Medicare for the DMEPOS. Furthermore, the
two individuals acquired five of their own fraudulent DMEPOS supply
companies and themselves used fraudulent DMEPOS orders to file more
than $11 million in fraudulent Medicare claims.\52\
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\52\ https://www.justice.gov/usao-sdny/pr/florida-business-owner-sentenced-five-years-prison-defrauding-medicare-more-11-million.
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A Texas woman in December 2024 was sentenced to 60 months
in prison for conspiracy to commit health care fraud. According to
court documents, she engaged in fraudulent billing practices as the
owner of a DMEPOS supplier. Her scheme involved substituting and
providing lesser valued items to Medicare beneficiaries and then
billing Medicare for the greater valued items. The items were primarily
continence supplies and included adult diapers, wipes, and bed
liners.\53\
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\53\ https://www.justice.gov/usao-wdtx/pr/el-paso-medical-equipment-supplier-sentenced-federal-prison-17-million-healthcare.
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Several DMEPOS suppliers in January 2024 agreed to pay
$2.1 million to resolve allegations that they violated the False Claims
Act by submitting false claims for payment to Medicare and other
federal health care programs. The settlement resolved resolve
allegations that over a 9-year period, the companies:
++ Sold used beds but billed federal health care programs as if
they were new beds.
++ Sold various hospital beds and pressure support surfaces to
beneficiaries of federal health care programs under a miscellaneous
code, which sometimes resulted in the federal program paying a higher
price.
++ Presented claims to the federal government and its contractors
that mischaracterized travel time as DMEPOS repair time in order for it
to be reimbursable by federal health care programs.\54\
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\54\ https://www.justice.gov/usao-sc/pr/durable-medical-equipment-companies-pay-millions-false-claims-settlement.
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A Florida man was sentenced to 87 months in prison in
September 2022 for his role in using a DMEPOS company to commit
Medicare and Medicaid fraud. Having established the company, he sought
to conceal his role as its true owner who exercised control over the
company (and the fraud) by listing a nominee or ``straw'' owner as the
owner on its corporate records and bank account. The individual
admitted that
[[Page 29201]]
he--and not a straw owner--bought lists of Medicare ``patients'' and
then directed a ``biller'' to submit fraudulent claims to Medicare for
DMEPOS that a physician did not prescribe, that were not medically
necessary, and that were not being supplied to any Medicare beneficiary
or Medicaid recipient. During a three-month period--and under the
individual's direction--the supplier submitted over $2.3 million in
fraudulent claims to Medicare and Medicaid and was paid over $1.6
million. The proceeds of the fraud were transferred from the supplier's
account to accounts held in the names of shell companies. Those
proceeds were then withdrawn from the shell company accounts by others
so they could not be traced to the individual.\55\
---------------------------------------------------------------------------
\55\ https://www.justice.gov/usao-sdfl/pr/miami-man-who-used-durable-medical-equipment-company-front-health-care-fraud-sentenced.
---------------------------------------------------------------------------
A Florida man was sentenced to prison in October 2022 for
submitting fraudulent claims to Medicare. The individual owned a DMEPOS
supplier. The supplier purported to provide DMEPOS to eligible Medicare
beneficiaries. Over a five-month period, the supplier submitted
approximately $2.2 million in fraudulent Medicare claims (and received
$1.4 million in Medicare payments) for DMEPOS that the business never
provided and that Medicare beneficiaries never requested.\56\
---------------------------------------------------------------------------
\56\ https://www.justice.gov/usao-sdfl/pr/durable-medical-equipment-company-owner-sentenced-health-care-fraud.
---------------------------------------------------------------------------
A Texas couple pled guilty in April 2025 to defrauding
Medicare. The couple operated a DMEPOS supplier that claimed to provide
parts and repairs for power wheelchairs, among other services. They
admitted that they received millions of dollars for parts and repairs
that were never performed or provided. Medicare was billed
approximately $14 million for power wheelchairs, parts and repairs for
just 37 Medicare beneficiaries between 2019 and 2023 as a result of
their scheme.\57\
---------------------------------------------------------------------------
\57\ https://www.justice.gov/usao-sdtx/pr/harlingen-couple-guilty-multimillion-dollar-medicare-fraud-scheme.
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A Georgia woman pled guilty in June 2024 to an information
charging her with conspiracy to commit health care fraud. The
individual and her conspirators owned, operated, and had a financial
interest in DMEPOS companies through which they obtained physicians'
orders for DMEPOS for Medicare beneficiaries without regard to medical
necessity. They obtained the DMEPOS orders using marketing call centers
and telemedicine companies, caused the submission of false and
fraudulent Medicare claims, and paid illegal kickbacks.\58\
---------------------------------------------------------------------------
\58\ https://www.justice.gov/usao-nj/pr/georgia-chiropractor-admits-149-million-health-care-fraud-and-kickback-scheme-related.
---------------------------------------------------------------------------
A South Carolina man was sentenced to 9 years in prison in
March 2024 for his role in a nearly $100 million healthcare fraud
scheme. The individual controlled and operated at least 10 DMEPOS
companies located throughout the United States. The person and his
conspirators used these companies to submit false and fraudulent claims
to Medicare for braces that were not medically necessary and/or were
obtained through the payment of kickbacks and bribes. Specifically, the
companies entered into agreements with an offshore, advertised call
center to purchase physicians' orders so the DMEPOS companies could
bill Medicare. When a Medicare beneficiary called the applicable 1-800
number, the beneficiary would be screened for eligibility and then
convinced that the beneficiary needed a brace and oftentimes upsold on
other braces. The call center would then contact a telemedicine company
whose physician or nurse practitioner would issue a prescription
without regard to the medical necessity. Beneficiaries were prescribed
braces without ever being examined by, seeing, or, in some instances,
even speaking to a medical professional.\59\
---------------------------------------------------------------------------
\59\ https://www.justice.gov/usao-sc/pr/mt-pleasant-man-sentenced-nine-years-federal-prison-role-one-largest-medicare-fraud.
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A North Carolina woman in April 2023 pled guilty to an
information charging her with one count of conspiracy to commit health
care fraud. The individual owned and operated various DMEPOS suppliers
through which she obtained physicians' orders for DMEPOS. She paid an
individual and others for each DMEPOS order for braces provided to her
DMEPOS supply companies. She then billed Medicare for the DMEPOS orders
that she obtained in exchange for kickbacks. She observed indicators
that these DMEPOS orders were not medically necessary, in part because
Medicare beneficiaries would frequently call to complain that they had
not ordered the DMEPOS that they received. In addition, to disguise the
scheme she put her DMEPOS supplier companies in the names of nominee
owners, including her sisters and a friend.\60\
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\60\ https://www.justice.gov/usao-nj/pr/north-carolina-woman-admits-participating-health-care-fraud-scheme.
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A Kentucky DMEPOS supplier agreed to pay $200,000 to
resolve allegations that it violated the False Claims Act by
fraudulently billing Medicare and Medicaid for respiratory devices
(specifically, non-invasive ventilators) that beneficiaries did not
need or use.\61\
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\61\ https://www.justice.gov/usao-edky/pr/floyd-county-company-agrees-pay-200000-resolve-allegations-fraudulent-billing.
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Elderly diabetics have also been a target for DMEPOS suppliers. For
example, a Florida diabetic shoe company and its president agreed in
January 2022 to pay over $5.5 million to settle claims brought under
the False Claims Act that it sold custom diabetic shoe inserts that
were not actually custom-fabricated in accordance with Medicare
standards. The company billed Medicare for the custom version or sold
the inserts to other providers who then billed Medicare, which allowed
the company to produce and sell more inserts and increase profits by
``cutting corners.'' \62\
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\62\ https://www.justice.gov/usao-sdfl/pr/diabetic-shoe-company-agrees-pay-55-million-resolve-false-claims-act-allegations.
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All of the foregoing indicates several things. First, DMEPOS fraud,
waste, and abuse is still a very significant problem, putting hundreds
of millions (even billions) of taxpayer dollars at risk and potentially
resulting in patient harm, such as in cases where beneficiaries use
unnecessary or substandard items. The OIG reiterated the problem in
2024 when it stated: ``Although CMS has a number of safeguards in place
to prevent bad actors from billing DMEPOS in Medicare, fraudulent
billing for DMEPOS continues to be a major concern. Recent cases
demonstrate that DMEPOS continues to be a target of fraudulent billing
and that new schemes have developed.'' \63\ Second, DMEPOS fraud
schemes do not necessarily follow a consistent pattern but can vary
widely in their particular facts. Third, DMEPOS fraud, waste, and abuse
is not restricted to certain types of items or certain areas of the
country but occurs with numerous different product types and in many
geographic areas. Considering the wide and ever-changing range of
payment safeguard risks associated with DMEPOS supplies, we must
continually take measures to address them.
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\63\ https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp.
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(2) Quality Standards
Section 302(a)(1) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 added section 1834(a)(20) of the Act.
Section 1834(a)(20) of the Act requires the Secretary to establish and
implement DMEPOS quality standards for suppliers
[[Page 29202]]
of certain items. As stated in section 1834(a)(20)(D) of the Act, these
items are as follows:
Covered items, as defined in section 1834(a)(13) of the
Act, for which payment may be made under section 1834(a) of the Act;
Prosthetic devices and orthotics and prosthetics described
in section 1834(h)(4) of the Act; and
Items described in section 1842(s)(2) of the Act (for
example, medical supplies; home dialysis supplies and equipment;
therapeutic shoes; parenteral and enteral nutrients, equipment, and
supplies).
Section 1834(a)(20)(E) of the Act authorizes the Secretary to
establish the DMEPOS quality standards by program instruction or
otherwise after consultation with representatives of relevant parties.
CMS first established quality standards via sub-regulatory guidance in
2006 and has updated them as needed since then. Currently accessible at
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/DMEPOSQuality/DMEPOSQualBooklet-905709.html, these
standards address matters such as the following:
Administration
Financial, human resources, and information management
Equipment and item delivery and set-up
Patient and caregiver training and instruction
Patient follow-up.
The standards are both extensive and detailed because we must
confirm that the supplier is bona fide and legitimate. Per Sec.
424.57(c)(24), all DMEPOS supplier locations, whether owned or
subcontracted, must meet the DMEPOS quality standards to enroll in and
bill Medicare.
(3) Accreditation
Consistent with section 1834(a)(20)(F)(i) of the Act (and with
certain exceptions), DMEPOS suppliers must be accredited by a CMS-
approved accrediting organization (AO) to enroll in and bill Medicare.
The main purpose of accreditation is to confirm that the supplier meets
the DMEPOS quality standards. The accreditation process has been in
effect since 2006.
Although Sec. 424.57(c)(24) states that all DMEPOS supplier
locations (owned or subcontracted) must be separately accredited,
section 1834(a)(20)(F) of the Act exempts certain individuals from the
accreditation requirements unless the Secretary determines the quality
standards specifically apply to them. The following DMEPOS supplier
types are currently exempted:
Physicians
Other eligible professionals (as defined in section 1848(k)(8)
of the Act), such as a physician assistant or nurse practitioner
Opticians
Prosthetists and orthotists
Qualified audiologists
Certain types of DMEPOS items are also exempt from accreditation,
including: (1) DME drugs (inhalation drugs and DME pump-infused drugs);
(2) HHAs' medical supplies; and (3) other Part B drugs, such as
immunosuppressive and antiemetic drugs.
Per section 1834(a)(20)(B) of the Act, the Secretary designates and
approves DMEPOS AOs, of which there presently are eight. To become an
AO or be retained or reapproved as one, the AO must meet the
requirements of Sec. 424.58. As addressed in greater detail throughout
section VI.B. of this proposed rule, these requirements include, but
are not limited to the following:
Completing the application process, which includes the
submission of detailed information about the AO's operations and
procedures.
Undergoing various CMS reviews.
Furnishing ongoing data to CMS about its activities, such
as its accreditation decisions, complaints received about suppliers,
etc.
In general, DMEPOS suppliers may choose the AO it wishes to
accredit them. In performing its DMEPOS accreditation activities--and
subject to CMS approval--an AO generally has some discretion in the
operational aspects of its review of a supplier's request for
accreditation. However, one critical and common component of the review
process is the AO's performance of an on-site survey of the supplier.
Along with the AO's review of the information the supplier furnishes as
part of its accreditation application, the survey enables the AO to
examine first-hand the supplier's operations and credentials to help
ascertain compliance with the quality standards. Per our subregulatory
guidance, DMEPOS suppliers currently must be surveyed once every 3
years following initial accreditation.
(4) Concerns About the Existing DMEPOS Accreditation Process
We are proposing various regulatory changes to our current DMEPOS
accreditation process to improve and strengthen it. There are several
reasons for this.
First, we have seen an increased number of reports of accredited
suppliers not meeting the quality standards, which has raised questions
as to the efficacy of some AO accreditation surveys and reviews.
Second, given the aforementioned AO discretion in various aspects of
its DMEPOS accreditation processes, we are concerned that differences
between the AOs in this regard could lead to inconsistencies in how
quality standard compliance determinations are made. Third, although
surveys are typically part of the DMEPOS accreditation process, not
every supplier receives one. This is especially true for large chain
suppliers with 25 or more separately enrolled locations (such as chain
pharmacies). We believe this is a potential vulnerability in our
enforcement of the DMEPOS accreditation requirement. Fourth, while
Sec. 424.58 outlines certain components of the DMEPOS accreditation
process (for example, AO data submission to CMS, applying to become an
AO), it does not address other important topics that, in our view,
should be outlined in regulation. Indeed, CMS regulations regarding the
accreditation of certified providers, certified suppliers, and home
infusion therapy (HIT) suppliers (found in 42 CFR part 488) contain
more extensive provisions than does Sec. 424.58, and we believe some
of the protections they afford the Medicare program in facilitating
provider and supplier compliance should be duplicated in Sec. 424.58.
Fifth, we have since 2006 neither reapproved any AOs nor undertaken a
full reassessment of the performance and suitability of our existing
AOs. We believe both are now necessary--particularly considering this
long passage of time--so we can ensure the DMEPOS accreditation program
is functioning effectively. Sixth, and perhaps most importantly, the
unique, aforementioned program integrity risks that DMEPOS suppliers
continue to pose require, in our view, stricter oversight of the
process that helps determines their qualifications.
An additional criminal case underscores our concerns. In March 2025
an individual pled guilty in Federal court (Southern District of
Florida) to accepting cash bribes and self-dealing as part of a
conspiracy to impede and obstruct the lawful functions of the U.S.
Department of Health and Human Services (HHS) and CMS in their
administration and oversight of the Medicare program.\64\ According to
court documents, the person was a contractor for a DMEPOS
[[Page 29203]]
AO and performed inspections of hundreds of DMEPOS suppliers for
compliance with the quality standards. The individual--
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\64\ https://www.justice.gov/usao-sdfl/pr/miami-inspector-pleads-guilty-scheme-obstruct-us-department-health-and-human-services.
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Accepted cash bribes from numerous owners of DMEPOS
suppliers to facilitate and expedite the accreditation process so these
companies could enroll in and bill Medicare;
Along with the individual's immediate family, formed
DMEPOS companies in the names of family members to conceal the
individual's own personal interest in the companies. The person then
sold some of these companies to others, having increased their value as
Medicare-enrolled DMEPOS suppliers; and
Directly or indirectly owned some of the suppliers the
individual surveyed.\65\
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\65\ Ibid.
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Considering that this case, and perhaps other situations where
unqualified suppliers were accredited, may have resulted in many
millions of dollars in improper Medicare payments, we believe we must
exercise much closer scrutiny over DMEPOS supplier accreditation in
general and DMEPOS AOs in particular to prevent such instances from
occurring.
In addition, certain CMS concerns about provider and supplier
accreditation are not limited to DMEPOS suppliers. In the February 15,
2024, Federal Register (89 FR 11996), we published a proposed rule
titled ``Medicare Program; Strengthening Oversight of Accrediting
Organizations (AOs) and Preventing AO Conflict of Interest, and Related
Provisions''. This proposed rule would update and supplement provisions
in 42 CFR part 488 (hereafter simply part 488) to enhance CMS'
oversight of certified provider and supplier AOs; examples of proposed
enhancements included addressing conflicts of interest and establishing
additional regulatory definitions and procedures for clarity and
consistency. We seek to do likewise for DMEPOS accreditation in the
subject proposed rule in part by incorporating several provisions in
the February 15, 2024, proposed rule into Sec. 424.58, though with
modifications to accommodate the unique characteristics of DMEPOS
accreditation.
(5) Linkage and Conclusion
We previously noted our desire and obligation to continually strive
to reduce DMEPOS fraud, waste, and abuse and, in turn, to limit
improper payments and help protect beneficiaries. Although means such
as high-risk screening, site visits, surety bonds, and our existing
accreditation program have assisted in this regard, the criminal cases
and other concerning situations we have seen make clear that more is
needed. Our current DMEPOS payment safeguards are not enough. We view
stricter accreditation requirements for both the AOs and DMEPOS
suppliers as a mechanism that could effectively supplement our existing
measures and halt a certain degree of ongoing fraud, waste, and abuse
by facilitating closer and more frequent oversight of the suppliers.
While the remainder of this section (section VI.B. of this proposed
rule) describes our specific proposals in detail, we present several
scenarios--similar to some of the aforementioned criminal cases--where
a strengthened accreditation program could help limit or prevent the
activities in question:
Scenario 1--Supplier U is accredited by a DMEPOS AO and is
Medicare-enrolled. It undergoes a stock transfer of 60 percent 15
months after initially enrolling, and the new owner assumes control of
the business. The new owner is uncommitted to complying with the
quality standards and the quality of U's services consequently
deteriorate, potentially harming beneficiaries for a considerable
period because U's 3-year deadline for another survey will not arrive
for another 21 months. However, with more frequent surveys and
reaccreditations, such as when the ownership change occurred, the AO
could more quickly and closely scrutinize the supplier under its new
ownership--before beneficiaries are harmed and further payments to the
non-compliant supplier are made.
Scenario 2--Supplier V is accredited and Medicare-
enrolled. Encountering financial problems 1 year into its
accreditation, V begins purchasing very substandard (and thus less
expensive) DMEPOS in order to cut costs. Without another survey and
reaccreditation of V for 2 more years, CMS might have no means of
knowing that V's poor-quality products are being furnished to
beneficiaries, that these individuals are possibly being harmed, and
that Medicare could be paying tens of thousands of dollars for items
that do not meet Medicare requirements.
Scenario 3--Supplier W is accredited and Medicare-
enrolled. Nine months after accreditation--or 27 months before its next
survey--it begins to engage in fraudulent practices, a few of which are
similar to those addressed in the previously noted criminal cases. To
help shield its activities, W does not keep records that comply with
the DMEPOS quality standards pertaining to financial management, such
as: (1) implementing financial management practices that ensure
accurate accounting and billing; and (2) maintaining accounts that link
equipment and item(s) to the beneficiary. If surveys and accreditations
were required to be annual, however, W's activities could be detected
earlier and, given W's failure to comply with the above financial
management quality standards, its accreditation and enrollment could be
revoked and many Medicare dollars saved.
Scenario 4--Accredited and enrolled Supplier X becomes so
deficient over a multi-month timeframe in (1) furnishing instructions
to beneficiaries on how to use equipment and (2) properly setting up
the equipment, that several beneficiaries are injured towards the end
of this period. X also repeatedly failed to conduct investigations of
beneficiary complaints about X's actions. If surveys could be performed
with greater regularity, though, the AO could have discovered these
violations of various quality standards involving product safety and
consumer services before any harm occurred.
Scenario 5--Y has been a DMEPOS AO for 1 year. It hires
two individuals as managing employees who will also participate in
surveys and accreditation decisions. One is a physician whose medical
license is currently revoked for engaging in fraudulent activity, while
the other is a non-physician practitioner whose Medicare enrollment is
revoked for furnishing false or misleading information on the Medicare
enrollment application. This could raise concerns about the integrity
of Y's operations--particularly the physician's participation in
surveys--yet existing Sec. 424.58 contains no prohibitions against
such hirings.
Scenario 6--Entity Z seeks to become a DMEPOS AO. As part
of its application, it submits the data currently required in Sec.
424.58(b). This data, though, does not include information about the
AO's policies and procedures for avoiding conflicts of interest and the
appearance thereof involving individuals who perform surveys for the
AO. In fact, there is no explicit prohibition in Sec. 424.58 against,
for example, an AO surveyor making an accreditation decision regarding
a DMEPOS supplier in which the surveyor has an ownership interest.
Given this, AO Z has three individuals who perform surveys of suppliers
that the individuals partially own. These suppliers did not meet the
quality standards, but the surveyors found them
[[Page 29204]]
compliant regardless, meaning the suppliers would improperly receive
Medicare payments despite their quality standard non-adherence. Yet if
CMS had had application information on Z's conflict of interest
policies and Sec. 424.58 contained a prohibition against such
activities, the obvious conflict of interest involving Z could possibly
have been avoided and Medicare dollars preserved.
b. Legal Authorities
There are several principal categories of legal authorities for our
proposed provisions:
Section 1834(a)(20)(A) of the Act requires the Secretary
to establish and implement quality standards for the suppliers of the
items and services described in section 1834(a)(20)(D) of the Act to be
applied by recognized independent accrediting organizations.
Notwithstanding section 1865(a) of the Act, section
1834(a)(20)(B) of the Act requires the Secretary to designate and
approve one or more independent AOs for purposes of applying the
quality standards referenced in section 1834(a)(20)(A) of the Act.
Section 1834(a)(20)(F)(i) of the Act (and with certain
exceptions) requires the Secretary to mandate that suppliers of the
items and services described in section 1834(a)(20)(D) of the Act
submit to the Secretary evidence of accreditation by an AO designated
under section 1834(a)(20)(B) of the Act.
Sections 1102 and 1871 of the Act provide general
authority for the Secretary to prescribe regulations for the efficient
administration of the Medicare program.
2. DMEPOS Accreditation Proposed Provisions
Section 424.58, which governs DMEPOS accreditation, contains the
following principal paragraphs:
Paragraph (a)--Purpose of Sec. 424.58
Paragraph (b)--AO application and reapproval application
procedures
Paragraph (c)--Ongoing responsibilities of AOs
Paragraph (d)--Continuing Federal oversight of approved AOs
Paragraph (e)--AO reconsiderations/appeal rights
Considering the extent of our proposed changes to Sec. 424.58, we
propose to entirely reorganize the current paragraph structure and
designations. Existing provisions would be moved, revised, deleted, or
supplemented as warranted. We believe this restructuring would help
stakeholders better understand requirements of Sec. 424.58. Except for
current paragraph (a) or as otherwise noted, all paragraph designations
are labeled as proposed new provisions even though the provision may
already exist in current Sec. 424.58 under a different paragraph. (For
example, current paragraph (b) would be noted as new paragraph (c) even
though Sec. 424.58 presently has a paragraph (c)). To the extent
needed, we will in this proposed rule cross-reference current Sec.
424.58 paragraph designations to new ones to further assist
stakeholders.
In this proposed rule, and unless otherwise indicated--
``Supplier'' refers to a DMEPOS supplier, including its
individually enrolled location;
``AO'' refers to an accrediting organization with a DMEPOS
accreditation program;
``Accreditation program'' or ``program'' refers to a
DMEPOS accreditation program; and
``Quality standards'' refers to DMEPOS quality standards.
a. Definitions (New Sec. 424.58(b))
We propose several new definitions in Sec. 424.58(b). We believe
they would help clarify the regulatory provisions to which they relate.
First, we propose to define ``complaint'' as an allegation from any
party (and via any format) that one of the AO's accredited suppliers
may be non-compliant with one or more quality standards or other
applicable CMS requirement; the complaint need not involve actual or
potential beneficiary harm. As part of the AO approval or reapproval
process, current Sec. 424.58(b)(1)(ix) requires the AO to establish
procedures for responding to and investigating complaints against its
accredited suppliers. Existing Sec. 424.58(c)(1)(iii), meanwhile,
requires the AO to monthly provide CMS with notice of such complaints.
Given these requirements, we believe a clear definition of
``complaint'' is warranted. Moreover, we do not believe beneficiary
harm should be a prerequisite for meeting the complaint definition, for
any type of non-compliance with the quality standards or other
applicable CMS requirement is of concern to us.
Second, we propose to define ``immediate jeopardy'' as a situation
where the supplier's non-compliance with one or more quality standards
or other applicable CMS requirement has caused, or is likely to cause,
serious injury, harm, impairment, or death to a patient or to the
health and safety of the general public. This definition--with minor
modifications for purposes of DMEPOS accreditation--has precedent in
that it mirrors the term's definition in Sec. 488.1 regarding
certified providers and certified suppliers. The definition is needed
for Sec. 424.58 partly because AOs, under current paragraph (c)(4)
thereof, must notify CMS within 2 calendar days of a supplier's
deficiency that poses immediate jeopardy.
Third, we propose to define ``reasonable assurance'' as meaning
that an AO has demonstrated to CMS' satisfaction that--
Its accreditation program requirements meet or exceed the
Medicare program requirements;
The suppliers the AO accredits meet or exceed Medicare
requirements; and
The AO is compliant with all provisions of Sec. 424.58.
As discussed further in this section VI.B. of this proposed rule,
we believe AOs should demonstrate that their accreditation programs
comply with Sec. 424.58 and all other CMS requirements, hence the need
for a reasonable assurance definition. We note that paragraph (1) of
our proposed definition duplicates that in Sec. 488.1 in both
terminology and purpose.
Fourth, we propose to define ``unannounced survey'' as meaning:
A survey conducted without any prior notice of any type
(through any means of communication or forum) to the supplier to be
surveyed, such that the supplier does not expect the survey until the
surveyors arrive; and
The AO schedules its surveys so that suppliers cannot
predict when they will be performed.
It is critical that DMEPOS supplier surveys be unannounced, as they
currently are, so that a non-compliant supplier cannot use prior notice
of a survey to remedy its deficiencies solely to pass the survey, after
which it may resume its non-adherence. Given this, we believe our
proposed definition of this term--which, with technical modifications,
is similar to the proposed definition of this term in the previously
noted February 15, 2024, proposed rule--will emphasize to AOs that no
early notification of any kind is permitted.
We solicit comment on the propriety of these definitions and
welcome any suggested edits thereto.
b. Initial Application for Approval of AO's Accreditation Program (New
Sec. 424.58(c))
Existing Sec. 424.58(b) outlines the process by which an entity
may apply or reapply to become an AO. While the processes for both are
largely similar, we propose to separate them into two paragraphs for
ease of comprehension. Initial application procedures would be
[[Page 29205]]
addressed in new paragraph (c) and reapproval application procedures in
new paragraph (d).
Current Sec. 424.58(b)(1) outlines information that AOs must
submit as part of the application process. This data is intended to
help CMS understand the AO's background, operations, planned
procedures, skill, number of staff, etc. However, we have not revisited
these data elements via rulemaking since promulgation in 2006.
Considering, too, the previously noted lack of CMS reapproval or full
reassessment of AOs for many years, we believe that more detailed and
comprehensive data should be submitted so we can fully ascertain a
current or prospective AO's qualifications. We accordingly propose the
following changes and additions to existing Sec. 424.58(b)(1), which
would be redesignated as new paragraph (c)(1).
(1) Reasonable Assurance Opening Statement (New Sec. 424.58(c)(1))
The opening part of existing paragraph (b)(1) states that an AO
applying for approval or reapproval of its DMEPOS accreditation program
must furnish certain information to CMS. This requirement would serve
as the opening statement for new Sec. 424.58(c)(1) but with two
revisions to its current language. First, we would remove the reference
to ``re-approval'' since reapproval application processes would be
addressed separately in new Sec. 424.58(d). Second, we would replace
the current phrase ``the following to CMS:'' with ``all the following
information and materials to demonstrate that the accreditation
organization provides reasonable assurance (as defined in paragraph (b)
of this section) regarding its program.'' The new language, which is
akin to that in the opening paragraph of Sec. 488.5(a), would
emphasize that it would not be enough to merely submit the required
information. Rather, the data must be sufficient to give CMS reasonable
assurance.
(2) Confirmation of Compliance (New 424.58(c)(1)(iii))
Existing Sec. 424.58(b)(1)(iii), which would become new Sec.
424.58(c)(1)(iii), starts with language that details the AO's
description of its operational processes. We propose to revise this to
require a detailed description of the organization's operational,
survey, and other accreditation processes to confirm that the suppliers
it accredits meet or exceed the DMEPOS quality standards and Medicare
program requirements. We believe this expanded data would give us a
broader understanding of the AO's procedures in full, instead of those
simply relating to operations.
We propose two other changes involving this paragraph. Current
paragraph (b)(1)(iii) contains six elements of the required
description, such as: (1) an explanation of the frequency with which
surveys will be performed; and (2) guidelines and instructions to
surveyors. To improve organizational clarity, we propose to designate
these elements as new Sec. 424.58(c)(1)(iii)(A) through (F) in the
same respective order they are listed in existing (b)(1)(iii). In
addition, new paragraph (c)(1)(iii)(G) would require the description to
address how the AO determines whether to perform a survey in situations
where it has the discretion to do so; this would have to include a
suggested methodology for sampling locations for surveys under a single
tax identification number or organization. As explained further in
section VI.B.2. of this proposed rule, surveys of DMEPOS suppliers may
not be required in all instances. That is, CMS may permit the AO to
determine whether a survey is necessary; this could involve, for
example, sampling, whereby the AO uses a formula to determine which
locations within a particular group (such as a large chain pharmacy)
should be surveyed. To help us understand the factors and criteria the
organization will consider in its determination and, more importantly,
whether it will exercise its discretion prudently, we believe new Sec.
424.58(c)(1)(iii)(G) is necessary.
(3) Redesignation of Existing Data Submission Provisions (New Sec.
424.58(c)(1)(i), (ii), (iv), (v), (vi), and (vii)(A), (B), and (C))
Current Sec. Sec. 424.58(b)(1)(i), (ii), and (iv) through (vii)(A)
through (C) describe additional information the AO must furnish.
Although we are not proposing to change the content of these
paragraphs, they would constitute, respectively, new Sec. Sec.
424.58(c)(1)(i), (ii), and (iv) through (vii)(A) through (C).
(4) Conflicts of Interest, Consulting Services, and Number of Surveyors
(New Sec. 424.58(c)(1)(vii)(D) and (E))
We propose additional requirements in new Sec. 424.58(c)(1)(vii).
Paragraph (D) would require the AO to explain in detail its
policies and procedures for avoiding conflicts of interest and the
appearance thereof involving individuals who conduct surveys or
participate in accreditation decisions. This must include the
organization's policies and procedures for all of the following:
The separation of its consulting services from its
accreditation services.
Protecting the integrity of the DMEPOS AO's accreditation
program (including the requirements of proposed Sec. 424.58(m) and (n)
(discussed later in this section VI.B. of this proposed rule).
The prevention and handling of potential or actual
conflicts of interest that could arise from situations in which a
DMEPOS AO owner, surveyor, or employee has an interest in, or
relationship with, a DMEPOS supplier to which the AO provides
accreditation services. Such interests or relationships include, but
are not limited, to the following:
++ Being employed as a DMEPOS AO surveyor.
++ Being employed by a DMEPOS supplier that is accredited by the
DMEPOS AO.
++ Having an ownership, financial, or investment interest in a
DMEPOS supplier that is accredited by the DMEPOS AO.
++ Serving as a director of or trustee for a DMEPOS supplier that
is accredited by the DMEPOS AO.
++ Serving on a utilization review committee of a DMEPOS supplier
that is accredited by the DMEPOS AO.
++ Accepting fees or payments from a DMEPOS supplier or group of
DMEPOS suppliers that is/are accredited by the DMEPOS AO.
++ Accepting fees for personal services, contract services,
referral services, or for furnishing supplies to a DMEPOS supplier that
is accredited by the DMEPOS AO.
++ Providing consulting services to a DMEPOS supplier that the
DMEPOS AO accredits.
++ Having members of their immediate family engaged in any of the
above stated activities. The term ``immediate family member'' would be
defined in proposed 424.58(b) as any person with whom the AO owner(s),
surveyors or employees have a lineal or immediate familial or marital
relationship, including a husband or wife; birth or adoptive parent,
child, or sibling; stepparent, stepchild, stepbrother, or stepsister;
father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-
law, or sister-in-law; grandparent or grandchild; and spouse of a
grandparent or grandchild. (This definition would be included in
proposed revised paragraph (b) of this section.)
++ Engaging in any activities during the course of the survey of
the DMEPOS supplier that would be or cause a conflict of interest.
For notifying CMS when a conflict of interest is
discovered.
We would also clarify in new paragraph Sec.
424.58(c)(1)(vii)(D)(5) that
[[Page 29206]]
for purposes of said paragraph, a conflict of interest exists when a
DMEPOS AO, the DMEPOS AO's successors, transferees, or assigns, the
DMEPOS AO owner(s), surveyors, or employees, or the immediate family
members of the DMEPOS AO owners(s), surveyors and employees have an
employment, business, financial or other type of interest in or
relationship with a DMEPOS supplier that the DMEPOS AO accredits.
We discuss in more detail later in this proposed rule our concerns
about potential conflicts of interest within a DMEPOS AO's
accreditation programs. Along with the aforementioned March 2025
criminal case in the Southern District of Florida, there might be other
situations where, for instance, an AO employee or owner has a familial
or other relationship with a supplier the AO is about to survey. This
could raise questions as to whether the AO will be entirely objective
in its survey or review of the supplier at issue. We also note that the
previously mentioned February 15, 2024, proposed rule would require the
submission of this proposed data as part of the initial application
process for AOs seeking to accredit certified providers and certified
suppliers. We believe this requirement should be duplicated for DMEPOS
AOs in paragraph (D). It is imperative, in our view, that DMEPOS AOs
take measures to avoid such conflicts to help ensure the integrity and
impartiality of its surveys and accreditation decisions; without this,
unqualified suppliers could become accredited and enrolled due to
subjective AO determinations, placing the Trust Funds and beneficiaries
at risk.
In proposed Sec. 424.58(c)(1)(vii)(E), we would require the AO to
outline its policies and procedures for ensuring it always has an
adequate number of surveyors. Our concern is that surveys could be
delayed--and perhaps more importantly, a particular survey might not be
performed as diligently and thoroughly--due to an insufficient number
of surveyors. We therefore believe paragraph (E), which would be
somewhat similar to current Sec. 488.5(a)(6), is necessary.
(5) AO Program Deficiencies (New Sec. 424.58(c)(1)(viii))
We propose in new Sec. 424.58(c)(1)(viii) that the AO describe its
processes for identifying and correcting deficiencies within its
accreditation program. It is important for AOs to very frequently
review their accreditation programs for vulnerabilities and weaknesses.
Without this, AOs may perform their functions in a substandard manner.
This risks the possibility that suppliers receive inadequate scrutiny,
which, in turn, could lead to them furnishing items and services while
non-compliant with the quality standards. Among other things, improper
Medicare payments would result. By describing its procedures for
ascertaining and rectifying deficiencies, the AO can help assure CMS
that its program will adhere to Medicare requirements and, if there is
an indication that compliance may be at risk, it will remedy the
matter.
(6) Use of Data To Ensure Program Compliance (New Sec.
424.58(c)(1)(ix))
Existing paragraph (b)(1)(viii) requires the AO to describe its
data management, analysis and reporting system for its surveys and
accreditation decisions, including the kinds of reports, tables, and
other displays generated by that system. We propose to designate this
paragraph as new (c)(1)(ix) and include an additional requirement
(taken from Sec. 488.5(a)(11)(i)) that the description explain how the
AO uses its data to ensure that its accreditation program adheres to
Medicare program requirements. Surveys and accreditation decision-
making are obviously critical components of an AO's accreditation
program, but there are other AO requirements under Sec. 424.58. Since
we need to ensure that the AO will adhere to all of the provisions in
Sec. 424.58, we believe an understanding of how the AO will use data
to maintain this compliance is necessary.
(7) Complaint Process (New Sec. 424.58(c)(1)(x))
Current Sec. 424.58(b)(1)(ix) requires the AO to explain its
procedures for responding to and investigating complaints against its
suppliers; this includes processes for coordinating with licensing
bodies, ombudsman programs, the National Supplier Clearinghouse (NSC),
and CMS. A robust AO process for handling complaints is important
because it involves reviewing a supplier's possible violation of a
quality standard or other applicable CMS requirement. An AO's failure
to properly execute this function could lead to improper Medicare
payments to a non-compliant supplier.
We propose several changes to this paragraph, which would be
designated as new Sec. 424.58(c)(1)(x)).
First, we would add procedures for closing out complaints as part
of this information submission requirement. Responding to and
investigating complaints is only part of the complaint process. We need
to know how the AO would resolve a particular complaint and deem the
matter concluded. That is, we believe our analysis of the AO's
qualifications regarding complaints must include an understanding of
the complaint's entire life cycle from beginning to end. Without this
knowledge, we cannot be assured that the AO will effectively handle the
complaint to an appropriate conclusion.
Second, we would change the NSC reference to the applicable
National Provider Enrollment (NPE) contractor. This is because the
latter entities have replaced the NSC as CMS' DMEPOS enrollment
contractors.
Third, new paragraphs Sec. 424.58(c)(1)(x)(A) and (B),
respectively, would require submission of the following information:
The steps and research the AO will undertake in its review
of the complaint; and
How the AO determines whether, in accordance with a
complaint, non-adherence to a quality standard or other applicable CMS
requirement exists, including the data it considers in its review and
when and how it would take action against the supplier.
As with our proposed change regarding complaint closure, we believe
the data in existing Sec. 424.58(b)(1)(ix) is insufficient to help us
to determine whether the AO will handle complaints thoroughly,
consistently, and diligently. Hence, we believe new Sec.
424.58(c)(x)(A) and (B) are warranted.
(8) Redesignation of Additional Data Submission Provisions (New Sec.
424.58(c)(1)(xi) Through (xv))
Existing Sec. 424.58(b)(1)(x) through (xiv) address other types of
information the AO must submit, such as: (1) policies and procedures
for notifying CMS of non-compliant suppliers; and (2) a list of the
organization's currently accredited DMEPOS suppliers. With two
exceptions, we are not proposing to revise these paragraphs but only to
designate them as new Sec. 424.58(c)(1)(xi) through (xv). The two
exceptions are as follows:
In existing paragraph (xii)(B) (redesigned as new
paragraph (xiii)(B)), we propose to include each supplier's
accreditation product codes as data the AO must submit with its initial
or reapproval application.
In existing paragraph (xii)(C) (redesigned as new
paragraph (xiii)(C)), we propose that the AO must also list each
supplier's accreditation effective date with its initial or reapproval
application.
Both requirements would help ensure that CMS has sufficient
information on each supplier's accreditation type and status.
[[Page 29207]]
We note that current Sec. 424.58(b)(1)(xv) requires the AO to
agree that it will permit its surveyors to serve as witnesses if CMS
takes an adverse action based on accreditation findings. We are not
designating this paragraph as new Sec. 424.58(c)(1)(xvi) because, as
explained later in this proposed rule, we are proposing to include it
as part of the larger agreement the AO must sign per proposed new Sec.
424.58(c)(1)(xxiii).
(9) Knowledge and Experience (New Sec. 424.58(c)(1)(xvi))
Section 488.1010(a)(4), which pertains to home infusion therapy
supplier accreditation, requires AOs in their applications to furnish
information that demonstrates their knowledge, expertise, and
experience in home infusion therapy. We propose a similar provision in
new Sec. 424.58(c)(1)(xvi) regarding DMEPOS. Despite the volume of
information required per existing Sec. 424.58(b), there is no specific
requirement that the AO detail its credentials and experience in the
DMEPOS arena. Put otherwise, the current data furnished under Sec.
424.58(b) does not, by itself, give us adequate assurance that the AO
understands the intricacies of, for example, the quality standards,
DMEPOS enrollment and payment, etc. We believe new Sec.
424.58(c)(1)(xvi) would help remedy this.
(10) Review Timeliness (New Sec. 424.58(c)(xvii))
We propose in new Sec. 424.58(c)(xvii) that the AO furnish
information about its ability to conduct timely reviews of supplier
accreditation applications. This requirement, which mirrors that in
Sec. 488.1010(a)(6)(vii), would help us determine whether the AO has
adequate resources to handle the accreditation requests it receives.
(11) Decision-Making Process (New Sec. 424.58(c)(1)(xviii))
Akin to Sec. 488.5(a)(13) concerning certified providers and
suppliers, new Sec. 424.58(c)(1)(xviii) would require the AO to
describe its decision-making process, including its policies and
procedures for approving, denying, or terminating a DMEPOS supplier's
accreditation status. This must also include an explanation of the
reasons for which the AO will deny or terminate a supplier's
accreditation. Since, as already mentioned, accreditation decisions are
among the most important AO functions, we must have a full
understanding of how the AO will make them. This could help us
ascertain, for instance: (1) the criteria the AO will use in its
determinations; (2) how broadly or narrowly the AO interprets the
quality standards; and (3) the AO's procedures for notifying a supplier
of accreditation approval, denial, or termination.
(12) Surveys (Sec. 424.58(c)(1)(xix))
We propose in new Sec. 424.58(c)(1)(xix)(A) and (B), respectively,
that the AO outlines its policies and procedures for the following:
Determining whether and when a survey is performed (for
example, the DMEPOS supplier is providing a new item type). This must
include the circumstances under which the AO will impose a corrective
action plan (CAP) in lieu of performing a follow-up survey regarding
DMEPOS supplier deficiency.
Ensuring that all onsite surveys are unannounced,
including for preventing unannounced surveys from becoming known to the
supplier beforehand.
Given the aforementioned importance of surveys in determining the
supplier's compliance with the quality standards, we believe the AO
should explain when it will and will not perform a survey. Regarding
proposed Sec. 424.58(c)(1)(xix)(B), which parallels Sec.
488.1010(a)(7)(i) for home infusion therapy accreditation, we
previously explained the need for surveys to be unannounced. We believe
new Sec. 424.58(c)(1)(xix)(B) would help assure us that they will be.
(13) CAPs (Sec. 424.58(c)(1)(xx))
In lieu of denying or terminating a supplier's accreditation for
failing to meet the quality standards, an AO may apply a CAP to the
supplier. In general, a CAP permits the supplier to attempt to remedy
the problem(s) within a specified timeframe before the AO takes one of
these two actions. Existing Sec. 424.58 only references CAPs in
paragraph (c)(1)(i) thereof, whereby AOs must provide to CMS various
survey-related information, which includes CAPs.
We believe this dearth of CAP provisions in Sec. 424.58 must be
addressed. To illustrate, we do not know the following:
The circumstances under which an AO will impose a CAP and,
if a CAP is applied, why the AO chose this approach instead of, as
applicable, denial or termination of accreditation.
The AO's procedures for imposing, monitoring, and
terminating a CAP.
How the AO oversees the supplier's efforts to comply with
the CAP and whether a follow-up survey is performed.
How the AO establishes the CAP's terms (for example, the
length of the CAP).
How the AO ensures that the CAP is adequate to address and
correct the deficiencies in question.
Whether AOs are more inclined to permit CAPs for certain
DMEPOS supplier types than for others and whether the supplier's length
of enrollment, adverse history (if any), and other factors impact the
AO's decision.
We are particularly, though not exclusively, concerned about the
first bulleted item. While a CAP (instead of denial or termination) may
be justified in some instances if the non-compliance is extremely minor
and can be quickly corrected, we have no understanding of the criteria
the AO uses in its CAP determinations. In fact, we have received
information that, depending on the AO, CAPs are being applied in many
instances of non-compliance, even for significant violations of the
quality standards. As already noted, compliance with the quality
standards is a requirement of Sec. 424.57(c)(24), and non-adherence to
any Sec. 424.57(c) supplier standard can result in improper Medicare
payments or perhaps grounds for revoking the supplier's Medicare
enrollment. If CAPs for such instances of non-compliance are being
regularly permitted, we must know the reasons and bases for this.
Accordingly, we propose several provisions to enable us to gain a
clearer understanding--and, more importantly, to exercise greater
oversight--of the AOs' CAP processes. (Additional CAP-related
provisions are addressed in section VI.B.2.c.(4). of this proposed
rule.)
As part of new Sec. 424.58(c)(1)(xx), and for the foregoing
reasons, we propose that the AO outline the policies and procedures via
which it will apply a CAP to the supplier. This includes:
The specific circumstances under which the AO will apply a
CAP as opposed to denying or terminating accreditation, and the
reason(s) for why the AO believes a CAP in these situations is more
appropriate; and
How a CAP is developed, implemented, and enforced,
including--
++ How the AO determines whether a CAP is acceptable;
++ The requirements of (and the timeframe and deadline for) the
supplier's resumption of compliance;
++ How the AO ascertains whether the supplier has returned to and
maintains compliance; and
++ The circumstances under which the AO will impose a CAP instead
of performing a follow-up survey for a supplier deficiency.
[[Page 29208]]
(14) Describing and Defining DMEPOS Supplier Deficiencies (New Sec.
424.58(c)(1)(xxi))
We propose in new Sec. 424.58(c)(1)(xxi) that the AO must
explain--
What it considers to be a supplier deficiency and how it
defines the term ``deficiency''; and
Whether the AO has different levels of DMEPOS supplier
deficiencies.
We are concerned that the meaning of ``deficiency'' and any AO-
identified levels thereof may differ among AOs, resulting in
inconsistent determinations. Therefore, we believe we must understand
the AO's policies regarding deficiency classifications.
(15) Potentially Fraudulent Activity (New Sec. 424.58(c)(1)(xxii))
We propose in new Sec. 424.58(c)(1)(xxii) that the AO must
describe its processes for: (1) detecting and addressing potential
fraud, waste, and abuse by suppliers (including identifying the AO's
definitions of the terms ``fraud'', ``waste'', and ``abuse''); and (2)
reporting this conduct to CMS, and, as applicable, law enforcement.
While the AO's principal function under Sec. 424.58 is to perform the
accreditation activities described therein, the AO must not disregard
possible fraud, waste, or abuse by suppliers. For instance, suppose an
AO is performing a survey and discovers that certain records the
supplier furnishes to the AO appear to be falsified. We believe the AO
should have procedures in place for handling these and other situations
and referring them to CMS and, as applicable, law enforcement.
(16) Agreement of Compliance (New Sec. 424.58(c)(1)(xxiii))
(a) Introduction
As part of the AO application process for certified provider and
certified supplier accreditation, 42 CFR 488.5 requires the AO to
furnish various written acknowledgements stating that the AO will
perform certain activities. These include, for example, providing CMS
with the following:
Copies of all survey reports and related information for
providers and suppliers seeking Medicare participation.
Timely notification of when a survey or complaint
investigation identifies an immediate jeopardy situation.
Notification of any proposed changes in the AO's
accreditation program and that it will not implement them without
written notice of continued program approval from CMS.
No concomitant requirement to submit acknowledgement statements
exists in current Sec. 424.58(b). This is concerning because, in our
view, without a written, binding AO commitment to execute functions
required under Sec. 424.58, we are less assured the AO will, in fact,
do so. Indeed, providers and suppliers enrolling in Medicare must sign
a certification statement on their Form CMS-855 application in which
they agree to adhere to various requirements, including the Medicare
laws, regulations, and program instructions applicable to the provider
or supplier. We see no appreciable difference between this
certification and one that would require an AO to make similar
agreements--a particularly important consideration given that we are
entrusting the AOs with the role of confirming DMEPOS suppliers'
compliance with the quality standards. In both cases, millions of Trust
Fund dollars could be at stake if we lack confidence in the party's
willingness and readiness to adhere to all Medicare requirements. We
accordingly believe that, as in Sec. 488.5, DMEPOS AOs should have to
explicitly agree to certain conditions as part of the application
process. (We note that some of the requirements in Sec.
424.58(c)(1)(xxiii) would refer to proposed new paragraphs in Sec.
424.58 that will be addressed later in this section of this proposed
rule.)
In the opening paragraph of new Sec. 424.58(c)(1)(xxiii), we
propose that the AO's chief executive officer (CEO) (or similar
official with authority to commit the organization to adhere to
Medicare laws and regulations) provide written acknowledgement that, as
a condition of CMS' approval or continued approval of the AO's
accreditation program, the AO agrees to adhere to the provisions in
Sec. 424.58(c)(1)(xxiii). The acknowledgement, which the official must
sign and date and which must be on the AO's letterhead, must list all
the data elements in Sec. 424.58(c)(1)(xxiii) and contain the AO's
agreement to comply therewith.
Two matters should be noted regarding this proposal. First, the
requirement that the CEO or similar official with binding authority
sign the statement is consistent with the provision at Sec.
424.510(d)(3)(1)(C) that an authorized official (as defined in Sec.
424.502) must sign an initial provider enrollment application of behalf
of an organization. Second, several of the paragraphs in 42 CFR part
488 require acknowledgement statements as a condition of AO approval.
We believe our proposed statements should also apply to reapprovals and
continued approval, particularly the latter. It is not enough for the
AO to comply with Sec. 424.58 only upon initial approval and
reapproval. We believe the AO should acknowledge that compliance must
be constant and that, as discussed further in this proposed rule, a
failure to maintain it could result in the termination or suspension of
the AO's approval status.
(b) Data Submission Within 3 Business Days
We propose in new Sec. 424.58(c)(1)(xxiii)(A)(1) and (2),
respectively, that the AO must agree to provide CMS within 3 business
days of the latter's request--
Any of the data described in Sec. 424.58(e)(1)(i); and
Any other information CMS deems necessary to facilitate
its oversight of the AO's accreditation program.
Concerning (c)(1)(xxii)(A)(1), AOs are presently required each
month under Sec. 424.58(c)(1)(i) (which, as explained later in this
proposed rule, will be designated as new paragraph (e)(1)(i)) to
furnish CMS with certain information, such as copies of all survey
results and CAPs. Considering, again, our role as overseer of Medicare
DMEPOS accreditation activities, we must be able to closely and
constantly monitor AOs' activities. Having to wait up to a month to
receive copies of survey reports and other survey data is antithetical
to this. We believe a 3-business day period would effectively balance
our need to secure this data expeditiously and the AO's need for
several days to acquire, organize, and submit the information to us.
This does not necessarily mean we will frequently request this
information outside of the previously mentioned monthly reports. It
only means we reserve the right to ask for it if, in our view,
circumstances warrant.
We believe proposed paragraph (c)(1)(xxiii)(A)(2) is especially
important. Even with the extensive information submissions we would
require in revised Sec. 424.58, this may not capture all the data we
need to ensure our effective oversight of the AOs. As the steward of
the Medicare Trust Funds, we should be able to collect any additional
information required to ascertain whether the AOs are properly
executing their respective accreditation programs. We believe the broad
scope of paragraph (c)(1)(xxiii)(A)(2) would afford us this
flexibility.
(c) Immediate Jeopardy Notifications
We previously noted that existing Sec. 424.58(c)(4) requires the
AO to send written notice to CMS within 2 calendar days of identifying
an accredited
[[Page 29209]]
DMEPOS supplier's deficiency if the latter poses an immediate jeopardy
situation; any adverse action the AO accordingly takes must also be
identified. Given our obligation to protect Medicare beneficiaries and
the consequent need for us to know when their safety may be threatened,
we believe that the AO's specific agreement to comply with this
requirement (which would be designated as new Sec. 424.58(e)(1)(iii))
is warranted.
(d) Notification of Change in AO Program
Current Sec. 424.58(c)(1)(v) requires an AO to notify CMS on a
monthly basis of any proposed changes to its accreditation standards,
requirements, or survey process. Any such changes can significantly
impact the AO's accreditation program, which, in turn, can affect our
responsibility for the DMEPOS accreditation program as a whole. Hence,
we propose in new Sec. 424.58(c)(1)(xxiii)(C) that the AO must agree:
(1) to furnish this notification to us in writing; and (2) that it will
not implement such changes absent prior written notice of continued
program approval from CMS consistent with Sec. 424.58(e)(2) (discussed
later in this proposed rule).
(e) Termination or Other Change in Supplier's Accreditation Status
Section 488.1010(a)(17)(iv) requires a home infusion therapy
supplier AO to acknowledge that it will notify CMS of any decision to
revoke or revise the accreditation status of a specific HIT supplier
within 3 business days of the date the AO took the action. As
accreditation is a requirement for DMEPOS enrollment under Sec.
424.57(c)(24), CMS must know as quickly as possible when a supplier's
accreditation is terminated, revoked, withdrawn or amended so we can
take similar action concerning the supplier's enrollment; a belated
notice from the AO could result in improper payments to an unaccredited
supplier. Thus, we propose in new Sec. 424.58(c)(1)(xxiii)(D) that the
AO must agree to provide this notification in writing to CMS within 3
business days of the AO's action.
(f) CAP Information
Consistent with our previously mentioned rationale for proposed new
Sec. 424.58(c)(1)(xx), we propose in new Sec. 424.58(c)(1)(xxiii)(E)
that the AO must agree to inform CMS of any decision to apply a CAP to
a specific supplier within 10 calendar days of the decision. This must
include--
The reason for the decision;
A detailed explanation and justification as to why the AO
applied a CAP instead of, as applicable, denying or terminating the
supplier's accreditation; and
The details of the supplier's CAP.
(g) Data for CMS Evaluation of Performance
Section 488.5(a)(11)(ii) requires a certified provider or supplier
AO to agree to submit timely, accurate, and complete data to support
CMS's evaluation of the AO's performance. Data to be submitted
includes, but is not limited to, provider/supplier identifying
information, survey schedules and findings, and notices of
accreditation decisions; the AO must submit this information according
to the instructions and timeframes CMS specifies. This regulatory
provision encompasses a wide range of data. Though some of it may
overlap other data referenced in proposed new Sec. 424.58(c)(1), we
believe a general, overarching agreement to furnish the scope and
breadth of data addressed in Sec. 488.5(a)(11)(ii) is justified so we
can ensure that we have all information necessary to execute our
oversight functions. To this end, new Sec. 424.58(c)(1)(xxiii)(F)
would duplicate the requirements of Sec. 488.5(a)(11)(ii) (with modest
modifications specific to DMEPOS suppliers).
(h) AO Implementation of CMS Changes
There are instances where CMS changes its DMEPOS accreditation
program requirements. Current Sec. 424.58(c)(2) requires that within
30 calendar days of said change, the AO must submit to CMS: (i) an
acknowledgment of CMS's notification of the change; (ii) a revised
crosswalk reflecting the new requirements; and (iii) an explanation of
how it will alter its standards to comply with CMS's new requirements
within the timeframes that CMS specifies in notification. As it is
important for AOs to implement these changes timely and in full, we
believe the AO should explicitly commit to do so. New Sec.
424.58(c)(1)(xxiii)(G) would thus require that the AO agree to adhere
to the following:
Submission of the data required in Sec. 424.58(e)(7).
(New paragraph (e)(7) would reflect current requirements in paragraph
(c)(2).)
The proposed changes must be submitted to CMS within 30
calendar days of the date of CMS' written notice to the AO.
The AO must not implement its proposed corresponding
changes without prior CMS approval.
(i) Deficiencies
We previously noted that new Sec. 424.58(c)(1)(xxi) would require
the AO to explain what it considers to be a DMEPOS supplier deficiency,
how it defines the term, and whether it has different levels of
deficiencies. However, and to facilitate consistency among the AOs, we
believe CMS should retain the discretion to: (1) define the term
deficiency; and (2) establish deficiency levels for use across all AO
DMEPOS accreditation programs. New Sec. 424.58(c)(1)(xxiii)(H) would
thus require the AO to agree to accept and adhere to any CMS-
established deficiency definitions and levels and categories thereof.
(j) Surveyors as Witnesses
Consistent with our aforementioned intention to move current Sec.
424.58(b)(1)(xv) to new Sec. 424.58(c)(1)(xxiii), we propose that new
Sec. 424.58(c)(1)(xxiii)(I) would require the AO to agree that its
surveyors can serve as witnesses if CMS takes an adverse action against
a supplier based on an accreditation finding.
(k) Sampling
We earlier addressed in this proposed rule the concept of sampling,
in which the AO utilizes a formula to determine which locations within
a particular group should be surveyed. We propose to require the AO's
agreement in new Sec. 424.58(c)(1)(xxiii)(J) that if CMS permits the
AO to perform surveys via a sampling process, the AO: (1) will submit
to CMS its planned sampling methodology in detail; and (2) will not
undertake sampling until CMS has approved the AO's methodology.
Considering that certain suppliers will be not surveyed under a
sampling approach, we must ensure that the AO's methodology aligns with
CMS' obligation to protect Medicare beneficiaries and the Trust Funds
against non-compliant suppliers.
(l) Patient Records
As part of its survey of a supplier, the AO must examine the
supplier's patient medical records. This helps confirm that the
supplier is actually serving patients and that the items and services
furnished to them are legitimate. For this reason, and as stated in
sub-regulatory guidance, the reviewed patient medical records must not
include: (1) mock files; (2) fictional patients; (3) simulated
documentation;
[[Page 29210]]
and (4) templates.\66\ Actual records of the patients are required.
With the aforementioned importance of verifying the bona fide provision
of these items and services, we propose in new Sec.
424.58(c)(1)(xxiii)(K) that the AO agree not to use these four types of
records in its surveys. We also propose to include duplicate patient
records as a fifth category. This means that the reviewed records must
be of the supplier's own patients and not those of another supplier. We
have encountered situations where multiple suppliers within a larger
organization have similar patient records. We do not believe that
records of other suppliers' patients should be considered in the
survey, for they do not reflect the items and services that the
surveyed supplier itself is furnishing.
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\66\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/DMEPOSQuality/DMEPOSQualBooklet-905709.html.
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Although we have elected to address this topic via rulemaking in
new Sec. 424.58(c)(xxiii)(K), we emphasize that we retain the
authority under section 1834(a)(20)(E) of the Act to establish, add,
and modify DMEPOS quality standards via sub-regulatory guidance.
(m) Costs of Ad-Hoc Surveys
As discussed further in section VI.B.2.d.(7). of this proposed
rule, we are proposing in new Sec. 424.58(e)(8)(ii) that CMS may at
any time direct the AO to perform a survey of any accredited supplier
or a group thereof. Given this, we are concerned there could be delays
in the survey's performance due to a potential disagreement between the
AO and the supplier regarding which of them pays the cost of a CMS-
required survey. To avoid such situations, we believe the cost issue
should be resolved well beforehand. Accordingly, we propose in new
Sec. 424.58(c)(xxiii)(L) that the AO must agree to have a binding
written agreement with each supplier it accredits regarding whether the
AO, the supplier, or both will assume the costs of a survey that CMS
directs the AO to perform under paragraph (e)(8)(ii) of this section.
(n) Truthfulness and Accuracy
To ensure that the AO understands its obligation to submit accurate
and complete data to CMS at all times, we propose in new Sec.
424.58(c)(xxiii)(M) that the AO must agree to submit all required
information to CMS both before and after approval of its accreditation
program in a truthful, accurate, and complete manner.
(o) Compliance With Sec. 424.58
In general, the components of our proposed Sec.
424.58(c)(1)(xxiii) AO attestation statement address fairly specific
elements (for example, an attestation to utilize CMS's deficiency
definition). Yet we reiterate that adherence to all provisions in Sec.
424.58 is still required. Merely because Sec. 424.58(c)(1)(xxiii) is
silent regarding a certain provision in Sec. 424.58 should not, in our
view, exempt the AO from agreeing to comply therewith. Consequently, we
propose in Sec. 424.58(c)(1)(xxiii)(N) that the AO in its statement
must agree to comply with all of the requirements in Sec. 424.58 at
all times. We note this would include agreeing to adhere to the
policies, procedures, and practices it outlined under Sec. 424.58(c)
as part of its initial or reapproval application and any changes
thereto made with prior CMS approval. In making its decision whether to
approve or reapprove an AO's accreditation program, CMS relies upon the
explanations the AO furnished in the application. Furthermore, in
approving any change to an AO's policies, procedures, and practices,
CMS does so with understanding that the AO will adhere to the new
processes. We therefore believe the AO should abide by: (1) its
representations in its application; and (2) any policy, procedural, or
practice change that CMS authorized.
(17) Additional Information Needed (New Sec. 424.58(c)(2))
Despite the wide scope of data to be furnished per Sec.
424.58(c)(1), CMS may need additional information to fully assess the
AO's credentials. Thus, we propose in new Sec. 424.58(c)(2) that if
CMS determines that further data is necessary to make a determination
on the AO's request for approval, we would notify the organization and
afford it an opportunity to provide this data.
(18) Application Withdrawal (New Sec. 424.58(c)(3))
Similar to Sec. 488.1010(c) with respect to AO applications for
HIT supplier accreditation, we propose in new Sec. 424.58(c)(3) that
an AO may withdraw its application for approval of its accreditation
program at any time before CMS posts the approval described in Sec.
424.58(c)(5) (discussed in section VI.B.2.(b).(20). of this proposed
rule). This would give the AO adequate opportunity to withdraw its
application if it wishes while setting forth a specific withdrawal
deadline.
(19) Reasons for Denial
Section 424.530(a) lists 18 reasons for which CMS can deny provider
or supplier enrollment applications, including those from DMEPOS
suppliers. Among these grounds are the following as outlined in Sec.
424.530(a)(1) through (4) and (12)(i), respectively:
The provider or supplier is non-compliant with the
enrollment requirements in Title 42.
The provider or supplier or any owner, managing employee,
managing organization, officer, director, authorized or delegated
official, medical director, supervising physician, or other health care
or administrative or management services personnel furnishing services
payable by a Federal health care program, of the provider or supplier
is--
++ Excluded by the OIG from Medicare, Medicaid, and any other
Federal health care program; or
++ Debarred, suspended, or otherwise excluded from participating in
any other Federal procurement or non-procurement activity in accordance
with section 2455 of the Federal Acquisition Streamlining Act (FASA).
The provider, supplier, or any owner, managing employee,
managing organization, officer, or director of the provider or supplier
was, within the preceding 10 years, convicted of a Federal or State
felony offense that CMS determines is detrimental to the best interests
of the Medicare program and its beneficiaries.
The provider or supplier has submitted false or misleading
information on the enrollment application to become Medicare-enrolled.
The provider or supplier is terminated, revoked or
otherwise barred from participation in a State Medicaid program or any
other Federal health care program.
The central purpose of these provisions is to prevent non-compliant
and unqualified providers and suppliers--or those that present a
program integrity risk--from being eligible to receive Medicare
payments. While DMEPOS AOs, unlike DMEPOS suppliers, neither enroll in
Medicare nor receive Medicare payments, they are responsible for
ascertaining quality standard compliance for potentially hundreds of
suppliers that may or do bill Medicare. In other words, in general
contrast to a single supplier, an AO's qualifications and performance
can impact the payment of hundreds of millions of Medicare dollars.
Consequently, considering the likely greater effect an AO has on the
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Funds, we believe it is especially important to have clear reasons in
Sec. 424.58 for which we can deny an AO's application for approval of
its accreditation program.
We propose the following denial reasons in new paragraphs (c)(4)(i)
through (viii), several of which duplicate those in Sec. 424.530(a),
given the latter's effectiveness in keeping unqualified providers and
suppliers out of the Medicare program. Specifically, denial of an AO's
application can occur if CMS determines that--
The AO has failed to comply with all application, data,
and agreement submission requirements outlined in Sec. 424.58(c). In
our view, if the applicant does not submit all the required information
and agreements in Sec. 424.58(c), the application is deficient, and
the AO therefore cannot be approved.
The AO has failed to provide reasonable assurance (as
defined in paragraph (b)). CMS must have confidence that the AO's
accreditation program will comply with all applicable CMS requirements
and, above all, ensure that only qualified DMEPOS suppliers are
accredited.