[Federal Register Volume 90, Number 229 (Tuesday, December 2, 2025)]
[Rules and Regulations]
[Pages 55342-55620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-21767]
[[Page 55341]]
Vol. 90
Tuesday,
No. 229
December 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, 424 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; Final Rule
Federal Register / Vol. 90 , No. 229 / Tuesday, December 2, 2025 /
Rules and Regulations
[[Page 55342]]
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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-F]
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: Final rule.
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SUMMARY: This final rule sets forth routine updates to the Medicare
home health payment rates in accordance with existing statutory and
regulatory requirements. In addition, this final rule finalizes
permanent and temporary behavior adjustments and recalibrates the case-
mix weights and update the functional impairment levels; comorbidity
subgroups; and low-utilization payment adjustment (LUPA) thresholds for
CY 2026. This final rule also finalizes changes to the face-to-face
encounter policy and changes to the Home Health Quality Reporting
Program (HH QRP) and the expanded Health Value-Based Purchasing (HHVBP)
Model requirements. In addition, it updates the Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive
Bidding Program (CBP). Lastly it finalizes: 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: These regulations are effective on January 1, 2026.
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 (HHVBP), 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:
Table of Contents
I. Executive Summary
A. Purpose and Legal Authority
B. Summary of the Provisions of This Final 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. Final CY 2026 Payment Adjustments Under the HH PPS
D. Final CY 2026 Home Health Low Utilization Payment Adjustment
(LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub-
Groups, and Case-Mix Weights
E. Final CY 2026 Home Health Payment Rate Updates
F. Final Regulation Change to Face-to-Face Encounter
III. Home Health Quality Reporting Program (HH QRP)
A. Background and Statutory Authority
B. Summary of the Provisions
C. Quality Measures Currently Adopted for the CY 2026 HH QRP
D. 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. Removal of Four Standardized Patient Assessment Data
Elements 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
G. Updates to Requirements for OASIS All-Payer Data Submission
H. 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. Finalized Changes to HHVBP Measure Removal Factors
C. Finalized 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 Conditions of Participation
(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. Finalized 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
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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 final rule updates the CY 2026 Medicare payment rates for
home health agencies (HHAs). In this final rule, we also finalize
permanent and temporary adjustments to the CY 2026 home health base
payment rate to account for the difference between assumed versus
actual behavior changes 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). In addition, this rule finalizes the recalibrated PDGM case-mix
weights and updates the low-utilization payment adjustment (LUPA)
thresholds, functional impairment levels, and comorbidity adjustment
subgroups under sections 1895(b)(4) of the Act for 30-day periods of
care in CY 2026. This rule finalizes an update to 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 finalizes 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 finalizing updated quality
reporting policies. We are finalizing the proposal 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 beginning with
the CY 2026 HH QRP. CMS is also finalizing the proposal to remove four
assessment items: one Living Situation item, two Food items, and one
Utilities item beginning with the CY 2026 HH QRP. We are also
finalizing the proposal 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 will be permitted 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 or man-
made disaster such as a cyber-attack, hurricane, tornado, or
earthquake) during the 30-day reconsideration period. CMS is also
finalizing a revised Home Health Consumer Assessment of Healthcare
Providers and Systems (HHCAHPS) Survey beginning with the April 2026
sample month. This rule also updates regulatory text to account for
all-payer data submission of OASIS data. In a request for information
(RFI) included in the CY 2026 HH PPS proposed rule, we sought
information on a change to the final data submission deadline period
from 4.5 months to 45 days. We also sought feedback on the digital
quality measurement (dQM) transition for HHAs. We solicited 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 sought input on future HH QRP
quality measure (QM) concepts of interoperability, cognitive function,
nutrition, and patient well-being. A summary of the comments submitted
in response to these RFIs is included in this final rule.
3. Expanded Home Health Value-Based Purchasing (HHVBP) Model
In accordance with the statutory authority at section 1115A of the
Act, we are finalizing our proposals to do the following for the
expanded HHVBP Model: (1) add a new measure removal factor for the
expanded HHVBP Model applicable measure set and (2) make changes to the
expanded HHVBP Model applicable measure set. Additionally, we included
in the proposed rule a request for information (RFI) related to
potential future performance measure concepts and we summarize comments
received in response to this RFI in this final rule.
We proposed to add a new measure removal factor for the expanded
HHVBP Model applicable measure set for measures that are not feasible
to implement. We proposed to remove three HHCAHPS Survey-based
measures, to align with proposed changes to the HHCAHPS survey. We
proposed 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 proposed revising the weights of the individual HHVBP
measures as well as the measure categories. As noted above, we are
finalizing these proposals without modification.
4. Updates to the Home Health Agency CoPs To Align With the OASIS All-
Payer Submission Requirements
We are finalizing the 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 proposed and are
finalizing 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 finalizing 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
proposed and are finalizing revisions and additions to 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
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finalized provisions 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 will help ensure that DMEPOS AOs closely oversee DMEPOS
suppliers for compliance with the DMEPOS quality standards.
7. DMEPOS Prior Authorization
In section V.C. of this final rule, we are finalizing regulations
regarding granting and withdrawing exemptions from mandatory prior
authorization requirements for certain DMEPOS suppliers.
8. DMEPOS Competitive Bidding Program
We are finalizing the proposed 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
We are finalizing the provisions for how single payment amounts
(SPAs) are calculated and how CMS determines the number of contracts to
award in each ``competition,'' which refers to the CBPs competitive
bidding area (CBA) and product category combination.
b. Adjustments to SPAs
We are finalizing the regulation 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 will be consistent with Medicare making annual covered item
updates for other DMEPOS items and services. This will account for
inflation in the cost of doing business for suppliers submitting bids
for furnishing items under a multi-year contract.
c. Bid Limits and Conditions for Awarding Contracts if Savings Are Not
Expected
We are finalizing the regulation 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. These changes will better ensure
DMEPOS CBP is responsive to rising costs over time while still ensuring
alignment with the statutory requirement for achieving savings.
d. Revising the Definition of ``Item'' Related to Medical Supplies
This final rule specifies 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
This final rule creates 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. 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 will 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 final rule will 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 final rule will 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 final rule streamlines 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 final rule streamlines 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 final rule codifies 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 final rule adds a Tribal exception to the DMEPOS CBP
regulations.
k. Addition of a Termination Clause for the DMEPOS CBP Supplier
Contracts
The final rule adds 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 final rule makes 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).
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m. Adding Definitions of Adjusted Fee Schedule, Amount Competition, and
Unadjusted Fee Schedule Amount to Sec. 414.402.
The final rule adds 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 Final Rule
1. Home Health Prospective Payment System (HH PPS)
In section II.B.1. of this final rule, we discuss comments related
to the monitoring and data analysis on the PDGM utilization.
In section II.C.1. of this final rule, we finalized a -1.023
percent permanent adjustment and a -3.0 percent temporary adjustment to
the base payment rate under the HH PPS.
In section II.D. of this final rule, we finalized the recalibrated
CY 2026 PDGM case-mix weights and updates to the low-utilization
payment adjustment (LUPA) thresholds, functional impairment levels, and
comorbidity adjustment subgroups.
In section II.E. of this final rule, we update the home health
wage index. We also 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 final home health
payment update percentage for CY 2026 is 2.4 percent. Additionally,
this rule finalizes 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 final rule, we finalized 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 final rule, we are finalizing the proposal
to remove the COVID-19 Vaccine: Percent of Patients Who Are Up to Date
measure and the item related to the measure. We are also finalizing the
proposal to remove four assessment items: one Living Situation item,
two Food items, and one Utilities item. CMS is finalizing the proposal
to implement a revised HHCAHPS Survey beginning with the April 2026
sample month. We are finalizing the proposal to revise the policy to
allow providers to submit a request for reconsideration of an initial
determination of non-compliance with the HH QRP data submission
requirements. They can request this if they believe that they can
demonstrate full compliance. We also are finalizing 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 summarize input received on a series of RFIs. In the CY 2026 HH
PPS proposed rule, we sought information on a change to the final data
submission deadline period from 4.5 months to 45 days. We also sought
feedback on the digital quality measurement (dQM) transition for HHAs.
We solicited feedback from the public on current adoption of health IT
and standards, including Fast Healthcare Interoperability Resources
(FHIR), and what related challenges or barriers HHAs are facing.
Finally, we sought 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 final rule, we finalize a proposal to add a
new measure removal factor for the expanded HHVBP Model applicable
measure set. This ninth measure removal factor will allow CMS to
propose the removal of a measure when it is no longer feasible to
implement the measure specifications. We also finalize proposed changes
to the expanded HHVBP Model applicable measure set and changes to
measure weights. We are removing three HHCAHPS Survey-based measures to
align with finalized changes to the HHCAHPS Survey. We also finalize
the proposed 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 changes to the applicable measure set, we
also finalize proposed revisions to the weights of the individual HHVBP
measures and the measure categories.
We also summarize public comments received in response to an RFI
included in the proposed rule related to potential future measure
concepts for the expanded HHVBP Model.
4. Updates to the Home Health Agency Conditions of Participation (CoPs)
To Align With the OASIS All-Payer Submission Requirements
In section V. of this rule, we finalized technical regulation text
changes to Sec. 484.45 and Sec. 484.55 of the Home Health Conditions
of Participation (CoPs) 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 finalized 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
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verifying suppliers' compliance with the quality standards, we are
finalizing proposals that add a number of provisions to our DMEPOS
accreditation regulations. Among our finalized provisions are as
follows:
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 final rule, we are finalizing regulations
regarding 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. In the final rule, we are revising 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 finalizing our proposal 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 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 finalizing our proposal 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 final 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 finalizing our proposal 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 finalizing our proposal 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 finalizes our proposal 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 finalizing that in no
event would the bid limit be allowed to exceed the unadjusted fee
schedule amount. In addition, this rule finalizes 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 finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 final rule will
reduce the burden on suppliers submitting bids under the DMEPOS
[[Page 55347]]
CBP. However, we are finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 finalizing our proposal 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 will
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 finalizing our proposal to
codify this process in regulation for all future rounds. Additionally,
we are finalizing our proposal 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 finalizing our proposal to add an exception to the DMEPOS
CBP that will 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.
k. Addition of a Termination Clause for the DMEPOS CBP Supplier
Contracts
We are finalizing the proposed changes 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 finalizing the rule 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)
the 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), will 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 finalizing the proposed changes 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 finalizing our proposal 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
This final rule adds 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. Payments 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 HHAs 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 55351]]
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.
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B. Monitoring the Effects of the Implementation of the PDGM
1. Routine PDGM Monitoring
The CY 2026 HH PPS proposed rule (90 FR 29108) included analysis of
Medicare home health benefit utilization, including overall total 30-
day periods of care and average periods of care per HHA user;
distribution of the type of visits in a 30-day period of care; the
percentage of periods that receive the LUPA; estimated costs; the
percentage of 30-day periods of care by clinical group, comorbidity
adjustment, admission source, timing, and functional impairment level;
and the proportion of 30-day periods of care with and without any
therapy visits, nursing visits, and/or aide/social worker visits. We
also included monitoring of home health visits using telecommunications
technology and remote patient monitoring.
Comment: Commenters discussed the home health utilization trends
presented in the monitoring concurrently with comments regarding access
to the benefit and the majority of commenters stated the opinion, as
they have in prior years, that a decline in utilization is not
necessarily related to a reduced need for home health services.
Response: We will continue to monitor and analyze home health
utilization trends, potential access issues, and other vulnerabilities
within the home health payment system. We address and provide more
detailed responses regarding certain utilization trends, access
concerns, and reported potential vulnerabilities within the home health
payment system in the comment summaries in subsequent sections of this
rule.
C. CY 2026 Payment Adjustments Under the HH PPS
1. Behavior Adjustments Under the HH PPS
a. Background
As discussed in section II.A.1. of this final rule, starting in CY
2020, the Secretary was required by section 1895(b)(2)(B) of the Act to
change the
[[Page 55353]]
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 reminded readers that in the CY 2020 HH PPS final
rule with comment period (84 FR 60513), we interpreted actual behavior
changes to encompass behavior changes that were previously outlined as
assumed by CMS, as well as any other behavior changes even if they were
not identified at the time we established the 30-day payment rate for
CY 2020. In the CY 2023 HH PPS final rule (87 FR 66796), we reviewed
evidence indicating that the number of therapy visits declined in CYs
2020 and 2021. That evidence also indicated a slight decline in therapy
visits beginning in CY 2019 after we finalized our policy removing
therapy thresholds prior to implementing the PDGM. In section II.B.1.
of the CY 2025 HH PPS proposed rule (89 FR 55318), our analysis showed
that the actual 30-day periods remained similar to the simulated 30-day
periods. CMS is required, by law, to account for actual behavior
changes related to the implementation of the PDGM and change to a 30-
day unit of payment. Additionally, the statute 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.
Although our analysis examines particular actual behavior changes,
some of which were part of our original assumed behavior assumptions
(for example, in the volume of visits for LUPAs, therapy visits, etc.),
the finalized methodology captures the entirety of all behavior changes
in order to calculate estimated aggregate expenditures.
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. The provision
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 accordingly posted 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 we determined had occurred
after we implemented the PDGM; our approach used to construct simulated
60-day episodes using 30-day periods; payment rate development for CY
2023; and information on the supplemental data files containing
information on the simulated 60-day episodes and actual 30-day periods
used in calculating the permanent adjustment to the payment rate.
Materials from the webinar, including the presentation and the CY 2023
descriptive statistics from the supplemental LDS files containing
information on the number of simulated 60-day episodes and actual 30-
day periods in CY 2021 that were used to construct the permanent
adjustment to the payment rate, as well as information such as the
number of episodes and periods by case-mix group, case-mix weights, and
simulated payments, can be found on the Home Health Patient-Driven
Groupings Model web page at https://www.cms.gov/medicare/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 more details for each step of the
calculation.
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, effective January 1, 2023, HHAs were required to
submit an updated version of the OASIS instrument, OASIS-E. This would
mean for purposes of calculating the behavior adjustments, we would use
the CY 2023 OASIS-E assessments and CY 2023 claims in CY 2025
rulemaking. 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 2023, CY 2024, and CY 2025 HH PPS final rules for
further information about the methodology.
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 related to the
implementation of the PDGM and the change to a 30-day unit of payment
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 (``repriced'') 30-day base
payment rate. We then convert the percent change into an adjustment
factor and apply it 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
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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 rate setting 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 Final Claims Results
We continue the practice of using the most recent complete home
health claims data available at the time of rulemaking. This CY 2026
final rule thus uses the most current CY 2024 data for determining any
permanent and temporary adjustments to the CY 2026 payment rate using
the methodology finalized in the CY 2023 HH PPS final rule (87 FR
66804). This section of this final rule updates the calculations in the
CY 2026 HH PPS proposed rule (90 FR 29129) as we have updated these
calculations between the proposed and final rules in previous years.
However, while we consider the claims data and the permanent and
temporary adjustments results complete for CY 2026, any adjustments to
payment rates for future payment years 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 final rule includes
two files: the actual CY 2024 30-day periods and the CY 2024 simulated
60-day episodes.
We remind readers that a data use agreement (DUA) is required to
purchase the CY 2026 final HH PPS LDS file using the CMS-R-0235A form
under OMB control number 0938-0734. Access will be granted for both the
30-day periods and the simulated 60-day episodes under one DUA. Visit
the HH PPS LDS web page for more information.\1\ In addition, the final
CY 2026 Home Health Descriptive Statistics from the LDS Files
spreadsheet is available on the HH PPS Regulations and Notices web
page,\2\ 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. 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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\1\ https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds.
\2\ 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
As noted, section 1895(b)(3)(D)(i) of the Act requires us to
annually determine the impact of differences between assumed behavior
changes and actual behavior changes on estimated aggregate
expenditures, beginning with 2020 and ending with 2026. For this final
rule, we update our calculations presented in the CY 2026 HH PPS
proposed rule (90 FR 29129) that we had proposed using to determine the
CY 2026 permanent and temporary adjustments using the most up to date
claims data at the time of this final rule. This is similar to what we
have done in previous final rules to update the proposed rule
calculations. However, we do not finalize these calculated adjustments,
as we explain later in this section and in the final decision section.
We begin by applying the methodology finalized in the CY 2023 HH PPS
final rule and described most recently in the CY 2024 HH PPS final rule
(88 FR 77687 through 77688), as well as applying 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 determine what the permanent and
temporary payment adjustments should be to offset for such increases or
decreases in estimated aggregate expenditures as a result of the impact
of differences between assumed behavior changes and actual behavior
changes.
Using the final CY 2024 dataset, as this is the most complete
claims data for this final rule, we began with 8,275,089 30-day periods
of care and dropped 495,480 30-day periods of care that had a claim
occurrence code 50 date after October 31, 2024. We also excluded
842,772 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 4,892 30-day periods were
excluded.
Additionally, we excluded 211,506 simulated 60-day episodes, which
consist of 393,108 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 (70.7 percent) and single 30-day periods
of care (29.3 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 final rule included 6,538,837 actual 30-day periods of care
and 3,849,780 simulated 60-day episodes of care for CY 2024.
Using the final dataset for CY 2024 (6,538,837 actual 30-day
periods which made up the 3,849,780 simulated 60-day episodes) and the
previously finalized methodology, 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.
[[Page 55355]]
As shown in table 2, 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 $1,914.73 based on the difference between the assumed
behavior changes and the actual behavior changes.
We then take 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.
To convert this base payment rate to a payment adjustment, we
calculated the percent change between the two payment rates ($1,914.73
and $1,957.63)--which is equal to -2.191%. We also calculated the
difference in aggregate expenditures in dollars for all CY 2024 PDGM
30-day claims using the those payment rates: the CY 2024 PDGM payment
rate that is budget neutral to the aggregate expenditures generated
from the CY 2024 simulated 60-day episodes ($1,914.73) and the CY 2024
PDGM payment rate that incorporates the permanent adjustment
calculations through CY 2023 data. This difference is shown as the
retrospective dollar amount that will be recouped with 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 final claims data and the methodology in our proposed
rule are shown in table 2. We reiterate that, as we explain further in
later sections, that we are not finalizing the permanent or temporary
payment calculated. Instead, the calculations that follow are being
presented to be consistent with how we have updated these adjustments
between the proposed and final rules in previous rulemaking.
[GRAPHIC] [TIFF OMITTED] TR02DE25.003
As shown in table 2, a permanent prospective adjustment of -2.192
percent to the CY 2026 30-day payment rate (assuming all adjustments
from prior years were applied) for CY 2024 would be required to adjust
for such increases in estimated aggregate expenditures in future years.
We remind readers, the permanent prospective adjustment of -2.192
percent is for illustrative purposes only and the annual (single year)
permanent adjustment cannot be added to previous annual adjustments.
Our final estimate of the CY 2024 base payment rate ($2,038.13)
resulted in excess expenditures of approximately $870 million in CY
2024.
We now have 5 years of claims data (CYs 2020 through 2024) under
the PDGM, and we have applied three permanent adjustments to the 30-day
payment rate (CYs 2023 through 2025) that together partially account
for the behavior changes we observed in the data, which we summarize in
table 3. We reiterate that, as we explain further, we are not
finalizing the permanent or temporary payment for CY 2024 reflected as
follows. And 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.
[[Page 55356]]
[GRAPHIC] [TIFF OMITTED] TR02DE25.004
f. CY 2026 Permanent Adjustment and Temporary Adjustment Calculations
In the preceding section we updated the analysis in the proposed
rule using CY 2024 final claims data to determine the difference in
expenditures between the 30-day periods and the simulated 60-day
episodes. We now update the analysis in the proposed rule using CY 2024
final claims data converting that difference into permanent and
temporary payment adjustment. We reiterate that, as we explain further,
we are not finalizing the permanent or temporary payment calculated in
this section.
Again, that analysis included simulations that assumed the full -
3.95 percent payment adjustment (the calculated CY 2025 permanent
adjustment) was already taken. We note that CMS implemented a payment
adjustment of -1.975 percent for CY 2025, rather than the -3.95 percent
we calculated (89 FR 88373), so the calculations set forth later in
this section would be 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 3, we do not
assume the full adjustment from prior years had been taken.
As discussed in section II.C.1.d. of this final rule, using the
final dataset for CY 2024 (6,538,837 actual 30-day periods which made
up the 3,849,780 simulated 60-day episodes) we determined the CY 2024
30-day base payment rate would have been $1,914.73 if calculated based
on actual behavior compared to assumed behavior. We then compared the
$1,914.73 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 4, 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 $1,914.73
(based on actual behaviors) is the total permanent adjustment
reflecting CYs 2020 through 2024 claims.
[GRAPHIC] [TIFF OMITTED] TR02DE25.005
As shown in table 4 a permanent prospective adjustment of -6.055
percent to the CY 2024 30-day payment rate is required to offset for
such increases in estimated aggregate
[[Page 55357]]
expenditures in future years. To illustrate this calculation:
[GRAPHIC] [TIFF OMITTED] TR02DE25.006
As we stated in the CY 2025 HH PPS final rule (89 FR 88373),
applying a -1.975 percent (half of the final calculated -3.95 percent)
permanent adjustment to the CY 2025 30-day payment rate did 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 4, a permanent prospective
adjustment of -6.055 percent to the CY 2024 30-day payment rate is
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 final permanent adjustment, which will include estimated aggregate
expenditures in CY 2024, by simply subtracting the -1.975 percent
applied in CY 2025 from the total permanent adjustment of -6.055
percent as shown in table 4.
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 - 0.06055).
To illustrate this calculation we used the following approach.
[GRAPHIC] [TIFF OMITTED] TR02DE25.007
x = 0.95838
x = 0.04162 (that is, 4.162 percent)
As shown previously, this methodology would suggest a -4.162
percent permanent adjustment for CY 2026. 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: \3\
---------------------------------------------------------------------------
\3\ 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.
---------------------------------------------------------------------------
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 = -2.192% (Table 3)
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)(1-0.02192) = (1-
0.03925)(1-0.0289)(1-0.01975)(1-x)
Solving, x = 4.162%.
In table 5, we provide the base payment rate for what CMS actually
paid, the recalculated base payment rate for 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.
[[Page 55358]]
[GRAPHIC] [TIFF OMITTED] TR02DE25.008
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 5, we finalized only half of the permanent adjustment
percentages in CYs 2023 through 2025 final rules. 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. In
the CY 2026 HH PPS proposed rule (90 FR 29133), we proposed to apply
the full permanent adjustment we (then) calculated of -4.059 percent,
noting that we would update this percentage using more complete claims
data in the final rule, to satisfy the statutory requirements at
section 1895(b)(3)(D) 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. Using more complete claims
data, and as calculated previously, the permanent adjustment to the CY
2026 30-day payment rate would be a reduction of 4.162 percent.
As described previously in this final 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 final rule for the analysis of CY 2024 claims. Table
6 provides a summary of the temporary adjustment dollar amount for CYs
2020 through 2026 as shown in the CY 2026 proposed rule (90 FR 29132).
[[Page 55359]]
[GRAPHIC] [TIFF OMITTED] TR02DE25.009
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 permanent
adjustments 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 CY 2026 HH PPS proposed rule (90 FR 29119), 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 payments for
home health care are substantially in excess of costs.\4\
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\4\ 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 exercised our authority under section
1895(b)(3)(D)(iii) of the Act to propose applying ``one or more''
temporary adjustments to begin recoupment of the retrospective
overpayments for CYs 2020 through 2024. 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 cumulative amount is
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 estimated that
collecting the full temporary dollar amount of $5,331,234,432 in a
single year (as shown in table 6) would require an approximate 34
percent reduction to the CY 2026 base payment rate. Additionally, we
anticipate that we will 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, in the CY 2026 HH PPS proposed rule (90 FR 29133), we proposed
to implement a -5.0 percent temporary adjustment (rather than the
estimated 34 percent) along with the permanent adjustment to reduce
larger temporary adjustments in future years. Beginning to apply only a
portion of the temporary adjustment in CY 2026 balances the underlying
statutory goal of budget neutrality against any hardship to HHAs.
We proposed implementing 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 will occur in CY 2026.
Using this estimated utilization, a 5.0 percent reduction to the CY
2026 30-day payment rate would collect approximately $786 million of
the total temporary adjustment dollar amount, equating to about 14.7
percent of the total $5.3 billion shown in table 6. In doing so,
however, we will 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
[[Page 55360]]
the implementation of the temporary adjustment factor is based on an
estimate of the number of 30-day periods that will 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, we
proposed applying the temporary adjustment on a prospective basis and
only with respect to the year for which such a temporary increase or
decrease is made. This means we will 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, whether -5.0 percent or a different
amount. 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 would propose one or more additional temporary adjustments to
account for retrospective overpayments. We refer readers to section
II.E.3.b. of this final rule for the CY 2026 base payment rates with
and without the temporary adjustment.
We solicited comments on the proposals to apply the permanent
adjustment of -4.059 percent (-4.162 percent using more complete claims
data) and the -5.0 percent temporary adjustment to the CY 2026 home
health base payment rate. One commenter, the Medicare Payment Advisory
Commission (MedPAC), supported the proposed permanent and temporary
payment adjustments for CY 2026. MedPAC stated that the reduction to
the base payment rate is generally consistent with their most recent
recommendation calling for a seven percent reduction. They also stated
that the home health base payment rate currently exceeds the estimated
cost of a typical 30-day payment period by 33 percent. We received
numerous comments opposing the permanent and temporary adjustment
proposals as summarized as follows.
(1) Excluding Data From HHAs With Anomalous Behavior
Comment: Several commenters expressed concerns that the data used
in the calculation is being influenced by potential fraudulent behavior
and anomalous utilization from some home health agencies, as evidenced
by potential cost report fraud and outlier billing patterns,
specifically in Los Angeles (LA) County, and should not be included in
the methodology used to set a national base payment rate. Many
commenters also stated that the adjustments should target agencies
committing billing fraud, rather than making ``blanket adjustments'' to
the home health payment rate based on HHAs who reduced therapy visits
in order to increase payments.
Additionally, commenters stated that cost reports are largely non-
representative of actual costs to provide care. They stated that the
underreporting of costs can be due to the design and/or
misunderstanding of the intent of the cost reports themselves; however,
the commenter acknowledged that it is also a consequence of more
providers not giving the cost reports the attention that they deserve.
Commenters also cited lack of auditing by CMS to ensure cost reports
are completely and accurately filled out.
A commenter stated that the current strategy creates a feedback
loop whereby reduced reimbursements result in HHAs being less capable
of providing the same number of therapy visits, triggering CMS to
further reduce reimbursements because fewer visits are provided.
Similarly, a commenter suggested CMS review the home health agency
admission criteria to ensure that agencies are not exclusively
admitting patients that may perform favorably on OASIS outcomes
assessments and/or have a lower probability of hospitalization as a
consideration for targeted payment adjustments.
Response: Both cost reports and claims are used as part of the rate
setting for home health. We remind commenters that each HHA Medicare
cost report is required to be certified by the Officer or Director of
the home health agency as being true, correct, and complete, with
potential penalties should any information in the cost report be a
misrepresentation or falsification of information. Specifically, 42 CFR
413.24(f)(4)(iv)(B) states that misrepresentation or falsification of
any information contained in this cost report may be punishable by
criminal, civil and administrative action, fine and/or imprisonment
under federal law. Furthermore, if services identified in this report
were provided or procured through the payment directly or indirectly of
a kickback or were otherwise illegal, criminal, civil and
administrative action, fines and/or imprisonment may result. CMS must
rely on the accuracy and completeness of cost report data when
analyzing home health costs. Using HHA Medicare cost report data as one
piece of the methodology to establish the case-mix relative weight
aligns with the use of this data in determining the base payment amount
under the HH PPS.
As discussed in the CY 2019 final rule (83 FR 56451), we use a
trimming methodology described in detail in the ``Analyses in Support
of Rebasing & Updating Medicare Home Health Payment Rates'' Report
available at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps/downloads/analyses-in-support-of-rebasing-and-updating-the-medicare-home-health-payment-rates-technical-report.pdf.
This methodology trims out values that fall in the top or bottom 1
percent of the distribution across all HHAs (that is, possible
``questionable'' data). Normalizing data by trimming out missing or
extreme values is a widely accepted methodology both within CMS and
amongst the health research community. In eliminating missing or
questionable data with extreme values from the data we obtain a more
robust measure of average costs per visit that is reliable for the
purposes of establishing base payment amounts and case-mix weights
under the HH PPS.
Furthermore, not all anomalous billing patterns indicate fraudulent
practice, and we would need further evidence to determine which
providers with anomalous billing patterns can be connected to
fraudulent practices. Excluding data some commenters view as
``anomalous'' from the calculation of the national 30-day base payment
rate, would thus require CMS to develop a new policy, including
thresholds for determining deviations excluded from the analytical
sample.
As always, we encourage providers to fill out the Medicare cost
reports as accurately as possible. We note that there are efforts to
monitor cost reports if there are concerns over the reported
information. CMS audits home health cost reports through the Medicare
Administrative Contractors (MACs) and the Center for Program Integrity
(CPI). The cost report certification and associated penalties generally
encourages HHAs to accurately represent the incurred costs of providing
home health care. Any additional thresholds used for the exclusion
criteria based on data anomalies would need to be discussed during
notice and comment rulemaking. We have not proposed such considerations
previously and we decline to do so now because we must balance
commenter concerns about
[[Page 55361]]
reducing the number of claims through too many exclusions, which could
also impact the results, with commenter concerns about possible
fraudulent behavior which may be limited to a small subset of
providers.
We do consider anomalous patterns to determine whether we should
review cost reports and claims and might initiate investigation for
evidence of fraud, waste, and abuse. CPI determines which providers may
warrant program integrity actions. We generally have not excluded
providers accused of fraud, waste, and abuse from samples before
completing the adjudicatory process, and decline to do so for LA county
claims. In addition, excluding all LA County claims might be
overinclusive: anomalies have not shown up in the data from all home
health providers in LA county, and even for those with anomalous data,
investigation might vindicate their claims.
In previous rules, commenters have suggested targeted payment
adjustments to certain providers, even under the previous 153-group
payment system. We addressed these suggestions in the CY 2016 HH PPS
and CY 2019 HH PPS final rules (80 FR 68421 and 83 FR 56455,
respectively). In those rules we stated that this strategy is not
viable, given the widespread nature of coding changes and improvements,
small sample sizes of agencies with significant nominal case-mix across
different classes of agencies, and difficulty in precisely
distinguishing the agencies that engage in abusive coding and other
behaviors from all others. Additionally, we reiterate that we are
required to make temporary and permanent payment adjustments to the
national, standardized 30-day period payment rate based on the impact
of differences between assumed versus actual behavior change, in
accordance with sections 1895(b)(3)(D)(ii) and (iii) to offset for such
increases or decreases in estimated aggregate expenditures. These
adjustments are not intended to account for coding abuses by specific
HHAs, but rather overall behavior changes CMS observes across the
system.
Cost report fraud and abusive billing behavior are concerns that
need to be addressed by the appropriate channels with the authority to
apply enforcement action, such as the hotline for reporting fraud at
the following website: https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity/reporting-fraud.
(2) Provider Margins and Access
Comment: Commenters expressed concerns that CMS does not consider
all-payer margins when considering application of the behavior payment
adjustments. Commenters suggested that CMS should consider all-payer
margins as these are much lower than Medicare margins and therefore CMS
should not apply a downward adjustment to the payment rate because this
would result in all-payer margins going even lower and will cause HHAs
to go out of business. Some commenters referenced analysis from the CMS
Office of the Actuary (OACT) \5\ regarding providers with negative
total facility margins. Commenters stated that OACT estimated that over
one-third of HHAs have negative total profit margins with simulations
suggesting that measure approaches nearly 45 percent by 2027 and nearly
60 percent by 2040. One commenter stated that this likely means
agencies will place a heavier emphasis on keeping higher margins and
reduce services to patients generating smaller payments, while another
commenter stated directly that their agency will be forced to reduce
their geographic service region, particularly the rural areas, in order
to avoid financial losses. Some commenters also stated the adjustments
would inhibit providers from investing in needed technology such as
remote patient monitoring, electronic health records, and artificial
intelligence that could ultimately save Medicare money. Commenters
stated again that CMS needs to consider all-payer margins for home
health rather than simply Medicare FFS margins. We also received
several comments stating that further payment rate reductions will
affect other payers that use Medicare as a benchmark to set payment
(for example, Medicare Advantage (MA) plans).
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\5\ https://www.cms.gov/files/document/simulations-affordable-care-act-medicare-payment-update-provisions-part-provider-financial-margins.pdf-0.
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Response: We have considered OACT's report, which projected the
impact of certain updates the Affordable Care Act made to Medicare
payment rates on Part A provider financial margins.\6\ We note that
HHAs that are hospital-based have shown negative margins for numerous
consecutive years, which MedPAC has suggested can be traced to how
hospital-based HHAs allocate overhead costs from its parent hospital
instead of the actual costs of providing home health care for which the
home health payment system is meant to account.\7\ Our analysis from
the CY 2024 HH PPS final rule, shown in Table B6 (88 FR 77695),
indicates that even prior to the PDGM, approximately 20 to 23 percent
of freestanding HHAs had margins below zero percent, indicating that
this phenomenon pre-dated the PDGM, and is not the result of the
behavior adjustments related to the initial behavior assumptions
applied in CY 2020 (88 FR 77695). In addition, the OACT report
indicated that the percentage of HHAs with negative total facility
margins was similar in 2011 and 2023.
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\6\ Ibid.
\7\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch7_MedPAC_Report_To_Congress_SEC.pdf.
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With respect to the comment that CMS must look at the HHA's overall
financial condition (that is, overall margins) or consider MA rates
when setting FFS payment rates, we have never endorsed the view that
Medicare funds allocated for FFS should be used to subsidize
reimbursement rates from other payers, a policy that would be
inconsistent with our obligation to be responsible stewards of the
Medicare Trust Funds and would ultimately increase costs to Medicare
beneficiaries, taxpayers, or both.
Comment: Many commenters noted a decrease in the number of HHAs,
with some claiming that CMS data suggests that over 1,000 HHAs have
closed between 2019 and 2024, and that home health users decreased by
20 percent. A commenter stated that hundreds of counties have become
``home health deserts'', meaning areas with a lack of HHAs, and
specifically with declines in the number of HHAs of 40 percent or more.
Several commenters also presented post- inpatient hospitalization
discharge analysis showing declines in home health usage. Commenters
stated that this would then increase overall Medicare spending, as
beneficiaries would be forced to receive care in more expensive
facilities such as hospitals and skilled nursing facilities. One
commenter stated that the proposed rule fails to address previous
evidence from providers, hospitals, and patients showing declining
access to the benefit. Another commenter noted that HHAs would not be
able to maintain the current level of access to care, particularly in
an environment that far outweighs increases in payment and surges in
administrative and staffing costs, which have more than doubled in
recent years. Another commenter recommended CMS conduct a comprehensive
impact analysis to determine how access has been affected before
finalizing the proposed behavior adjustments. Commenters state that the
behavior adjustments should not be applied to mitigate further closures
of HHAs thereby creating access issues for beneficiaries.
Response: The CMS market saturation data set suggests that the
change in the
[[Page 55362]]
number of Medicare-certified HHAs is relatively small: the data
reflects a 2.5 percent decrease from 2020-2025.\8\ MedPAC suggests that
much of the decline in the volume of home health use has been driven by
a reduction in the number of beneficiaries in FFS Medicare, as a
growing share of beneficiaries enroll in MA.\9\ When controlling for
FFS enrollment, the number of 30-day periods in 2023 decreased by 1.8
percent. At the same time, the share of FFS beneficiaries using home
health has also declined, falling 2.3 percent in 2023.\10\
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\8\ https://data.cms.gov/summary-statistics-on-use-and-payments/program-integrity-market-saturation-by-type-of-service/market-saturation-utilization-core-based-statistical-areas.
\9\ https://www.medpac.gov/wp-content/uploads/2025/06/Jun25_ExecutiveSummary_MedPAC_Report_To_Congress_SEC.pdf.
\10\ Ibid.
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Using the CMS saturation data \11\ within 2024, we do see some
evidence of a reduction in the number of HHAs in certain geographic
areas. The geographic areas that experienced decreases in providers
serving the CBSA relative to 2023 are also likely to have a relatively
low number of providers, such as Salisbury, Maryland and Hood River,
Oregon. There are also areas that saw a decrease in providers, with an
accompanying increase in number of home health users and increase in
total payment change, such as Thomasville, Georgia and Clewiston,
Florida. The dataset provides an incomplete view of how HHAs entering
or exiting the market may affect home health use and total payments in
the area. The differences in changes in total payments in the area and
the resulting geographic market dynamics will likely vary based on the
hospitals operating in the area, number of competing HHAs operating in
the area, number of Medicare FFS beneficiaries, penetration of MA
enrollment, number of post-acute facilities, dual-eligible
beneficiaries, Medicaid policy for the state, as well as many other
factors. While we agree that there are data that support some areas
with reductions in HHAs, we note that this may not be solely
attributable to the payment adjustments as there are other factors, as
described previously, that could contribute to the ebb and flow of HHAs
entering and exiting the market.
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\11\ https://data.cms.gov/summary-statistics-on-use-and-payments/program-integrity-market-saturation-by-type-of-service/market-saturation-utilization-core-based-statistical-areas.
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Commenters presented an analysis similar to the post-discharge
analysis that we discussed in the CY 2025 HH PPS final rule (89 FR
88372). We found that 76 percent of acute inpatient hospital referrals
have home health claims within 7 days of discharge compared to 62.6
percent of referrals from short-stay acute inpatient stays presented by
the commenters.
We also presented the percentage of Medicare FFS home health claims
within seven days of discharge by the preceding claim type in Figure 8
of the CY 2025 HH PPS final rule (89 FR 88372). In our analysis we
found an average of 80 percent, 79 percent, and 75 percent using home
after discharge to home health for 2018 (pre-PDGM), 2020 (PDGM), and
2023 (PDGM) respectively for Medicare FFS beneficiaries (89 FR 88372).
In addition, MedPAC noted that data reported by HHAs to CMS indicate
that 96.1 percent of home health services were initiated in a timely
manner in 2023, a rate that was stable relative to 2022. As such, we do
not believe that access has been compromised greatly since the
implementation of the behavior adjustments, nor do we see statistical
evidence presented by commenters, rather, anecdotal evidence.
(3) Methodological Concerns
Comment: Commenters suggested technical flaws in the methodology to
determine the impact of differences between assumed behavior changes
and actual behavior changes on estimated aggregate expenditures. These
commenters also recommended changes to the methodology for the
calculation of the permanent and temporary adjustments. Specifically,
some commenters stated that CMS should account for decreases in home
health payments from CYs 2020 through 2024, shrinking FFS enrollment,
and payment offsets occurring through lower MA benchmarks.
Response: Commenters have suggested that there are technical flaws
in the methodology in previous rulemaking (87 FR 66797). Specifically,
previous commenters suggest that the methodology does not compare
behaviors assumed by CMS in establishing the CY 2020 rate to actual
behaviors observed on aggregate expenditures. We have responded to
these concerns in past rulemaking stating that CMS is not required to
correct or quantify each original assumption regarding HHA behavior
change, but rather, ensure that the payment rate is accurately
accounting for all behaviors related to the implementation of the PDGM
and the 30-day unit of payment that actually occurred in a given year.
We remind commenters that the changes in the aggregate expenditures
under the PDGM between different years are not part of the repricing
process and therefore not a variable in the methodology used to
calculate the permanent and temporary adjustments. CMS continues to
reiterate that the methodology is technically accurate in that it
captures actual changes in behavior that have been explained in
previous rulemaking, as well as this final rule. As required by law,
our methodology compares aggregate expenditures between the actual 30-
day periods and simulated 60-day episodes paid under the prior payment
system within a single claims' year to determine what the payment rate
should be to ensure that payments under the two systems would be equal.
We recognize the overall decline of home health utilization and
payments over time, decreasing Medicare FFS enrollment, and the growing
share of enrollment in MA. In their most recent report, MedPAC states
that when controlling for FFS enrollment, the number of 30-day periods
in 2023 decreased by 1.8 percent from 2022.\12\ However, we remind
commenters that the statutory requirements for the permanent and
temporary adjustments do not state that we need to account for changes
in MA benchmarks. When setting home health payment rates, we look only
at Medicare FFS home health payments, not MA payment rates, and have a
legal obligation to reimburse costs for expenditures made under
Medicare FFS based on 42 CFR part 413.5. In addition, it is unclear how
we would separate out total home health expenditures from MA as
individual provider payments differ amongst varying MA plans.
Furthermore, home health payments from MA plans are not available in
encounter claims and provider payments from different MA plans are
considered proprietary information, which CMS cannot access.
---------------------------------------------------------------------------
\12\ MedPAC--March 2025 Report to Congress Chapter 7.
---------------------------------------------------------------------------
Comment: Commenters suggested that CMS not apply the exclusions
finalized in the CY 2023 final rule (87 FR 66804) for pricing simulated
60-day episodes, stating that excluded episodes have different
characteristics than those included and introduce systemic bias
undermining the accuracy of CMS's calculations. Commenters expressed
concern over the increasing percentage of 30-day periods excluded from
the sample. Commenters recommended that we include data that is
currently excluded in our process for creating simulated 60-day
episodes.
Response: We previously explained that the exclusion criteria in
the finalized methodology dropped 30-day periods of care that had a
claim occurrence code 50 after October 31,
[[Page 55363]]
2024, and before January 1, 2024, to ensure the 30-day period will not
be part of a simulated 60-day period that began in 2023 and to ensure a
simulated 60-day episode (simulated from two 30-day periods) does not
overlap years (90 FR 29129). Additional exclusions include 60-day
periods where no OASIS information was available, a recent SOC/ROC
OASIS was not available, a wage index was not available, or the episode
cannot be grouped to a Health Insurance Prospective Payment System
(HIPPS) code due to a missing primary diagnosis or other reason. All
the exclusion criteria are applied because the criteria are needed to
appropriately price the simulated 60-day episodes for within the year
the claims would have been paid. It is not relevant whether the 30-day
periods that are excluded have different case-mix characteristics or
higher visits if the 30-day periods are not able to be repriced
accordingly as a simulated 60-day period. As stated in previous
rulemaking (87 FR 66804), without these exclusions, we would not be
confident we were appropriately grouping 30-day periods into simulated
60-day episodes. The excluded 30-day periods would need to show large
differences compared to the episodes that were not excluded in order to
significantly change the estimated aggregate expenditures from the 60-
day episodes to produce significant revisions to our calculations.
Additionally, the permanent adjustment is based on the percentage
change between the payment rates (which utilizes the same claims), and
the temporary adjustment is based on the aggregate expenditures of all
claims (that is, no exclusions) using the two payment rates (that is,
the actual payment rate and the budget neutral payment rate with the
permanent adjustment applied). Therefore, we do not believe that the
small portion of excluded claims significantly biased our results.
Comment: A commenter noted roughly 40 percent of the diagnoses
previously allowed under the prior payment system are no longer
accepted as a primary diagnosis under the PDGM. This commenter stated
that this change may impact coding behavior and could potentially lead
to the simulated 60-day episodes being inaccurately assigned.
Response: We refer readers to the CY 2023 HH PPS final rule (87 FR
66803) for a detailed response to this comment. In that rule, we stated
that, while we acknowledge 41 percent (29,948) of all the diagnosis
codes are not assigned a clinical group under the PDGM, we disagree
that those unassigned codes would have created any significant
difference in assigning the clinical level in the 153-group case-mix
system. For example, out of all the diagnosis codes available in the
final grouper for the 153-group case mix system, only 22 percent
(15,936) of the diagnosis codes could potentially contribute to the
clinical score. Of those codes which could have contributed to the
clinical score, only 6.99 percent (1,114) of the diagnosis codes are
not accepted as a principal diagnosis under the PDGM.
Comment: Several commenters suggested that when simulating 60-day
episodes we should update the calculation of payment under the prior
system by including an update for recalibration of case-mix group
weights and fixed dollar loss (FDL) for outlier payments. Commenters
raised concerns about recalibration not controlling for the impact of
COVID-19. Commenters claim that this introduces challenges in
determining whether changes were due to PDGM or pandemic-related
disruptions. These commenters stated that during the COVID-19 pandemic,
hospitals discharged differently and there were more staffing shortages
and telehealth substitution for visits, which was not representative of
long-term care delivery. Commenters specifically noted that CMS did not
apply any COVID-specific exclusions, implement control periods,
spillover analysis, or validation checks in the methodology. Commenters
referred to these issues as a methodological gap that undermines the
validity of CMS's behavior adjustment calculations.
Response: If we were to implement an updated FDL instead of using
the finalized CY 2020 final rule FDL to determine outlier payments
under the simulated episodes, it is unclear whether it would be an
accurate representation to retrospectively assign the necessary FDL to
hit a 2.5 percent target for the years after CY 2020. In addition,
updating the FDL for the 153-group payment system would require an
iterative process to adjust the PDGM FDL used in repricing to also hit
the 2.5 percent target of total PDGM expenditures. We note that the 2.5
percent is only a target amount that is set prospectively and is never
reconciled and adjusted for.
If we were to implement recalibration of case-mix weights
(including early vs. late visits or admission source) when determining
aggregate payments under the 60-day payment system, the aggregate
expenditures would not change because we would implement the
recalibration of case-mix weights in a budget neutral manner. In other
words, although the case-mix weights themselves may increase or
decrease from year-to-year, we correspondingly offset any estimated
increases or decreases in total payments under the HH PPS, as a result
of the case-mix recalibration, by applying a budget neutrality factor
to the national, standardized payment rate. Recalibrating the pre-PDGM
case-mix weights to reflect changes due to COVID-19 would not increase
the aggregate payments estimated for simulated 60-day periods paid
under pre-PDGM. Since we are comparing a single year of data priced
under the PDGM and 153-group case-mix system, COVID-19 wouldn't bias
the PDGM payments differently than the 153-group or vice-versa. In the
CY 2022 HH PPS final rule (86 FR 62249), we discussed the influence of
the COVID-19 PHE on home health utilization and finalized a proposal to
recalibrate the PDGM case-mix weights, functional impairment levels,
and comorbidity subgroups while maintaining the LUPA thresholds for CY
2022. We stated that, because there are several factors that contribute
to how the case-mix weight is set for a particular case-mix group (such
as the number of visits, length of visits, types of disciplines
providing visits, and non-routine supplies) and the case-mix weight is
derived by comparing the average resource use for the case-mix group
relative to the average resource use across all groups, we believed the
COVID-19 PHE would have impacted utilization within all case-mix groups
similarly. Therefore, the impact of any reduction in resource use
caused by the COVID-19 PHE on the calculation of the case-mix weight
would be minimal since the impact would be accounted for both in the
numerator and denominator of the formula used to calculate the case-mix
weight.
Comment: Many commenters recommended that CMS apply the Patient
Driven Payment Model (PDPM) parity adjustment methodology used in the
CY 2023 Skilled Nursing Facility (SNF) PPS final rule (87 FR 47502) to
the PDGM data.
Response: As we stated in the CY 2023 HH PPS final rule (87 FR
66802), the SNF PPS and HH PPS are different; SNFs are paid a per-diem
payment with different case-mix variables, and HHAs are paid under a
bundled payment system. In addition, unlike the requirements of the SNF
PPS parity adjustment, CMS is required, by law, to account for behavior
changes related to the implementation of the PDGM, which CMS did by
comparing actual PDGM claims to what the same utilization (for example,
visits, OASIS responses, etc.) would look like under a 60-day unit of
payment.
[[Page 55364]]
Comment: Commenters stated that relying on a simulation of payments
under the pre-PDGM payment system establishes a budget neutrality
target that places an artificial limit on current PDGM payments.
Response: We finalized the methodology for estimating payments
under the PDGM and simulated 60-day periods in the pre-PDGM system in
the CY 2023 final rule (87 FR 66804). While it is unclear why the
commenter states repricing establishes a budget neutrality target that
places an artificial limit on current PDGM payments, we would like to
remind commenters that repricing compares expenditures paid under the
PDGM and pre-PDGM systems to determine if we are paying more under the
PDGM than we otherwise would have absent the new payment system (that
is, the 153-group system). Then if it is determined that we are paying
more under the PDGM then we determine what the recalculated PDGM budget
neutral payment rate for the claims year would be. Regardless of the
magnitude and frequency of individual behavior change (for example,
changes in LUPAs, therapy, etc.), the occurrence of any behavior change
is captured by the methodology to determine the impact on aggregate
expenditures. The methodology does not cap or limit the increase of
expenditures in a given year as it uses the actual utilization for that
year to reprice claims. Meaning, if utilization goes up from one year
to another, expenditures in turn increase as well, so we disagree with
commenters that state we are limiting PDGM payments as the expenditures
are directly tied to the services that providers are, or are not,
providing.
(4) Suggested Change in Timeframe for Behavior Change Adjustments
Comment: Several commenters suggested that the behavior change
observed after CY 2021 is no longer related to the implementation of
the PDGM and change in the unit of payment and that we stop the
adjustments after this timeframe. Commenters pointed out factors such
as differences in visit thresholds for assigning case-mix adjusted
claims as LUPAs between simulated 60-day episodes and actual 30-day
periods, bias in timing assignment for episodes, potential bias in
clinical group assignments for acuity, mapping limitations for
assumptions cross-walking OASIS-E to OASIS-D responses for missing
OASIS items, and overall mismatch of patterns between 2019 60-day
episodes and simulated 60-day episodes, such as therapy thresholds.
Commenters reminded CMS that the law requires that any permanent or
temporary payment adjustment be related to only the impact of
differences between assumed behavior changes and actual behavior
changes on estimated aggregate expenditures that could occur as a
result of the implementation of the new case-mix system and change in
the unit of payment. Commenters mentioned additional changes that
influenced behavior change beyond the implementation of the PDGM:
application of the permanent adjustments reducing payments to a point
where providers had to make business decisions to ensure adequate
provision of services, recalibration and LUPA updates, introduction of
the OASIS-E in CY 2023, expansion of the HHVBP Model, and increased MA
penetration, among other things. Commenters stated that CMS should not
consider behavior change that could be unrelated to the implementation
of the PDGM when calculating the permanent and temporary adjustments,
as this would be counter to what the law requires. Commenters stated
that the exclusion of data from CY 2022 and beyond would result in the
need for a 1 percent increase to the 30-day payment rate in CY 2026 and
necessitate recalculating the temporary adjustment amounts for CYs 2020
and 2021 to offset the amount already collected in CY 2025 because the
base rate for 2025 was set too low. Similarly, other commenters
requested CMS pause the permanent adjustment this year until stable,
post-pandemic data can be evaluated. This commenter suggested this data
collection would begin in 2023.
Response: For the reasons described later in section, we agree with
commenters in part and will not finalize the proposed -4.059% permanent
payment adjustment based on the analysis in the proposed rule that
concluded a -4.059% permanent adjustment was necessary to account for
behavior changes from CY 2024 (based on the updated calculations
described previously in this final rule, the final calculation results
in a -4.162% reduction). We will instead finalize a -1.023 percent
permanent adjustment (see calculation in the final decision), which is
based only on changes in estimated aggregate expenditures that we
previously calculated for CYs 2020 through 2022 and finalized through
notice and comment in rulemaking for CY 2023 and 2024 (FR 87 66886 and
FR 88 77869).
In the CY 2026 proposed rule (90 FR 29119 through 29126), we
discussed various trends identified in monitoring changes related to
the PDGM using analysis of CY 2024 claims. We agree with commenters to
the extent that this data might suggest that there were large changes
at the start of the PDGM. These changes, that may indicate that HHAs
were adapting to the implementation of a new case-mix system, have
decreased in magnitude (90 FR 29121 through 29125) to the extent we
believe that the implementation of the PDGM is the reason for these
changes through CY 2022; however, as discussed by commenters, CMS
implemented policy changes in CYs 2023 through 2025 that could have
prompted behavior change not directly attributable to the PDGM.
CMS policy changes implemented in CYs 2023 through 2025 might make
it difficult to precisely distinguish the behavior changes related to
the extenuating factors such as those mentioned by commenters and those
behavior changes related to the implementation of the PDGM, based on
analysis included in the proposed rule. These policy changes include
recalibration of case-mix weights and LUPA visit thresholds finalized
in the CY 2023, 2024, and 2025 final rules; reassignment of certain
ICD-10-CM codes related to the PDGM clinical groups and comorbidity
groups in the CY 2023 final rule; finalizing permanent adjustments in
the CY 2023, 2024, and 2025 final rules; and the introduction of OASIS-
E in 2023 and finalized mapping of OASIS-E to OASIS-D in the CY 2025
final rule for calculating functional points for functional impairment
levels during repricing; and the expanded HHVBP Model.
Because it is difficult to definitively isolate the behaviors
directly related to the PDGM implementation after CY 2022, we are only
finalizing a permanent adjustment based on data from CYs 2020 through
2022. As required by law, we will continue to analyze data through CY
2026 claims to determine if any additional permanent adjustments are
needed to account for the impact of assumed versus actual behavior
change related to the implementation of the PDGM and the change to a
30-day unit of payment on estimated aggregate expenditures. Further,
when analyzing the overall home health trends, such as the distribution
of 30-day periods of care by the twelve PDGM clinical groups,
distribution of 30-day periods of care by admission source and timing,
distribution of 30-day periods of care by functional impairment level,
distribution of 30-day periods with therapy and non-therapy visits, and
average therapy visits per 30-day period by clinical group (Tables 6,
8, 9, 10, and Figure 3 in 90 FR 29121 through 29125), we see indicators
that suggest provider
[[Page 55365]]
behavior changed more significantly in the years immediately following
the implementation of the PDGM, but has decreased in magnitude overall
starting in CY 2023.
We disagree with commenters to the extent they suggest that we
should not rely on data from CY 2022 but should only use CYs 2020-2021
claims for calculating the behavior adjustments. As noted previously
and as shown in the CY 2026 HH PPS proposed rule (90 FR 29119 through
29126), our analysis supports that the observed behavior changes in CYs
2020 through 2022 are attributable to the implementation of the PDGM
and the 30-day unit of payment. Therefore, since the observed behavior
change directly attributable to the implementation of the PDGM
transpired in CYs 2020 through 2022, and not CYs 2020 and 2021 as the
commenters suggest, we disagree with commenters that a 1 percent
increase in the 30-day payment rate in CY 2026 is warranted. We are
also recalculating the temporary adjustments for CYs 2023 and 2024 (see
Table 7). For those reasons, instead of the -4.059% adjustment we
proposed, we will finalize the -1.023% remaining adjustment for CY 2026
(see calculation in the final decision later in this section).
Comment: A commenter requested CMS adopt a phased approach to
implementing the temporary adjustment, moderating the annual impact to
providers, and requested CMS propose a timeframe for collecting the
temporary adjustment amount in order to allow providers to business
plan.
Response: We recognize the rationale for this commenter's request
and stated in the proposed rule that implementing both the permanent
and temporary adjustments in the same year may be burdensome to HHAs,
hence why we proposed only to implement a smaller 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. We did not propose that
the -5.0 percent temporary adjustment would be applied each year after
CY 2026, rather that we would continue to analyze the data each year
through CY 2026 claims as required by law, and in a time and manner
deemed appropriate we would propose one or more temporary adjustments
to account for retrospective overpayments. We will take into
consideration the suggestion to develop a timeframe for these
adjustments in order to create a more stable business planning
environment.
Comment: Commenters recommended that CMS also not make temporary
adjustments based on data from CY 2022 and beyond. Commenters describe
how the data is not appropriate for determining behavior change due to
PDGM versus other unrelated factors as summarized in the preceding
comment.
Response: We thank commenters for the recommendation and have
considered how to recalculate the temporary adjustments based on the
various reasons raised by the commenters. We agree that there have been
multiple other factors that likely have affected changes in provider
behavior, separate and distinct from the implementation of the PDGM and
the change to a 30-day unit of payment in CY 2020. As discussed in this
final rule, we believe that the majority of change in response to the
PDGM and the change to a 30-day unit of payment occurred in CYs 2020
through -2022. As such, we have recalculated the temporary adjustment
amount using the inalized methodology for CYs 2020 through 2022 (see
Table 7).
Final Decision: As discussed in the comment/responses on the
permanent and temporary behavior adjustments, there are several factors
that make it difficult to determine changes resulting from the
implementation of PDGM and non-PDGM-related behaviors, such as the
recalibration of case-mix weights and LUPA visit thresholds and changes
in the distribution of 30-day periods by PDGM clinical groups, therapy
visits, admission source and timing, and functional impairment level
beginning in CY 2023. Additionally, we have observed a decrease in the
magnitude of these changes in our monitoring beginning in CY 2023. As
such, we are only finalizing the remaining permanent adjustment needed
to account for behavior change attributable to the implementation of
the PDGM calculated using only the claims experience for CYs 2020
through 2022.
Permanent Adjustment
Based on consideration of the public comments and reevaluation of
PDGM trends, we are finalizing for CY 2026 the following:
We exercise the authority expressly delegated under the
statute to apply permanent adjustments ``at a time and in a manner
appropriate'' to apply the remaining permanent adjustment of -1.023
percent (see the following calculations) to account for behavior change
related to the implementation of the PDGM in CYs 2020 through 2022.
We exercise the same authority not to apply any permanent
adjustment based on CY 2023 or 2024 data. In future rulemaking, we will
provide additional analysis on 2023 and 2024 data to support that
behavior changes in these years are attributable to factors beyond the
implementation of the PDGM and a 30-day unit of payment. However, we
will continue to annually analyze the data through CY 2026 claims, as
required by law, to determine if any additional permanent adjustments
would need to be made based on the impact of assumed versus actual
behavior change on estimated aggregate expenditures resulting from the
implementation of the PDGM and the 30-day unit of payment.
The CY 2026 permanent adjustment is calculated using the
permanent adjustments already applied to the CYs 2023, 2024, and 2025
finalized payment rates and to determine the payment rate reduction
needed for CYs 2020 through 2022. These steps are summarized in the
following:
When calculating the payment rate reduction for CYs 2020 through
2022, we multiply the annual permanent adjustment factors calculated
for each of those years (accounting for -6.52 percent or 0.9348
finalized for CY 2020 claims, -1.42 percent or 0.9858 finalized for CY
2021 claims, and -1.767 percent or 0.9823 finalized for CY 2022 claims)
which is approximately a cumulative payment rate reduction of -9.480
percent or 0.9052 needed to account for behavior change and the
difference in aggregate expenditures for CYs 2020 through 2022.
Total Permanent Adjustment needed for CYs 2020 through 2022 = 0.9348 x
0.9858 x 0.9823 = 0.9052
We determine what payment rate reduction is needed through a
permanent payment adjustment, by dividing the payment rate reduction
needed for CYs 2020 through 2022 by the cumulative payment rate
reduction already applied from the permanent adjustments implemented in
prior final rules. When calculating the cumulative payment reduction
applied, we account for the -3.925 percent or 0.96075 applied in CY
2023 final rule, -2.890 percent or 0.97110 applied in CY 2024 final
rule, and -1.975 percent or 0.98025 applied in CY 2025 final rule, to
calculate the cumulative permanent payment adjustment applied to be
0.91456. When we divide 0.9052 (payment rate reduction needed for CY
2020 through 2022) by 0.91456 (payment rate reduction applied in CYs
2023 through 2025 final rules), we determine that -1.023 percent or
0.9898 needs to be applied as a permanent adjustment to the CY 2026 30-
day payment rate and to reach the payment rate reduction needed for CYs
2020 through 2022.
[[Page 55366]]
Total Permanent Adjustment applied in CYs 2023 through 2025 = 0.96075 x
0.97110 x 0.98025 = 0.91456
Total Permanent Adjustment [to be applied] for CY 2026 = 0.9052/0.91456
= 0.98977
1-0.98977 = 1.023 percent
We determine that a permanent adjustment of -1.023 percent applied
to CY 2026 30-day payment rate is needed to account for behavior change
for CYs 2020 through 2022 based on the repricing methodology finalized
in the CY 2023 final rule. Therefore, we are finalizing a -1.023
percent permanent adjustment to the CY 2026 30-day payment rate.
We note that the law requires us to annually determine the impact
of differences between assumed behavior changes and actual behavior
changes on estimated aggregate expenditures through CY 2026 claims.
That is, we will continue to apply the finalized methodology through CY
2026 claims. However, while the law requires us to continue to evaluate
the need for any additional permanent adjustments in future rulemaking,
we reiterate that any additional permanent adjustment(s) would be
related to actual behavior change resulting only from the
implementation of the PDGM and the change in the unit of payment as
required by law.
Though we are calculating and only finalizing the remaining
permanent adjustment for CYs 2020-2022 in this final rule, we may still
see an accrual in the temporary adjustment dollar amount. In other
words, while the permanent adjustment accounts for the prospective
payment amount needed to prevent future overpayments, the temporary
adjustment will account for the prior overpayment and difference
between expenditures for actual and recalculated budget neutral payment
rates.
Temporary Adjustment
Finalizing applying a permanent adjustment of -1.023 percent to CY
2026 for CYs 2020 through 2022 means we need to reconcile the
difference between the finalized budget neutral rate and the new budget
neutral rate for CY 2023 to calculate the new temporary adjustment
dollar amounts. In the CY 2025 final rule, we compared the difference
in the actual CY 2023 payment rate of $2,010.69 and the PDGM budget
neutral rate of $1,875.46. Since we are finalizing a permanent
adjustment of -1.023 percent to account for behavior change in CYs 2020
through 2022 claims, this means, the recalculated budget neutral rate
for CY 2023 should be $1,894.43. We determined what the budget neutral
rate for CY 2023 should be by adjusting what the actual CY 2023
finalized payment rate was and accounting for the permanent adjustment
already applied to the CY 2023 payment rate and the remainder needed to
apply to CY 2023 for the payment rate reduction needed for CYs 2020
through 2022.
$2,010.69 x (1-(1-0.9052/0.96075) = $1,894.43
For the recalculated budget neutral CY 2024 payment rate, we update
the CY 2023 recalculated budget neutral payment rate by applying 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 recalculated
budget neutral CY 2024 base payment rate would have been $1,977.43.
$1,894.43 x (1.0124) x (1.0012) x (0.9998) x (1.030) = $1,977.43
Using the recalculated budget neutral payment rates for CY 2023
and 2024, we determine the new temporary adjustments for those two
years by comparing what the difference in aggregate expenditures would
have been for those two years when comparing expenditures with the
actual payments and estimated expenditures with payments under the
recalculated budget neutral payment rate. We present the new temporary
adjustments for CY 2023 and 2024 in Table 7.
BILLING CODE 4120-01-P
[[Page 55367]]
[GRAPHIC] [TIFF OMITTED] TR02DE25.010
BILLING CODE 4120-01-C
In this final rule, 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. However, we have considered commenters' concerns
about the magnitude of a -5.0 percent temporary adjustment in tandem
with any finalized permanent adjustment. As such, we are finalizing
implementing a 3.0 percent reduction in CY 2026, that is equivalent to
a 0.9700 temporary adjustment factor, to the CY 2026 national, 30-day
payment rate. By implementing a -3.0 percent temporary adjustment, we
can begin recoupment of retrospective overpayments. We determined that
the total temporary adjustment dollar amount is approximately $4.7
billion through CY 2024 and that implementing a -3.0 percent temporary
adjustment may allow us to recoup $471 million of this total dollar
amount. We estimate we will be able to recoup $471 million if CY 2026
claims have approximately 7.7 million case-mix adjusted 30-day periods.
Any additional temporary adjustments needed to recoup the total
temporary adjustment will be discussed in future rulemaking. Also, in
response to comments, we will consider a schedule for the temporary
adjustment in future rulemaking as well.
We will continue with our monitoring of the trends in home health
utilization, including the number of visits, diagnosis reporting, and
other data that we present in our monitoring section to analyze
behavior changes that are and are not related to the implementation of
the PDGM and the 30-day unit of payment. We will present this analysis
in future rulemaking along with our calculations of the impact of the
difference between assumed versus actual behavior change on estimated
aggregate expenditures to ensure that any potential future adjustments
would be the result of the implementation of the PDGM and the 30-day
unit of payment.
D. CY 2026 Home Health Low Utilization Payment Adjustment (LUPA)
Thresholds, Functional Impairment Levels, Comorbidity Sub-Groups, and
Case-Mix Weights
1. Final CY 2026 PDGM LUPA Thresholds
Under the HH PPS, LUPAs are paid when a certain visit threshold for
a payment group during a 30-day period of care is not met. In the CY
2019 HH PPS final rule with comment period (83 FR 56492), we finalized
a policy setting the LUPA thresholds at the 10th percentile of visits
or two visits, whichever is higher, for each PDGM 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 will be paid the full 30-day period case-mix adjusted
payment amount (subject to any partial payment adjustment or outlier
adjustments). If a 30-day period of care does not meet the PDGM LUPA
visit threshold, then payment will be made using the per-visit payment
amounts as described in
[[Page 55368]]
section II.E.4.c. of this final rule. For example, if the LUPA visit
threshold is four, and a 30-day period of care has four or more visits,
it is paid the full 30-day period payment amount; if the period of care
has three or 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 and 70306) that we
will 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 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 PHE would 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 have been more
indicative of visit patterns in CY 2024 rather than continuing to use
the LUPA thresholds derived from the CY 2018 data pre-PDGM. Therefore,
we finalized a policy to update the LUPA thresholds for CY 2024 using
data from CY 2022.
For CY 2025, we proposed to update the LUPA thresholds using CY
2023 home health claims utilization data (as of March 19, 2024), in
accordance with our policy to annually recalibrate the case-mix weights
and update the LUPA thresholds, functional impairment levels and
comorbidity subgroups. Therefore, we finalized the functional points
and functional impairment level updates for CY 2025 as proposed, using
updated CY 2023 claims data (as of July 11, 2024).
For CY 2026, we proposed to update the LUPA thresholds using CY
2024 home health claims utilization data (using more complete CY 2024
claims data as of July 11, 2025), in accordance with our policy to
annually recalibrate the case-mix weights and update the LUPA
thresholds, functional impairment levels, and comorbidity 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 18 case-mix groups have a decline in their LUPA
threshold of 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 can
be found in the CY 2026 HH PPS proposed rule (90 FR 29145).
We solicited public comment on the proposed updates to the LUPA
thresholds for CY 2026. The following is a summary of the comments we
received and our responses:
Comment: The majority of the commenters expressed support for the
proposed updates to the LUPA thresholds and recognized that these
updates are necessary to help align payments more closely with evolving
care delivery and improve payment accuracy. However, multiple
commenters expressed concern that ongoing upward adjustments to some of
the LUPA thresholds seem to be arbitrary and not fully supported by
clinical evidence. As such, these commenters recommended that the LUPA
thresholds remain static or clinically justified, and that there be an
established monitoring system that is able to identify providers with
abnormally low LUPA rates in an effort to ensure care delivery reflects
medical appropriateness rather than potential payment manipulation.
Response: We thank the commenters for their feedback and their
support for the annual update of the LUPA thresholds. Our policy is
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. While the visit patterns and
utilization data do not constitute clinical evidence, we note that the
LUPA thresholds are annually updated to correspond with the visit
patterns associated with each home health resource group, which we do
monitor and include in the rule. More specifically, the visit patterns/
utilization data serve as the most accurate method to update the LUPA
thresholds, as the LUPA rates correspond to provider behavior that
correlates with the visit patterns/utilization data as opposed to
clinical standards. We could consider a separate monitoring system for
those providers who have abnormally low LUPA rates in future
rulemaking. However, this could potentially require collaboration on
potential program integrity efforts. We also note that low LUPA rates
do not necessarily mean that a provider is acting inappropriately. We
believe updating the LUPA thresholds is the most accurate way to
reflect the provision of home health visits based on the most current
utilization data available at the time of rulemaking.
Final Decision: We are finalizing the proposal to update the LUPA
thresholds for CY 2026 using CY 2024 claims data (as of July 11, 2025).
The final 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 8 and are also available
on the HHA Center web page, located at https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.
2. Final 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
[[Page 55369]]
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 proposed 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 proposed to use the same methodology previously finalized to update
the functional impairment levels for CY 2026. The final updated OASIS
functional points table and the table of functional impairment levels
by clinical group for CY 2026 are listed in tables 8 and 9,
respectively.
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We solicited public comment on the proposed updates to the
functional points and the thresholds for functional impairment levels
by clinical group. The following is a summary of the comments we
received and our responses:
Comment: Several commenters opposed the proposed updates to the CY
2026 functional impairment points and levels. These commenters
described the proposed changes to functional impairment scoring as
arbitrary, nontransparent, and reflecting changes that are not aligned
with actual patient characteristics. Several of these commenters cited
that high acuity patients (providing examples such as beneficiaries
with multiple sclerosis) will require constant supervision and are
misclassified into low functional levels, which ultimately results in
underpayment. Some commenters objected to the division of patients into
evenly distributed impairment categories and stated that this approach
does not reflect the increasing acuity of all functional levels. Some
commenters also questioned whether CMS uses discharge assessments
instead of the Start of Care (SOC) OASIS items, which they state leads
to potentially misrepresenting resource needs. Some commenters also
emphasized that they believe the point value changes in OASIS scoring
devalues clinically
[[Page 55371]]
significant indicators including indicators such as ambulation or
therapy needs, leading to a risk in undermining access to medically
necessary services. As such, these commenters suggested that CMS
provide greater transparency in methodology, reevaluate impairment
thresholds, and incorporate social determinants of health into the
scoring process to more accurately capture the complexities of home
health patients.
Response: We appreciate the commenters' feedback and
recommendations. We note that we proposed and finalized the methodology
which utilizes those OASIS items specifically related to functional
status, as well as the use of the start of care OASIS for calculating
the functional impairment level in the CY 2019 HH PPS final rule (83 FR
56454). At this time, we do not use OASIS items associated with social
determinants of health but could consider this in future rulemaking. We
use the follow-up OASIS near the time of recertification for the third
and fourth 30-day periods of care. This helps to ensure that the
functional impairment level is determined to correspond with expected
resource use. We do not use the discharge OASIS given the beneficiary
would no longer be receiving home health services. Still, we maintain
that annual recalibration is vital to ensuring the most accurate and
current assessment of the relationship between resource use and
functional points, functional impairment levels, comorbidities,
utilization thresholds, and case-mix weights. We contend that the use
of the most up-to-date data in revising functional impairment levels is
integral to ensure that all variables used in the case-mix adjustment
process align with the actual costs of delivering home health services.
Also, we note that the functional impairment levels are structured so
that approximately one-third of periods within each clinical group are
assigned to low, medium, and high categories, as this ensures that the
case-mix system appropriately reflects differences in functional
impairment. This classification of functional impairment has been a
fundamental component of the HH PPS since its implementation and
remains essential under the PDGM. Previously, the HH PPS grouped home
health episodes using functional scores based on functional OASIS items
with similar average resource use within the same functional level,
with approximately a third of episodes classified as low functional
score, a third of episodes classified as medium functional score, and a
third of episodes classified as high functional score. Likewise, the
PDGM groups home health periods of care using functional impairment
scores based on functional OASIS items with similar resource use and
have three levels of functional impairment severity: low, medium, and
high. However, the PDGM differs from the previous HH PPS functional
variable, in that the three functional impairment level thresholds in
the PDGM vary between the clinical groups. As such, the PDGM functional
impairment structure accounts for patient characteristics within each
clinical group that are associated with increased resource use due to
functional impairment. This ensures that payment is more accurately
aligned with patient characteristics, including beneficiaries who have
greater need with activities of daily living (ADLs) and who are more
functionally impaired. Updating the functional impairment levels based
on the most current OASIS and claims data ensures that the payment
system captures changes in functional impairment and the associated
increases in resource use. Regardless of whether patients entering home
health are more impaired due to shifts in the broader health care
system or any other influence, the functional levels capture the
relationship between functional status as indicated on the OASIS with
resource use captured on claims. While we acknowledge commenters'
concerns, we emphasize that the proposed recalibration is designed to
strengthen the alignment between payment and patient characteristics,
not to diminish access to medically necessary services. As such,
updating the functional levels would specifically capture any changes
in functional impairment and any changes in resource use associated
with ADLs.
Final Decision: We are finalizing the functional points and
functional impairment level updates for CY 2026 as proposed, using
updated CY 2024 claims data (as of July 11, 2025).
3. Final 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 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 proposed 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.
For CY 2026, we proposed 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 was included in the CY 2026 HH PPS proposed
rule (90 FR 29136).
We solicited comments on the proposed updates to the low
comorbidity adjustment subgroups and the high comorbidity adjustment
interactions for CY 2026. Using more updated claims data (as of July
11, 2025), for CY 2026 there are 20 low comorbidity subgroups, and 98
high comorbidity subgroups as shown in tables 10 and 11.
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The following is a summary of the comments we received and our
responses:
Comment: Commenters broadly expressed support for CMS's proposal
to implement the proposed low and high comorbidity adjustments using CY
2024 claims data. Commenters stated these adjustments would result in
more accurate payments, reflecting the resources required to
effectively manage patients with these conditions. Additionally,
commenters indicated that the proposed changes to the comorbidity
subgroups should reflect the actual costs of providing care.
Response: We thank commenters for their support.
Comment: A commenter expressed concern for the elimination of
certain diabetic subgroups and the removal of Endocrine 2 from the low
comorbidity list, citing that these actions may result in adverse
consequences for
[[Page 55379]]
beneficiaries that require intensive diabetes management. Another
commenter recommended that CMS expand subgroup coding logic to include
additional conditions such as rheumatic mitral and aortic valve
disease, diabetes with mononeuropathy, and cystitis. Several commenters
also raised concerns about inconsistencies with the high comorbidity
pairings specifically as it relates to instances in which certain
behavioral and circulatory conditions are paired with only one skin
subgroup, Skin 3 or Skin 4, despite comparable clinical risks. As such,
these commenters recommended CMS expand pairings to better capture
patient complexity and increase the alignment for current comorbidity
adjustments so that there is arguably a more adequate reflection to the
costs of patients with multiple chronic conditions in an effort to
reduce systematic underpayment and potential access barriers. One
commenter suggested refining the case-mix adjustment methodology,
particularly as it related to the admission source variable and
suggested that shifts from inpatient to outpatient and ambulatory
surgical center settings alter the distribution of clinical complexity
in ways not fully reflected in historical data.
Response: We appreciate commenters' review of the proposed
comorbidity subgroup refinements. As outlined in the CY 2020 final rule
with comment period (84 FR 60510) and further detailed in the technical
report Overview of the Home Health Groupings Model,\13\ the home health
specific comorbidity list is a result of principles of patient
assessment by providers, as well as the evaluation of body systems and
their associated diseases, conditions, and injuries, as this framework
was specifically used to develop the clinically relevant categories
that resultingly identify relationships that are tied to increased
resource usage. We also acknowledge commenters' concerns regarding the
elimination of certain diabetic subgroups and the removal of Endocrine
2 from the low comorbidity list. However, we remind commenters that
only the subgroups of diagnoses representing more than 0.1 percent of
periods of care, and demonstrating at least the median resource use,
will qualify for a low comorbidity adjustment. That said, the specific
subgroups, including rheumatic mitral and aortic valve disease,
diabetes with mononeuropathy, and cystitis, that do not meet these
statistical and utilization thresholds ultimately do not qualify for
inclusion in the payment adjustment, even if clinically complex. As a
result, this ensures that payment adjustments are based on demonstrated
cost patterns rather than clinical potential alone. In instances where
the data does not demonstrate the requisite frequency or resource use
associated with the condition, such diagnoses are not included in the
adjustment. For example, in response to concerns about behavioral and
circulatory conditions being paired with only one skin subgroup, Skin 3
or Skin 4, despite comparable clinical risks, we again want to remind
commenters that subgroup combinations are determined by observed
utilization and statistical significance. If specific conditions do not
meet the required thresholds in relation to particular ulcer types,
they are not included in those pairings. Finally, we acknowledge the
one commenter suggestion to refine the case-mix adjustment methodology,
particularly regarding the admission source variable. We will continue
to monitor these trends and assess whether refinements to the admission
source variable are warranted in future rulemaking to ensure that the
case-mix adjustment methodology remains accurate and responsive to
evolving patterns of care.
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\13\ https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health-pps/home-health-pps-archive.
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Final Decision: We are finalizing the updated comorbidity
adjustment subgroups and the high comorbidity adjustment interactions
using CY 2024 home health data. For CY 2026, the final updated
comorbidity adjustment subgroups include 20 low comorbidity adjustment
subgroups as identified in table 10 and 98 high comorbidity adjustment
interaction subgroups as identified in table 11. The final 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/Center/Provider-Type/Home-Health-Agency-HHA-Center.
4. Final 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 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). We included the proposed case-mix weights in table 25 of the
proposed rule (90 FR 29145). In this final rule, we update these case-
mix weights with claims data as of July 11, 2025, as shown in table 13.
These data are the most current and complete data available at the time
of this rulemaking.
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 25 of the proposed rule 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 2022 home health cost reports. We use 2022 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
[[Page 55380]]
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 BBB shows the
coefficients of the payment regression used to generate the weights,
and the coefficients divided by average resource use.
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The final updated case-mix weights for CY 2026 are listed in table
13 and will also be posted on the HHA Center web page \14\ upon display
of this final rule.
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BILLING CODE 4120-01-C
Changes to the PDGM case-mix weights are implemented in a budget
neutral manner by multiplying the CY 2026 national standardized 30-day
period payment rate by a case-mix budget neutrality factor. Typically,
the case-mix weight budget neutrality factor is also calculated using
the most recent, complete home health claims data available. For CY
2026, we will continue the practice of using the most recent complete
home health claims
[[Page 55399]]
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 produced a
proposed case-mix budget neutrality factor for CY 2026 of 1.0051.
We invited public comments on the CY 2026 proposed case-mix weights
and proposed case-mix weight budget neutrality factor. The following is
a summary of the comments we received and our responses:
Comment: Several commenters expressed support for the proposed
case-mix weights using the most current data available for
recalibration.
Response: We thank the commenters for their support.
Comment: Several commenters expressed concern over the proposed
recalibration of the PDGM case-mix weights, stating that they believe
this proposal relies on potentially fraudulent claims data (including
the data particularly from Los Angeles County, COVID-19 pandemic-era
anomalies and outdated assumptions) which may potentially reward
outlier behavior while penalizing providers that are compliant. A few
commenters suggested that weights should be frozen at CY 2020 levels
until potentially problematic claims (claims that have billing patterns
based on excessive recertification rates and abnormal use of high
reimbursement codes) are excluded. Several commenters also mentioned
that they believe CMS's methodology blends behavior assumptions with
recalibration, which ultimately results in ``double counting'' and
misclassification of provider behavior. Some commenters stated that
this methodology results in the current weights undervaluing high
acuity cases, including patients with heart failure, COPD, diabetes,
and complex postsurgical recovery, as well as the therapy related
groupings. Commenters further suggested that undervaluation has already
reduced access to therapy services, particularly for patients that
require intensive speech language, swallowing, or mobility
interventions. Commenters also posited that annual recalibration
creates volatility, complicates financial and operational planning, and
thus, requested that CMS increase transparency by publishing multiyear
comparative tables, impact simulations, and clearer explanations of
OASIS mapping assumptions. Some commenters cited that rising patient
acuity, operational expenses, and workforce shortages present
justifications for higher payment levels and thus stated that
recalibration should not be constrained by budget neutrality.
Commenters further stated that budget neutrality reallocates points in
ways that diminish the weight of important clinical factors (such as
ambulation, which potentially leads to adverse outcomes like increased
falls and hospitalizations). Other commenters noted that the combined
effect of recalibration and other adjustments contributes to
substantial year-to-year payment variances, which they state may
disproportionately disadvantage HHAs that are mainly serving medically
complex or rural populations.
Response: CMS appreciates commenters' feedback regarding the
proposed recalibration of the PDGM case-mix weights. While we
understand concerns about data integrity, behavior assumptions, and the
impact on high acuity patients, ultimately, we continue to believe that
annual recalibration is essential to ensure that weights reflect
current utilization patterns and patient characteristics. Recalibration
only considers patient characteristics and associated resource use to
ensure that the case-mix weights accurately reflect the types of
patients HHAs are servicing. The behavior adjustments only ensure that
Medicare is not paying any more under the PDGM than it would have under
the prior 153-group system.
If CMS were to prolong recalibration beyond an annual schedule,
this would not accurately reflect year-to-year changes in resource use
associated with patient characteristics. That said, for CY 2026, the
use of CY 2024 claims represents the most complete and current data
available. Also, as it relates to commenters' concerns regarding
fraudulent/anomalous claims, we would like to note that the
recalibration methodology finalized in the CY 2019 HH PPS rule (83 FR
56502) is applied nationally and is based on the aggregate relationship
between patient characteristics and observed resource use. Therefore,
any stated ``undervaluation'' would be the result of what is being
reported by HHAs. To add, program integrity issues are addressed
through separate oversight channels and do not alter the statutory
requirement for recalibrations to be implemented in a budget-neutral
manner, as required by section 1895(b)(3)(A)(i) of the Act. Finally, we
acknowledge that annual recalibration may contribute to year-to-year
variability, but the overarching intent is to align payments as closely
as possible with actual resource use as reported by HHAs. While we
understand commenters' concerns about HHAs serving mainly medically
complex or rural populations potentially being disproportionately
disadvantaged, the case-mix weights are universally applied to the
national, standardized 30-day payment rate. Nevertheless, CMS will
continue to evaluate ways to improve transparency while monitoring
broader system trends such as rising acuity, workforce shortages, and
operational costs.
Final Decision: We are finalizing the recalibrated case-mix
weights for CY 2026, updated with claims data as of July 11, 2025. We
did not receive any comments on the proposed case-mix weight budget
neutrality factor. Therefore, we are finalizing the proposal to
implement the changes to the PDGM case-mix weights in a budget neutral
manner by applying a case-mix budget neutrality factor to the CY 2026
national, standardized 30-day period payment rate. Using the most
updated data at the time of rulemaking, the final case-mix budget
neutrality factor for CY 2026 will be 1.0052.
E. CY 2026 Home Health Payment Rate Updates
1. Final 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 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
[[Page 55400]]
(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 market basket update for CY 2026 was 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 was then
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 was estimated to be 0.8
percentage point for CY 2026. Therefore, the proposed CY 2026 home
health market basket update was 2.4 percent (3.2 percent market basket
percentage increase, reduced by a 0.8 percentage point productivity
adjustment). Furthermore, we proposed that if more recent data became
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 final 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 was 0.4 percent (2.4 percent
minus 2 percentage points).
We invited public comments on the proposed CY 2026 home health
market basket percentage increase and productivity adjustment. The
following is a summary of the comments received and our responses:
Comment: Multiple commenters stated that they support CMS' proposal
and application of the CY 2026 market basket update but expressed
concerns that the proposed market basket update of 3.2 percent for CY
2026 would fail to adequately address the inflationary pressures and
cost increases experienced by HHAs.
Commenters cited organization-specific experience and data
demonstrating that the proposed update does not align with the
increased cost of skilled care experienced by the home health industry,
particularly for labor costs amid continued recruitment challenges, and
stated that they believe it to be inconsistent with price trends
evidenced in Bureau of Labor Statistics (BLS) data. They emphasized
that it is critically important for the annual payment update to
accurately reflect price growth in the cost of care to ensure that
beneficiaries needing home health services have access to care and to
support the viability of this important Medicare benefit over time.
Multiple commenters noted that they expect actual inflation costs to
far exceed the proposed market basket update, creating a widening gap
between Medicare payments and the actual cost of providing home health
services.
Several commenters urged CMS to reassess the market basket
construction, forecasting methodology, whether the reliance on the
Employment Cost Index is capturing shifts to contract labor and other
changes to the home health workforce, and to consider methodological
refinements and greater transparency.
Response: We appreciate the comments regarding the proposed CY 2026
HH PPS market basket update and recognize the concerns raised about
inflationary pressures affecting HHAs. Section 1895(b)(3)(B) of the Act
requires that the standard prospective payment amounts 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. The
home health market basket is a fixed-weight, Laspeyres-type price
index, which measures the change in price, over time, of the same mix
of goods and services purchased in the base period. Any changes in the
quantity or mix of goods and services (such as shifts in the
occupational mix of the workforce) purchased over time relative to the
base period are appropriately not measured. The home health market
basket was last rebased to reflect a 2021 base year effective for CY
2024 (88 FR 77726).
We continue to believe that the home health market basket cost
weights accurately reflect the cost structure of HHAs, allowing for an
accurate estimate of the price pressures that HHAs will face in CY
2026. Since the home health market basket update is required to be set
prospectively, it relies on a mix of historical data for part of the
period for which the update is calculated and forecasted data for the
remainder. As a result, the market basket percentage increase reflects
expectations of trends, which may periodically differ from actual
experience due to unforeseen events and short-term volatility.
The forecasted data are provided by IHS Global Inc. (IGI), a
nationally recognized economic and financial forecasting firm with
which CMS contracts to forecast the components of the market baskets.
In the CY 2026 HH PPS proposed rule, we proposed that if more recent
data become available, we would use such data, if appropriate, to
derive the final CY 2026 home health market basket update for the final
rule.
In this final rule, we have incorporated the most recent historical
data and forecasts provided by IGI to capture the expected price and
wage pressures facing HHAs in CY 2026. The CY 2026 market basket update
in this final rule reflects historical data through the second quarter
of 2025 and forecasted data for the third quarter of 2025 through the
fourth quarter of 2026. Accordingly, the final CY 2026 market basket
update reflects an updated and revised outlook on the U.S. economy.
Based on IGI's third quarter 2025 forecast with historical data
through second quarter 2025 of the 2021-based home health market basket
percentage
[[Page 55401]]
increase for CY 2026 is 3.2 percent, reflecting forecasted compensation
price growth of 3.3 percent. We will continue to evaluate opportunities
to enhance transparency around the market basket and to assess whether
refinements to inputs or methods are warranted. Any changes deemed
necessary would be proposed through notice and comment rulemaking.
Comment: Several commenters noted that in every year from 2021
through 2024, actual inflation has outpaced the CMS market basket
adjustment for the home health industry. Commenters emphasized that CYs
2021 and 2022 alone represented a shortfall of over 5 percentage points
and, unless corrected, the forecast error compounds underpayments with
each successive year which could result in significant cumulative
underpayment by the year 2030.
Multiple commenters referenced the precedent for CMS to implement
forecast error corrections, noting that in the FY 2024 Skilled Nursing
Facility Prospective Payment System final rule CMS finalized a 3.6
percentage points market basket forecast error adjustment for SNFs.
They stated that the cumulative shortfall in the SNF updates, preceding
the implementation of the market basket forecast error adjustment, was
less than the shortfall experienced by home health providers over the
CY 2021-2022 period and noted that CMS subsequently finalized
additional forecast error adjustments for SNFs in FY 2025 and FY 2026.
Several commenters recommended that CMS exercise its authority to
implement a one-time market basket forecast error adjustment to
payments in CY 2026 to account for previous forecast errors in home
health market basket updates. They stated that this additional funding
would enable home health providers to recruit and retain staff and be
competitive in their local labor markets, while supporting improved
access to care.
Response: A forecast error for a market basket update is equal to
the actual market basket percentage increase for a given year less the
forecasted market basket percentage increase. Due to the uncertainty
regarding future price trends, forecast errors can be both positive and
negative, as has occurred since the implementation of the HH PPS.
We acknowledge that over most of the history of the HH PPS,
forecast errors have been smaller in magnitude, with the largest error
prior to 2021 being an over forecast of 1.2 percentage points in 2009.
As noted by commenters, more recently the home health market basket has
been under forecast, with the largest forecast errors occurring in 2021
and 2022. The cumulative forecast error since HH PPS inception (fiscal
year 2002 to CY 2024, excluding CY 2018 and CY 2020 when the market
basket update was statutorily mandated) is -0.1 percent. The recent
forecast errors were largely a function of uncertainty in the overall
economy and the health sector specifically due to the nature of the
COVID-19 PHE and the unforeseen rapidly accelerating inflationary
environment.
In contrast to the SNF PPS, there is currently no mechanism to
adjust for a market basket forecast error in the home health
prospective payment system. Any changes in this respect would require
careful consideration of the statutory and regulatory frameworks
specific to the HH PPS, and any changes deemed necessary would be
proposed through notice and comment rulemaking.
Comment: Numerous commenters opposed the proposed 0.8 percentage
point productivity adjustment for CY 2026, arguing that this adjustment
fails to account for home health-specific productivity factors.
Commenters noted that the proposed 2026 productivity adjustment of 0.8
percentage point is among the highest historically applied without
adequate justification or transparency and suggested that the 10-year
moving average used to determine the productivity adjustment may be
influenced by unprecedented pandemic-related fluctuations.
Several commenters expressed their belief that the productivity
adjustment methodology is fundamentally flawed when applied to
healthcare settings. One commenter cited that since 2014, the BLS'
estimate of the annual percentage change in the private nonfarm
business sector total factor productivity has ranged from -0.9 to 3.8,
while CMS's computed productivity adjustment ranged from 0 to 0.8
percentage point. Commenters highlighted that CMS has applied the
productivity adjustment exclusively to restrict increases in Medicare
payments, and that in the one year where productivity in the non-farm
business sector declined, CMS set the productivity adjustment to 0
rather than increasing payments.
Multiple commenters emphasized that industry-specific challenges
prevent hospitals and HHAs from achieving productivity improvements
consistent with the private nonfarm business sector. They stated that
the private nonfarm sector encompasses a broad range of industries,
some with stable and predictable production processes and outputs,
while healthcare providers operate in complex environments
characterized by unpredictable patient volumes, rising input costs,
varying patient acuity levels, and regulatory requirements. Therefore,
they posited that the use of the Total Factor Productivity (TFP)
adjustment holds healthcare providers to an unreasonable standard by
requiring that they mimic productivity gains obtained in industries
that operate very differently.
Numerous commenters noted their belief that the cumulative effect
of these reductions year over year, combined with the asymmetric
treatment of declines in economy-wide productivity, leads to an
increasing gap between payments and the cost of providing services,
leaving healthcare providers increasingly underfunded and ultimately
restricting the amount of care they can provide. Commenters suggested
CMS reconsider the use or magnitude of the productivity adjustment or
otherwise take these criticisms into account when considering decisions
that affect payment where flexibility is afforded.
Response: Section 1895(b)(3)(B)(vi) of the Act requires the
application of the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act to the HH PPS market basket increase
factor. As required by statute, the CY 2026 productivity adjustment is
derived based on the 10-year moving average growth in economy-wide
private nonfarm business TFP for the period ending in CY 2026. We
recognize the concerns of commenters regarding the appropriateness of
the productivity adjustment; however, we are required under section
1895(b)(3)(B)(vi) of the Act to apply the specific productivity
adjustment described here.
We have always made available on the CMS website the general method
for calculating the productivity adjustment. This includes providing a
link to the most recent BLS historical TFP data, which allows
interested parties to obtain historical TFP annual index levels for
1987 through 2024. We also provided the IGI projection model (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/medicareprogramratesstats/downloads/tfp_methodology.pdf), which
is used to derive annual TFP growth rates for 2025 and 2026. The annual
index level derived from this method is then interpolated to quarterly
levels, and the CY 2026 productivity adjustment is equal to the percent
change in the 40-quarter moving average projected level for the period
ending December 31,
[[Page 55402]]
2026, relative to the 40-quarter moving average projected level for the
period ending December 31, 2025. We believe our methodology for the
productivity adjustment is consistent with section
1886(b)(3)(B)(xi)(II) of the Act which states that the productivity
adjustment is equal to the 10-year moving average of changes in annual
economy-wide private nonfarm business multi-factor productivity (as
projected by the Secretary for the 10-year period ending with the
applicable fiscal year, year, cost reporting period, or other annual
period).
At the time of this final rule, the CY 2026 productivity adjustment
reflects BLS historical TFP data through 2024 (released on March 21,
2025) and IGI's forecasted TFP growth for 2025 and 2026. The average
annual growth rate of historical TFP published by BLS for 2017 through
2024 is currently 0.9 percent and IGI is projecting average TFP growth
of about 0.3 percent for 2025 and 2026 based on IGI's third-quarter
2025 forecast. Combining the historical and projected TFP data over the
entire 10-year time period results in a compound annual growth rate of
TFP of 0.8 percent for 2026. The productivity adjustment (based on the
10-year period ending with CY 2026) for the CY 2026 final rule is the
same as the CY 2026 proposed rule. The 0.8percent productivity
adjustment in the CY 2026 final rule is larger than the productivity
adjustment in prior final rules for CY 2023 and CY 2024 mainly due to
the incorporation of updated BLS historical data.
In response to commenters' concerns about the productivity
adjustment only being applied if it reduces the payment update, we note
that the productivity adjustment was established under the Affordable
Care Act with a specific policy intent to encourage efficiency
improvements in healthcare delivery by linking Medicare payment updates
to economy-wide productivity gains. The statutory language in section
1886(b)(3)(B)(xi)(II) of the Act requires that the Secretary reduce
(not increase) the market basket percentage increase by changes in
economy-wide productivity, therefore, only positive productivity
adjustments are applied.
Final Decision: Consistent with section 1895(b)(3)(B)(vi) of the
Act, and as outlined previously in section IV.B.1. of this final rule,
we are finalizing the home health payment update methodology. The
market basket percentage increase for CY 2026 for the HH PPS is based
on IGI's third quarter 2025 forecast of the home health market basket
percentage increase, which is estimated to be 3.2 percent. As outlined
earlier in this section, we are applying a 0.8 percentage point
productivity adjustment to the CY 2026 home health market basket
percentage increase. Therefore, the final CY 2026 home health market
basket update is equal to 2.4 percent.
2. Final 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 proposed 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 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
[[Page 55403]]
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. Final 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 proposed 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 final CY
2026 HH PPS wage index will 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 will include the 5
percent cap on wage index decreases as discussed previously.
There exist some geographic areas where there are no hospitals,
and thus, 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 proposed to
continue to use the same methodology discussed in the CY 2007 HH PPS
final rule (71 FR 65884) to address those geographic areas in which
there are no inpatient hospitals.
For 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 proposed the CY 2026 wage index value for Hinesville, GA would be
0.8800. With updated wage data, the final CY 2026 HH PPS wage index
value for Hinesville, GA will be 0.8779.
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 will 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 proposed
that the CY 2026 HH PPS wage index for rural North Dakota would be
0.8346. With updated wage data, the CY 2026 HH PPS final wage index
value for rural North Dakota will be 0.8329.
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 will 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
[[Page 55404]]
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
was 0.2452. However, because 0.2452 is more than a 5 percent decline in
the CY 2025 wage index, we proposed 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 resulted in a proposed wage index value
of 0.3653. The unadjusted CY 2026 final wage index for rural Puerto
Rico is 0.2443. However, because 0.2443 is more than a 5 percent
decline in the CY 2025 wage index, we are finalizing the CY 2026 5
percent cap adjusted wage index for rural Puerto Rico, set equal to 95
percent of the CY 2025 wage index, which will result in a final 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 proposed that the CY
2026 wage index for rural Delaware would be 1.0133. With updated wage
data, the CY 2026 HH PPS final wage index value for rural Delaware will
be 1.0095.
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 proposed that HHAs that provide services in the Northern
Mariana Islands and American Samoa will 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.
We solicited comments on the proposed CY 2026 HH PPS wage index.
The following is a summary of the comments we received and our
responses:
Comment: Several commenters were opposed to the proposed wage index
updates, particularly in rural areas. These commenters expressed
concern that wage index changes in rural areas would worsen rural
access to care issues. A commenter stated that the current method of
adjusting labor costs using the hospital wage index does not accurately
account for increased travel costs and lost productivity in serving
rural areas. This commenter recommended a population density
adjustment, stating that travel costs are increased because of the time
and mileage involved for home health personnel to travel from patient
to patient to provide services in areas with lower population
densities, while, in densely populated areas, these costs are
significantly reduced because of the relative proximity of
beneficiaries to the home health agency.
Response: We appreciate commenters' concerns regarding the wage
index values assigned to rural areas. As discussed in the CY 2022 HH
PPS final rule (86 FR 62285), we do not believe that a population
density adjustment is appropriate at this time. Rural HHAs continually
cite the added cost of traveling from one patient to the next. However,
urban HHAs cite the added costs associated with needed security
measures and traffic congestion. The home health wage index values in
rural areas are not necessarily lower than the home health wage index
values in urban areas. The home health wage index reflects the wages
that inpatient hospitals pay in their local geographic areas. We
continue to believe that in the absence of home health specific data,
the pre-floor, pre-reclassified hospital wage index is appropriate for
the geographic adjustment of home health claims.
Comment: Several commenters expressed concern that home health
providers are unable to benefit from IPPS hospital wage index policies
such as reclassification and the rural floor. A commenter recommended
that all providers should be guaranteed that their wage index value
does not drop below the rural wage index value applicable in the state
of operation. A few commenters requested that CMS modify its wage index
policy to incorporate hospital reclassifications to ensure fair
geographic payment adjustments. Another commenter stated that the
significant variance in the wage index values assigned to IPPS
hospitals and HHAs and hospices makes it much more difficult for home
health and hospice providers to recruit nurses and other professional
and para-professional staff when hospitals can offer those same
individuals a much higher salary and benefit package due to this large
variance in the wage index values.
Other commenters recommended that CMS institute a floor policy in
the HH PPS. Several commenters located in Puerto Rico recommended that
CMS implement a National Wage Index Floor of 0.6000. These commenters
believe that a national wage index floor would stabilize Medicare home
health payments and also improve parity within the national Medicare HH
PPS. A few commenters also recommended a 0.8000 floor in the HH PPS
wage index similar to the hospice floor.
Response: We thank the commenters for their recommendations. We
continue to believe that the regulations and statutes that govern the
HH PPS differ from the hospital and hospice regulations and statutes,
such that there would be differences between how these payment systems
apply wage index policies including geographic reclassification, or the
rural floor. Section 4410(a) of the Balanced Budget Act of 1997
provides that the area wage index applicable to any hospital that is
located in an urban area of a state may not be less than the area wage
index applicable to hospitals located in rural areas in that State.
This rural floor provision is specific to hospitals. The
reclassification provision at section 1886(d)(10)(C)(i) of the Act
states that the Medicare Geographic Classification Review Board shall
consider the application of any subsection (d) hospital requesting the
Secretary change the hospital's geographic classification for purposes
of payment under the IPPS. This reclassification provision is only
applicable to hospitals as defined in section 1886(d) of the Act. In
addition, we do not believe that using hospital reclassification data
would be appropriate as these data are specific to the requesting
hospitals.
Additionally, the application of the hospice floor is specific to
hospices and does not apply to HHAs. The hospice floor was developed
through a negotiated rulemaking advisory committee, under the process
established by the Negotiated Rulemaking Act of 1990 (Pub. L. 101-648).
Committee members included representatives of national hospice
associations; rural, urban, large, and small hospices; multi-site
hospices; consumer groups; and a government representative. The
Committee reached consensus on a methodology that resulted in the
hospice wage index. We continue to believe the use of the pre-floor and
pre-reclassified hospital wage
[[Page 55405]]
index results in the most appropriate adjustment to the labor portion
of the home health payment rates.
Comment: Several commenters expressed concern with the wage index
values assigned to their specific geographic areas. A commenter
recommended that the wage index value for rural Hawaii match or exceed
the wage index value assigned to rural California. A few commenters
expressed concern with the wage index value assigned to rural Puerto
Rico after the adoption of the delineations from OMB Bulletin No. 23-
01.
Response: We appreciate the concerns expressed by commenters
regarding wage index values in specific geographic areas, including
rural Hawaii and rural Puerto Rico. While we understand these concerns,
we believe that the permanent 5 percent cap policy provides an adequate
safeguard against any significant payment reductions in CY 2026 while
improving the accuracy of the payment adjustment for differences in
area wage levels.
Comment: Several commenters recommended far-reaching revisions and
reforms to the HH PPS wage index methodology. A commenter stated that
the pre-floor, pre-reclassified hospital wage index is inadequate for
adjusting home health costs and recommended that CMS develop and
implement a wage index model that is consistent across all provider
types so that all providers have a level playing field from which to
compete for personnel. Another commenter recommended that CMS develop a
home health wage index and retire the use of the hospital wage index to
determine the home health wage index. This commenter stated that until
a new home health wage index can be implemented, they support CMS'
proposal to continue using OMB's most recent statistical area
delineations for the hospital wage index. A commenter stated that the
current wage index fails to capture real costs in high-price markets
such as New York City, creating structural underpayments that
destabilize safety-net providers. This commenter believes that as with
PDGM itself, COVID-19 pandemic-era data should be excluded from wage
index calculations and that without meaningful reform to the wage index
methodology, providers in many regions will continue to face structural
disadvantages that further limit their ability to deliver care. Another
commenter recommended changes to the wage index methodology including
using state-specific data such as BLS wage surveys, accounting for
housing and transportation costs, and exploring payment adjustments for
high-cost areas.
Response: We thank the commenters for their recommendations. While
we did not propose any changes to the wage index methodology in the
proposed rule, we may consider these recommendations in future
rulemaking.
Comment: A few commenters expressed support for the finalized 5
percent cap policy. However, other commenters recommended updates to
the finalized 5 percent cap policy. A commenter recommended lowering
the threshold of the cap to 2 percent. This commenter believes that
lowering the cap to 2 percent would protect HHAs who operate with
negative or razor-thin operating margins and are still experiencing
multiple negative consequences due to the COVID-19 pandemic.
Response: We appreciate commenters' recommendations for changes to
the 5 percent cap policy. However, in the CY 2026 HH PPS proposed rule,
we did not propose to make changes to this policy. Therefore, these
comments are outside the scope of the proposed rule. Any changes to the
finalized 5 percent cap policy would need to go through notice and
comment rulemaking. However, we continue to believe that a 5 percent
cap would most effectively mitigate any significant decreases in a
geographic area's wage index for a calendar year, while still balancing
the importance of ensuring that area wage index values accurately
reflect relative differences in area wage levels. Furthermore, we
believe that the 5 percent cap on wage index decreases provides a
degree of predictability in payment changes for providers and allows
providers time to adjust to any significant decreases they may face
year to year.
Final Decision: After consideration of public comments, we are
finalizing our proposal 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 final CY 2026 HH PPS
wage index will include the 5 percent cap on wage index decreases.
Additionally, using our established methodology for rural areas
with no hospitals, we are finalizing including in the CY 2026 HH PPS
wage index the wage indexes for the Northern Mariana Islands and
American Samoa. 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. We believe that CBSA 99965 (Guam) represents a
reasonable proxy because the islands are located within the Pacific Rim
and share a common status of US territories. Therefore, HHAs that
provide services in the Northern Mariana Islands and American Samoa
should use CBSA 99965 (Guam) and should receive the wage index assigned
to CBSA 99965 (Guam) of 0.9611.
The final 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. Final 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.
[[Page 55406]]
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 market basket, 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 will use to pay the claim.
We may adjust a 30-day case-mix and wage-adjusted payment based on
the information submitted on the claim to reflect the following:
A LUPA is provided on a per-visit basis as set forth in
Sec. Sec. 484.205(d)(1) and 484.230.
A partial payment adjustment as set forth in Sec. Sec.
484.205(d)(2) and 484.235.
An outlier payment as set forth in Sec. Sec.
484.205(d)(3) and 484.240.
b. Final 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 HHAs in a budget-neutral
manner. To determine the CY 2026 national, standardized 30-day period
payment rate, we will continue our practice of using the most recent,
complete utilization data at the time of rulemaking; that is, we are
using CY 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 final rule, we are finalizing the implementation of a permanent
adjustment of -1.023 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 final permanent adjustment factor is
0.98977. 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 final case-mix weight
budget neutrality factor for CY 2026 is 1.0052.
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 1.0025. We then apply the wage index budget
neutrality factor of 1.0025 to the 30-day period payment rate.
Next, we update the 30-day period payment rate by the final CY 2026
home health payment update percentage of 2.4 percent. As discussed in
section II.C.1. of this final rule, we also finalizing the
implementation of a temporary -3.0 percent reduction to the CY 2026
base payment rate. The final temporary adjustment factor is 0.97000.
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 final temporary adjustment and is
calculated in table 14.
Next, we update the 30-day period payment rate by the final CY 2026
home health payment update percentage of 2.4 percent. The CY 2026
national standardized 30-day period payment rate is calculated in table
14.
[[Page 55407]]
[GRAPHIC] [TIFF OMITTED] TR02DE25.038
The CY 2026 national standardized 30-day period payment rate for
an HHA that does not submit the required quality data will be updated
by 0.4 percent (the final CY 2026 home health payment update percentage
of 2.4 percent minus 2 percentage points) and is shown in table 15.
[GRAPHIC] [TIFF OMITTED] TR02DE25.039
c. Final 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 final 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 1.0005. 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.
[[Page 55408]]
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 final 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 final CY 2026 national
per-visit rates for HHAs that submit the required quality data are
updated by the final CY 2026 home health payment update percentage of
2.4 percent and are shown in table 16.
[GRAPHIC] [TIFF OMITTED] TR02DE25.040
The CY 2026 per-visit payment rates for HHAs that do not submit the
required quality data will be updated by 0.4 percent, which is the
final CY 2026 home health payment update percentage of 2.4 percent
minus 2 percentage points and are shown in table 17.
[GRAPHIC] [TIFF OMITTED] TR02DE25.041
We solicited comments on the proposed CY 2026 30-day home health
payments rates and per-visit payment rates, but did not receive
comments on this proposal.
Final Decision: We are finalizing the updates to the CY 2026
national, standardized 30-day period payment rates and the CY 2026
national per-visit payment amounts as proposed, using the final CY 2026
market basket update.
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
[[Page 55409]]
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 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.
[GRAPHIC] [TIFF OMITTED] TR02DE25.042
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
[[Page 55410]]
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-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. Final 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
proposed an FDL ratio of 0.46 for CY 2026. CMS stated that we would
update the FDL, if needed, in the final rule once we have more complete
CY 2024 claims data.
We solicited comments on the proposed CY 2026 FDL. The following is
a summary of the comments we received and our responses:
Comment: Several commenters opposed the proposed update to the CY
2026 FDL. A commenter recommended maintaining the current FDL for CY
2026. Other commenters expressed concern that CMS is raising the FDL
based on potentially fraudulent data, specifically in what they
describe as high fraud areas such as LA County. These commenters
recommended excluding suspect claims so that legitimate HHAs are not
penalized based on flawed data. Another commenter suggested that
raising the FDL will make it harder to qualify for outlier payments and
could harm agencies caring for high acuity patients.
Response: We remind commenters that the FDL is set such that
outlier
[[Page 55411]]
payments do not exceed 2.5 percent of total home health payments. A
high FDL ratio reduces the number of episodes that can receive outlier
payments but makes it possible to select a higher loss-sharing ratio,
and therefore, increase outlier payments for qualifying outlier
episodes. Alternatively, a lower FDL ratio means that more episodes can
qualify for outlier payments, but outlier payments per episode must
then be lower. We appreciate the commenters' concerns regarding
potential fraudulent billing and its potential impact on the proposed
FDL. However, as discussed previously, outlier billing patterns are not
always indicative of fraudulent practice. CMS currently includes the
most recent and complete claims data when updating the FDL. If CMS
excluded the claims the commenter views as outliers from the
calculation of the FDL, CMS would need to make thresholds for
determining what qualifies as an outlier to be excluded from the
analytical sample. In addition, dropping providers with anomalous
billing patterns can cause the sample to be much smaller relative to
the most recent and complete claims for that given year. It is
important to note that providers that have anomalous billing patterns
will need further evidence to state definitively whether their
activities cannot be connected to fraudulent practices. Depending on
the circumstance, anomalous patterns can prompt further review and
initiate investigation for evidence of fraud, waste, and abuse.
We appreciate commenters sharing insight into how we can address
concerns about potential fraud in the home health market. Cost report
fraud and abusive billing behavior are concerns that need to be
addressed through the appropriate channels with the authority to pursue
enforcement action, such as the hotline for reporting fraud at the
following website: https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity/reporting-fraud.
Furthermore, we are statutorily required to ensure that total
outlier payments do not exceed the 2.5 percent aggregate level (as
required by section 1895(b)(5)(A) of the Act). 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 the PDGM beginning in CY 2020 and calculated payment
for high-cost outliers based upon 30-day periods of care. We have used
the most recent claims data to calculate the FDL ratio since that time.
In the CY 2026 HH PPS proposed rule, we stated that we would use the
most recent claims data available which is CY 2024 claims data. Using
CY 2024 claims data, we found that the FDL ratio would need to be
increased from the final CY 2025 FDL of 0.35 to 0.37.
Final Decision: With updated CY 2024 claims data (as of July 11,
2025) and given the statutory requirement that total outlier payments
not exceed 2.5 percent of the total payments estimated to be made under
the HH PPS, we are finalizing an FDL ratio of 0.37 for CY 2026.
F. Change to Face-to-Face Encounter Regulations
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 describe 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 (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
[[Page 55412]]
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 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.
As stated in the CY 2026 proposed rule, 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 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 also stated in the CY 2026 proposed rule that 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 proposed 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 proposed 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.
We stated that this 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. We noted that these revisions would also address
concerns that the current regulations do not align with the CARES Act
language.
We solicited comments on these proposed revisions to 42 CFR
424.22(a)(1)(v) and the proposed removal of Sec. 424.22(a)(1)(v)(C).
Comment: All commenters expressed strong support for the proposed
changes that would expand who can conduct face-to-face encounters. Some
commenters specifically expressed appreciation that CMS proposed these
changes after they were suggested by
[[Page 55413]]
stakeholders in past comments and letters to CMS. Commenters
consistently praised CMS for aligning regulations with the CARES Act
provisions and simplifying the process, which addresses timely care
initiation while maintaining program integrity. Additionally,
commenters stated that the proposed changes would improve access to
care and administrative efficiency due to operational flexibility,
streamlined processes, and reduce administrative complexity. They also
stated that the proposed changes would improve workforce optimization
allowing for team-based care and resource utilization, especially in
complex care settings, rural areas, HHAs with staffing challenges, and
when managing referrals from various settings.
Response: We thank commenters for their support.
Comment: A few commenters requested that CMS provide additional
clarification and guidance related to implementation details,
documentation requirements, and acceptable formats to ensure consistent
application across contractors, specifically as they relate to facility
and community referrals, MACs, and auditors. Another commenter
requested clarification regarding the requirement that face-to-face
encounters need to be related to the primary reason for home health
services, mentioning that this requirement has been interpreted by HHAs
to mean that the primary diagnosis needs to be in perfect alignment
with the face-to-face encounter. Additionally, a few commenters asked
clarifying questions related to the proposed face-to-face encounter
changes as follows: Will HHAs be required to delay sending the
certification statement until the completed face-to-face encounter
documentation is received, or can a handoff be documented in other
ways? If documentation of collaboration is required, will it suffice
for the HHA to record the process, or must a formal order be signed by
both the certifying provider and the face-to-face encounter provider?
If a specialist performs the face-to-face encounter, will HHAs be
required to demonstrate how that specialist is involved in the
patient's plan of care? And will CMS mandate that Medicare Advantage
(MA) plans align their requirements with CMS policy, or should HHAs
prepare for distinct processes across MA plans? A few commenters
requested guidance on whether CMS intends to issue parameters to guide
how HHAs and practitioners demonstrate that the face-to-face encounter
is conducted by the most knowledgeable practitioner, especially in
situations where care is shared among providers. These commenters also
requested that CMS maintain flexibility for HHAs and practitioners to
determine, based on clinical judgment and care team structure, which
practitioner is best positioned to perform the face-to-face encounter
while still meeting eligibility and certification requirements. One
commenter also recommended that educational materials related to
regulatory changes be made available in Spanish to avoid errors in the
interpretation of documentation requirements.
Response: We thank the commenters for their recommendations. We
will take all these suggestions into consideration when updating
subregulatory guidance with additional clarifying information and
examples if needed. Additionally, we have issued instructions in the
past to the contractors who perform medical reviews to ensure
compliance with this regulation, and we will continue to educate MACs
and auditors to further support consistent application of existing
regulations and this added flexibility. We would like to remind readers
that these changes only add flexibility to the face-to-face encounter
and do not otherwise change the intent, documentation requirements, or
acceptable formats of the face-to-face encounter. We refer readers back
to 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, sections 6.2.1 and 6.2.3) for additional details on our
program integrity, quality goals, and requirements for the face-to-face
encounters.
We also remind commenters that diagnosis codes are not required to
be on the face-to-face documentation and do not exactly have to match
the primary diagnosis for which the patient is receiving home health
services. Rather, the face-to-face documentation has to sufficiently
demonstrate that the encounter was related to the primary reason that
home health services were needed (42 CFR 424.22(a)(1)(v)). With respect
to the specific questions on timing of the face-to-face encounter and
certification statement, the HHA's method of recording collaboration
between providers including specialists, and how HHAs and practitioners
can demonstrate the most knowledgeable practitioner, we remind readers
again that these changes allow for additional flexibility with respect
to the practitioners who can complete the face-to-face encounter; the
intent and guidelines of the face-to-face encounter and other payment
policies are otherwise unchanged. Additionally, a condition of
participation for HHAs includes care coordination, such as assuring
communication with all physicians or allowed practitioners involved in
the plan of care and integrating orders from all physicians or allowed
practitioners involved in the patient's plan of care to assure the
coordination of all services and interventions. We agree with the
commenter that HHAs should use clinical judgment to determine what
practitioner is the most appropriate to perform the face-to-face
encounter, and we intend to maintain this flexibility for HHAs;
however, the documentation needs to support that the physician
completing the face-to-face encounter has firsthand information of the
patent's primary reason for needing home health services and also is
the most appropriate (that is, the most knowledgeable) provider to
complete the face-to-face encounter. Lastly, regarding Medicare
Advantage plan requirements, this is outside the scope of our proposed
policy, as this policy only applies to Medicare FFS home health payment
requirements.
Comment: A commenter requested that the face-to-face encounter
requirement be eliminated, noting their belief that it creates an
administrative burden due to diverting limited resources from patient
care to paperwork navigation and creating unnecessary obstacles for
patients and providers, causes access to care concerns due to delays
and disruptions to care, and is ineffective in achieving the original
intent of the requirement, which was to reduce fraud, waste, and abuse.
This commenter suggested that CMS focus its program integrity efforts
on targeting ``bad providers'' instead of implementing broad
requirements that burden ``good providers'' and prioritize outcomes
over administrative processes.
Response: We appreciate the commenter's feedback; however, the
face-to-face encounter requirement is set forth in section
1814(a)(2)(C) of the Act, and, because this is a statutory requirement,
we must require this encounter as a condition for payment and have no
regulatory discretion to eliminate it. As such, we refer readers back
to the CY 2011 HH PPS final rule, where we cited research that supports
that recent physician involvement results in significantly better
patient outcomes and decreased hospitalizations compared to patients
who did not receive a face-to-face physician visit during their episode
of
[[Page 55414]]
care (Wolff et al., 2009, p. 11511). Additionally, the CY 2011 HH PPS
final rule addressed concerns about feasibility by providing increased
flexibility to the time frames in which face-to-face encounters are
completed in order to address access to care risks, especially those
faced in rural areas, and accounted for administrative burden. Care
coordination, including assuring communication with all physicians or
allowed practitioners involved in the plan of care, is a condition of
participation and the responsibility of the HHA. Additionally, we note
that these changes provide additional flexibility by allowing more
providers to conduct the face-to-face encounter.
Comment: A few commenters requested that telehealth face-to-face
encounters be permitted to reduce burden on beneficiaries and improve
access to care. One commenter requested that Puerto Rico be given this
flexibility to utilize telehealth face-to-face encounters due to the
recurring natural disasters that they face.
Response: We thank commenters for their suggestions. Telehealth
face-to-face encounters can be performed at an approved originating
site as specified in the Medicare Benefit Policy Manual (Pub. 100-02,
chapter 7, section 30.5.1.1).
Final Decision: We are finalizing the changes to the face-to-face
encounter regulations as proposed.
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.
B. Summary of the Provisions
In accordance with the statutory authority at section
1895(b)(3)(B)(v) of the Act, we proposed the following policies in the
proposed rule: We proposed 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 proposed the removal of
four assessment items: one Living Situation item, two Food items, and
one Utilities item. We also proposed to revise the policy to allow
providers that fail to provide complete, timely data to CMS to submit a
request for reconsideration if they can demonstrate full compliance. We
noted in the proposed rule that 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. We also proposed to implement a revised HHCAHPS Survey
beginning with the April 2026 sample month. The proposed rule also
included a proposal to update regulatory text to account for all-payer
data submission of OASIS data. As part of the request for information
(RFI) contained in the proposed rule, we sought 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 also sought feedback on the digital
quality measurement (DQM) transition for HHAs. We solicited feedback
from the public on the current adoption of health IT and standards,
including Fast Healthcare Interoperability Resources (FHIR), and what
related challenges or barriers HHAs are facing. Finally, we sought
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 C-19.
BILLING CODE 4120-01-P
[[Page 55415]]
[GRAPHIC] [TIFF OMITTED] TR02DE25.043
[[Page 55416]]
BILLING CODE 4120-01-C
D. 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
In the CY 2026 HH PPS proposed rule, we proposed to remove the
COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date''
measure (``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)). We noted that 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 and referred readers to section VII of the
proposed rule for more details on the estimated burden reduction
related to the 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). We refer readers to the CY 2024 HH
PPS final rule, where we adopted Patient/Resident COVID-19 Vaccine
measure into the HH QRP for further background on the adoption of this
measure (88 FR 77762 through 77764). Since that time, HHAs have
expressed concerns about data collection challenges and increased
provider burden in collecting patient immunization data.\15\ 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 \16\ is declining, and as noted in the proposed rule, 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 the proposed rule for more details on
this estimated burden reduction.
---------------------------------------------------------------------------
\15\ 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.
\16\ 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 proposed that, effective with assessments completed on or after
the date of publication of this 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 proposed to remove the Patient/Resident COVID-
19 Vaccination is Up to Date item (O0350) from the OASIS effective
April 1, 2026, since it is not technically feasible to remove the item
earlier. However, under our proposal, until this item can be removed
from the OASIS, HHAs would be permitted to 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 not to
be rejected by the iQIES under existing submission specification edits.
We invited public comments 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. The following is a
summary of the comments received and our responses:
Comment: A majority of commenters supported CMS's proposal to
remove the Patient/Resident COVID-19 Vaccine measure from the HH QRP,
with most citing the collection burden associated with the measure as
support for its removal. Many commenters highlighted that there are
many other sources that provide national COVID-19 vaccination rates.
Some cited the end of the public health emergency and the reduced need
to track COVID-19 vaccination rates through a standalone process. Some
commenters also recommended that, given the expected timeframe for
removal of this measure, CMS should clearly explain how providers could
reduce their burden associated with the proposal to make the Patient/
Resident COVID-19 Vaccination is Up to Date OASIS item (O0350)
voluntary.
Response: We thank commenters for their support. We agree that the
burden associated with this measure, including the resources spent by
HHA staff in trying to ascertain patients' vaccination status,
outweighs the benefit of its continued inclusion in the program,
particularly given the end of the COVID-19 PHE,\17\ the decrease in
COVID-19 cases, as well as the availability of treatments for COVID-19.
We will ensure that HHAs understand that submission of the Patient/
Resident COVID-19 Vaccination OASIS item (O0350) is voluntary with the
final posting of this final rule through a range of CMS communication
methods. This will allow for providers to immediately reduce efforts in
collecting the O0350 item by providing any valid response until the
item is removed with the implementation of OASIS E2 on April 1, 2026.
---------------------------------------------------------------------------
\17\ https://archive.cdc.gov/www_cdc_gov/coronavirus/2019-ncov/your-health/end-of-phe.html.
---------------------------------------------------------------------------
Comment: A few commenters opposed the proposed removal of the
Patient/Resident COVID-19 Vaccine measure from the HH QRP. These
commenters cited the continued recommendation by the Centers for
Disease Control and Prevention (CDC) and the Advisory Committee on
Immunization Practices (ACIP) in 2025 for adults and especially adults
65 or older to receive the COVID-19 vaccine due to higher rates of
hospitalization and deaths amongst this population associated with
COVID-19. Another commenter noted that this measure offers valuable
information to clinicians entering a patient's home and helps providers
to better understand a patient's risk of contracting or transmitting
COVID-19.
Response: We appreciate the commenters' concerns for providers and
patients in home health. We note that since the end of the COVID-19
PHE, there has been an increase in the availability of treatments,
including antiviral medications used to treat mild to moderate COVID-19
in vulnerable populations.\18\ The CDC has also recently updated its
adult and child immunization schedules to apply individual-based
decision-making to COVID-19 vaccination.\19\ As we stated in the
proposed rule, because the number of COVID-19 cases and
deaths[thinsp]is declining and the availability of treatments has
increased, we believe the threat to vulnerable populations,
[[Page 55417]]
such as HH patients, is also reduced. There has also been a reduction
in risk to HH providers treating patients in homes. On these bases, 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.
---------------------------------------------------------------------------
\18\ COVID-19 Treatment Options, https://www.cdc.gov/covid/treatment/index.html.
\19\ https://www.cdc.gov/media/releases/2025/cdc-immunization-
schedule-adopts-individual-based-
decision.html#:~:text=Unlike%20the%20COVID%2D19%20primary,physicians%
2C%20nurses%2C%20and%20pharmacists.
---------------------------------------------------------------------------
Final Decision: After consideration of the public comments, we are
finalizing 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. Beginning with patients discharged on or after
April 1, 2026, HHAs would not be required to collect and submit the
Patient/Resident COVID-19 Vaccine measure data to CMS. Until that time
and with the posting of this final rule, 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.
E. Removal of Four Standardized Patient Assessment Data Elements
Beginning With the CY 2026 HH QRP
In the CY 2025 HH PPS final rule (88 FR 88433 through 88439), 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 the proposed rule, we proposed to remove the four standardized
patient assessment data elements under the SDOH category, as we
acknowledged the burden associated with these items. We noted that we
continuously look for ways to balance the need for data collection
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 noted we will work towards the
workflow for these specific data elements being part of a low burden
interoperable electronic system. The focus will turn towards how these
data and associated recommendations exchanged can improve care
coordination, efficiency, reduction in errors and patient experience.
As health IT advances and interoperability of data becomes more
standardized, the burden to collect and share clinical data on these
and other relevant patient information will 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 ndustry 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 recognized the burden that the
collection of the additional data will impose on already overextended
staff. We also acknowledged the additional cost and resources HHAs will
bear for training HH staff and altering their workflows if they are
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
$1,133 per HHA). We referred readers to section VII.A.3. of the
proposed rule for more details on this estimated burden reduction.
We proposed that 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. We noted that these items would not be required to meet HH QRP
requirements beginning with the CY 2026 HH QRP.
We invited public comments on our proposal to remove four
standardized patient assessment data elements collected under the SDOH
category from the HH QRP beginning with the CY 2026 HH QRP. The
following is a summary of the comments received and our responses:
Comment: A slight majority of commenters expressed their support
for the proposal to remove the four standardized patient assessment
data elements focused on collecting information related to SDOH. These
commenters often acknowledged the importance of better understanding of
SDOH in addressing healthcare challenges and noted that there may be
less burdensome methods for obtaining SDOH data.
Response: We thank commenters for their support of our proposal to
remove these four SDOH items from the standardized patient assessment
data elements collected and submitted using the OASIS. We continue to
monitor the HH QRP data collection requirements to look for ways to
reduce the administrative burden, where appropriate, while maintaining
a high standard of quality care. We agree that removing these items at
this time will alleviate some of the burden on HH providers associated
with HH QRP data collection and submission requirements. We intend to
align the HH QRP more closely with our overarching goal for improved
health care delivery through health IT advances and low-burden
interoperable electronic systems. As we stated in the CY 2026 HH PPS
proposed rule (90 FR 2908), we plan to refocus efforts on how data
elements can improve care coordination, efficiency, reduction in
errors, and patient experience.
Comment: Many commenters opposed CMS' proposal to remove the four
SDOH items from the HH QRP. Many commenters who opposed the SDOH items'
proposed removal shared that collecting these data allows HHAs to
identify barriers to care access and adherence to care plans. Some
commenters further stated that they are already collecting SDOH data on
their patients to support efforts of nurses, social workers, and care
managers. A commenter stated that these items are particularly useful
in rural HHAs to address deficits in rural patients' living situations.
A few commenters stated these SDOH items were particularly important in
caring for patients with complex or chronic conditions and geriatric
patients. These commenters noted that integration of SDOH into care
planning can result in cost savings by reducing readmissions and
emergency department visits while improving patients' post-care
outcomes.
Response: We appreciate the commenters' concerns and feedback
regarding the importance of collecting these SDOH items from HH
patients and acknowledge the value that commenters ascribe to the
collection of this information for discharge planning and care
coordination. We recognize commenters' experiences using SDOH data to
improve outcomes and facilitate high quality care through improved
coordination between HH providers. We also acknowledge feedback from
commenters that healthcare outcomes may be different for those patients
experiencing unstable housing, food insecurity, or challenges paying
utilities.
[[Page 55418]]
However, in reviewing the data collection and reporting
requirements for the CY 2027 HH QRP, we determined that these SDOH
items should be removed from the OASIS prior to the start of data
collection and submission. We have re-evaluated the value of adding
these SDOH items to the OASIS for the purposes of the HH QRP against
their need at this time. We considered that HHA have not yet begun to
report these data, we do not currently have a specific use for these
items in the HH QRP, these SDOH items are not clinical items related to
direct patient care, and we have refocused efforts on modernization of
health care and health care systems which may support less burdensome
ways of collecting SDOH data in the future. We continuously review and
reassess the balance of data collection and HH provider burden for the
HH QRP, and at this time, determined these SDOH items should be removed
prior to implementation.
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 balancing burden for HHAs
and their staff. As outlined in our RFI in the CY 2026 HH PPS proposed
rule (90 FR 29108), we are refocusing our efforts to advance the
digital quality measurement transition to include ways for data
elements, such as those related to SDOH, to be collected as part of a
low-burden interoperable electronic system. Given these administrative
goals and efforts to reduce burden for HHAs, we do not believe that the
collection of SDOH items via the OASIS assessment outweighs the cost
and burden of collecting them at this time.
Comment: Some commenters noted that SDOH screening has already
been integrated into many HHAs care coordination workflows and that
removing the SDOH items without a plan would disrupt current care
processes.
Response: The purpose of the HH QRP data is to meet CMS quality
reporting requirements. Even though we will no longer require HHAs to
collect and submit these four items to CMS using the OASIS, HHAs can
still collect and use SDOH information and share it with local
agencies, in compliance with applicable laws governing confidentiality
and privacy of patient information, if they believe this would be
beneficial.
We understand implementation efforts to collect and submit any
data elements for the purposes of meeting HH QRP requirements are
inherently burdensome for HHAs and their staff, particularly adopting
and implementing new data elements since they involve adjustments to
health IT systems and electronic health record (EHRs), workflows, and
staff training. We are always reviewing and reassessing this balance of
data collection and HH provider burden for the HH QRP. For the four
SDOH items, we reconsidered the value of their collection and
submission to us for the purposes of the HH QRP against their need at
this time. We specifically considered that these items are not clinical
in nature. While they reflect certain aspects of a resident's health
that may inform clinical decisions, they are not factors within the
scope of care that an HHA and its staff provide.
Comment: A few commenters who opposed our proposal to remove the
four SDOH items noted that these items are critical for risk adjustment
and evaluating HHA performance across demographic groups.
Response: We wish to clarify that these four SDOH items are not
currently being used for risk adjustment for any HH QRP measures, and
we do not currently utilize them for evaluating HH performance across
demographic groups. Furthermore, there are no current plans for
utilizing the four SDOH items in risk adjustment models or to report HH
performance stratified by these elements, either publicly or in
confidential feedback reports. While we finalized the adoption of the
four SDOH items in the CY 2025 HH PPS final rule (88 FR 88433 through
88439), these items were not yet available on the OASIS. Because data
collection has not begun and we do not have an active use for these
items, we have re-evaluated the value of adding them to the OASIS at
this time.
Final Decision: After consideration of the public comments, we are
finalizing our proposal to remove four standardized patient assessment
data elements (one item for Living Situation (R0310); two items for
Food (R0320A and R0320B); and one item for Utilities (R0330)) collected
under the SDOH category from the HH QRP beginning with the CY 2026 HH
QRP without modification.
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-percent 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).
As we noted in the proposed rule, we became aware that there were
inconsistencies in our preamble and regulation text regarding HHA
requests for reconsideration. On this basis, in the proposed rule, we
sought to address those inconsistencies.
[[Page 55419]]
2. HH QRP Reconsideration Policy: Amending and Codifying 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). in order to support
such a 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 proposed 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 proposed 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 proposed 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
proposed to codify this process at Sec. 484.245(d)(5).
We further proposed that we would notify the HHA in writing of our
final decision regarding its request for an extension to file a
reconsideration of the non-compliance request via an email from CMS. We
proposed to notify the HHA via email because this would allow for more
expedient correspondence with the HHA, given the 30-day reconsideration
timeframe. We proposed to codify this process at Sec. 484.245(d)(6).
We noted that we considered proposing similar modifications across
all post-acute care setting quality reporting programs to more closely
align the reconsideration processes.
We invited comments 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). The
following is a summary of the comments received and our responses:
Comments: All commenters supported the proposal to amend the
current reconsideration policy to permit HHAs to request an extension
to file a reconsideration request, citing the increasing number of
natural and man-made emergencies that could require HHAs to submit such
a request.
Response: CMS thanks commenters for their support of the proposed
updates to the current reconsideration policy that would permit HHAs to
request an extension to file a reconsideration request.
Final Decision: After consideration of the public comments
received, we are finalizing 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 at Sec. 484.245(d)(5) and (d)(6).
3. Codifying the Bases on Which CMS Can Grant a Reconsideration Request
As discussed previously, in the CY 2013 HH PPS final rule, we
stated that, after we reviewed 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 final rule (77 FR 67096). Our
regulation at Sec. 484.245(d)(3) requires that an HHA's request for
reconsideration includes 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 noted in the proposed rule that 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 proposed 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 proposed to amend Sec. 484.245(d)(4) to codify this modified
policy. We noted that we considered proposing similar modifications
across all post-acute care setting quality reporting programs to more
closely align the reconsideration processes.
We invited comments on these proposals to amend the bases by which
we grant a reconsideration request
[[Page 55420]]
under the HH QRP reconsideration policy and to codify this proposed
policy at Sec. 484.245(d)(5). The following is a summary of the
comments received and our responses:
Comment: All commenters supported CMS's proposal to clarify the
current data non-compliance reconsideration policy. Some commenters
noted that this update was needed, with HHAs facing a range of
disasters more frequently. Many commenters also expressed that the
consistency of the policy across care settings was also welcomed. One
commenter requested that CMS further provide technical assistance and
practical examples of acceptable supporting documentation, especially
for smaller agencies that may lack compliance resources. Another
commenter sought to determine CMS's plans to update guidance to
surveyors in light of this policy update.
Response: CMS thanks commenters for their support of the updates
to the data non-compliance reconsideration request policy and process.
CMS will seek to ensure the requirements of acceptable supporting
documentation as part of the reconsideration process are available to
stakeholders. CMS will also ensure all stakeholders engaged in the
reconsiderations process have clear guidance on how this update affects
current processes that evaluate HHA compliance.
Final Decision: After consideration of the public comments
received, we are finalizing our 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
2 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 \20\ 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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\20\ https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf.
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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'' \21\ 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 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
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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\21\ 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
proposed at Sec. 484.45(a) to remove the term ``beneficiary'' and
replace it with the term ``patient.''
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 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 also proposed to remove the term ``beneficiary'' at
Sec. 484.55(d)(1)(i).
We noted that 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
[[Page 55421]]
and CY 2025 Home Health PPS final rules. We noted that this policy
would 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. 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, the changes
proposed to the survey and the quality measures derived from testing
included 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. Since the
publication of the proposed rule, the HHCAHPS Survey and measures went
through consensus-based entity re-evaluation as described here: https://p4qm.org/EM. As of August 7, 2025, the updated HHCAHPS measures were
endorsed with a condition that a robust logic model illustrating the
actions accountable entities can take to improve patient experience is
included in the next measure evaluation in 2030. Due to the very
favorable recommendations from the PRMR, we proposed to move forward
with the five measures. CMS proposed to implement the revised HHCAHPS
Survey beginning with the April 2026 sample month. Table C-20 provides
a comparison of the current and proposed HHCAHPS Survey measures.
Proposed to move forward with the five measures. CMS proposed to
implement the revised HHCAHPS Survey beginning with the April 2026
sample month. Table C-20 provides a comparison of the current and
revised or new HHCAHPS Survey measures.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
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 proposed calculating 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 proposed 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 will continue to be calculated using four rolling quarters and
will 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
will 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 will be reported individually, we will 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 proposed
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 will be updated to include the
new measures will be October 2027, with scores calculated using data
from Q2 2026 through Q1 2027. In the interim period, measure scores
will 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-
[[Page 55425]]
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 will 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 were 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, and the
diagnosis adjustments were no longer significant. As such, CMS proposed
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 proposed to add a mode adjustment in
addition to the case-mix adjustment, with the revised survey. Case-mix
adjustment will 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 will 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 invited public comment on the HHCAHPS Survey proposals. The
following is a summary of the comments received and our responses:
Comment: Most commenters expressed support for revising the
HHCAHPS Survey to make it shorter and simpler. Some commenters noted
that these changes represent a meaningful step toward making the
instrument more patient-centered and less burdensome. Some commenters
expressed strong support for adding the three new HHCAHPS Survey items
noting that ensuring family caregivers are better equipped to meet the
needs of the individuals they care for is critical for home health care
and the new items strengthen the survey's relevance to patients.
Response: We thank the commenters for their support.
Comment: A few commenters asked for a crosswalk and dry run period
so agencies are not penalized during the transition to the new survey
in April 2026, as well as information for vendors to prepare to
administer the updated survey for their client agencies.
Response: The revised HHCAHPS Survey instrument and crosswalks
between the original and proposed publicly reported measures are
available on the HHCAHPS website at https://homehealthcahps.org/Survey-and-Protocols/Survey-Materials. CMS conducted a focused HHCAHPS Survey
Vendor Update Training in late August 2025 to help the approved survey
vendors prepare for the transition. There will also be an opportunity
for survey vendors to submit test files to ensure they are properly
formatted. Additionally, the updated XML data file layouts and XML file
schemas used for data submission are available on the HHCAHPS website
at https://homehealthcahps.org/Data-Submission/Data-Submission-Resources.
Comment: A few commenters voiced concerns about the proposed
measure changes to the HHCAHPS Survey, specifically eliminating three
composite measures: Care of Patients, Communication between Providers
and Patients, and Specific Care Issues. A commenter supported the
removal of the four medication questions that are currently included in
the Specific Care Issues measure.
Response: The Specific Care Issues measure is being retired
because four of the seven items that made up this measure have been
removed from the updated HHCAHPS Survey with the remaining three survey
items being reported as individual measures. As we were shortening the
survey, we removed four of the six current HHCAHPS Survey questions
related to medications patients are taking that were previously
included in the Specific Care Issues measure. The Care of Patients and
the Communications Between Providers and Patients measures are not
being retired. However, CMS will not be able to report them publicly
until there are at least 12 months of data that reflect the survey
updates.
Comment: A commenter suggested freezing the HHCAHPS Star Ratings
on the website during the transition period to the new measures and
caveating the changes on the Care Compare website.
Response: We will take into consideration feedback on how the
HHCAHPS data are reported during the transition period.
Comment: A commenter asked whether the following question was
tested: In the last 2 months of care, did home health staff from this
agency provide your family or friends with information or instructions
about your care as much as you wanted? Another commenter noted that
they found the phrase ``as much as you wanted,'' when referring to the
amount of information sharing a patient desired from home health staff,
to be a challenging for assessing quality. This commenter also noted
that the phrasing ``helped you take care of your health,'' could be
interpreted by respondents in a variety of ways. This same commenter
also recommended that the following question focus on the plan of care:
In the last two months of care, how often did you feel that home health
staff from the agency care about you as a person?
Response: All three questions were developed based on important
aspects of home health care identified during a literature review and
focus groups with
[[Page 55426]]
home health patients. Questions were cognitively tested with home
health patients and their family members through both one-on-one
interviews with an experienced interviewer and as part of the 2022 mode
experiment. Patients felt that home health agencies should give
pamphlets and information to the family members and friends that help
with the person's care, such as spouses and children, which led to the
development of the question ``In the last two months of care, did home
health staff from this agency provide your family or friends with
information or instructions about your care as much as you wanted''.
When asked what the phrase ``helped you take care of your health''
meant in the question ``In the last 2 months of care, how often have
the services you received from this agency helped you take care of your
health'' patients explained that that they were thinking about the ways
the care they received helped them to walk better, helped their wounds
to heal, and helped with their diets and overall health. Patients
understood the question ``In the last two months of care, how often did
you feel that home health staff from the agency cared about you as a
person'' to mean whether staff took the time to get to know them on a
personal level or form a personal connection with them, for example,
treating them like people and not ``like a number''. Results from
several rounds of interviews consistently showed that questions were
well understood and supported by patients and their families.
Comment: Several commenters requested CMS to add the web mode of
survey administration, stating that the HHCAHPS Survey should be
offered in an electronic format delivered by email or text.
Response: A web-based mode was tested during the 2022 mode
experiment with very few respondents opting to complete via web.
Obtaining email addresses for sample members was challenging and not
routinely available. CMS will continue to evaluate the possibility of a
web-based mode for this population in the future.
Comment: A few commenters did not support the removal of the case-
mix adjustment for patients with diagnoses of schizophrenia or dementia
as they believed communication challenges with individuals with these
diagnoses would not be accounted for without the adjustment.
Response: In the most recent mode experiment, despite robust
statistical testing, the potential schizophrenia and dementia adjusters
were no longer statistically significant and did not show an impact on
responses. Since these patients are most likely to have proxy
respondents, this helps with the validity of these patients' responses.
Comment: A couple of commenters were concerned about the increased
cost to agencies for retraining staff and revising their systems for
the new survey.
Response: The updated HHCAHPS Survey instrument should not require
any changes to existing data that HHAs provide their HHCAHPS Survey
vendors. The approved survey vendors will need to update their systems
and materials.
Comment: A commenter suggested fielding both the revised and
original survey items concurrently during a transition period.
Response: Many agencies having very small sample sizes and given
the expense of running two instruments simultaneously, CMS has elected
to phase out the current survey and phase in the new survey rather than
run two separate surveys concurrently.
Comment: A commenter suggested that CMS eliminate the ``Overall
Rating'' and ``Willingness to Recommend'' stating that the responses to
these questions do not always align with the responses to other more
specific questions in the survey. Another commenter asked that these
questions be at the beginning of the survey.
Response: CMS administers these two standard questions across all
of its CAHPS surveys to provide a cross-provider metric. These
questions also capture a combined assessment of a patient's entire home
health experience, integrating all aspects of their interactions with
the home health agency and staff. To keep CAHPS surveys fairly short,
we are unable to ask questions that encompass all aspects of care. We
agree that the home health-specific survey measures and individual
items are critical and CMS will, therefore, continue to report these as
well. Overall rating questions are generally at the end of all CAHPS
surveys so a respondent can provide an overall assessment of their
experiences after thinking about more specific aspects of their care.
Comment: A commenter recommended that CMS ensure that the Spanish
HHCAHPS Survey is not simply a literal translation, but one that is
culturally and linguistically validated; raised challenges in Puerto
Rico related to internet connectivity, mail access, and responsiveness
to phone calls; and suggested that survey vendors conducting telephone
outreach in Puerto Rico be required to use a Puerto Rico area code
(787) when placing calls.
Response: The Spanish translation was developed by a reliable
translation service provider and thoroughly reviewed by native Spanish
speakers. The translation service was asked to retain phrasing from the
current HHCAHPS Survey instrument as much as possible since that
translation was reviewed and cognitively tested specifically with
patients in Puerto Rico to ensure that they could understand the
questions. We appreciate the challenges of conducting both mail and
telephone surveys in Puerto Rico and encourage agencies there to work
closely with their HHCAHPS Survey vendors to implement mixed-mode
surveys (i.e., mail survey with telephone follow-up of non-
respondents), which give patients a choice of how to respond. We have
provided vendors with your suggestion to use a Puerto Rico area code
when making outbound calls. Agencies in Puerto Rico should work with
their vendors to implement this and any other measures (within HHCAHPS
protocols) to help maximize response rates.
Final Decision: After consideration of the public comments we
received, we are finalizing our proposal to update the HHCAHPS measures
beginning with the April 2026 sample month.
I. HH QRP Quality Measure Concepts Under Consideration for Future
Years--Request for Information (RFI)
In the CY 2026 HH PPS proposed rule (), we sought input on the
importance, relevance, appropriateness, and applicability of each of
the quality measure concepts under consideration listed in Table C-21
for future years of the HH QRP. In the CY 2024 HH PPS proposed rule (88
FR 43738 through 43740), we included an 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 sought input on four concepts for future measures for the HH QRP
in the CY 2026 HH PPS proposed rule.
1. Interoperability
We sought 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 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
[[Page 55427]]
use of electronic health information from, other health IT without
requiring special efforts by the user.\22\ 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.\23\ We requested 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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\22\ 21st Century Cures Act, 42 U.S.C. 300jj(9) (2016).
\23\ 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)).\24\ 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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\24\ 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 requested 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 sought input on the feasibility
of measuring improvement in cognitive functioning during a HH stay,
which typically averages 56 days; \25\ 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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\25\ 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 sought 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.\26\ This comprehensive approach emphasizes person-centered care
by promoting well-being of patients and their family members. We sought
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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\26\ Well-Being Concepts. CDC Archives. WHPL_Canon_WB_Well-
Being_Concepts___HRQOL___CDC_2017.pdf.
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4. Nutrition
Finally, we sought 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
sought 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] TR02DE25.047
1. Interoperability
Most commenters on the interoperability measure concept stressed
the value and importance of advancing interoperability in healthcare in
general and in home health specifically. Many commenters shared that
national standards will be critical for any interoperability measure
concept. Most commenters also shared that federal funding was needed to
ensure that home health could have the same advances in health record
systems seen in hospital and physician practices. Numerous commenters
cited the HITECH Act (Pub. L. 111-5), that subsidized the adoption and
[[Page 55428]]
implementation of certified electronic health record (EHR) systems for
hospitals and physician practices but that was not available to home
health, behavioral health, and other post-acute care settings. They
note, without this funding, HHAs have not had access to the same level
of financial or technical support to build and maintain an
interoperable infrastructure. Many commenters specifically noted that
HH was behind in the development of health IT deployment and this would
be a barrier to any measure.
Those who support the development of an interoperability measure
concept outlined criteria that must be considered. Some shared that any
measure must evaluate both technical readiness or capability and the
processes or practices of data exchange. Others shared that a measure
should address interoperability between health care providers, between
providers and patients, and between providers and payers. One commenter
noted that the exchange of information needs to account for clinical as
well as social determinants of health information. A number of
commenters highlighted the work of The Post-Acute Care Interoperability
(PACIO) project \27\ that supports development of FHIR (Fast Healthcare
Interoperability Resources) technical implementation guides and
suggested any interoperability work builds on these ongoing efforts.
One commenter shared that this measure concept should include caregiver
information in electronic health records. Another advocated for
building out a measure process based on the Trusted Exchange Framework
Common Agreement (TEFCA) initiative.
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\27\ For more information on the Post-Acute Care
InterOperability (PACIO) project, see: https://pacioproject.org/.
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Several commenters who stressed the importance of interoperability
also noted that they didn't support an interoperability measure concept
for HH due to what they described as significant financial and
operational barriers to advancing standardized interoperability in HH.
They argue that home health agencies currently are largely not at the
appropriate level of technology adoption for interoperable data
exchange or measures that evaluate the ability of data systems to
securely share information across providers and with patients.
2. Cognitive Function
Commenters shared that addressing cognitive function in home
health care is a critical clinical area. Many commenters shared that
the OASIS tool already has several tools that evaluate aspects of
cognitive function. The PHQ 2-9(copyright), Brief Interview for Mental
Status (BIMS(copyright)), and Confusion Assessment Method
(CAM(copyright)) were often referenced, and commenters shared that
those tools would not be sufficient to address the range of issues that
encompass cognitive function. One commenter highlighted that the
current tools are not effective in assessing mild cognitive impairment
that can affect activities of daily living or instrumental activities
of daily living. Several commenters particularly note that these tools
were intended to assess some areas of cognition but not intended for
performance measures.
Some commenters shared that the trajectory of patients with
cognitive function challenges can vary and make the use of any one tool
alone insufficient to address the range of cognitive function
challenges. Some patients with progressive neurological conditions will
have steady decline and not likely to expect cognitive improvement.
Patients with chronic conditions may complicate assessment of cognitive
function and a patient's expected care path would also be progressive
decline. These issues are made more challenging due to the short
average length of stay that numerous commenters suggest is too short to
have a meaningful impact on cognitive function.
With these considerations, many commenters stressed that CMS
should not target a cognitive function measure focused on improvement
but rather focus on maintenance or limiting cognitive decline. Some
commenters, after considering the complexity of cognitive function,
argued against developing a single measure to address this domain or to
not develop this measure domain with the present challenges. One
commenter shared that there would need to be additional resources for
home health agencies to build expertise in addressing cognitive
function needs to justify introducing a new measure related to this
measure domain.
3. Well-Being
Numerous commenters provided input on the well-being measure
concepts. Many commenters shared that addressing well-being could be
important for home health patients. Commenters often also shared that
any measure concept addressing well-being should account for what HHAs
can reasonably affect with respect to well-being during a home health
stay. Most commenters also shared that any measure of well-being should
be an evidence-driven, validated tool.
A commenter highlighted the importance of including caregiver
input on assessing patient well-being, where appropriate. Some
commenters had suggestions about what kinds of tools may best address
the well-being measure concept. A few commenters suggested CMS consider
focusing on a patient reported outcome measure structure. Other
commenters suggested specific components of the OASIS that could
already be valuable as part of a wellbeing measure such as the BIMS,
CAM, and PHQ 2-9 and not duplicate the value of these tools when
considering a well-being concept.
Many commenters also suggested that given the timeframe of a home
health stay, the focus for CMS should be on a process rather than
outcome measure since the HHA would have limited ability to affect the
broad concept of well-being. Others cautioned that HHAs could not
address an issue as broad as well-being in the timeframe of a patient's
HH care and that this measure concept should not be considered for the
HH QRP.
4. Nutrition
Many commenters described the importance of nutrition in patient
care and in home health specifically. Commenters share that clinicians
can support patients' health by understanding their nutritional status.
Commenters who supported developing a nutrition measure concept often
stressed the need for using tools that were validated and reliable.
Commenters suggested a range of nutrition tools such as the
standardized Mini Nutritional Assessment (MNA) or Malnutrition
Screening Tool (MST) that could provide reliable data. Another
commenter suggested the DETERMINE nutrition risk scale as a screening
tool. Another tool suggested was the hand grip strength (HGS) through
purposeful activities and further referencing research that shows in
older adults, a significant association between malnutrition and HGS.
Yet another commenter noted that weight was collected and start of care
and resumption of care and that CMS should use data already available
in consideration of a new measure concept. The most commonly cited tool
from commenters was the Malnutrition Care Score (MCS), an electronic
clinical quality measure (eCQM) adopted into the Inpatient Quality
Reporting (IQR) program for acute care hospitals.
Commenters stated they favored the MCS because it assesses a
different aspects of care that are essential to addressing malnutrition
in any care setting. One commenter noted that the
[[Page 55429]]
MCS addresses the malnutrition care workflow that are necessary to
identify and manage malnutrition risk in a timely and effective manner.
Commenters described the four steps of: (1) Screen for malnutrition
risk; (2) Conduct nutrition assessment; (3) Document malnutrition
diagnosis; and (4) Document nutrition care plan strong, clear, clinical
processes underpinning the measure. A number of commenters highlighted
that this tool has been successfully utilized in quality reporting and
therefore is key for CMS consideration for the HH QRP.
Commenters who supported a nutrition measure for HH often stressed
that a measure concept related to nutrition should be a process measure
because of the complex range of issues that encapsulate nutrition
issues. One commenter suggested that any measure concept should also
align with broader efforts to improve access to nutrition supports,
such as the Supplemental Nutrition Assistance Program (SNAP) and
nutrition programs authorized under the Older Americans Act. Some
commenters who differed in support for the development of a nutrition
measure concept were unified in arguing that CMS needed to support HH
by increasing funding to address nutritional challenges. Currently,
HHAs incorporate dietician or nutritionist services with no expectation
of reimbursement. The commenter suggested that CMS should reimburse for
dietician services and empower HHAs to more comprehensively address
nutritional issues in their patients.
Several commenters did not support current development of a
nutrition measure concept because of a number of factors. They cited
the lack of reimbursement for services that would support nutrition
interventions. They also noted that the complex issues around nutrition
care would not fall within the scope of HHAs to address in the limited
time frame of home health care. They often cited the current margins in
HH care that are being taxed in providing the essential services of the
home health benefit.
Response: We thank all the commenters for responding to this RFI.
While we are not responding to specific comments in response to the RFI
in this final rule, we will take this feedback into consideration for
our future measure development efforts for the HH QRP.
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, approximately seventy
percent (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
noted in the proposed rule that we believe by reducing this deadline
from 135 days to 45 days, we could reduce the time between data
collection and public reporting resulting in the improvement in
timeliness with limited change in burden to providers.
We requested feedback on this potential future reduction of the HH
QRP data submission deadline from 4.5 months to 45 days. Specifically,
we requested 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.
Comment: Most commenters supported a reduction in the final data
submission deadline from 4.5 months, with additional recommendations
related to implementation. They agreed with the CMS assessment that
timely
[[Page 55430]]
public reporting is essential for informed consumer decision-making and
enhances transparency and accountability. Some commenters stressed that
with any reduction in timeframe, CMS should adopt a phased approach
over several fiscal years to allow for providers and other stakeholders
to adjust to the transition. Many commenters suggested that CMS should
pilot the reduction in submission deadlines before moving to national
implementation of the policy update, stating that this would allow CMS
to evaluate the impacts and determine appropriate technical guidance,
stakeholder engagement, and operational flexibility needed to
successfully implement this change.
Other commenters cautioned that a transition from 4.5 months to 45
days would cause harm to a range of HHAs due to additional
administrative burden. They noted that this would especially be the
case for small HHAs, stand-alone HHAs that operate with limited
resources, HHAs that manage coding and review in-house, HHAs experience
high field staff turnover, or HHAs that lack robust EMR or analytics
systems. They noted this could introduce errors and comprise the
quality of OASIS data submitted. One commenter expressed concerns due
to the rate cuts that are currently under consideration for HHAs.
Commenters who expressed concerns with the potential reduction in the
submission deadline had suggestions for how to make the transition
manageable for HHAs. Many suggested that the submission deadline should
be 60 days to be consistent with the data CMS cited in the original
RFI, which showed that only 1.3% of data was submitted after 60 days.
Other commenters noted that 60 days would be a reasonable target since
the 60-day time frame would align with the current HHA episode of care,
and with some HHA's expectations around HH QRP conditions of
participation guidelines. A few commenters suggested 90 days to account
for the current administrative burdens HHAs are managing. A few
commenters cited the financial pressure currently faced by HHAs and
opposed the reduction in the submission deadline over concerns that
HHAs would not be able to meet the new workflow and operational
challenges in the current resource environment.
Along with feedback on this RFI, numerous commenters provided
feedback related to OASIS submissions. Many commenters suggested that
CMS should move to a four-year cycle in updating the OASIS. One
commenter requested that the timeframe for updating claims-based
measures be reduced to also provide more timely information related to
these measures which have grown in importance. One commenter also
requested that CMS align any reconsideration updates to account for the
reduction in submission deadlines.
Response: We thank all the commenters for responding to this RFI.
While we are not responding to specific comments in response to the RFI
in this final rule, we will take this feedback into consideration for
our future measure development efforts for the HH QRP.
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, issued an RFI in the CY 2026HH PPS proposed rule to
gather broad public input on the dQM transition in HHAs.
1. Background
As we noted in the proposed rule, 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 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,\28\ 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:
---------------------------------------------------------------------------
\28\ ``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).
---------------------------------------------------------------------------
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 considered opportunities to advance FHIR[supreg]-based reporting
of patient assessment data for the submission of the OASIS. Our
objective was to explore how HHAs typically integrate technologies with
varying complexity into existing systems and how this affects HH
workflows. In this RFI, we sought 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 also sought input on future measures under consideration
including applicability of interoperability as a 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 sought 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
[[Page 55431]]
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] \29\
applications integrated with your EHR or other health IT?
---------------------------------------------------------------------------
\29\ 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? \30\
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\30\ 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.\31\ 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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\31\ 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 invited any feedback, suggestions, best practices, or success
stories related to the implementation of these technologies and noted
that we would use the input to inform our future dQM transition
efforts.
Comment: Many commenters expressed support for a transition to dQMs
in the HH QRP, citing that using FHIR as a standard can alleviate
administrative burden and improve data quality if implemented
effectively. Many of these commenters supported the transition but had
recommendations for CMS on successful implementation for HHAs,
including a phased implementation or ``glide path'' approach, reporting
flexibility, and adequate time to update systems after CMS finalizes a
change to HH QRP requirements. Many commenters recommended funding or
incentive opportunities to obtain resources and technology for improved
exchange of health information. Numerous commenters also noted that
implementation and updating EHRs is resource intensive, and that HHAs,
along with other PAC providers, were not included in Meaningful Use
funding through the Health Information Technology for Economic and
Clinical Health (HITECH) Act of 2009.
Several commenters expressed concerns about the differences in dQM
and IT readiness across HHAs. They highlighted data that over time, the
adoption of EHR technology has increased in the post-acute care;
however, the interoperability of that technology remains limited. A
commenter gave examples of HHAs still receiving records via fax and
noted that many HHAs lack connectivity to EHRs. Commenters suggested
that technical assistance would be needed for HHAs that were the least
advanced in health IT capabilities, and to also provide opportunities
for those farther along to meet today's certified EHR technology
(CEHRT) standards. Some commenters went further to note that they could
not support any implementation around dQMs without federal commitment
of additional funding for these goals.
Commenters addressed other related issues related to a dQM's
implementation. Some commented on the need to manually submit OASIS and
other PAC assessment data. They recommend that CMS develop and
implement standardized Application Programming Interfaces (APIs) that
would allow for direct data exchange between certified EHRs and CMS
systems (directly). Another commenter noted that CMS has regulations
that limit use of technology in populating OASIS items from a patient's
medical chart. With the ability of artificial intelligence and other
technologies, they noted that HHAs could now incorporate some patient
data more efficiently without removing clinician review of the data.
They argued this could significantly reduce the time required to
complete the OASIS.
Several commenters also provided detailed responses to the RFI's
questions about their agency's current state of health IT use,
challenges and/or opportunities that may arise during
[[Page 55432]]
integration of technologies with varying complexity into existing HH
systems, how it affects workflow, and what support may be needed to
complete and submit quality data in ways that protect and enhance care
delivery.
Response: We thank commenters for their feedback. While we will not
be responding to specific comments submitted in response to this RFI in
this final rule, we intend to use this information to inform future dQM
transition work and potential future rulemaking to further our efforts
toward a patient-centric digital health ecosystem.
L. Form, Manner, and Timing of Data Submission Under the HH QRP
We did not propose any new policies regarding Form, Manner, and
Timing of Data Submission Under the HH QRP in the proposed rule.
M. Policies Regarding Public Display of Measure Data for the HH QRP
1. Ending 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 of the CY 2026 HH PPS proposed
rule, we proposed to remove the Patient/Resident COVID-19 Measure
beginning with the CY 2026 HH QRP. However, we noted that 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 proposed 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
invited 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.
Comment: Some commenters supported the proposal to end of the
public display of the Patient/Resident COVID-19 Measure data after the
January 2026 Care Compare refresh on Medicare.gov.
Response: We appreciate commenters' support.
Final Decision: We will cease publicly reporting data for this
measure after the January 2026 Care Compare refresh, as proposed.
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 rule (80 FR 68624), the Center for Medicare and
Medicaid Innovation (Innovation Center) implemented the Home Health
Value-Based Purchasing (HHVBP) Model (``original Model'') in nine
states on January 1, 2016. The design of the original 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.\32\ 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.\33\
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\32\ https://innovation.cms/gov/data-and-reports/2020/hhvbp-thirdann-rpt.
\33\ 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.\34\ 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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\34\ https://www.cms.gov/newsroom/press-releases/cms-takes-action-improved-health-care-seniors-announces-intent-expand-home-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. 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. In the CY 2026 HH PPS proposed
rule (90 FR 29184), we proposed adding and codifying an additional
measure removal factor at Sec. 484.358, Factor 9: It is not feasible
to implement the measure specifications.
We noted that this new measure removal factor would 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 invited public comments on this proposal. The following is a
summary of the comments we received and our responses:
[[Page 55433]]
Comment: Commenters supported this proposed addition to the measure
removal factors.
Response: CMS appreciates the positive comments regarding the
proposed measure removal factor.
Final Decision: CMS is finalizing as proposed the proposal to add
and codify at Sec. 484.358 Measure Factor 9: It is not feasible to
implement the measure specifications.
C. Changes to the Expanded HHVBP Model's Applicable Measure Set
We proposed removing three measures from the current applicable
measure set and adding four measures starting in CY 2026. The proposed
removal of the three measures was necessary due to revisions to the
Home Health Consumer Assessment of Healthcare Providers and
System[supreg] (HHCAHPS) Survey that were proposed beginning with the
April 2026 sample. These proposed survey revisions prevent the three
HHCAHPS Survey-based measures from being calculated as currently
specified for the expanded HHVBP model.
1. Removal of Three HHCAHPS Survey-Based Measures From the Expanded
HHVBP Model Applicable Measure Set
The HHCAHPS Survey, a nationally standardized and publicly reported
survey, is designed to measure the experiences of people receiving home
health care from Medicare-certified HHAs. It is conducted for HHAs 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 the proposed rule, CMS proposed changes to the HHCAHPS
Survey. These proposed changes would affect the survey questions used
to calculate three measures that are used in the expanded HHVBP Model.
CMS 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 the
final rule, and will become effective beginning with the April 2026
sample month.
Given these proposed changes, we proposed 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 proposed to remove these three HHCAHPS Survey-based measures
using the proposed and finalized Removal Factor 9: It is not feasible
to implement the measure specifications. This measure removal factor is
described in more detail previously in section IV.B. of this final
rule. The removal of these measures is necessary because the proposed
changes to the HHCAHPS Survey instrument have been finalized, as the
current measure specifications cannot be calculated using the finalized
survey revisions. Because 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 will be removed because the survey
changes have been 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.
We invited public comments on this proposal. The following is a
summary of the comments we received and our responses:
Comment: Several commenters provided feedback regarding the
proposed removal of certain HHCAHPS Survey items. Most of the
commenters supported the changes to the HHVBP applicable measure set. A
commenter stated that they supported the removal of outdated composite
measures, such as those removed in the revised HHCAHPS Survey. Another
commenter supported changing the HHVBP applicable measure set based on
HHCAHPS Survey changes but encouraged CMS to revise the HHCAHPS Survey-
based measures rather than remove them entirely.
Response: CMS appreciates the support for aligning the HHVBP Model
applicable measure set with the revised HHCAHPS Survey change. At this
time, CMS is not introducing replacement measures for those based on
removed elements of the HHCAHPS Survey. However, we will take these
public comments into consideration as we continue to refine the HHVBP
Model applicable measure set.
Comment: A few commenters opposed any measure set changes at this
time.
Response: CMS notes that these measures cannot be retained in the
expanded HHVBP Model given the finalized changes to the HHCAHPS Survey.
Comment: A commenter encouraged CMS to remove all HHCAHPS Survey-
based measures from the calculation of HHA quality scores to focus on
objective clinical measures.
Response: CMS declines to remove all HHCAHPS Survey-based measures
from the calculation of HHA quality scores and believes that self-
reported patient experience data remains valuable for holistically
measuring quality of care. As such, the measures still calculable from
the revised HHCAHPS Survey, Overall Rating and Willingness to
Recommend, will remain in the expanded HHVBP Model's applicable measure
set.
Final Decision: After consideration of the public comments
received, CMS is finalizing the removal of three HHCAHPS Survey-based
measures as proposed.
[[Page 55434]]
2. Addition of Medicare Spending Per Beneficiary Post-Acute Care (MSPB-
PAC) to the Expanded HHVBP Model Applicable Measure Set
We proposed adding 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 noted that we anticipate adding the MSPB-PAC measure would
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 HHAs. 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 HHAs 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.\35\
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\35\ See https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assesment-Instruments/NursingHomeQualityInits/Downloads/2016_07_20_mspb_pac_Itch_irf_snf_measure_specs.pdf for more details
on the specifications for the MSPB-PAC measure.
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We noted that 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 would use 2 years of data covering CY 2022 and CY 2023
as baseline data. Because the MSPB-PAC measure is a 2-year measure, CY
2026 performance for the measure would 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 would 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 would
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 would allow the Model to better incentivize high-
quality home health care across the country.
We invited public comments on this proposal. The following is a
summary of the comments we received and our responses:
Comment: Several commenters supported the addition of the MSPB-PAC
measure, encouraging CMS to adopt MSPB-PAC to align with administrative
priorities and focus on spending efficiency. They acknowledged that
adding MSPB-PAC to HHVBP supported CMS's shift towards more
comprehensive accountability by combining cost metrics with functional
and patient-reported outcomes. They agreed the MSPB-PAC measure would
advance HHVBP's emphasis on cost-effectiveness, which is a key
indicator of value in home health care. A commenter stated that
agencies that can deliver necessary care in fewer episodes should be
recognized and rewarded. They also expressed appreciation that MSPB-PAC
includes price-standardized payments for Part A and Part B services,
and is risk-adjusted to reflect patient complexity, thereby making it
an appropriate tool for assessing efficiency.
Response: CMS appreciates commenters' understanding of the value of
the MSPB-PAC measure and the supportive feedback.
Comment: A few commenters encouraged CMS to ensure the new measure
was validated and properly risk-adjusted to avoid unfairly penalizing
agencies serving complex, high-need patients.
Response: CMS appreciates commenters' concerns. CMS is committed to
ensuring fairness, accuracy, and feasibility for all quality measures
used in the expanded HHVBP Model. CMS also reminds commenters that the
MSPB-PAC measure is risk adjusted to account for variations in patient
populations and resource utilization across PAC providers.
Comment: Multiple commenters stated that MSPB-PAC is not a measure
of care quality, only of expenditures. A commenter noted that the
introduction of the Patient-Driven Groupings Model (PDGM) for Medicare
payment aligned payment with payment complexity and removed incentives
to increase the volume of therapy visits, making the MSPB-PAC measure
unnecessary. Another commenter noted that, within the PDGM, payment is
determined by defined patient characteristics: admission source,
clinical grouping, functional impairment level, and comorbidity
adjustment. This commenter expressed concern that patients referred
from acute settings or presenting with higher-acuity conditions such as
wounds, neurological rehabilitation needs, or musculoskeletal
impairments generate higher episodic payments due to increased resource
requirements.
Response: Incentivizing care coordination and efficient resource
allocation is consistent with the expanded HHVBP Model's goal of
improving the quality and efficiency of Medicare home health care,
leading to
[[Page 55435]]
better outcomes for beneficiaries and reduced costs for the Medicare
program. CMS believes that the addition of MSPB-PAC will further the
goal of improving the efficiency of home health care, creating
incentives for coordination of care and incentivizing providers to find
efficient ways to deliver high quality care. CMS acknowledges that
higher-acuity patients often require more resource-intensive
treatments. CMS notes that the MSPB-PAC measure is risk-adjusted to
account for differences in patient acuity. In addition, clinically
complex patients receive a higher payment rate under the PDGM, limiting
the financial incentive to avoid these high acuity patients.
Comment: Some commenters questioned whether HHAs that spend more
than the national average of MSPB-PAC will receive a lower score on the
measure. They also questioned whether HHAs that spend more than the
average for their cohort will receive a lower score on the measure.
Response: We appreciate the commenters' concerns. MSPB-PAC is a
metric of cost-effectiveness and efficiency, and as such, lower
spending results in a higher score on the measure. As with all expanded
HHVBP Model measures, HHAs will receive TPS scores based on their
measure performance relative to their cohort. Full measure
specifications for MSPB-PAC are available at the following link:
https://www.cms.gov/files/document/home-health-outcome-measures-table-oasis-e2025.pdf.
Comment: Some commenters stated that the incentive to reduce costs
of care which would result from adding the MSPB-PAC measure would not
necessarily lead to higher quality care for patients and would run
contrary to the goals CMS has for promoting patient-centered care. Some
commenters particularly noted the potential for unintended consequences
associated with the introduction of the MSPB-PAC measure, stating that
adding the measure would create disincentives for HHAs to admit
clinically complex patients, undermining access to care for high-need
patients.
Response: We appreciate these comments. As part of our ongoing
monitoring of the expanded HHVBP Model, we will monitor for changes in
patient characteristics that may suggest unintended consequences
associated with adding the MSPB-PAC measure. We note that the MSPB-PAC
measure is risk-adjusted to account for differences in patient acuity.
In addition, clinically complex patients receive a higher payment rate
under PDGM, limiting the potential for unintended consequences.
Comment: A commenter stated that the MSPB-PAC and DTC-PAC measures
measure very similar outcomes and that only one should be added to the
expanded HHVBP Model.
Response: We believe that the MSPB-PAC and DTC-PAC measures measure
different dimensions of quality and efficiency. DTC-PAC is a measure of
patient outcomes while MSPB-PAC is a measure of resource use and cost
efficiency. The DTC-PAC measure uses inpatient hospital claims to
identify episodes with an associated unplanned hospitalization and
administrative data to identify patients who die within 31 days of
discharge, both of which result in an episode being classified as not
having a successful community discharge. The MSPB-PAC measure uses
Medicare Part A and B claims to measure the average Medicare spending
per patient during and after the home health stay. The goal of the DTC-
PAC measure is to encourage the provision of comprehensive care that
facilitates successful long-term recovery at home. The goal of the
MSPB-PAC measure is to incentivize providers to improve care efficiency
and coordinate services across the episode of care, ultimately reducing
total Medicare spending. Analyses conducted as part of the endorsement
process for the MSPB-PAC measure found a small but significant negative
association between the MSPB-PAC measure scores and the DTC measure
scores. These results show that MSPB-PAC and DTC-PAC measure separate
dimensions of quality.\36\
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\36\ National Quality Forum (NQF) (2021) Cost and Efficiency,
Spring 2020 Cycle: CDP Report. Available from: https://digitalassets.jointcommission.org/api/public/content/926365c68be1441791340150005aacd6?v=39e48ce7.
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Comment: Several commenters opposed adding any additional measures
to the HHVBP applicable measure set, noting that HHAs have made
substantial investments in quality improvement strategies tied to the
current Model's framework. Some commenters expressed concern about the
burden of adding additional measures, given the proposed reductions to
home health payments. Another commenter encouraged CMS to maintain a
stable and predictable measure environment, requesting that CMS
maintain the current measure set and weight distribution in the near
term, while engaging stakeholders in a phased, transparent process for
any future expanded HHVBP Model refinements.
Response: We appreciate these comments but note that one of the
goals of the expanded HHVBP Model is to study new potential quality and
efficiency measures for appropriateness in the home health setting.
Adding the MSPB-PAC measure to the HHVBP applicable measure set is
consistent with this goal. We have and will continue to engage
stakeholders in the measure development and implementation processes.
Comment: Some commenters expressed concern that, as a claims-based
measure, MSPB-PAC lacks real-time transparency, limiting HHAs' ability
to implement timely performance improvements.
Response: We recognize commenters' concerns regarding the
timeliness of public reporting data. We remain committed to ensuring
providers have access to the most timely data available to support
quality improvement efforts. The MSPB-PAC measure is intended to
provide actionable, transparent information to providers. By evaluating
a given HHA's risk-adjusted Medicare spending in a defined timeframe as
compared to that of the national median HHA, the MSPB-PAC measure
recognizes HHAs that deliver high quality care at lower cost to
Medicare, when used in conjunction with the other quality measures in
the expanded HHVBP Model. The MSPB-PAC measure will have a six-month
data lag, similar to the other claims-based measures already included
in the HHVBP Model applicable measure set. Additionally, as discussed
in the CY 2018 HH PPS final rule (82 FR 51676), improvements in
performance in the MSPB-PAC measure over a one-year period will also be
included in the two years of measure data, so providers' improvement
efforts can still be reflected in their two-year measure scores.\37\
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\37\ https://www.govinfo.gov/content/pkg/FR-2017-11-07/pdf/2017-23935.pdf.
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Comment: Some commenters expressed concern that MSPB-PAC reflects
spending related to factors outside of HHAs' control, potentially
including spending for care the patient receives after discharge that
may not have been preventable.
Response: We recognize commenters' concerns. We believe providers
will not be unfairly punished for spending outside of their control.
The MSPB-PAC measure excludes certain services and costs that are
considered clinically unrelated or beyond the provider's control. This
is done so that providers are held accountable only for the costs they
can reasonably manage. The episode of care definition that the MSPB-PAC
measure uses includes the period a patient is directly under a
provider's care, as well as a defined
[[Page 55436]]
period after the end of that provider's treatment which may be
reflective of and influenced by the services rendered by the provider.
Final Decision: After consideration of the public comments
received, we are finalizing the addition of MSPB-PAC measure to the
expanded HHVBP Model's applicable measure set as proposed.
3. Addition of OASIS-Based Function Measures to the Expanded HHVBP
Model Applicable Measure Set
We proposed 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 Care 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
policy 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 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.\38\
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\38\ 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.\39\
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\39\ 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.
---------------------------------------------------------------------------
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.
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. We anticipate that HHAs that receive
payment adjustments will have greater incentives to improve or maintain
quality of care.
The following is a summary of the comments we received and our
responses:
Comment: Most of the commenters supported CMS' proposed addition of
the measures of bathing and dressing to complement the DC Function
measure. However, many of the supportive commenters encouraged CMS to
work toward replacing these measures with GG-based counterparts.
Response: We appreciate commenters' support of these measures. CMS
agrees with commenters about the desirability of section GG-based
versions of these measures. Once section GG-based versions of these
measures are available, we may consider proposing changing to the GG-
based measures through future rulemaking.
Comment: Some commenters opposed adding any measures based on the
OASIS M1800 items, even in the short-term. These commenters stated that
the functional areas addressed by these measures would be better served
by developing new quality measures based on the OASIS GG items. One
commenter expressed concern that using the M1800-based measures could
delay development and implementation of the GG-based measures.
Response: We agree with commenters about the desirability of
Section GG-based versions of these measures but note that each of the
M1800 item-based measures were used in the TNC in Self-Care measure
that was used in the expanded HHVBP Model prior to 2025. The addition
of the M1800-based measures will not delay development or
implementation of the GG-based measures, as CMS will continue to work
toward development of the GG-based measures, even while the M1800-based
measures are publicly reported. Both the M1800 items and GG items will
continue to be collected during this development period. Once section
GG-
[[Page 55437]]
based versions of these measures are available, we may consider
proposing changing to the GG-based measures through future rulemaking.
Comment: A few commenters encouraged CMS to replace the DC Function
measure with individual OASIS-based function measures.
Response: We finalized the proposal to add the DC Function measure
to the HHVBP applicable measure set in the CY 2024 HH PPS final rule
(88 FR 77676). Public comments on this change were generally
supportive. CMS will not remove the DC Function measure at this time.
The DC Function measure contributes valuable insights about the quality
of care provided to patients. For many patients, the overall goals of
HHA care may include optimizing functional improvement, returning to a
previous level of independence, maintaining functional abilities, or
avoiding institutionalization Unlike the individual OASIS-based
function measures, the DC Function measure does not solely reflect
improvement of patients at discharge, as it estimates the percentage of
patients who meet, as well as exceed, an expected discharge function
score. The measure gives credit for patients who, based on their own
demographic and clinical characteristics, are expected to maintain, as
opposed to improve in, function. We will continue to monitor
performance trends of the DC Function measure.
Comment: Some commenters opposed adding any additional measures to
the HHVBP applicable measure set. A few commenters cited concerns with
the administrative burden of adding new measures, while another noted
the investments that providers have made in quality improvement
strategies based on the current measure set.
Response: We appreciate commenters' concerns about changes to the
HHVBP applicable measure set. We note that these measures were used in
the TNC in Self-Care measure that was part of the HHVBP applicable
measure set prior to 2025, when it was replaced by the DC Function
measure. As a result, CMS believe that HHAs should be able to adjust to
this change in the measure set without unreasonable burden.
Comment: A commenter requested that CMS not obscure the role of the
nurse in providing patient-centered care.
Response: We appreciate the comment and remain committed to
supporting the contributions made by all members of an
interdisciplinary patient-centered care team.
Comment: A few commenters expressed concerns about the fairness,
accuracy, and feasibility of new measures. A commenter encouraged CMS
to validate all proposed new measures before tying the measures to
payment. Another encouraged CMS to ensure that functional measures are
appropriately risk-adjusted to account for the complexity of patient
populations. Another commenter encouraged CMS to adopt a perspective
oriented around comprehensive care. Another commenter recommended CMS
either delay the proposed changes or make at least some of the changes
voluntary for the first performance year before payments are impacted.
Response: We appreciate commenters' concerns about quality measure
accuracy and fairness. We remain committed to ensuring that all HHVBP
applicable measures account for providers' patient populations and
notes that all three of the proposed function measures are risk-
adjusted. Additional information about the specifications of these
function measures is available at the following link: https://www.cms.gov/files/document/home-health-outcome-measures-table-oasis-e2025.pdf. While CMS recognizes commenters' concerns about the timing
of adding these measures, we do not believe the addition of these
measures needs to be delayed particularly given that the three measures
are included in the TNC in Self-Care measure previously used in the
expanded HHVBP Model. The function measures have been thoroughly vetted
and two of the measures have been utilized in HH QRP for multiple
years. These function measures would add valuable information about
quality of care to the expanded HHVBP Model, which we believe will be
beneficial to incorporate into the Model sooner rather than later.
After implementation, we will monitor performance trends for these
function measures to verify that the measures are meaningfully
identifying HHAs' quality of care. Therefore, CMS has decided not to
delay implementation of these measure changes.
In addition, we do not believe making the new measures voluntary
would be viable or beneficial to the expanded HHVBP Model or providers.
The expanded HHVBP Model is designed to incentivize HHAs to provide
high-quality home health care across the country.
Given the intent of the expanded HHVBP Model to improve the quality
of care furnished to Medicare beneficiaries and study what incentives
are sufficiently significant to encourage HHAs to provide high quality,
CMS believes that it is important that none of the measures used in the
Model be voluntary. Permitting HHAs to voluntarily decide whether to
use the newly finalized measures would result in some HHAs receiving
performance scores that are based on less complete and less
representative data, reducing the impact of the Model on quality. In
addition, the addition of the three finalized OASIS-based function
measures to the Model increases the number of HHAs that have sufficient
data available to receive a payment adjustment, which also increases
the impact of the Model on quality.
Final Decision: After consideration of the public comments
received, CMS is finalizing the addition of the three OASIS-based
function measures to the HHVBP applicable measure set as proposed.
4. Updates to Individual Measure Weights and Category Weights
Along with the proposed revisions to the current HHVBP applicable
measure set, we proposed revising the weights of the individual
measures starting with the CY 2026 performance year as well as revising
the measure category weights. Table D-22 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 proposed 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
[[Page 55438]]
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 did not propose changing the
measure category weights for the smaller-volume cohort 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] TR02DE25.048
Comment: A few commenters supported all of the proposed changes to
HHVBP Model's measure weights. Another commenter only supported
modifications caused by the proposed changes to HHCAHPS Survey-based
measures, as they opposed the other proposed changes to the HHVBP
applicable measure set.
Response: We appreciate the comments supporting the proposed
changes to HHVBP measure weights. We note that all proposed changes to
measure weights are necessary given the changes to the expanded HHVBP
Model's applicable measure set that are being finalized in this rule.
Comment: Several commenters disagreed with CMS's proposed measure
weight changes. A commenter expressed concern about the increased
weight for the OASIS-based measures. A different commenter expressed
concern about the increased weight each individual HHCAHPS Survey-based
measure would receive under the proposed measure category weights.
Another commenter requested that measure weight changes be introduced
gradually. A different commenter expressed concerns about the
differential impact the revised measure weights might have on providers
in Puerto Rico. A few commenters opposed any measure set or measure
weight changes at this time.
Response: We appreciate the comments received on the proposed
changes to the expanded HHVBP Model individual measure and category
weights. We note that changes to measure weights are necessary given
the changes to the expanded HHVBP Model applicable measure set that are
being finalized as part of this rule. The increase in the number of
total measures in the expanded model, the increase in the number of
measures in the OASIS-based and claims-based categories, and the
decrease in the number of measures in the HHCAHPS Survey-based
category, necessitate adjusting the weight assigned to some or all of
the measures in the HHVBP Model applicable measure set.
As measures are removed and added to the expanded HHVBP Model, CMS
works to balance measure weights across both measure categories and
across individual measures. For example, the removal of three HHCAHPS
Survey-based measures is required to align with the finalized changes
to the HHCAHPS Survey, reducing the total number of HHCAHPS Survey-
based measures in the HHVBP Model to two. As outlined in the proposed
rule and below in section IV.C.5, CMS evaluated options which could
preserve the HHCAHPS Survey-based measure category weight (30 percent)
or preserve the individual HHCAHPS Survey-based measure weights (6
percent) but could not preserve both. CMS determined that these
alternatives would be inconsistent
[[Page 55439]]
with previous decisions about applying differential weights to
measures, and therefore these alternatives were not proposed.
At this time, CMS has not identified any disproportionate impacts
the revised measure weights would have on providers in Puerto Rico. We
will continue to monitor trends in measure performance that may
indicate unintended consequences from participating in the expanded
HHVBP Model.
Final Decision: After consideration of the public comments
received, we are finalizing the changes to the expanded HHVBP Model's
individual measure weights and category weights as proposed.
5. Alternatives Considered
We considered two alternative options for revising the HHVBP
measure weights prior to choosing the previously discussed proposals.
Table D-23 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.
[GRAPHIC] [TIFF OMITTED] TR02DE25.049
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 invited comments on these alternatives considered. The following
is a summary of the comments we received and our responses:
Comment: A commenter recommended that CMS adopt Option 3, retaining
the 6.00 percent individual measure weight for the remaining two
HHCAHPS Survey-based measures.
Response: We appreciate the commenter's suggestion. However, as
stated previously, we determined that the alternative measure weight
options would be less consistent with previous decisions about applying
differential weights to measures.
Final Decision: After consideration of the public comments
received, we are finalizing the changes to the expanded HHVBP Model's
individual measure weights and category weights as proposed.
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.\40\ 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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\40\ 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
[[Page 55440]]
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 requested 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.
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.41 42 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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\41\ 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.
\42\ 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 \43\ 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 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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\43\ 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 requested comments related to the potential addition of the
respecified FMI measure to the measure set for the expanded HHVBP
Model. The following is a summary of the comments we received and our
responses:
Comment: Several commenters agreed that CMS should include the
Falls with Major Injury (FMI) measure in HHVBP applicable measure set
in the future. Supporters agreed that the measure would improve the
robustness and completeness of the data set, and that falls are a
relevant concern for patients that should be tracked. A commenter
suggested that CMS consider adding questions to HHCAHPS survey
instrument related to falls, to complement OASIS data and improve
accuracy. However, other commenters cited concerns about accuracy of
reporting, the unique circumstances of episodic home health care
compared to 24/7 institutional care, the potential risk of penalizing
providers for factors outside of their control, potential overlap with
the MSPB-PAC measure, and the possibility that providers might be
discouraged from admitting high-risk patients. A commenter welcomed an
opportunity for CMS to validate agencies' existing fall reporting and
prevention rather than add new elements to the current FMI quality
measure.
Response: CMS appreciates the public comments regarding the
respecified FMI measure. CMS will consider this input while continuing
to refine the expanded HHVBP Model in the future.
2. Potential Future Changes to HHCAHPS Scoring Rules and Applicable
Measure Set
We sought 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 the rule, CMS anticipated 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 sought 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.
[[Page 55441]]
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, CMS proposed and finalized the decision to
modify the HHCAHPS Survey instrument. Among other changes, the proposal
removed 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 sought public comments on the possibility of adding these three
remaining HHCAHPS Survey items to the expanded HHVBP Model as single-
item measures. We also sought 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. The following is a summary
of the comments we received and our responses:
Comment: Several commenters disagreed with CMS's potential future
uses for HHCAHPS Survey-based measures. A few commenters recommended
CMS not include the remaining individual items from the Specific Care
Issues measure, and instead prioritize patient reported outcome
measures. Several commenters discouraged CMS from reporting future
HHCAHPS Survey-based measures using only achievement points. These
commenters believed that incorporating achievement points and
improvement points simultaneously would avoid additional disruptions,
better inform agencies' decisions, and avoid disadvantaging agencies
that are improving. They uniformly expressed that agencies should be
given the full two-year period before the HHCAHPS Survey-based measures
are reintroduced.
Response: We appreciate the public comments regarding the HHCAHPS
Survey-based measures. We will consider this input while continuing to
refine the expanded HHVBP Model in the future.
Comment: Several commenters offered suggestions other than those
directly named in the RFI. A commenter suggested that CMS adopt
comprehensive functional outcome measures that accurately capture a
patient's full range of functional status, including communication,
cognition, and swallowing. A few commenters opposed any additional data
collection or measures.
Response: CMS appreciates the public comments submitted in response
to this RFI. CMS will consider this input while continuing to refine
the expanded HHVBP Model in the future.
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 4022(a) of Pub. L. 100-203
(December 22, 1987)), required the Secretary to develop a comprehensive
assessment for Medicare-participating HHAs. Section
1891(c)(2)(C)(i)(II) of the Act also 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.
Subsequently, CMS developed an assessment instrument that identifies
each patient's need for home care and the patient's medical, nursing,
rehabilitative, social and discharge planning needs. Part of this
assessment requires Medicare-certified HHAs to use a standard core
assessment data set, the Outcome and Assessment Information Set
(OASIS). Thus, OASIS became the designated assessment instrument for
use by an HHA in complying with these reporting requirements.
Section 704 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, December 8, 2003)
suspended the legal authority of the Secretary to require HHAs to
gather or report non-Medicare and non-Medicaid patient data to CMS
until certain conditions \44\ were met. Subsequently, CMS conducted a
study from 2004 to 2005 and submitted a report \45\ to Congress which
recommended that the suspension of data collection on non-Medicare and
non-Medicaid patients continue. In addition, the Improving Medicare
Post-Acute Care Transformation Act (IMPACT Act) (Pub. L. 113-185,
October 6, 2014) required CMS to create a uniform quality measurement
system that allows CMS to compare outcomes across post-acute care (PAC)
providers, which include HHAs.
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\44\ Section 704(b) of the MMA suspended legal authority to
require HHAs to report on non-Medicare and non-Medicaid patient data
until at least two months after the Secretary published final
regulations on CMS's collection and use of OASIS data for non-
Medicare/Medicaid patients following the submission of a report to
Congress on the study described under section 704(c) of the MMA.
\45\ The ``OASIS Study: The Costs and Benefits Associated with
the Collection of Outcome and Assessment Information Set (OASIS)
Data on Private Pay Home Patients--Report to Congress'' https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf.
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In response to the IMPACT Act, 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'' (87 FR 66790, November 4,
2022) 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 through
66865). With the CY 2025 HH PPS final rule (89 FR 88354, November 7,
2024), 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 reporting period (89 FR 88439
through 88441). This ended the suspension of the OASIS data collection
on non-Medicare and non-Medicaid HHA patients.
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
[[Page 55442]]
align with the transition to OASIS all-payer submission requirements we
proposed at Sec. 484.45(a) to remove the term ``beneficiary'' and
replace it with the term ``patient.''
Additionally, under section 484.55 of the HHA CoPs, 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 must incorporate the most current version of the OASIS data
items. This includes clinical record items, patient history, supportive
assistance, etc. Section 484.55(d)(1)(i) specifies a ``beneficiary
elected transfer'' in reference to one scenario in which an OASIS
assessment must be updated. To support the transition to OASIS all-
payer submission requirements, we also proposed to remove the term
``beneficiary'' at Sec. 484.55(d)(1)(i).
Comment: A commenter requested additional clarification regarding
the OASIS all-payer requirements. The commenter noted that the proposed
policy shift would be a significant operations change for HHAs and the
electronic medical record (EMR) systems they utilize. The commenter
suggested CMS update the OASIS validation rules and engage EMR vendors
in pilot testing.
Response: While the commenter noted the operational change that may
be required, HHAs have had substantial time to prepare for the
transition to the OASIS all-payer requirement as this policy was
initially finalized in 2022 in the CY 2023 HH PPS final rule (87 FR
66862). With implementation of OASIS all-payer data submission, there
is no required change to HHA electronic medical record systems. CMS is
not introducing any new required OASIS items with the implementation of
the all-payer proposal that would require a change to OASIS submission
processes. With all-payer submission, HHAs will now be required to
submit OASIS for patients receiving skilled care regardless of payor
source using the same processes currently in place for Medicare and
Medicaid patients. Lastly, all HHAs will continue to have access to
technical support relative to submission of OASIS data via the QIES
Technical Support Office website https://qtso.cms.gov/ and iQIES team
at CMS.
After consideration of public comment, we are finalizing the
technical changes to the CoPs as proposed. Thus, Sec. 484.45(a) will
state 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'' and Sec. 484.55(d)(1)(i)
will state ``Elected transfer.'' These technical changes 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. We emphasize that there is no change to existing
policy regarding patient exemptions from 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. Additionally, we remind readers that the OASIS submission
requirements continue not to apply to patients receiving Part B
outpatient therapy services provided by an HHA that elects to provide
these outpatient services.\46\ Patients receiving Part B outpatient
therapy services would not have an HHA plan of care nor would an OASIS
assessment be completed on these patients.
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\46\ In accordance with 484.105(g) an HHA that furnishes
outpatient physical therapy or speech-language pathology services
must meet all of the applicable conditions of Part 484 and the
additional health and safety requirements set forth in Sec. Sec.
485.711, 485.713, 485.715, 485.719, 485.723, and 485.727 to
implement section 1861(p) of the Act.
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VI. Provider Enrollment and Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Accreditation Policies
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 central purpose of the enrollment process is
to help verify 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 assists
in preventing unqualified and potentially fraudulent individuals and
entities from entering and improperly 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 requirement is that the provider
must 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 collects important information about the provider. This
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 various provider
enrollment transactions, such as:
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. (DMEPOS)
suppliers 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 under Sec.
424.540. (Deactivation, an important program integrity safeguard, means
that the provider's or supplier's billing privileges are stopped for
one or more of the reasons outlined in Sec. 424.540(a)(1) through (8)
(for example, non-compliance with enrollment requirements). However,
they can be restored (or ``reactivated'') upon the submission of
information required under Sec. 424.540).
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.
[[Page 55443]]
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 final rule, we proposed and are finalizing several changes to our
Medicare provider enrollment regulations.
(Section VI.A.2 of this final rule addresses our proposed and
finalized change to one of our Medicaid provider enrollment
provisions.)
b. Legal Authorities
There are two principal categories of legal authorities for our
proposed and finalized 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
This section of this final rule discusses our proposals, outlines
the comments we received and responses thereto, and identifies our
final provisions. A number of the comments addressed multiple proposals
and topics simultaneously, particularly with respect to revocations and
stays of enrollment. We will thus include all the comments and
responses received on the subjects in sections VI.A.1.c.(1).(a).
through (c). of this rule within section VI.A.1.c.(1).(d). of this
final rule.
(1) Revocation and Denial Reasons, Revisions to Other Revocation
Policies, Retroactive Revocations, and Stays of Enrollment
(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
proposed several additions and revisions to our revocation and denial
policies in part 424 subpart P.
(i) 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 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 proposed 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.'' Given 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.
(ii) 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. This authority aims to protect Medicare beneficiaries and
the Trust Funds against harmful and non-compliant prescribing
practices.
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 depend
upon the setting in which the drugs were furnished. 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
prescribing during inpatient stays no less than in other environments.
We accordingly proposed 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.
(iii) Abuse of Billing Privileges (Sec. 424.535(a)(8)(i))
Section 424.535(a)(8) permits revocation of enrollment if--
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 (Sec. 424.535(a)(8)(i)); or
CMS determines that the provider has a pattern or practice
of submitting claims that fail to meet Medicare requirements (Sec.
424.535(a)(8)(ii)).
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; or
When the equipment necessary for testing is not present
where the testing is stated to have occurred.
We have recently seen cases where providers and suppliers have
submitted
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claims for payment involving services or items that the beneficiary
states were never furnished. While the ``but are not limited to''
caveat in paragraph (a)(8)(i) means that 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 paragraph (a)(8)(i). We accordingly proposed to include it
in new paragraph (a)(8)(i)(D).
(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; the revocation is
thus prospective. Paragraphs (g)(2)(i) through (viii) list eight
situations where the revocation effective date is retroactive,
generally meaning that the revocation becomes effective back to the
date on which the provider's non-adherence to Medicare requirements
commenced.
The purpose of paragraph (g)(2) is to prevent payment to a provider
while it is out of compliance. 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. For this
reason, we proposed several new grounds and effective dates for
retroactive revocations. These will be designated as paragraphs
(g)(2)(viii) through (xiv) (the requirement in current paragraph
(g)(2)(viii) will be removed, as later explained) and are as follows:
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.
We proposed these particular grounds because, as we explained in
the proposed rule, the revoked provider or supplier 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, reflects in our view 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 were 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 (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 integrity of 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. Thus, we
proposed to include the revocation bases in Sec. 424.535(a)(8) as
grounds for retroactive applicability.
Under new paragraph (a)(8)(iii), the revocation effective date in
paragraph (a)(8)(i) would be the earliest date of service on the claim
or claims that is or are triggering the revocation. To illustrate, if
CMS revokes the provider for submitting claims for non-furnished
services with the claims' service dates of 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
[[Page 55445]]
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. The reason for the different
effective dates is that while (a)(8)(i) requires only one claim
submission, (a)(8)(ii) requires a pattern or practice, which cannot be
established via a single claim. 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 proposed to
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).
We also proposed several other technical changes involving
retroactive revocations.
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) over
the years, we proposed to replace the current language of Sec.
405.800(b)(2) with a statement that a revocation's effective date 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 proposed 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
proposed two changes involving Sec. 424.535(g)(2)(viii). One is that--
given proposed new Sec. 424.535(g)(2)(viii) through (xiv)--we proposed
to redesignate existing Sec. 424.535(g)(2)(viii) as new Sec.
424.535(g)(2)(xv). The other proposed change involved 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 proposed to add certain
standard violations to (g)(2) in paragraphs other than current
(g)(2)(viii)(A), (B), and (C).
(c) Revisions to Stay of Enrollment Authority (Sec. 424.541)
Along with revocations and deactivations, CMS has a third vehicle
with which to prevent Medicare fraud, waste, and abuse as well as
improper payments: a ``stay of enrollment.'' Under Sec. 424.541(a)(1)
and (2), we can impose a stay against a provider if the provider:
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 these cases would ease the burden on providers without
hindering our obligation to protect the Trust Funds. To further explain
the rationale behind stays of enrollment, we noted in the proposed rule
several critical differences between stays and revocations and
deactivations.
Length of 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. An enrollment stay,
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.
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. Yet under Sec. 424.541(a)(2)(ii)(B), these claims
are 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 these payments if the requirements in Sec.
424.541(a)(2)(ii)(B) are met.
Mechanism for Resuming Compliance--A revoked or
deactivated provider cannot 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 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. 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 in Sec.
424.541(a)(1)(ii) (for example, Form CMS-855 change of information).
This means that 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
proposed that its scope be expanded to cover other situations--one of
which 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 paragraph (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. We
believe it would be inconsistent to allow the more concerning action of
application non-submission to be subject to a stay and have situations
where the provider actually submitted the form to result in a
deactivation. Therefore, we proposed to expand Sec. 424.541(a)(1)(i)
to include instances where the provider's change of
[[Page 55446]]
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
proposed two changes to this section. One was 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. Considering 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. The other was to 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
practice, but we sought 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 proposed 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 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, again, the stay period
CMS has assigned may be less than 60 days, we proposed to change ``60-
day period'' to ``CMS-assigned stay period''.
(d) Comments Received
We received the following comments on the provisions addressed in
section VI.A.1.c.(1). of this final rule:
Comment: A number of commenters expressed concern about our
reference to beneficiary attestations in proposed new Sec.
424.535(a)(8)(i)(D), believing this provision to be overly punitive.
They stated that because of the potential for unintentional and
innocuous misunderstandings and errors (as well as delays in mailing
products and incorrect postal tracking), providers should be able to:
(1) furnish input, documentation, and explanations to CMS; and (2) take
corrective action before any revocation occurs. Some commenters added
that attestations could contain unsubstantiated information given that
patients may not understand or recall the items or services they
received. Accordingly, the attestation alone should not be a basis for
revocation without CMS performing a thorough investigation of the
matter and assessing the accuracy of the attestation, with several
commenters. Another commenter believed that CMS would use the provision
to revoke massive numbers of providers and suppliers, with one
commenter stating that stronger contractor oversight of providers would
be a sounder approach.
Response: We appreciate these concerns but stress two things.
First, this is not a new revocation ground; in fact, it has existed for
many years. As indicated in the proposed rule and this final rule (and
as correctly noted by a commenter), we currently have the authority to
revoke a provider under Sec. 424.535(a)(8)(i) in the beneficiary
attestation situations addressed in proposed Sec. 424.535(a)(8)(i)(D).
We are merely adding a specific reference to situations in Sec.
424.535(a)(8)(i)(D) to reiterate our authority in this regard given the
disconcerting increase in these scenarios. Second, and notwithstanding
this authority, we do not revoke providers on this basis (or any other
basis under Sec. 424.535(a)) as a matter of course. We only do so: (1)
after a thorough investigation of the facts of the case; and (2) when
it is truly warranted. Indeed, we fully recognize the impact of a
revocation on a provider and do not take these measures lightly.
Concerning the commenters' apparent suggestion of an informal
appeals process whereby documentation and an explanation could be
furnished to CMS before a revocation occurs, we most respectfully
disagree. Considering that we only undertake these revocations after a
very careful and detailed analysis and when clearly warranted, we
believe we must proceed with the revocation promptly to ensure that the
Trust Funds are protected against further improper billing. We have
always maintained that establishing an informal pre-revocation appeals
process could encourage providers to disregard compliance with Medicare
requirements until they are notified of the non-adherence, upon which
they will remedy the issue and remain enrolled but then perhaps resume
their prior behavior. In other words, allowing providers to always take
corrective action and resume compliance before revocation gives them no
incentive to remain adherent in the first place, which leaves the
Medicare program at risk of billions of dollars in payments to non-
compliant providers. We reiterate that with all revocations regardless
of the reason, the provider has an opportunity to be heard via the
appeals process in 42 CFR part 498.
Comment: Several commenters appeared to suggest that a stay of
enrollment (rather than a revocation) be applied to situations
involving proposed Sec. 424.535(a)(8)(i)(D).
Response: Although we were somewhat uncertain as to the context of
the commenters' specific recommendation, we respectfully do not believe
a stay of enrollment would be an adequate substitution for a revocation
in a Sec. 424.535(a)(8)(i)(D) scenario. Stays are short-term measures
designed to be a less serious action than a deactivation or revocation.
As noted, we only undertake a revocation under Sec. 424.535(a)(8)(i)
in exceptional cases due to the provider's concerning activity.
Considering the seriousness of such behavior and the consequent need to
protect the Trust Funds and beneficiaries for an extended period, we
believe a revocation, rather than a stay, is the most appropriate CMS
action.
Comment: Several commenters stated that Sec. 424.535(a)(8)(i)(D)
appears to allow revocation based on a single beneficiary complaint or
minor administrative error. Other commenters stated that Sec.
424.535(a)(8)(i)(D) scenarios should only result in revocation if there
is a pattern of abuse, an intent to commit fraud, or a hindrance to
patient care.
Response: We appreciate these comments. Section 424.535(a)(8)(i)
scenarios have never required a pattern of conduct (unlike, for
instance, Sec. 424.535(a)(8)(ii)), fraudulent intent, or patient care
impact. On the other hand, Sec. 424.535(a)(8)(i) has never been
intended to punish providers for small transgressions. Only in rare and
exceptional circumstances have we ever revoked a provider under Sec.
424.535(a)(8)(i), and this will be the case for Sec.
424.535(a)(8)(i)(D). We recognize commenters' concerns and wish to
assure stakeholders that we have no intention whatsoever of revoking
legitimate providers under Sec. 424.535(a)(8)(i)(D) on spurious and
unfair bases.
Comment: A commenter stated that a competitor's use of Sec.
424.535(a)(8)(i)(D) to generate false claims against the provider
should itself mandate the competitor's revocation.
[[Page 55447]]
Response: We appreciate and will contemplate this suggestion as we
continue our efforts to strengthen Medicare program integrity and the
provider enrollment process.
Comment: Regarding Sec. 424.535(a)(8)(i)(D), a commenter sought
clarification regarding: (1) how CMS will distinguish between potential
fraud and a mere misunderstanding or delivery delay; (2) whether there
is a formal appeals process to challenge such a finding; and (3)
whether provider can continue operations during an investigation or
will instead face immediate suspension of billing privileges.
Response: We thank the commenter for these comments and respond as
follows. First, and as already stated, CMS will carefully investigate
the facts in all potential Sec. 424.535(a)(8)(i)(D) situations. While
we cannot address in detail the operational aspects of these
investigations, we again assure providers that Sec.
424.535(a)(8)(i)(D) revocations will occur only when truly justified.
Second, providers can appeal any Sec. 424.535(a)(8)(i) revocation
under 42 CFR part 498. Third, if the commenter's use of ``immediate
suspension of billing privileges'' refers to Medicare payment
suspensions under 42 CFR 405.371, CMS cannot predict when the latter
provision may or will be invoked. Nor can CMS advise the provider as to
whether it can or should continue its full operations during a Sec.
424.535(a)(8)(i)(D) investigation; we believe this would be the
provider's independent business decision. We can, though, state that if
the provider is revoked after the investigation, it loses its Medicare
billing privileges and the revocation will, per proposed Sec.
424.535(a)(8)(iii)(A), be retroactive to the earliest date of service
on the claim or claims that is or are triggering the revocation.
Comment: A commenter stated that instead of an immediate revocation
under Sec. 424.535(a)(8)(i), CMS could, while conducting an
investigation, perform a pre-payment audit of the supplier's claims to
ensure that CMS guidelines are being followed; this would facilitate
continuity of patient care.
Response: We appreciate and may consider this suggestion as a
possible action during our investigation.
Comment: A commenter supported our proposal to change the term
``Part B or D drugs'' in Sec. 424.535(a)(14) to ``Medicare-covered
drugs''.
Response: We appreciate the commenter's support.
Comment: A commenter supported our proposal to change the term
``prescribe drugs'' in Sec. Sec. 424.535(a)(13)(ii) and
424.530(a)(11)(ii) to ``one or more drugs.''
Response: We appreciate the commenter's support.
Comment: A commenter opposed our proposed revision to Sec.
424.535(a)(13), stating that a provider on this basis could be revoked
for isolated or unrelated state licensing issues without any
educational opportunity or appeal.
Response: We appreciate this comment. While we are respectfully
uncertain as to the type and timing of the educational opportunity to
which the commenter refers, we reiterate that: (1) we always carefully
examine the facts of the case before undertaking revocation action; and
(2) providers can appeal a Sec. 424.535(a)(13) revocation per 42 CFR
part 498.
Comment: A commenter stated that our expanded revocation reasons
increase the likelihood of harsh penalties for minor or administrative
errors.
Response: We respectfully disagree. We believe our revisions to
Sec. 424.535(a)(8)(i), (a)(13), and (a)(14) are relatively minor; for
example, the addition of Sec. 424.535(a)(8)(i)(D) is, as discussed,
simply a reminder of our existing authority. We do not anticipate a
significant increase in Sec. 424.535(a)(8)(i), (a)(13), and (a)(14)
revocations stemming from our proposals, and we will continue to
exercise great care and prudence in determining whether a revocation is
warranted.
Comment: Several commenters supported our proposal to include
certain application rejections within the scope of enrollment stays.
Response: We appreciate the commenters' support.
Comment: While favoring our proposed expansion of the stay of
enrollment's applicability, several commenters requested that CMS to go
further and require a stay in the situations described in Sec. 424.541
(and perhaps others) instead of giving the MACs discretion to impose a
deactivation or revocation. A commenter stated that this would: (1)
reduce burden on suppliers and better facilitate continued patient
access to care; (2) reduce inconsistency among the MACs in these cases;
(3) assist suppliers that are part of a group when their PTANs are
deactivated upon the deactivation of the group's PTAN; and (4) allow
payment for services performed. Other commenters recommended that CMS
expand the reasons for which a stay can be imposed in lieu of many
deactivation and revocation grounds (especially revocations with
retroactive effective dates); the commenters stated that this would
give suppliers time to correct the issue without the consequences of a
revocation.
Response: We appreciate these comments. MACs generally do not have
the discretion to choose whether to impose a stay, deactivation, or
revocation. These actions are only imposed via CMS's direction (for
instance, through Chapter 10 of CMS Publication 100-08 or specific CMS
instruction to the MAC regarding a particular provider). Regarding the
further expansion of stay of enrollment grounds, we thank the
commenters' for their recommendation and may consider it for future
rulemaking.
Comment: A commenter supported our stay of enrollment proposal but
requested that CMS ensure the efficiency of the existing provider
enrollment process regarding stays before adding additional grounds.
Response: We appreciate the commenter's support and are confident
that the MACs can operationally accommodate our new stay of enrollment
basis.
Comment: A commenter requested that CMS issue guidance to MACs
requiring them to follow the stay of enrollment instructions in CMS
Change Request (CR) 13449.
Response: We appreciate this comment but believe it is outside the
scope of this final rule.
Comment: A commenter stated that some providers that have a stay
imposed against them do not receive a notification letter and therefore
are: (1) unable to meet the 15-day rebuttal timeframe; and (2)
uncertain as to the status of their enrollment when a claim is denied.
Response: Although we respectfully believe this comment is outside
the scope of this final rule, we thank the commenter for bringing this
to our attention as we continue to take steps to enhance the provider
enrollment process.
Comment: Several commenters opposed the proposal to change the
stay's effective date from the postmark date to the date the
provider's: (1) non-compliance began; or (2) revalidation or change of
information submission was rejected. They stated that this change would
reduce the time the supplier has to research, address, and correct the
issue causing the stay. A commenter added that: (1) our change would
likely result in a stay that is more than 60 days, which would
invalidate the stay of enrollment; and (2) a stay freezes
[[Page 55448]]
payment, meaning there is no need to back-date the stay.
Response: We appreciate the commenters' feedback and recognize the
potential time reduction for remedial action by the provider. Yet we
reiterate that using the postmark date permits the provider to receive
payment for services furnished between the commencement of non-
compliance (for example, the day after the date on which the
revalidation application was due) and the postmark date. A core purpose
of our provider enrollment proposals is to help halt payments to non-
compliant providers, and we believe that having the postmark date as
the stay effective date contradicts this. Also, this change would not
result in a stay greater than 60 days because any 60-day long stay
would begin on the non-compliance date. To illustrate, suppose a 60-day
stay is imposed on a provider effective on the non-adherence date of
April 1. The letter's postmark date is April 5. The stay would end on
May 30, 60 days after the April 1 effective date. Regarding the final
comment in the previous paragraph, we reemphasize most respectfully
that the issue is not whether payment is frozen but whether the
provider was entitled to payment in the first place; we believe the
provider was not during the period between the date of non-compliance
and the postmark date.
Comment: A commenter stated that a stay should only be applied when
there is clear evidence of intent.
Response: We respectfully disagree. Even if a provider failed to
timely submit a revalidation or change of information application for
innocuous reasons, non-compliance still results and the provider is not
entitled to payment absent the corrective measures permitted under
Sec. 424.541.
Comment: Several commenters requested that CMS define ``rejected''
in the context of CMS' proposed stay of enrollment expansion (for
example, whether it references the MAC's rejection of a revalidation
application).
Response: The term ``rejected'' for purposes of 42 CFR part 424,
subpart P (which includes Sec. 424.541) is defined in Sec. 424.502
and further described in Sec. 424.525.
Comment: A commenter: (1) supported our change from ``60-day
period'' to ``CMS assigned stay period''; and (2) questioned whether
CMS' proposed clarification that a stay can be up to 60 days is
intended to make Sec. 424.541 consistent with CMS CR 13449.
Response: We appreciate the commenter's support and note that our
change is unrelated to CR 13449. It simply incorporates our existing
position into Sec. 424.541.
Comment: Multiple commenters recommended that CMS fully implement
the ``state of enrollment'' standard across all programs, including
with respect to DMEPOS suppliers, to promote uniformity and fairness.
Response: We believe the commenters are referring to ``stay of
enrollment'' rather than ``state of enrollment.'' While we are
respectfully unclear as to the ``programs'' to which the commenter is
referring, stays of enrollment can apply to all Medicare provider and
supplier types, including DMEPOS suppliers.
Comment: Numerous commenters opposed the concept of retroactive
revocations in general. Several commenter stated that CMS' existing and
proposed grounds (as well as payment collection and any additions to
the Medicaid termination database) should not be implemented in a
particular case if an appeal is pending. A commenter stated that CMS'
proposed reasons could result in unfair and unwarranted repayments to
the Medicare program. Other commenters stated that retroactive
revocations: (1) should only be invoked in cases of intentional or
systemic provider fraud, waste, or abuse; and (2) could financially
devastate providers.
Response: We appreciate the concerns expressed. Retroactive
revocations are designed to recoup payments to which the provider was
not entitled due to its non-compliance. That is, and potentially
excluding situations under Sec. 424.541, once the provider is non-
adherent to Medicare enrollment requirements, it cannot receive payment
for services furnished beginning on or after the point the non-
compliance began. Our allowance of prospective revocation dates for the
grounds in proposed Sec. 424.535(g)(viii) through (xiv) has resulted
in hundreds of millions of dollars in payments to non-compliant
providers; we accordingly believe we have an obligation to the American
taxpayers to stop this. Indeed, we estimated in the proposed rule that
our proposed grounds would annually save nearly $2.2 billion in
taxpayer monies.
Insofar as appeals, and most respectfully, we historically have not
delayed implementing retroactive revocations or commencing collections
while appeals are pending. As the appeals process takes some time,
delayed implementation could result in many millions of dollars in
continued payments to non-compliant providers as well as postponed
repayment of monies to which Medicare and the taxpayers are entitled.
Should the revocation be reversed on appeal, repayment of any collected
monies can be facilitated. Concerning the final two comments, we
respectfully reiterate that the core issue is payments to non-compliant
providers regardless of whether fraud is involved; allowing prospective
revocations in all-non fraud cases would, as it has, lead to additional
billions of dollars to these providers. While we recognize the
financial impact retroactive revocations can have on providers: (1) we
again note that we only revoke providers when truly necessary; and (2)
a provider's vigilant and constant compliance with Medicare enrollment
requirements can help avoid revocations.
Comment: A commenter: (1) expressed doubt that CMS could determine
precisely when a supplier fell out of compliance with Sec. 424.57(b)
or (c); and (2) requested that CMS establish clear standards for when a
retroactive revocation would apply.
Response: We thank the commenter for this feedback. As CMS always
diligently and carefully reviews the facts and circumstances of all
potential revocation cases before taking any action, we are confident
we will be able to ascertain the point at which non-compliance
commenced. As for the second comment, we are respectfully unclear as to
the ``standards'' the commenter seeks. Our retroactive revocation
grounds are detailed in Sec. 424.535(g)(2), and a number of our
underlying revocation reasons in Sec. 424.535(a) contain factors that
CMS considers in its revocation determinations.
Comment: Several commenters opposed retroactive revocations for
non-compliance with a condition or standard in Sec. 424.57(b) or (c).
A commenter stated that: (1) it could be difficult for CMS to determine
the date of non-compliance (for purposes of establishing the effective
date); and (2) a stay of enrollment would be a more suitable action
considering that stays are designed to address non-compliance.
Response: While we appreciate the commenters' feedback, we
reiterate our belief that CMS will be able to establish the proper
effective date. As for the final comment, there are numerous levels of
non-compliance, with some being significant enough to warrant
revocation while others are not. Stays are intended to address the
latter; they are generally limited to minor instances of non-compliance
most typically involving failure to submit a revalidation or change of
information application. In our view, violations of the DMEPOS
conditions of payment and supplier standards are potentially more
concerning than actions triggering a stay because they focus on
supplier's
[[Page 55449]]
inherent ability to qualify as a DMEPOS supplier. If we applied a stay
to all Sec. 424.57(b) or (c) violations, we believe suppliers would be
less inclined to ensure constant adherence to the conditions and
standards; they would know they could regain compliance at any time and
be paid for services furnished during the stay. Given, too, that many
of the supplier standards are designed to protect beneficiaries and
prevent fraudulent activity, we believe retroactive revocations for
Sec. 424.57(b) and (c) violations are warranted.
Comment: A commenter supported all of our proposed retroactive
revocation bases except for that involving the submission of false or
misleading information on the enrollment application. The commenter was
concerned that this retroactive revocation ground could be based on a
small or inadvertent error by the provider. The commenter requested
that CMS tailor this basis to intentional misrepresentations; other
commenters, too, stated that evidence of intent should be a
prerequisite for CMS action. Another commenter stated that there should
be exceptions to this practice, such as if the supplier misunderstood
the question or data elements on the application.
Response: We appreciate the commenter's support. Regarding the
retroactive revocation basis the commenters reference, revocations
under Sec. 424.535(a)(4) are typically not imposed for minor,
unintentional errors. Indeed, we take these actions infrequently and
only when clearly appropriate. In light of the seriousness of
falsifying information, we believe retroactive revocations are
warranted in all of these cases.
Comment: Several commenters opposed retroactive revocations for
failure to submit certain changes of information. A commenter stated
that in change of ownership situations: (1) state licensure or IRS
delays regarding name changes (or other circumstances outside the
supplier's control) could delay the provider's report of the change to
CMS; and (2) it could be difficult for a large entity to report a
change to numerous MACs for all of its locations. A commenter stated
that retroactive revocation in these types of situations would be
unfair. The commenter added that retroactive revocations on this basis
could discourage providers from reporting any change due to the harsh
penalties. Other commenters stated that CMS should be flexible
regarding the 30-day reporting period and account for situations and
extenuating circumstances beyond the provider's control and use a
``good-faith effort'' standard.
Response: We thank the commenters for their feedback. As with all
revocations, CMS under Sec. 424.535(a)(9) does not take action unless
deemed truly necessary and only after a thorough examination of the
circumstances of the case. This includes consideration of several
factors outlined in Sec. 424.535(a)(9), such as the materiality of the
data and, if reported, how belatedly. Nonetheless, while we recognize
that not every potential Sec. 424.535(a)(9) case is the same: (1) it
remains the provider's responsibility to timely report this information
to us; and (2) numerous providers (including large entities enrolled
with several MACs) do timely meet this requirement. The potential for
revocation has not deterred the latter providers from fulfilling their
reporting obligations, and we do not see this changing with a
retroactive revocation application; in fact, we believe it will
encourage providers to be more vigilant in their reporting
responsibilities.
Comment: A commenter stated that providers cannot reasonably
operate under the risk of losing payment for services already rendered
in good faith, explaining that this would punish compliant providers
and create fear and instability in the marketplace.
Response: We appreciate this concern but note that CMS has had
retroactive revocation reasons in Sec. 424.535 for numerous years.
During this period, and most respectfully, we have not seen widespread
fear or instability in the provider community due to retroactive
revocations. We again wish to assure providers that revocations
(whether retroactive or not): (1) occur very infrequently when compared
to the universe of well over 2 million Medicare-enrolled providers and
suppliers; and (2) are not intended to harm or cause concern for
legitimate providers but only to protect Medicare, the taxpayers, and
the provider community at large from non-compliant ones.
Comment: Several commenters generally stated that: (1) technical or
administrative errors should not lead to severe consequences for
providers; (2) the increased number of revocations under our proposals
could lead to a reduction of providers and suppliers in certain areas
(including low billing practitioners) and thus harm or interrupt
patient care; (3) CMS' proposed retroactive revocations are based on
unwarranted reasons, are too broad, and lack guardrails.
Response: We appreciate these comments and note the following.
First, and as previously indicated, we only revoke providers when
justified and necessary under the circumstances; again, we recognize
the significant consequences of revocations on providers and do not
take action on merely spurious grounds. Second, we do not foresee a
substantial increase in the number of revocations under our proposals.
For instance, our addition of Sec. 424.535(a)(8)(i)(D) is merely a
restatement of our existing authority under Sec. 424.535(a)(8)(i), not
an expansion of it. Other revocation proposals, such as the change from
Part B or D drugs to Medicare-covered drugs in Sec. 424.535(a)(13) and
Sec. 424.530(a)(11) are, in our view, rather modest expansions
intended to address specific vulnerabilities. Even if revocations were
to increase, we have implemented many revocation reasons via rulemaking
over the years and have not seen resulting access to care issues.
Third, we detailed in the proposed rule and this final rule our
rationales for our retroactive revocation bases; as we stated, we
believe these grounds are warranted, specific, and necessary to prevent
improper payments to non-compliant providers.
Comment: Existing Sec. Sec. 424.535(a)(4) and 424.530(a)(4) permit
revocation or denial if the provider or supplier certified as ``true''
misleading or false information on the enrollment application to be
enrolled or maintain enrollment in Medicare. Several commenters stated
that before any Sec. 424.535(a)(4) revocation is imposed: (1) the
provider should have an opportunity to research and respond to the
matter, since the problem could be a minor, correctable omission; and
(2) the case should be reported to the Supplier Audit & Compliance Unit
(SACU), which the commenters stated presently handles these
investigations. Another commenter stated that CMS should define ``false
or misleading'' as used in Sec. 424.535(a)(4).
Response: We appreciate these comments. Respectfully, it was
unclear whether they pertained to all Sec. 424.535(a)(4) revocations
(regardless of whether they were retroactive) or were limited to
retroactive revocations. In either case, we refer the commenters to our
prior statements in this final rule regarding a pre-revocation quasi-
appeals process and remedial action. If we were to require one in all
potential Sec. 424.535(a)(4) situations, providers (especially
fraudulent ones) might have little incentive to submit honest, accurate
information since they could always correct it prior to any revocation.
Regarding investigations, CMS works closely with the National
Provider
[[Page 55450]]
Enrollment Contractors (NEPCs) (which process DMEPOS supplier Form CMS-
855S enrollment applications (OMB Control No. 0938-1056)) in reviewing
and investigating potential Sec. 424.535(a)(4) situations. As for the
final comment, we most respectfully believe that the terms ``false''
and ``misleading'' have been plain on their face since the promulgation
of Sec. 424.535(a)(4) years ago.
Comment: Several commenters expressed concern about Sec.
424.535(i), stating that CMS should only use this authority in
egregious situations. A commenter stated that it would be unfair to
revoke all locations of a large supplier (especially retroactively)
based on, for example, a minor instance of non-compliance at one of its
locations. Another commenter stated that each site should be examined
on its own merits rather than directly tied to the enrollment status of
the revoked provider unless systemic issues exist across the larger
provider entity. An additional commenter stated that CMS should only
revoke non-compliant locations rather than the provider's other ones,
while another stated that the rule is unclear as to whether retroactive
revocations would be applied to other supplier locations under the same
TIN or to all supplier locations under a common ownership.
Response: We appreciate these comments. Section 424.535(i) has been
effective since 2019. We have generally only invoked this provision in
exceptional circumstances and not for minor matters. The overwhelming
preponderance of our revocations under Sec. 424.535 have been limited
to the non-compliant enrollment/location in question without affecting
the provider's other enrollments. In fact, and as we stated in the
September 10, 2019, final rule with comment period titled, ``Medicare,
Medicaid, and Children's Health Insurance Programs; Program Integrity
Enhancements to the Provider Enrollment Process'' (84 FR 47794), Sec.
424.535(i) is not an ``all or nothing'' provision. We do not
automatically revoke all of the provider's other enrollments in Sec.
[thinsp]424.535(i) situations. We instead apply and consider a series
of factors outlined Sec. [thinsp]424.535(i) to each individual
enrollment in determining whether that enrollment should be revoked,
too.
Concerning the commenters' final comment, CMS can apply Sec.
[thinsp]424.535(i) to any and all of a provider's enrollments--
including those under different names, numerical identifiers, or
business identities.
Comment: Several commenters stated that fraudulent activity tends
to be limited to a small number of parties and not the preponderance of
providers (such as community-based suppliers). Accordingly, a commenter
stated, revocation policies should not indiscriminately penalize all
suppliers--potentially disrupting care to thousands of beneficiaries
who rely on otherwise compliant suppliers.
Response: We appreciate this comment but stress that our revocation
provisions would only impact non-compliant providers. They are not
meant to penalize providers that adhere to Medicare enrollment
requirements.
Comment: As a concluding, overarching general comment, numerous
commenters believed CMS's proposals were overly punitive towards
legitimate providers. They believe that the provisions lacked due
process and failed to allow providers and suppliers to correct honest
mistakes before CMS takes action, with: (1) a commenter contending that
the proposals would not deter fraud; and (2) another commenter stating
that certified providers and certified suppliers are allowed to correct
standard and condition-level deficiencies. Commenters stated that
revocations in general unfairly occur based on minor transgressions and
financially devastate providers. These commenters added that even if
the revocation is overturned on appeal, the provider may be unable to
economically recover and the burden on Medicare contractors in
processing these matters can be significant. Commenters further
stressed that any sanctions should be commensurate with the violation.
Another commenter stated that CMS should: (1) consider the proposals'
unintended consequences and update them to ensure that they exclude bad
actors; (2) consider the burdens faced by solo practitioners, small
groups, or independent providers; and (3) apply enforcement discretion
when the totality of facts surrounding scrutinized activity does not
demonstrate an intent to commit fraud or abuse. Concerning this third
comment, another commenter stated that retroactive revocations should
not occur if the harm to the supplier outweighs the harm to the
Medicare program.
Response: We appreciate these comments and again recognize the
concerns expressed by many provider and supplier types (such as
individual physicians, group practices, etc.). We reiterate our
statements regarding: (1) our practice of only revoking providers when
truly warranted and after careful investigation; (2) the need for CMS
to take prompt action to prevent payments to non-compliant providers;
and (3) the reasons for no existing pre-revocation appeals process. We
believe due process rights are afforded by the appeals procedures in 42
CFR part 498 and that revocations have indeed helped stem fraud, waste,
and abuse and kept problematic parties out of the Medicare program;
this is a central purpose of our proposed revocation provisions. In
addition, we note that stays of enrollments and deactivations have been
utilized in situations where a revocation would be too severe an action
or otherwise not commensurate with the violation.
Regarding the commenters' final two comments, we respectfully
remind stakeholders that enforcement action cannot be limited to
situations where fraud is (or was intended to be) involved. If we did
place this limit, this would permit non-compliant suppliers to remain
enrolled, with billions of dollars in continued payments thereto, so
long as there is no fraud. As already noted, providers must always
remain adherent to Medicare enrollment requirements, and they are not
entitled to payment if they are non-compliant, even if no fraud is
involved. In this same vein, any improper payment harms the Medicare
program. While we understand the harm that providers can experience
with a revocation and, as already stated, do not revoke providers
unless clearly necessary, it is ultimately the provider's
responsibility to ensure constant adherence to Medicare enrollment
requirements. We have an obligation to place the interests of Medicare
beneficiaries, the program at large, and the taxpayers at the highest
level; it is with this principle in mind that we have undertaken our
program integrity measures over the years.
After reviewing these comments, we are finalizing the proposals
addressed in section VI.A.1.c.(1)(a) through (c) without modification.
(2) New Deactivation Authority
Regulations 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. One reason for which CMS can deactivate a
provider or supplier is that the provider or supplier has not submitted
any Medicare claims for 6 consecutive months. A core purpose of this
provision is 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
[[Page 55451]]
discontinued providers or suppliers and then, for example, using the
Medicare billing number of a deceased physician Shutting down inactive
billing numbers helps stem such activities. Indeed, 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.
The deactivation concept has only applied to Medicare billing
privileges rather than the ordering, certifying, and referring of
Medicare services and items. Yet improper ordering, certifying, or
referring can pose significant risks to the Medicare program and its
beneficiaries, and we have established a number of provider enrollment
requirements to prevent this activity.
These include the following:
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 (in accordance with 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)). 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 these services or
items.
Under Sec. 424.535(a)(21), CMS can 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.
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 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, and we accordingly proposed to address
this topic in new Sec. 424.547.
In Sec. 424.547(a)(1)(i) and (ii), we proposed that CMS may
deactivate a physician's or 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.
To distinguish deactivations of billing privileges from those of
ordering, certifying, and referring capabilities, we proposed in new
Sec. 424.547(a)(2) that for purposes of Sec. 424.547 only, the term
``deactivate'' means that the physician's or 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 proposed to add the
following language to the beginning of this definition: ``Except in the
situations described in Sec. 424.547''.
We also proposed to duplicate several of Sec. 424.540's
deactivation and reactivation procedures in new Sec. 424.547 as
follows:
In Sec. 424.547(b)(1), we proposed 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 proposed 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 proposed 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 proposed to clarify that a
physician or practitioner may not order, certify, or refer the Medicare
services or items referenced in Sec. 424.507(a) and (b) while
deactivated under Sec. 424.547.
We received the following comments on this proposal:
Comment: Several commenters expressed concern about the impact of
our deactivation provision in proposed Sec. 424.547 on HHAs and
hospices. The commenters stated that it could prevent HHAs and hospices
from billing for claims when the ordering or certifying provider was
deactivated for 12 months of non-certifying, especially if the
individual only performs this function on a very infrequent basis and
is unaware of the 12-month provision. Commenters recommended that CMS
ensure that: (1) databases identifying eligible physicians/
practitioners for ordering/certifying purposes are updated; (2) use
careful discretion in exercising this authority, with particular
consideration for physicians employed by hospices; (3) perform targeted
outreach to potentially impacted physicians (including notices thereto
as they approach the 12-month period and allowing them to indicate
whether they wish to remain active); (4) ensure that the reactivation
process is efficient with minimal delays; and (5) furnish training to
HHAs and hospices regarding the new requirement. Another commenter
stated that CMS' provision could inadvertently impact physicians who
treat Medicaid or Medicare Advantage patients and requested an
exceptions process (or a more nuanced threshold) that allows providers
to demonstrate active practice via means other than Part B billing. An
additional commenter stated that non-billing is not indicative of
fraudulent activity.
Response: We thank the commenters for their feedback. As we
explained in the proposed rule and this final rule, this provision is
intended to prevent unscrupulous parties from accessing unused billing
numbers. This is the same motivation that triggered our promulgation of
Sec. 424.540(a)(1) in 2006, which permitted a provider's deactivation
for 12 consecutive months of non-billing (later revised to 6 months).
While the final commenter is correct that non-billing is not
necessarily indicative of fraudulent
[[Page 55452]]
behavior, the improper accessing of unused billing numbers can be.
As for the other comments, we understand the concerns expressed
about our proposal. As we implement this requirement, we will: (1)
consider the commenters' third and fifth recommendations; (2) ensure
that appropriate databases are updated; and (3) maintain the efficiency
of the reactivation process. Regarding the second recommendation, our
deactivation authority under Sec. 424.540(a)(1) has always been
discretionary, and the same will be true with Sec. 424.547; we will
exercise our authority only after careful consideration and when deemed
necessary. With respect to the comment regarding Medicaid and Medicare
Advantage, Sec. 424.547's purview is limited to individuals: (1)
enrolled via the Form CMS-855O solely to order, certify, and refer
certain Medicare services and items; and (2) who do not themselves bill
Medicare for services and items furnished. Being exclusively a Medicare
fee-for-service provision of a rather restrictive scope, we do not
believe it will have a significant impact on Medicaid and Medicare
Advantage supplier enrollees. Given, moreover, the critical program
integrity safeguards of this provision, we are respectfully unable to
carve out regulatory exceptions to Sec. 424.547's application.
Comment: A commenter stated that our deactivation provision is
contrary to CMS regulations because there is no requirement that
hospice physicians or physician members of the interdisciplinary group
(``IDG'') must order, certify, or refer for hospice services. The
commenter recommended that CMS: (1) delay this proposal to give
hospices time to prepare; or (2) exempt hospice providers from this
provision or apply it only to providers in higher-risk areas.
Response: While we appreciate this comment, our proposal does not
in and of itself require any individual to order, certify, or refer
services for payment to be made; any such requirements are addressed in
other CMS regulations. It instead involves the separate issue of a lack
of ordering, certifying, and referring over a 12-month period by those
enrolled via the Form CMS-855O and the consequent program integrity
risk due to dormant provider numbers. Due to this risk, we must
respectfully decline to delay this requirement or to exempt certain
physicians or practitioners therefrom. Nonetheless, we note again that
this provision is discretionary, and stakeholders should not assume
that deactivation will always occur in Sec. 424.547 situations.
As a final point of clarification, we reiterate that Sec. 424.547
applies to all the services and items referenced Sec. 424.507. It is
not limited to, for example, home health services.
Comment: A commenter believed our deactivation proposal could harm
practitioners with low Medicare billing volumes but who deliver quality
care, adding that any disruption in enrollment status could interrupt
patient care.
Response: We thank the commenter for this feedback. However, our
deactivation proposal involves ordering and certifying physicians and
practitioners and not those who bill Medicare.
After reviewing these comments, we are finalizing this proposal
without modification.
(3) Liability for Furnished Information
As already mentioned, current Sec. Sec. 424.535(a)(4) and
424.530(a)(4) permit revocation or denial 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 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 thereon, 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. This
assertion is incorrect. Longstanding CMS policy is 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 emphasize this point, we proposed to add
new paragraph (d)(10) to Sec. 424.510. Paragraph (d)(10) would state
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 received the following comments on this proposal:
Comment: Several commenters supported our proposed revision to
Sec. 424.510 emphasizing that 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. A commenter stated
that this is consistent with CMS' longstanding position on the matter.
Response: We appreciate the commenters' support.
Comment: Several commenters opposed our revision to Sec.
424.510(d)(1) regarding provider responsibility for submitted data. A
commenter stated that it is unfair to shift legal liability to
providers for all application information since providers often rely
upon billing services and outside consultants. The commenter added that
this puts small suppliers at risk of revocation for clerical errors
they did not commit. Another commenter stated that providers must often
rely upon third parties to accumulate data and that there are limits to
the provider's ability to confirm the information's accuracy. The
commenter noted that a provider should not be unduly penalized when:
(1) a provider makes a good faith effort to accurately complete the
application; and (2) the inaccuracy was the third party's fault.
Response: While we appreciate these comments, we respectfully do
not believe our Sec. 424.510(d)(1) addition shifts liability to the
provider, for the ultimate responsibility for submitting truthful and
accurate information has always rested with the provider. The provider,
in fact, attests to the accuracy of the submitted data via the Form
CMS-855 certification statement. We recognize that some providers use
third-parties for application preparation and information gathering
purposes. This is the provider's independent business decision. Yet
this decision comes with the possibility that data from the third-party
may be inaccurate. Should the provider elect to assume this risk, it
also assumes the responsibility for the data's correctness when
submitting it to Medicare. Indeed, if we absolved these types of
providers from all liability for inaccurate third-party data, the
provider would have no motivation to confirm it is correct or, to avoid
responsibility, would always have a third-party collect and furnish the
information. As we have regularly stated in the past, incorrect
enrollment data can result in inaccurate payments (and even fraud,
waste, and abuse), and the provider--not a third-party--must ensure its
correctness.
After reviewing these comments, we are finalizing this proposal
without modification.
(4) Submission of Documentation
One of the many critical functions of MACs is to validate the
accuracy of the
[[Page 55453]]
information the provider furnishes on its enrollment application (for
example, the provider states it is licensed, but the MAC finds that the
license has expired). If submitted data is incorrect, the potential
exists for improper payments to be paid to non-compliant or unqualified
providers and suppliers. Although MACs can validate certain data via
electronic means, verifying documentation from the provider is
sometimes needed. Existing Sec. 424.510(d)(2)(ii), (iii)(A), and
(iii)(B) 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, etc.
All applicable Federal and State licenses and
certifications.
Documentation associated with regulatory and statutory
requirements needed to establish a provider's eligibility to furnish
Medicare covered items or services.
This and other documentation is also identified on the Form CMS-855
enrollment applications as materials the provider must submit with its
application.
Notwithstanding 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 (for instance, a
provider's owner is excluded by the OIG, meaning the provider is not
entitled to Medicare payments). To 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 proposed in
new Sec. 424.510(d)(2)(iii)(C) that CMS may require the submission of
any other documentation needed to validate the data on the enrollment
application; this includes, but is not limited to, documentation
regarding the provider's ownership or management.
We received the following comments on this proposal:
Comment: Several commenters supported our change to Sec. 424.510
regarding CMS and MAC documentation requests. However, a commenter
requested clear guidance (both sub-regulatory and via the contractors'
requests to providers) on what documentation is required to better
ensure consistency among the MACs. Another commenter requested grace
periods or additional technical guidance for providers in Puerto Rico.
Response: We appreciate the commenters' support. We will instruct
MACs on what documentation to request and when. Concerning the final
comment, we are respectfully unclear as to the types of grace periods
and technical guidance the commenter is requesting. We will ensure,
though, that providers (regardless of their location) understand what
documentation is or may be required.
After reviewing the comments, we are finalizing this proposal
without modification.
(5) Reassignment Effective Dates
In the provider enrollment context, and consistent with 42 CFR
424.80, reassignment of benefits refers to the scenario where 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. However, the Form CMS-855R has been discontinued.
Reassignments are now facilitated via information furnished on the Form
CMS-855I (OMB control number 0938-1355) and Form CMS-855B (OMB control
number 0938-1377). Accordingly, 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.
As 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 initial enrollment and the reassignment
should be determined in the same manner. Hence, we proposed 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). 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 in accordance with
a reassignment is permissible if the circumstances in Sec.
424.521(a)(1) are applicable.
We received the following comment on this proposal:
Comment: A commenter requested that CMS increase the retroactive
billing date to 60 days before their effective date instead of 30 days.
The commenter stated that this would: (1) ensure that providers have
sufficient time to balance administrative requirements for multiple
enrollments and multiple providers; and (2) align with the maximum 60-
day stay of enrollment period.
Response: We appreciate this commenter's request but most
respectfully must decline it. If we pushed the date back to 60 days, we
may be unable to determine whether the provider was compliant with
enrollment requirements between the 31st and 60th days, which would be
well before the provider submitted their enrollment application. Also,
enrollment stays are very different from billing effective dates. The
former effectively stops payment due to the provider's non-compliance,
whereas the latter addresses the point from which a provider can begin
billing. It is therefore unnecessary that their applicable timeframes
match.
After reviewing this comment, we are finalizing our proposed
provision without modification.
(6) 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 the
standard, codified in Sec. 424.57(c)(10), requires the supplier to
have a comprehensive
[[Page 55454]]
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.
We received the following comments on our proposal:
Comment: Several commenters opposed our proposal to require an
authorized official to sign the comprehensive liability insurance
policy. A commenter stated that the authorized official's signature on
the enrollment application is sufficient since the insurance policy
must be submitted as part of the application process. Another commenter
stated that this requirement could be problematic for larger, multi-
layered providers because the authorized official may not be the
provider's CEO or president; that is, the authorized official might not
be the same person responsible for maintaining the company's liability
insurance. An additional commenter stated that instead of requiring an
authorized official to sign the policy, CMS should permit an approved
member of management with signature authority to do so. Another
commenter stated that because some suppliers work with brokers on all
insurance requirements, it may not be possible for them to comply with
this requirement.
Response: We appreciate these comments and respond as follows.
First, and strictly and solely for purposes of this particular
requirement, a supporting document is distinct from the Form CMS-855
application itself. A person's signature on one of these two documents
does not, with respect to provider enrollment, automatically confer an
authority to sign the other; for instance, an individual who currently
signs the liability insurance policy may not qualify as an authorized
official under Sec. 424.502. In light of the importance of the
liability insurance policy, we must ensure that the individual(s)
signing both documents have the authority to do so. We cannot presume
that the authorized official's signature on the Form CMS-855 means the
liability insurance policy signer was similarly authorized.
Second, the definition of ``authorized official'' does not require
an individual to explicitly have the title of chief executive officer
or president per se. The person must merely have the authority
described in that definition. Moreover, a provider can have as many
authorized officials as it wishes so long as the authorized official
definition is met for each. (Indeed, larger providers often have
multiple authorized officials.) This means that one authorized official
could sign the Form CMS-855 and another the liability policy. They need
not be the same person. We believe this will help suppliers comply with
this requirement.
Third, we are most respectfully uncertain as to the third
commenter's reference to ``approved member of management with signature
authority.'' If the commenter is stating that any manager should be
able to sign the liability policy, this would defeat the purpose of our
requirement, since--unless the person is an authorized official--we
have no means of knowing whether the person is truly authorized to sign
policy and, possibly, who the person even is. By requiring an
authorized official to sign the liability policy, we can identify the
signer (since the person will be reported on the Form CMS-855) and
thereby screen the individual as we do all other authorized officials.
Fourth, we appreciate the commenter's feedback regarding broker
use. Yet we reiterate that the provider can have an indefinite number
of authorized officials, meaning we believe the provider will be able
to have at least of them sign the policy even if a broker is utilized.
After reviewing these comments, we are finalizing this proposal
without modification.
(7) Adverse Legal Actions
Consistent with Sec. 424.516(b) through (d), certain Medicare
provider and supplier types, such as DMEPOS suppliers, must report any
adverse actions (for example, felony convictions) imposed against them,
their owners, managing employees or organizations, or corporate
directors or officers within 30 calendar days of the action. However,
other provider and supplier types have 90 days to report this
information. To make these timeframes consistent and to ensure that we
are alerted much sooner of the concerning actions, we proposed to
revise Sec. 424.516(e)(1) to require all provider and suppliers,
regardless of type, to report adverse legal actions to us within 30
days.
We received the following comments on this proposal:
Comment: Several commenters opposed our requirement for all
providers and suppliers to report adverse action changes within 30
days, with one commenter stating that it may create compliance burdens
without clear evidence of improved oversight outcomes.
Response: We appreciate these comments but believe our proposal
will indeed strengthen program integrity and provider oversight. The
shorter reporting timeframe will help notify CMS much sooner of
provider activity that could pose a serious risk to the Medicare
program. We also reiterate that certain other provider and supplier
types have long been subject to a 30-day adverse action reporting
requirement, yet we are unaware of any undue burden that has resulted
therefrom. We believe the same will hold true with our expansion of
Sec. 424.516(e)(1).
After reviewing these comments, we are finalizing this proposal
without modification.
(8) Certain Modifications to Provider Enrollment Paragraph References
(Sec. Sec. 424.535(a)(23) and 424.530(a)(18)) and Enrollment
Provisions (Sec. 424.205))
Under Sec. Sec. 424.535(a)(23) and 424.530(a)(18), CMS may revoke
or deny a Medicare Diabetes Prevention Program (MDPP) supplier's
enrollment if the supplier violates an enrollment condition or standard
in Sec. 424.205(b) or (d). Since the promulgation of Sec. 424.205 in
2017: (1) Sec. Sec. 424.535(a)(23) and 424.530(a)(18) have been
established; and (2) there have been revisions to the organizational
structure of Sec. 424.205. To ensure that Sec. Sec. 424.535(a)(23),
424.530(a)(18), and 424.205 accurately reflect correct paragraph
designations, we proposed changes to all three.
First, the MDPP enrollment standards are now in Sec. 424.205(c)
rather than Sec. 424.205(d). We thus proposed 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)).
[[Page 55455]]
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 under, respectively,
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, under,
respectively, Sec. Sec. 424.530(a)(1) or 424.535(a)(1). We proposed 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 in these situations we can deny or
revoke under either the (a)(1) provisions or (a)(18)/(23).
We received no comments on these proposed changes and are therefore
finalizing them without modification.
(9) 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 proposed to include the latter within the scope
of Sec. 424.540(a)(8).
We received no comments on this proposal and are thus finalizing it
without change.
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.\47\ 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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\47\ 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.
---------------------------------------------------------------------------
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.
One requirement, outlined in section 1902(a)(39) of the Act (and
applicable to CHIP in accordance with section 2107(e)(1)(C) of the Act)
is that the State must deny or terminate a provider's Medicaid or CHIP
enrollment if the provider is--
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 in accordance with
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 the
termination and, if the Secretary determines appropriate, include the
termination in any database or similar system developed under section
6401(b)(2) of the Affordable Care Act.
CMS has developed and currently operates a database in accordance
with these statutory provisions. 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) 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 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),
we proposing to change the aforementioned ``and'' reference to ``or.''
We received no comments on this proposal and are thus finalizing it
without change.
[[Page 55456]]
(3) Miscellaneous Comments
We also received the following comments in response to our provider
enrollment proposals:
Comment: A commenter requested that CMS streamline its provider
enrollment and revalidation processes to reduce administrative burden
on compliant HHAs, adding that delays in enrollment can hinder patient
care.
Response: We appreciate this comment but believe it is outside the
scope of this final rule.
Comment: A commenter requested that CMS facilitate a balanced
appeals process that avoids harming patient care over minor
administrative oversights.
Response: We appreciate this comment. However, because CMS did not
propose provisions regarding its existing provider enrollment appeals
process, we respectfully believe that this comment is outside the scope
of this final rule.
Comment: Several commenters stated that CMS should increase the
deactivation non-billing period in Sec. 424.540(a)(1) from 6 months to
12 months, contending that some providers do not bill for 6 or more
months for legitimate reasons.
Response: We appreciate this comment but believe it is outside the
scope of this final rule.
Comment: Several commenters stated that CMS should: (1) work with
MACs to establish clear and reasonable processing timeframes for
provider enrollment and change of ownership applications, with
transparent tracking of progress; and (2) require MACs to implement
systems that prevent duplicate document requests and ensure that
information already submitted is appropriately retained and applied to
the pending file.
Response: We appreciate this comment but believe it is outside the
scope of this proposed rule.
Comment: Concerned about inconsistency among the MACs, several
commenters recommended that CMS ensure that providers have access to a
MAC contact person who is responsible for holding enrollment analysts
accountable for timely and accurate compliance with CMS requirements.
Other commenters suggested that CMS: (1) hold MACs accountable for
timeliness standards for application processing as well as prompt and
accurate responses suppliers; (2) ensure more training of MAC
representatives; and (3) establish a reporting escalation process to
trigger oversight and accountability of the MACs related to timely
processing, inconsistent performance, and unreasonable delays.
Response: We appreciate this comment but believe it is outside the
scope of this final rule.
Comment: A commenter stated that CMS must furnish clear guidance to
any provider under a provisional period of enhanced oversight (for
example, the timeline for review).
Response: We appreciate this comment but believe it is outside the
scope of this final rule.
Comment: A commenter stated that with respect to the current
enrollment process for larger DMEPOS suppliers, CMS should: (1) utilize
a central point of contact at the supplier's corporate headquarters for
documentation requests (and other requests) rather than contacting each
individually enrolled site; and (2) assess the benefit of the existing
site visit process.
Response: We appreciate the comment but believe it is outside the
scope of this final rule.
(4) Final Provisions
Consistent with the foregoing, we are finalizing all of our
proposed provider enrollment provisions without modification.
B. DMEPOS Supplier Accreditation Process
1. Introduction
a. Overview of DMEPOS Accreditation
(1) DMEPOS Suppliers
(A) Background and Program Integrity Concerns
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 Sec. 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.
We explained at length in the proposed rule that DMEPOS suppliers
have long presented to the Medicare program a very elevated risk of
fraud, waste, and abuse. In recognizing this threat, CMS has
established particularly stringent requirements that DMEPOS suppliers
must meet to enroll and maintain enrollment in Medicare. To illustrate,
DMEPOS suppliers under Sec. 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
are additional 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. 424.57(d).
Compliance with DMEPOS quality standards.
Accreditation by a CMS-approved DMEPOS accrediting
organization.
Notwithstanding these and other DMEPOS program integrity efforts we
have undertaken, serious concerns remain. We noted in the proposed rule
that numerous Office of Inspector General (OIG) reports since 1998 have
noted payment safeguard issues associated with DMEPOS suppliers. We
specifically cited therein several recent OIG reports and alerts
related to these matters.\48\ We also outlined a number of recent
criminal convictions involving DMEPOS suppliers.\49\ Indeed, DMEPOS
fraud, waste, and abuse is still a very significant problem, putting
hundreds of
[[Page 55457]]
millions (even billions) of taxpayer dollars at risk and potentially
resulting in patient harm, such as when 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.'' \50\
---------------------------------------------------------------------------
\48\ 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/#:~:; https://oig.hhs.gov/reports/all/2025/medicare-improperly-paid-suppliers-for-intermittent-urinary-catheters/; https://oig.hhs.gov/fraud/consumer-alerts/consumer-alert-catheter-scam/.
\49\ 90 FR 29200-29201.
\50\ https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp.
---------------------------------------------------------------------------
(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 of certain items. As
authorized under section 1834(a)(20)(E) of the Act, 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:
Human resources, and information management.
Equipment and item delivery and set-up.
Patient and caregiver training and instruction.
Patient follow-up.
Two other sets of quality standards involve administration and
finances. The administration standards require, among other things,
that the supplier: (i) comply with all Medicare laws, regulations, and
guidance; and (ii) implement business practices that prevent fraud,
waste, and abuse. Part of this latter requirement involves the supplier
using procedures and conduct that ensure its compliance with applicable
laws and regulations, as well as assigning one or more company leaders
to address compliance issues. The financial administration standards,
meanwhile, state that the supplier must--
Use financial management practices that ensure accurate
accounting and billing.
Keep accurate, complete, and current financial records
that reflect cash- or accrual-based accounting practices.
Keep accounts that link equipment and items to the patient
and manage patient service revenues and expenses regularly, including
linking charges to patient equipment, supplies, and services with
bills, receipts, and deposits.
These requirements make clear that the quality standards go beyond
matters of direct patient care and equipment quality to include
administrative. legal, and financial compliance as well as fraud, waste
and abuse prevention. The standards as a whole are both extensive and
detailed because we must confirm that the supplier is bona fide and
legitimate.
(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.
Section 424.57(c)(24) states that all DMEPOS supplier locations
(owned or subcontracted) must be separately accredited in order to
enroll in and bill Medicare. However, 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. These persons include, for example, physicians and opticians.
Per section 1834(a)(20)(B) of the Act, the Secretary designates and
approves DMEPOS AOs, of which there presently are eight. To become or
be retained or reapproved as an AO, the AO must meet the requirements
of Sec. 424.58. As addressed in greater detail in the proposed rule
and throughout section VI.B. of this final rule, these requirements
include, but are not limited to, the following:
Completing the application process, which includes
submitting 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
contingent upon CMS approval--an AO has some discretion in the
operational aspects of its review of a supplier's request for
accreditation. 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 sub-regulatory guidance,
DMEPOS suppliers currently must be surveyed once every 3 years
following initial accreditation.
(4) Concerns About the Existing DMEPOS Accreditation Process
The proposed rule contained a substantial number of proposed
additions and revisions to our current DMEPOS accreditation process.
Aside from the overarching need to improve and strengthen said process,
and as we explained in the proposed rule, there were several other
reasons behind our proposals.
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 previously noted 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 the
AOs make quality standard compliance determinations. Third, although
surveys are typically part of the DMEPOS accreditation process, not
every supplier receives one. This is particularly true for large chain
suppliers with 25 or more separately enrolled locations (such as chain
pharmacies). We see this as a potential vulnerability in our
enforcement of the DMEPOS accreditation requirement. Fourth, while
Sec. 424.58 outlines certain components of the DMEPOS accreditation
process, it does not address other important topics that, in our view,
should be outlined in regulation. We note that CMS regulations
regarding the accreditation of certified providers, certified
suppliers, and home infusion therapy suppliers (found in 42 CFR part
488) contain more extensive provisions than does Sec. 424.58; 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
[[Page 55458]]
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.
A recent 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.\51\ According to court documents,
the person was a contractor for a DMEPOS AO and performed inspections
of hundreds of DMEPOS suppliers for compliance with the quality
standards. The individual--
---------------------------------------------------------------------------
\51\ https://www.justice.gov/usao-sdfl/pr/miami-inspector-pleads-guilty-scheme-obstruct-us-department-health-and-human-services.
---------------------------------------------------------------------------
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, established
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.\52\
---------------------------------------------------------------------------
\52\ Ibid.
---------------------------------------------------------------------------
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.
Moreover, 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 proposed in the July 2, 2025, proposed rule to do
likewise for DMEPOS accreditation 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.
b. Legal Authorities
There are several discrete statutory authorities for our final
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 (regarding
accreditation of providers and suppliers in general), 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
Given the extent of our proposed changes to Sec. 424.58, we
proposed to entirely reorganize the current paragraph structure and
designations. Except for current paragraph (a) or as otherwise noted,
all finalized paragraph designations in Sec. 424.58 are labeled as new
provisions even though the provision may already exist in current Sec.
424.58 under a different paragraph. We received over 350 timely pieces
of correspondence on our proposed DMEPOS accreditation provisions. Many
individual comments pertained to multiple topics discussed in this
subsection VI.B.2. of this final rule. For this reason, all of the
comments and responses--regardless of the regulatory provision they
addressed--are contained in section VI.B.16. of this final rule.
a. Definitions (New Sec. 424.58(b))
We proposed several new definitions in Sec. 424.58(b) to help
clarify the regulatory provisions to which they relate.
First, we proposed 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 believed a clear definition of
``complaint'' is warranted.
Second, we proposed 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 was needed
because AOs, under current paragraph Sec. 424.58(c)(4) thereof, must
notify CMS within 2 calendar days of a supplier's deficiency that poses
immediate jeopardy.
Third, we proposed 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.
Fourth, we proposed 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.
[[Page 55459]]
This definition reflects our belief that it is critical for DMEPOS
supplier surveys to 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.
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 proposed to separate them into two paragraphs for
ease of comprehension. Initial application procedures would be
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. We have neither revisited
these data elements via rulemaking since 2006 nor, as already stated,
reapproved or fully reassessed the AOs for many years. Given this
lapse, we believe that requiring AOs to submit with their applications
the additional data described in this subsection (B)(2)(b) would help
us: (1) better ascertain the AO's qualifications; and (2) ensure that
the AO will properly and competently perform its functions and remain
in compliance with the requirements of Sec. 424.58. We accordingly
proposed changes and enhancements 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))
We proposed that the opening part of paragraph (c)(1) would state
that an AO applying for approval of its DMEPOS accreditation program
must furnish ``all the following information and materials to
demonstrate that the DMEPOS accreditation organization provides
reasonable assurance (as defined in paragraph (b) of this section)
regarding its program.'' This language would emphasize that it would
not be enough to merely submit the required information in paragraph
(c)(1). 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 outlines the components of
the AO's required explanation of its operational processes. We proposed
to revise this provision to:
Require a detailed description of the organization's
survey and other accreditation processes (not merely its operational
processes) to confirm that the suppliers it accredits meet or exceed
the DMEPOS quality standards and Medicare program requirements.
Re-designate the six elements of the required description
of operational processes in current Sec. 424.58(b)(1)(iii) as new
Sec. 424.58(c)(1)(iii)(A) through (F) in the same respective order
they are listed in existing (b)(1)(iii).
Add new paragraph (c)(1)(iii)(G) to 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. This
would help us understand the factors and criteria the AO will consider
in its determination and, more importantly, whether it will exercise
its discretion prudently.
(3) Redesignation of Existing Data Submission Provisions (New Sec.
424.58(c)(1)(i), (ii), (iv), (v), (vi), and (vii)(A), (B), and (C))
Strictly for organizational purposes and without making any changes
in content, we proposed to redesignate Sec. Sec. 424.58(b)(1)(i),
(ii), and (iv) through (vii)(A) through (C) (which describe additional
information the AO must furnish) as 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 proposed additional requirements in new Sec. 424.58(c)(1)(vii).
New 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 information 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 section VI.B. of this final rule)).
Preventing and handling potential or actual conflicts of
interest that could arise from situations where 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 any member of their immediate family engaged in any of
the previously stated activities. The term ``immediate family member''
would be defined in proposed Sec. 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.
++ 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 also proposed to clarify in new paragraph Sec.
424.58(c)(1)(vii)(D)(5) that 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.
As we explained in the proposed rule, DMEPOS AO avoidance of
conflicts of interest is needed to help ensure the integrity and
impartiality of its surveys
[[Page 55460]]
and accreditation decisions. We believe our proposed provisions
regarding conflicts of interest and consulting would assist in this.
Also, in new Sec. 424.58(c)(1)(vii)(E) we proposed to require the
AO to outline its policies and procedures for ensuring it always has an
adequate number of surveyors.
(5) AO Program Deficiencies (New Sec. 424.58(c)(1)(viii))
We proposed 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,
which could lead to inadequate scrutiny of suppliers, the accreditation
and enrollment of unqualified suppliers, and, hence, improper payments.
(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 proposed 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.
(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. However, we believed the data
that existing Sec. 424.58(b)(1)(ix) requires is insufficient to help
us to determine whether the AO would handle complaints thoroughly,
consistently, and diligently. We thus proposed several changes to this
paragraph, which would be designated as new Sec. 424.58(c)(1)(x).
First, we proposed to add procedures for closing out complaints as
part of this information submission requirement.
Second, we proposed to change the NSC reference to the ``applicable
National Provider Enrollment contractor (NPEC)''. 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.
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.
(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 did not propose to revise these paragraphs but only to
re-designate them as new Sec. 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 proposed 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 proposed 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.
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 did not propose to designate
this paragraph as new Sec. 424.58(c)(1)(xvi) because, as explained
later in this final rule, we proposed to include it as part of the
broader 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 proposed a similar provision in
new Sec. 424.58(c)(1)(xvi) regarding DMEPOS so we could better
understand the AO's credentials and qualifications.
(10) Review Timeliness (New Sec. 424.58(c)(xvii))
We proposed 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 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 would also include an explanation of the
reasons for which the AO will deny or terminate a supplier's
accreditation. We believe this information would give us a more
thorough understanding of how the AO will make its decisions.
(12) Surveys (Sec. 424.58(c)(1)(xix))
We proposed in new Sec. 424.58(c)(1)(xix)(A) and (B) that the AO
outline its policies and procedures for the following:
Determining whether and when a survey is performed (for
example, the DMEPOS supplier is providing a new type of item). 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 a DMEPOS supplier deficiency.
Ensuring that all onsite surveys are unannounced,
including 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--and our earlier noted
view that surveys should be unannounced--we believe Sec.
424.58(c)(1)(xix) is needed.
[[Page 55461]]
(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.
To enable us to gain a clearer understanding of the AOs' CAP
processes, we proposed in new Sec. 424.58(c)(1)(xx) that the AO
outline the policies and procedures via which it would apply a CAP to
the supplier. This would include--
The specific circumstances under which the AO would apply
a CAP as opposed to denying or terminating accreditation, and the
reason(s) for why the AO believes a CAP in these situations would be
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.
(14) Describing and Defining DMEPOS Supplier Deficiencies (New Sec.
424.58(c)(1)(xxi))
We proposed in new Sec. 424.58(c)(1)(xxi) that the AO would be
required to 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. We thus believe we must understand the
AO's policies regarding deficiency classifications.
(15) Potentially Fraudulent Activity (New Sec. 424.58(c)(1)(xxii))
We proposed in new Sec. 424.58(c)(1)(xxii) that the AO would be
required to 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, we do not
believe the AO should disregard possible fraud, waste, or abuse by
suppliers.
(16) Agreement of Compliance (New Sec. 424.58(c)(1)(xxiii))
(a) Introduction
To ensure that we have the DMEPOS AO's binding commitment to adhere
to all CMS requirements, we proposed in new Sec. 424.58(c)(1)(xxiii)
that DMEPOS AOs must explicitly agree to certain conditions as part of
the application process. (Some of Sec. 424.58(c)(1)(xxiii)'s
requirements would refer to new paragraphs in Sec. 424.58 that will be
addressed later in this section of this final rule.)
In the opening paragraph of new Sec. 424.58(c)(1)(xxiii), we
proposed 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.
(b) Data Submission Within 3 Business Days
We proposed 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) (which
involves the AO's monthly submission of information to CMS); and
Any other information CMS deems necessary to facilitate
its oversight of the AO's accreditation program.
Considering, again, our role as overseer of Medicare DMEPOS
accreditation activities, we must be able to closely and constantly
monitor AOs' activities via rapid access to critical information, hence
the need for Sec. 424.58(c)(1)(xxiii)(A)(1) and (2).
(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 DMEPOS supplier's deficiency if the deficiency poses an
immediate jeopardy situation; any adverse action the AO accordingly
takes must also be identified. Given this provision's importance, we
believe that the AO's specific agreement in proposed paragraph
(c)(1)(xxiii)(B) 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. Such changes can significantly impact
the AO's accreditation program and, in turn, our responsibility for the
DMEPOS accreditation program as a whole. Accordingly, we proposed 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
final rule).
(e) Termination or Other Change in Supplier's Accreditation Status
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. We thus proposed 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 proposed 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
[[Page 55462]]
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. We believe a general,
overarching agreement to furnish the scope and breadth of data
addressed in Sec. 488.5(a)(11)(ii) is warranted so we can ensure that
we have all information needed to execute our oversight functions. To
this end, we proposed 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 the notification. As it is
important for AOs to implement these changes timely and fully, we
believe the AO should explicitly commit to do so. We therefore proposed
in new Sec. 424.58(c)(1)(xxiii)(G) 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. Consequently, we proposed in new Sec.
424.58(c)(1)(xxiii)(H) that the AO 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 proposed 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
Though addressed in more detail later in this final rule, the
concept of sampling involves the AO's use of a formula to determine
which locations within a particular group should be surveyed.
Consistent therewith, we proposed 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.
(l) Patient Records
As part of its survey of a supplier, the AO must examine the
supplier's patient medical records to 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 patient records; (3) simulated documentation;
and (4) templates.\53\ Actual records of the patients are required.
Given this, we proposed 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
proposed to include duplicate patient records as a fifth category,
meaning the reviewed records must be of the supplier's own patients and
not those of another supplier; this is because the latter records do
not reflect the items and services that the surveyed supplier itself is
furnishing.
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Although we have elected to address this topic via rulemaking in
new Sec. 424.58(c)(1)(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 the proposed rule and this final rule, we
proposed 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. We expressed concern in the proposed rule about potential
delays in said surveys due to a potential disagreement between the AO
and the supplier regarding which of them pays the cost of a CMS-
directed survey. To help ensure that this cost issue is resolved well
beforehand, we proposed in new Sec. 424.58(c)(1)(xxiii)(L) that the AO
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 the survey referenced in paragraph (e)(8)(ii).
(n) Truthfulness and Accuracy
To ensure that the AO understands its obligation to submit accurate
and complete data to CMS at all times, we proposed in new Sec.
424.58(c)(1)(xxiii)(M) that the AO 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
While the components of the proposed Sec. 424.58(c)(1)(xxiii)
attestation statement include fairly specific elements (for example, an
attestation to utilize CMS's deficiency definition), we emphasize that
adherence to all provisions in Sec. 424.58 is still required. We hence
proposed in Sec. 424.58(c)(1)(xxiii)(N) that the AO in its statement
be required to agree to comply with all of the requirements in Sec.
424.58 at all times; this would include agreeing to adhere to the
policies, procedures, practices, and agreements it outlined under Sec.
424.58(c) as part of its initial or reapproval application and any
changes thereto made with prior CMS approval.
(17) Additional Information Needed and Withdrawal of Application (New
Sec. 424.58(c)(2) and (c)(3))
We proposed two changes in new Sec. 424.58(c)(2) and (c)(3).
First, notwithstanding the wide scope of data
[[Page 55463]]
to be furnished per Sec. 424.58(c)(1), CMS may need additional
information to fully assess the AO's credentials. Thus, we proposed 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. Second, we proposed 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 notice described in Sec. 424.58(c)(6)
(discussed later in this proposed rule).
(18) 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. These provisions help 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. We thus believe it is 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 must be able to protect the DMEPOS
accreditation program from unqualified AOs. For reasons outlined in
detail in the proposed rule, we proposed the following denial grounds
in new paragraphs (c)(4)(i) through (viii), several of which duplicate
those in Sec. 424.530(a):
Denial Reason 1--The AO has failed to comply with all
application, data, and agreement submission requirements outlined in
Sec. 424.58(c).
Denial Reason 2--The AO has failed to provide reasonable
assurance (as defined in paragraph (b)).
Denial Reason 3--The current number of CMS-approved DMEPOS
AOs is sufficient to ensure the continued administration of CMS' DMEPOS
accreditation program.
Denial Reason 4--The AO's DMEPOS program was previously
terminated, suspended, or placed on probation by CMS under,
respectively, new Sec. 424.58(h), (i), or (j).
Denial Reason 5--The AO, or any owner (as defined in Sec.
424.502), managing employee (as defined in Sec. 424.502), governing
body member, W-2 or contracted surveyor, or W-2 or contracted health
care or administrative or management services personnel thereof--
++ Is OIG-excluded;
++ Is debarred, suspended, or otherwise excluded from participating
in any Federal procurement or non-procurement activity; or
++ Within the preceding 10 years:
++ Was convicted of a Federal or State felony offense that CMS
determines is detrimental to the best interests of the Medicare program
and its beneficiaries;
++ Has had a Medicare enrollment revoked under Sec. 424.535;
++ Has had a license to provide health care suspended or revoked by
any State licensing authority; or
++ Has been suspended or terminated from participating in a Federal
or State health care program.
Denial Reason 6--The AO has submitted false or misleading
information on its application in order to gain CMS approval or
reapproval as a DMEPOS AO.
Denial Reason 7--The AO is non-compliant with any
provision in Sec. 424.58.
Denial Reason 8--CMS otherwise determines that approval of
the applicant as a DMEPOS AO would not be in the best interests of the
Medicare program and its beneficiaries.
(19) Notice of Approval/Denial, Public Notice, and Length of Approval
(New Sec. 424.58(c)(5) Through (7))
Existing Sec. 424.58 does not address when and how an AO is
notified of CMS' decision to approve or deny its application for
approval of its accreditation program. To clarify these issues, we
proposed several provisions, the rationales for each of which were
outlined in the proposed rule (90 FR 29211-29212). Under Sec.
424.58(c)(5), CMS would send notice of its decision to the AO within
210 calendar days from the date CMS determines that the AO's
application is complete. The notice would include: (i) the basis for
the decision; (ii) if applicable, the effective date of approval; and
(iii) if applicable, the length of the approval (not to exceed 6
years). Under proposed Sec. 424.58(c)(6), CMS would announce on its
website its decision to approve or deny the application. The
announcement would be posted within 210 calendar days from the date
that CMS determines that the AO's application was complete. If the
application is approved, the posting would also state the approval's
effective date (no later than the notice's publication date) and length
(6 years or less). In addition, Sec. 424.58(c)(7) would state that CMS
may approve an accreditation program for any period up to a maximum of
6 years.
3. AO Reapproval Process (New Sec. 424.58(d))
New Sec. 424.58(d) would outline the procedures involving an AO's
application for reapproval of its DMEPOS accreditation program. As
earlier mentioned, and except as otherwise noted, these procedures
would generally duplicate those for initial applications in terms of
content and rationale.
We proposed in new Sec. 424.58(d)(1)(i) that except as stated in
paragraph (d)(1)(ii), an approved DMEPOS AO that seeks to continue as
such must apply for reapproval of accreditation at least 9 months
before its current approval term expires. This would afford CMS--prior
to the current approval's expiration--sufficient opportunity to: (1)
review the application; (2) consider the AO's qualifications and past
performance; and (3) render a decision. CMS would have the discretion,
though, to grant the AO an additional 30 days to reapply.
We previously noted our concern that we have not reapproved any AO
since the DMEPOS accreditation program's inception in 2006. Considering
this nearly two-decade period, and as explained in the proposed rule,
we believe it is imperative to commence a reapproval process for all
current AOs as soon as possible after the effective date of any
finalization of our proposals. Hence, we proposed in Sec.
424.58(d)(1)(ii) that CMS may require AOs to submit reapproval
applications under paragraph (d) any time after January 1, 2026, which
would be the effective date of our revisions to Sec. Sec. 424.57 and
424.58. The application would have to be submitted within 60 calendar
days of CMS' submission request; if it is not, CMS terminates the AO's
DMEPOS accreditation approval.
We proposed in new Sec. 424.58(d)(2) that as part of its
reapproval application submission: (1) the AO would have to furnish all
information and statements identified in Sec. 424.58(c)(1); and (2)
CMS could request additional information under Sec. 424.58(c)(2).
We also proposed in new Sec. 424.58(d)(3) through (7) to duplicate
our proposals in Sec. 424.58(c)(3) through (7), respectively. The same
rationales would apply (for example, establishing clear reapproval
application withdrawal procedures; giving CMS adequate time (a maximum
of 210 days) to render its decision).
[[Page 55464]]
4. Ongoing Responsibilities of a CMS-Approved AO (New Sec. 424.58(e))
Existing Sec. 424.58(c)(1) through (6) outline activities an
approved AO must undertake on an ongoing basis. These functions, some
of which have already been referenced, are as follows:
Monthly submission of data concerning the AO's activities
(such as copies of surveys; notice of accreditation decisions and
complaints received; information about actions taken against suppliers,
etc.).
Submission of the acknowledgment, cross walk, and
explanation in response to a change in CMS requirements.
Allowing the AOs' surveyors to serve as witnesses if CMS
takes an adverse action against a supplier based on an accreditation
determination.
Notification to CMS within 2 calendar days of a supplier's
immediate jeopardy deficiency.
Within 10 calendar days of receiving CMS notice that CMS
intends to withdraw the AO's approval, provide written notice of the
withdrawal to all the AO's accredited DMEPOS suppliers.
Annually furnish CMS-specified summary information
regarding the prior year's accreditation activities and trends.
We proposed to include these requirements within new Sec.
424.58(e) but to also make certain changes and additions to them.
a. Submission of Monthly Information, Requested Information, and
Immediate Jeopardy Deficiencies (New Sec. 424.58(e)(1))
There are five categories of data in current Sec. 424.58(c)(1)(i)
through (v) that the AO must furnish on a monthly basis. We proposed
several revisions thereto.
First, in the opening paragraph of (c)(1) (which we are
redesignating as new paragraph (e)(1)(i)), we proposed for purposes of
clarity to change the reference ``on a monthly basis'' to ``no later
than the last day of each month.''
Second, existing paragraph (c)(1)(i) requires monthly submission of
copies of all accreditation surveys, together with any survey-related
information that CMS may require (including CAPs and summaries of
findings with respect to unmet CMS requirements). We proposed that
paragraph (c)(1)(i) would become new paragraph (e)(1)(i)(A), with the
parenthetical in the previous sentence regarding CAPs and summaries
constituting new paragraph (e)(1)(i)(A)(1). In new Sec.
424.58(e)(1)(i)(A)(2), and for the same reason behind proposed new
Sec. 424.58(c)(1)(iii)(G), we proposed that the required data must
include the instances in which the AO had the discretion to perform a
survey but elected not to, including the reason(s) behind the AO's
decision.
Third, we proposed to delete the requirement in current Sec.
424.58(c)(1)(iii) of monthly notice to CMS regarding complaints. This
is because we proposed in new Sec. 424.58(e)(3)--as discussed later in
this final rule--a separate process and timeframe for the AO's
submission of complaint data to CMS.
Fourth, we proposed to add new paragraph (e)(1)(i)(C) that would
require monthly notice of resolved deficiencies. As already mentioned,
any DMEPOS supplier deficiency is of concern to us since it involves
non-compliance with the quality standards or other applicable CMS
requirement. Hence, we believe CMS should be made aware of them.
We did not propose to change the general content of existing
paragraphs (c)(1)(ii) and (iv) regarding the monthly reporting of
accreditation decisions and adverse actions. These two provisions, with
slight technical modifications, would serve as new paragraphs
(e)(1)(i)(B) and (D).
Current Sec. 424.58(c)(1)(v) requires the AO to report proposed
changes to its accreditation standards or requirements or survey
process on a monthly basis. It also states that CMS may withdraw its
approval of the AO's accreditation program if the AO implements these
changes without prior CMS approval. We proposed to delete this
requirement because, as discussed later in this final rule, the
question of AO process and standard changes is addressed more
thoroughly in new Sec. 424.58(e)(2).
In new Sec. 424.58(e)(1)(ii), and for the same reasons behind
proposed Sec. 424.58(c)(1)(xxiii)(A), we proposed that--
CMS may at any time request the AO to submit any of the
information described in new paragraph (e)(1)(i) or any other data CMS
deems necessary to facilitate its oversight of the AO's accreditation
program; and
The AO must furnish this data to CMS within 3 business
days of the request.
We also previously discussed current Sec. 424.58(c)(4) and its 2-
day notification requirement regarding immediate jeopardy deficiencies.
We proposed to retain this requirement as part of new Sec.
424.58(e)(1)(iii).
b. AO Standard or Requirement Changes (New Sec. 424.58(e)(2))
As mentioned earlier, existing Sec. 424.58(c)(1)(v) requires the
AO each month to notify CMS of any proposed changes to its
accreditation standards, requirements, or survey process; the AO cannot
implement the change without prior CMS approval. While we did not
propose to revise the basic requirements of Sec. 424.58(c)(1)(v), we
believe that additional safeguards are needed so that we: (1) become
aware of planned changes sooner than we presently do; (2) have enough
information to fully understand the breath of the revision; and (3)
have the authority to either authorize or prohibit the AO's proposed
revision. Therefore, we proposed several changes to Sec.
424.58(c)(1)(v), which would become new Sec. 424.58(e)(2).
First, we proposed in the opening paragraph of Sec. 424.58(e)(2)
to incorporate the existing notice requirement in current Sec.
424.58(c)(1)(v) with two additions. One would require the notice to be
written; this is current practice, but we wish to include this in
regulation. To address questions from AOs regarding Sec.
424.58(c)(1)(v)'s scope, the other addition would state that Sec.
424.58(e)(2)'s scope includes the addition, modification, or removal of
a DMEPOS product service category to the list of categories for which
the AO accredits DMEPOS suppliers.
Second, we proposed in new Sec. 424.58(e)(2)(i) that the notice
must:
Be submitted at least 60 calendar days before the proposed
change's intended effective date;
Contain a detailed explanation of the revisions and the
rationale for them; and
Include a detailed crosswalk (in table format) containing
the exact language of the AO's revised accreditation requirements and
the applicable Medicare requirements for each.
In new Sec. 424.58(e)(2)(ii), we proposed that CMS would furnish
the AO written approval or disapproval of the proposed change within 30
calendar days of the effective date of the revision.
In new Sec. 424.58(e)(2)(iii), and to emphasize to AOs the need
for prior CMS acquiescence, we proposed to largely restate our existing
position in Sec. 424.58(c)(1)(v) that CMS may terminate or suspend its
approval of the AO if the AO implements the change before or without
CMS approval.
c. Complaints (New Sec. 424.58(e)(3))
We previously noted that existing Sec. 424.58(c)(1)(iii) requires
the AO to provide monthly notice to CMS of all complaints involving
suppliers. As with certain other information falling under current
Sec. 424.58(c)(1), we are concerned that only requiring the reporting
of complaints on a monthly basis could leave us unaware for weeks of
allegations of suppliers' non-compliance
[[Page 55465]]
with the quality standards or other applicable CMS requirement. Again,
considering our obligation to safeguard the Trust Funds against
improper payments and to protect beneficiaries, we believe complaint
data should be furnished to us more frequently. We accordingly proposed
the following requirements in new Sec. 424.58(e)(3).
In paragraphs (e)(3)(i)(A) through (C) and (3)(ii), we proposed
that upon receipt of a complaint, the AO must--
Provide written notice of the complaint to CMS no later
than 5 calendar days after receipt;
In accordance with its existing policies and procedures
described in paragraph (c)(1)(x), perform an initial review of the
complaint to determine whether, based on the complaint and any other
data, the supplier may be non-adherent to one or more quality standards
or other applicable CMS requirement; and
Within 21 days after receiving the complaint, conduct a
survey of the supplier if the initial review determines that such non-
compliance may exist.
No more than 10 calendar days after completing the action
in paragraph (e)(3)(i)(B) or (C) (as applicable), give CMS written
notice of the result of the initial review or, as applicable, the
survey. (The notice must also inform CMS of any action the AO took or
intends to take regarding the supplier, such as a termination of
accreditation or imposition of a CAP.)
These requirements would help ensure that: (1) we receive the
complaint expeditiously; (2) it is thoroughly investigated; and (3) we
are aware of the result.
d. CAPs (New Sec. 424.58(e)(4))
We proposed in Sec. 424.58(e)(4) that the AO must give CMS written
notice of any decision to apply a CAP to a particular supplier no later
than 10 calendar days after its decision. The notice must include--
The reason for the decision;
A detailed explanation and justification as to why the AO
imposed a CAP instead of, as applicable, denying or terminating the
supplier's accreditation; and
The terms of the supplier's CAP (for example, deadline for
compliance, the AO's plans for enforcement and ensuring compliance).
This would help us ascertain the AO's: (1) compliance with its CAP
policies contained in its application for CMS approval or reapproval;
and (2) judgment in imposing CAPs instead of denying or terminating
accreditation.
e. Accreditation Denials and Terminations (New Sec. 424.58(e)(5))
We proposed in new Sec. 424.58(e)(5)(i) that the AO must give CMS
written notice of any decision to deny, terminate, revoke, withdraw, or
amend a supplier's accreditation within 5 calendar days of the
decision; the notice must identify the reason for the AO's
determination. Without our expeditious knowledge of such actions, an
unaccredited and unqualified supplier might remain enrolled for a
considerable period, possibly resulting in improper payments and
beneficiary harm. Also, and as we explained in the proposed rule, this
information could help CMS detect potentially systemic issues and
trends among suppliers.
We recognize the relative independence that AOs must retain in
their operations and particularly their accreditation decision-making,
Nonetheless, there are several situations where we believe we must
require that the AO take action because of the serious program
integrity risk the situation entails. Thus, we proposed in new
paragraphs (e)(5)(ii)(A)(1) through (5) that notwithstanding any other
provision in Sec. 424.58, an AO must deny or terminate a supplier's
accreditation if--
The supplier fails to meet the licensure requirements in
Sec. 424.57(c)(1)(ii);
The supplier is not operational (as that term is defined
in Sec. 424.502);
The supplier's location fails to meet the accessibility
requirements in Sec. 424.57(c)(7)(i)(B);
The supplier's Medicare enrollment is revoked due to non-
compliance with one or more DMEPOS quality standards and the
reenrollment bar under Sec. 424.535(c) has not expired; or
Directed by CMS.
To ensure that the AO carries out a CMS-directed accreditation
denial or termination, we further proposed in new paragraph
(e)(5)(ii)(B) that the AO must: (1) deny or terminate the supplier's
accreditation within 3 business days after receiving written notice
from CMS to do so; and (2) provide CMS written notice that it has taken
this action within 5 business days of receiving the written direction
from CMS.
f. Annual Summary of Data and CMS Changes (New Sec. 424.58(e)(6) and
(7))
Existing Sec. 424.58(c)(6) requires the AO to annually furnish
summary data specified by CMS that relates to the past year's
accreditation activities and trends. Although we did not propose to
change this requirement, we did propose to designate it as new Sec.
424.58(e)(6).
We previously noted that as part of the AO statement that proposed
Sec. 424.58(c)(1)(xxiii) would require, the AO per Sec.
424.58(c)(1)(xxiii)(G) must--in response to CMS notification of a
change in the quality standards, survey process, or other requirement--
furnish CMS with corresponding changes in the AO's requirements. We
proposed in new Sec. 424.58(e)(7) to outline the required timeframe
and content of this data submission.
The opening paragraph of Sec. 424.58(e)(7)(i) would: (1) include
the requirement in proposed Sec. 424.58(c)(1)(xxiii)(G); (2) state
that the AO's submission of concomitant revisions is to ensure
continued comparability with the quality standards, survey process, and
other requirements; and (3) require the AO to report its proposed
changes to CMS no later than 30 days after receiving CMS' written
notice. In addition, new paragraphs (e)(7)(i)(A) through (C) would
include the data submission elements and formats required in existing
Sec. 424.58(c)(2), specifically--
An acknowledgment of CMS's notification of the change;
A revised crosswalk reflecting the new requirements; and
An explanation of how the AO will modify its standards to
conform to CMS's new requirements within the timeframes outlined in the
notice it received from CMS.
In new Sec. 424.58(e)(7)(ii), we proposed to state that the AO
cannot implement its proposed corresponding revisions without CMS
approval. This requirement would help CMS ensure that the AO
understands and accurately implements CMS' revisions.
g. Performance of Surveys (New Sec. 424.58(e)(8))
As we explained in the proposed rule, not every supplier receives
an accreditation survey. For instance, CMS currently permits AOs to
undertake sampling for large supplier chain surveys. Factors an AO
considers in determining which chain locations are surveyed include:
(1) the supplier's physical location (for instance, whether it is in a
high-fraud area); and (2) the types of products the supplier furnishes.
We have received information that various DMEPOS suppliers that
were not surveyed were later found to be non-compliant with the quality
standards. We emphasized throughout section VI.B. of the proposed rule
CMS' obligation to prevent improper Medicare payments and to protect
beneficiaries. By permitting AOs to forgo surveys in
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certain instances, we risk the potential for patient harm and for
millions of Medicare dollars to be paid to non-compliant suppliers.
Believing that we must revisit the current process and establish
stricter and broader requirements regarding the performance of surveys,
we proposed the following requirements in new Sec. 424.58(e)(8).
Proposed opening paragraph (e)(8) and paragraph (e)(8)(i)(A) would
state that except as otherwise directed or permitted in writing by CMS
(for instance, allowing sampling), the AO must perform a survey of all
supplier locations for which the supplier seeks accreditation or
reaccreditation with the AO. (This includes, but is not limited to,
accreditations: (1) for a new item type the supplier has not previously
furnished; or (2) as required under 42 CFR 424.551, discussed later in
this final rule.) Per our concerns about non-surveyed suppliers, we
believe the blanket survey requirement in paragraph (e)(8)(i)(A) is
necessary. Nevertheless, we also recognize that isolated and limited
instances of sampling or other survey exemptions could be warranted.
While we were unable to specify or predict in the proposed rule what
those instances may be and do not commit to allowing survey exceptions
in this final rule, we believe our administration of the DMEPOS
accreditation program requires that we have the flexibility to address
particular circumstances as they arise.
New paragraph (e)(8)(i)(B) would require the AO to perform all
surveys as unannounced surveys. While the caveat in proposed opening
paragraph of (e)(8)(i) would permit us to waive this requirement in
certain situations, we do not anticipate doing so given the previously
noted importance of preventing prior notice to the supplier.
In new paragraph (e)(8)(i)(C), we proposed that the AO cannot
accredit the supplier location before: (1) the survey is conducted; and
(2) the AO deems the supplier compliant with the quality standards. Our
concern is that if we permitted accreditation (and then enrollment)
prior to the survey and it is later determined that the supplier does
not meet the quality standards, many thousands of dollars in improper
payments to the supplier could have resulted.
We also proposed in new paragraph (e)(8)(ii) that CMS may, at any
time, direct the AO to perform a survey of an accredited supplier or a
group thereof. We do not believe surveys should be restricted to
initial accreditation and reaccreditation situations, especially
considering the aforementioned 3-year time gap between them. Suppliers
must at all times be compliant with the quality standards and not
merely upon initial accreditation and reaccreditation. To help verify
that such adherence is always maintained, we believe we need discretion
to direct an AO to conduct a survey at any time. Having to wait until
reaccreditation to resurvey the supplier could lead in the interim to
improper payments to a supplier that has fallen out of adherence to the
quality standards.
We further proposed in new paragraph (e)(8)(iii) that when
performing a survey, the AO must also confirm that the supplier is
licensed in accordance with Sec. 424.57(c). We believe most AOs
perform this task during the survey, but we proposed to require this in
regulation considering the importance of the supplier's compliance with
State (and not only Federal) laws.
h. Surveyor Witnesses (New Sec. 424.58(e)(9))
We have cited current requirements in Sec. 424.58(c)(3) that the
AO allow its surveyors to serve as witnesses if CMS undertakes an
adverse action against a supplier in response to an accreditation
finding. Consistent with our reorganization of Sec. 424.58, we
proposed to designate this requirement without change as new paragraph
Sec. 424.58(e)(9).
i. Entrance of Data Into System (New Sec. 424.58(e)(10))
Notwithstanding our proposed additional reporting requirements, we
outlined our concerns in the proposed rule about our ability to access
accreditation and survey data immediately. There could be instances
where we need prompt information about a particular supplier in real-
time and cannot wait for the AO to send it to us. Thus, we proposed in
new Sec. 424.58(e)(10) that if directed by CMS, the AO must enter
accreditation, survey, product code, and other data into a CMS-
designated system. This system, to which CMS and the NPECs would have
access, would enable us to review accreditation data at any time. To
preserve our operational flexibility, we did not detail in the proposed
rule either the specific system involved or the timing, content, and
extent of the data entry. We may even later determine that the data
entry is unnecessary if an alternative means of accessing this
information in real-time is established. The implementation of Sec.
424.58(e)(10) is thus contingent upon CMS determining that the entry is
needed, hence the ``if directed'' caveat at the beginning of paragraph
(e)(10).
j. Adverse Actions (New Sec. 424.58(e)(11))
As previously noted, we proposed under new Sec. 424.58(c)(4)(v)
that CMS could deny an AO's application for approval or reapproval of
its accreditation program if the AO, or any AO owner, managing
employee, governing body member, surveyor, or health care or
administrative or management services personnel, has any of the adverse
actions specified in Sec. 424.58(c)(4)(v). Consistent therewith, we
proposed in new Sec. 424.58(e)(11) to duplicate this denial reason as
a general prohibition against such relationships on an ongoing basis,
not simply as part of the AO's application determination. We believe
this change would further underscore the importance of ensuring that
parties associated with the AO do not pose program integrity risks.
5. Continuing Federal Oversight of AOs (New Sec. 424.58(f))
Existing Sec. 424.58(d) outlines procedures for our ongoing review
of AOs. While we intend to retain some of the provisions of this
section, which would become new Sec. 424.58(f), we proposed changes to
parts of its contents and structure to improve clarity and strengthen
our oversight.
The opening paragraph of current Sec. 424.58(d) states that the
paragraph establishes specific criteria and procedures for continuing
oversight and for withdrawing approval of a CMS-approved DMEPOS AO. We
proposed to revise this to state that CMS evaluates the performance of
each CMS-approved DMEPOS accreditation program on an ongoing basis;
means of monitoring include, but are not limited to, the reviews
identified in proposed paragraph (f). We believe this new language
would clarify that CMS' oversight procedures are not restricted to
those in paragraph (f). We further proposed that existing Sec.
424.58(d) regarding terminations of AOs be in proposed new paragraph
(h). Hence, the designation of Sec. 424.58(d) as new Sec. 424.58(f)
will not include these paragraphs or any other reference to AO
terminations.
a. Equivalency Reviews (New Sec. 424.58(f)(1))
As described in current Sec. 424.58(d), an equivalency review
involves our comparison of the AO's standards (and the AO's application
and enforcement thereof) to CMS requirements and processes. Paragraphs
(d)(1)(i) through (iii) outline the following instances in which CMS
may perform this review: (i) CMS imposes new requirements or changes in
its survey process; (ii) the
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AO proposes new standards or changes in its survey process; or (iii)
the AO's term of accreditation expires. We believe that retaining these
three paragraphs in new paragraph (f)(1) would imply that we can only
perform equivalency reviews in these three situations, which is not our
intention. For reasons already noted, we must be able to constantly
monitor the AO's operations--even if none of the three previous
scenarios apply--and equivalency reviews are an important means of
doing so. Consequently, we proposed in new paragraph (f)(1) that we may
perform an equivalency review at any time; the contingencies in
existing (d)(1)(i) through (iii) would not be included in paragraph
(f)(1).
b. Validation Survey of Suppliers (New Sec. 424.58(f)(2))
Another means of validating the AO's accreditation processes is to
review the AO's survey procedures. Addressed in the opening paragraph
of existing Sec. 424.58(d)(2), this can involve CMS or its designated
survey team--
Performing a survey of an accredited DMEPOS supplier;
Examining the results of the AO's survey of a supplier; or
Observing an AO's survey of a supplier onsite.
After the review, CMS identifies whether (as stated in current
Sec. 424.58(d)(2)(i) through (iii)), the review indicates the
following:
At least a 10 percent disparity between the AO's and CMS'
respective survey findings for non-immediate jeopardy standards.
Any disparity between the AO's and CMS' respective survey
findings for standards constituting immediate jeopardy.
Regardless of the disparity rate, there are widespread and
systemic problems in the AO's processes such that accreditation by the
AO no longer provides CMS with adequate assurance that suppliers meet
or exceed Medicare requirements.
Additional provisions regarding CMS' performance of a supplier
survey (as a means of ascertaining the AO's performance) are addressed
in existing Sec. 424.58(b)(2). Specifically, the latter states that
CMS performs supplier surveys on a representative sample basis or in
response to substantial allegations of non-compliance.
We proposed several modifications to the foregoing provisions to
both consolidate and streamline our requirements and to enhance our
ability to perform the aforementioned reviews.
First, we proposed to incorporate all provisions regarding
validation surveys within new Sec. 424.58(f)(2) rather than continue
to have them split between Sec. 424.58(b)(2) and (d). We believe this
would facilitate clarity and consistency.
Second, we proposed in new paragraph (f)(2)(i) that CMS may survey
suppliers to validate the AO's survey process. Such surveys can be
comprehensive or focus on certain standards or requirements. We noted
in the proposed rule that paragraph (f)(2)(i) would not include the
three survey situations in the opening paragraph of existing Sec.
424.58(d)(2), the provisions in Sec. 424.58(d)(2)(i) through (iii), or
references to sample bases and substantial allegations of non-
compliance in Sec. 424.58(b)(2). This is because we believe that
paragraphs (b)(2) and (d)(2), as currently written, could be
erroneously read as restricting our flexibility to: (1) conduct
supplier surveys; and (2) reach conclusions that indicate problems with
the AO's accreditation program. It is crucial, in our view, to have
much wider latitude in assessing an AO's performance and to take action
as needed.
Third, existing Sec. 424.58(b)(3) through (6) state, respectively,
that--
If CMS discovers that the supplier is non-adherent to the
quality standards, CMS may revoke the supplier's billing number or
require the AO to perform a subsequent full survey at the AO's expense;
A supplier selected for a validation survey must
authorize: (1) the survey to occur; and (2) the CMS survey team to
monitor the correction of any deficiencies found during the survey;
If the selected supplier does not comply with the existing
authorization requirements of paragraph (b)(4), it does not meet the
quality standards and may have its supplier billing number revoked; and
If the survey finds that the supplier is non-compliant
with one or more quality standards, the supplier no longer meets the
quality standards and may have its supplier billing number revoked.
Except for changing ``supplier billing number'' to ``enrollment''
(the latter being the more accurate term), we did not propose revisions
to these requirements, which we would designate as new Sec.
424.58(f)(2)(ii), (iii), (iv), and (v).
c. Deficiencies (Sec. 424.58(f)(3))
As part of the proposed statement under new Sec.
424.58(c)(1)(xxiii), new paragraph (H) thereof would require the AO to
agree to accept and adhere to any CMS-established deficiency definition
as well as levels and categories of deficiencies. To reiterate CMS'
discretion in both this regard as well with respect to CMS' authority
to establish quality standards under section 1834(a)(20) of the Act, we
proposed in new Sec. 424.58(f)(3)(i) that CMS may--
Define the term ``deficiency'';
Establish levels and categories of deficiencies; and
Revise the quality standards.
New Sec. 424.58(f)(3)(ii) would require the AO in its
accreditation activities to apply and adhere to: (1) any CMS-
established definition of deficiency and categories and levels thereof;
and (2) all CMS-established quality standards.
d. Additional Reviews (Sec. 424.58(f)(4))
We proposed in new Sec. 424.58(f)(4)(i)(A) to expand upon the
reviews addressed in new Sec. 424.58(f)(1) and (2) and permit CMS--at
any time and for any reason--to conduct a review of the AO's processes
or performance to--
Validate the AO's representations to CMS (for example, its
statements in new paragraph (c)(1)(xxiii)); or
Assess the AO's adherence to its own policies and
procedures, the provisions of Sec. 424.58, and all other CMS
requirements.
We also proposed in new Sec. 424.58(f)(4)(i)(B) that the scope,
length, and timing of the review would lie within CMS' discretion.
Furthermore, evidence of the AO's potential non-compliance with any of
the policies and requirements addressed in new Sec. 424.58(f)(4)(i)(A)
is not required for CMS to perform a review.
In new Sec. 424.58(f)(4)(ii)(A) through (H), we proposed to list
some of the types of reviews that CMS may perform either collectively
or individually. Paragraphs (f)(4)(ii)(A) and (B) would respectively
reference the reviews in new Sec. 424.58(f)(1) and (2). Paragraphs
(f)(4)(ii)(C) and (D) would reflect two of the previously mentioned
reviews in existing Sec. 424.58(d)(2): examining the results of an
AO's surveys of suppliers and observing onsite an AO's survey of a
supplier. Proposed new paragraphs (f)(4)(ii)(E) through (H) would
address the following reviews of the AO's onsite operations, similar to
those for certified providers and certified suppliers in 42 CFR
488.8(h):
Conducting onsite inspections of the AO's operations and
offices.