[Federal Register Volume 91, Number 127 (Monday, July 6, 2026)]
[Proposed Rules]
[Pages 41216-41327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-13602]
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Vol. 91
Monday,
No. 127
July 6, 2026
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 410, 414, et al.
Calendar Year 2027 Home Health Prospective Payment System (HH PPS) Rate
Update; Requirements for the HH Quality Reporting Program and the
Expanded HH Value-Based Purchasing Model; Medicare Provider Enrollment,
Durable Medical Equipment (DME), and DME, Prosthetics, Orthotics, and
Supplies (DMEPOS) Policies; Proposed Rule
Federal Register / Vol. 91 , No. 127 / Monday, July 6, 2026 /
Proposed Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 410, 414, 422, 423, 424, 484, and 498
[CMS-1844-P]
RIN 0938-AV80
Calendar Year 2027 Home Health Prospective Payment System (HH
PPS) Rate Update; Requirements for the HH Quality Reporting Program and
the Expanded HH Value-Based Purchasing Model; Medicare Provider
Enrollment, Durable Medical Equipment (DME), and DME, Prosthetics,
Orthotics, and Supplies (DMEPOS) Policies
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would set forth routine updates to the
Medicare home health payment rates in accordance with existing
statutory and regulatory requirements. In addition, this proposed rule
discusses the behavior adjustment and proposes a temporary behavior
adjustment and proposes to recalibrate the case-mix weights and update
the functional impairment levels; comorbidity subgroups; and low-
utilization payment adjustment (LUPA) thresholds for CY 2027.
Additionally, this proposed rule discusses the provision of home health
palliative care services and includes a request for information (RFI)
on a home health specific wage index. This rule would also propose
changes to the Home Health Quality Reporting Program (HH QRP) and
summarizes potential initiatives to improve alignment between the HH
QRP and expanded Home Health Value Based Purchasing (HHVBP) Model.
Lastly, the rule would--clarify the application of the DMEPOS face-to-
face encounter requirements for the replacement of DMEPOS items; make
changes to the provider and supplier enrollment requirements; make
changes regarding DME benefit expansion for infusion pumps and drugs;
and discuss collection of information requirement changes regarding the
DMEPOS Competitive Bidding Program (CBP) country of origin.
DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on August 31, 2026.
ADDRESSES: In commenting, please refer to file code CMS-1844-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov/docket/CMS-2026-XXXX. Follow the instructions under the ``submit a
comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1844-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1844-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
For general information about the Home Health Prospective Payment
System (HH PPS), send your inquiry via email to
[email protected].
For information about the Home Health Quality Reporting Program (HH
QRP), send your inquiry via email to
[email protected].
For more information about the expanded Home Health Value-Based
Purchasing (HHVBP) Model, please visit the Expanded HHVBP Model web
page at https://www.cms.gov/priorities/innovation/innovation-models/expanded-home-health-value-based-purchasing-model or send your inquiry
via email to [email protected].
Nancy Allert (410) 786-4317, Jennifer Phillips (410) 786-1023,
Olufemi Shodeke (410) 786-1649, Misty Whitaker (410) 786-4975, for
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Encounter Requirements for Identical Replacement Items. Frank
Whelan (410) 786-1302, for Medicare provider and supplier enrollment
and DMEPOS accreditation.
For more information about the DME Benefit Expansion for Infusion
Pumps and Drugs, send your inquiry via email to [email protected].
Austin Gutowski, (410) 786-1643, for DME Competitive Bidding
Program--Country of Origin.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov/. Follow the search instructions on that website to
view public comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
I. Executive Summary
A. Purpose and Legal Authority
1. Home Health Prospective Payment System (HH PPS)
As required under section 1895(b) of the Social Security Act (the
Act), this proposed rule would update the CY 2027 Medicare payment
rates for home health agencies (HHAs). In this proposed rule, we
include an analysis of home health utilization, as well as analysis of
the difference between assumed versus actual behavior change on
estimated aggregate expenditures for home health payments as a result
of the change in the unit of payment to 30 days and the implementation
of the Patient Driven Groupings Model (PDGM) case-mix adjustment
methodology. This proposed rule also discusses the permanent
adjustments applied in previous years and proposes a temporary
adjustment to the CY 2027 home health base payment rate. In addition,
this rule proposes to recalibrate the PDGM case-mix weights and to
update the low-utilization payment adjustment (LUPA) thresholds,
functional impairment levels, and comorbidity adjustment subgroups
under sections 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day
periods of care in CY 2027. This proposed rule proposes to update the
CY 2027 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,
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as required by section 1895(b)(5)(A) of the Act).
Additionally, this rule discusses provision of palliative care
services under the Medicare home health benefit and includes a request
for information (RFI) regarding the construction of a home health
specific wage index.
2. Home Health (HH) Quality Reporting Program (QRP)
In accordance with the statutory authority at section
1895(b)(3)(B)(v) of the Act, we are proposing updated quality reporting
policies. First, we summarize potential initiatives to improve
alignment between the HH QRP and expanded HHVBP Model. We also propose
to revise the HH QRP data submission deadlines beginning with the CY
2027 HH QRP. We also propose to revise the HH QRP OASIS and HHCAHPS
Annual Payment Update (APU) reporting timeframe to report a calendar
year of data (January 1 through December 31). We propose some revisions
to regulatory text in support of rule proposals and to improve digital
transfer of information during the reconsiderations process. Finally,
we are soliciting public comments on one Request for Information (RFI)
on future measure concepts for the HH QRP.
3. Expanded Home Health Value-Based Purchasing (HHVBP) Model
We are not proposing any expanded HHVBP Model-specific policy
changes in this proposed rule. We have included a brief summary of the
Model with context relevant to potential alignment between the HH QRP
and the expanded HHVBP Model.
4. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Encounter Requirements for Identical Replacement Items
We propose clarifying the application of the DMEPOS face-to-face
encounter requirements, as outlined in 42 CFR 410.38, and the related
documentation necessary to support the replacement of DMEPOS items. We
do not believe it necessary to require an additional in-depth
beneficiary examination to ``gather[ ] subjective and objective
information associated with diagnosing, treating, or managing a
clinical condition for which the DMEPOS is ordered'' for replacement
items. Such information should be recorded when the beneficiary is
initially assessed and receives the item, and the practitioner should
only write replacement orders for beneficiaries with ongoing medical
need for the item(s). Therefore, we propose that an additional face-to-
face encounter within the 6 months preceding an order/prescription for
replacement of a DMEPOS item will not be required per 42 CFR 410.38. We
clarify that for purposes of 42 CFR 410.38(d)(2), a ``replacement''
refers to the provision of an item that replaces an item falling under
the same Healthcare Common Procedure Coding System (HCPCS) code; it
does not include those situations involving the provision of a
different item, for example, because of a change in medical condition.
5. Provider Enrollment and DMEPOS Accreditation
Consistent with section 1866(j) of the Act, we are proposing a
number of Medicare provider enrollment provisions to strengthen and
clarify certain aspects of the provider enrollment process. These
include but are not limited to: (1) adding grounds for denying or
revoking a provider's or supplier's Medicare enrollment; and (2)
expanding the reasons for which CMS can apply a retroactive effective
date for provider and supplier revocations. These changes are necessary
to help ensure that payments are made only to qualified providers and
suppliers, which we believe would assist in protecting the Trust Funds
and Medicare beneficiaries.
We are also proposing several minor revisions to our DMEPOS
accreditation provisions in Sec. 424.58, such as clarifying certain
timeframes by which DMEPOS accreditation organizations must report data
to CMS. We believe these revisions would help improve the efficiency of
the DMEPOS accreditation process.
6. Durable Medical Equipment (DME) Benefit Expansion for Infusion Pumps
and Drugs
In section V.C. of this proposed rule, we propose to make changes
to the Medicare Part B definition of DME at 42 CFR 414.202 to implement
amendments made to the definition of DME at section 1861(n) of the Act
by section 6222(a) of the Consolidated Appropriations Act, 2026 (CAA,
2026), expanding the scope of the benefit for DME to include certain
external infusion pumps and associated home infusion drugs or other
associated supplies. The legal authority for this proposed rule is
provided by section 1861(n) of the Act, as amended by section 6222(a)
of the CAA, 2026, and section 1871 of the Act.
7. DMEPOS Competitive Bidding Program--Country of Origin
We discuss requesting to revise the DMEPOS Competitive Bidding
Program (CBP) information collection under Office of Management and
Budget (OMB) Control Number 0938-1408 (CMS-10744) to require DMEPOS CBP
contract suppliers to report the country of origin for the lead items
furnished during the contract's period of performance. This information
will allow beneficiaries and interested parties to learn where the
DMEPOS item originated, if interested.
B. Summary of the Provisions of This Proposed Rule
1. Home Health Prospective Payment System (HH PPS)
In section II.B.1. of this proposed rule, we provide monitoring and
data analysis on the PDGM utilization.
In section II.C.1. of this proposed rule, we discuss the permanent
behavior adjustment and propose a temporary adjustment to the base
payment rate under the HH PPS.
In section II.D. of this proposed rule, we propose to recalibrate
the CY 2027 PDGM case-mix weights and to update the low-utilization
payment adjustment (LUPA) thresholds, functional impairment levels, and
comorbidity adjustment subgroups.
In section II.E. of this proposed rule, we propose to update the
home health wage index. We also propose to update the CY 2027 national,
standardized 30-day period payment rates and the CY 2027 national per-
visit payment amounts by the home health payment update percentage.
Additionally, this rule proposes the CY 2027 fixed dollar loss (FDL)
ratio to ensure that aggregate outlier payments are projected not to
exceed 2.5 percent of the total aggregate payments, as required by
section 1895(b)(5)(A) of the Act.
In section II.F. of this proposed rule, we discuss the provision of
palliative care services under the Medicare home health benefit.
In section II.G. of this proposed rule, we include a request for
information (RFI) on the construction of a home health specific wage
index.
2. Home Health Quality Reporting Program (HH QRP)
In section III.D. of this proposed rule, we summarize potential
initiatives to improve alignment between the HH QRP and expanded HHVBP
Model.
In section III.E. of this proposed rule, we are proposing to revise
the HH QRP data submission deadlines beginning with the CY 2027 HH QRP.
We are also proposing to revise the HH QRP OASIS and HHCAHPS Annual
Payment Update (APU) reporting timeframe to report a calendar year of
data (January 1 through December 31). Additionally, we propose some
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revisions to regulatory text in support of rule proposals or to improve
digital transfer of information during the reconsiderations process.
In section III.F. of this proposed rule, we are soliciting public
comments on one Request for Information (RFI) on future measure
concepts for the HH QRP.
3. Expanded Home Health Value Based Purchasing (HHVBP) Model
In section IV. of this proposed rule, we summarize the expanded
HHVBP Model. We are not proposing any expanded HHVBP Model-specific
changes in this proposed rule. We have included a brief summary of the
Model with context relevant to potential alignment between the HH QRP
and expanded HHVBP Model.
4. DMEPOS Requirements for Identical Replacement Items
In section V.A. of this proposed rule, we would clarify that while
an order would continue to be required for replacement of DMEPOS items,
a new face-to-face encounter would not need to occur to support payment
for these DMEPOS items.
5. Provider Enrollment and DMEPOS Accreditation
We are proposing a number of Medicare provider enrollment
provisions to strengthen and clarify certain aspects of the provider
enrollment process. These include, but are not limited to, the
following:
Adding grounds for denying or revoking 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.
CMS can currently impose a reapplication bar of up to 10
years if the provider or supplier is denied enrollment for submitting
false or misleading information on or with their enrollment
application. (This means they cannot reapply to Medicare for up to 10
years.) We propose to expand this to permit a reapplication bar
regardless of the denial reason.
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.
We also propose several minor changes to our DMEPOS accreditation
provisions in Sec. 424.58, such as proposing a timeframe by which an
accrediting organization must report suspected fraud, waste, or abuse
to CMS. We believe these changes would help improve the DMEPOS
accreditation program's efficiency.
6. DME Benefit Expansion for Infusion Pumps and Drugs
In section V.C. of this proposed rule, we propose to revise the
definition of DME at 42 CFR 414.202 to implement section 6222(a) of the
CAA, 2026 by providing that certain external infusion pumps, associated
home infusion drugs, or other associated supplies are treated as
meeting the ``appropriate for use in the home'' requirement when
specified statutory criteria are satisfied.
7. DMEPOS Competitive Bidding Program--Country of Origin
In section VI. of this proposed rule, we discuss our request to
revise the collection currently approved under OMB Control Number 0938-
1408 (CMS-10744) to collect from DMEPOS CBP contract suppliers the
country of origin for the lead items furnished during the DMEPOS CBP
contract's period of performance.
As done historically with the product information reported on Form
C by a DMEPOS CBP contract supplier, the reported country of origin
information would be populated in the Medicare Supplier Directory for
the contract supplier during the contract period of performance.
C. Summary of the Regulatory Impact Analysis
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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
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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 home health agencies to bill
services under a home health plan of care.
2. Current System for Payment of Home Health Services
For home health periods of care beginning on or after January 1,
2020, Medicare makes payment under the HH PPS on the basis of a
national, standardized 30-day period payment rate that is adjusted for
case-mix and area wage differences in accordance with section
51001(a)(1)(B) of the BBA of 2018. The national, standardized 30-day
period payment rate includes 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
if 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
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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 B1. Each HHRG has an associated case-mix
weight that is used in calculating the payment for a 30-day period of
care. For periods of care with visits less than the low-utilization
payment adjustment (LUPA) threshold for the HHRG, Medicare pays
national per-visit rates based on the discipline(s) providing the
services. Medicare also adjusts the national standardized 30-day period
payment rate for certain intervening events that are subject to a
partial payment adjustment. For certain cases that exceed a specific
cost threshold, an outlier adjustment may also be available.
Under this case-mix methodology, case-mix weights are generated for
each of the different PDGM payment groups by regressing resource use
for each of the five categories (admission source, timing, clinical
grouping, functional impairment level, and comorbidity adjustment)
using a fixed effects model. A detailed description of each of the
case-mix variables under the PDGM have been described previously, and
we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through
70305) for further information.
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B. Monitoring the Effects of the Implementation of the PDGM
1. Routine PDGM Monitoring
CMS routinely analyzes Medicare home health benefit utilization,
including but not limited to, overall total 30-day periods of care and
average periods of care per HHA user; distribution of the type of
visits in a 30-day period of care; the percentage of periods that
receive the LUPA; estimated costs for 30-day period of care; the
percentage of 30-day periods of care by clinical group, comorbidity
adjustment, admission source, timing, and functional impairment level;
the proportion of 30-day periods of care with and without any therapy
visits, nursing visits, and/or aide/social worker visits; and number of
home health visits using telecommunications technology and remote
patient monitoring. For the monitoring included in this rule, we
examine simulated data for CYs 2018 and 2019 and actual data for CYs
2020, 2021, 2022, 2023, 2024, and 2025 for 30-day periods of care. We
refer readers to the CY 2022 HH PPS final rule (86 FR 35881) for
discussion about simulated data for CYs 2018 and 2019.
(a) Utilization
Table 2 shows the overall utilization of home health services. This
data indicates the average number of 30-day periods of care per unique
HHA beneficiary was higher in CY 2025 compared to CYs 2021, 2022, and
2023. The data also indicates that overall, the number of 30-day
periods of care decreased between CY 2018 and CY
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2025. Table 3 shows the average utilization of visits per 30-day period
of care by home health discipline. Table 4 shows the proportion of 30-
day periods of care that are LUPAs and the average number of visits per
discipline of those LUPA 30-day periods of care over time. The data
show a decreasing trend in the average number of visits per 30-day
period and average number of visits per discipline for LUPA 30-day
periods of care between CY 2018 and CY 2025.
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(b) Analysis of 2024 Cost Report Data for 30-Day Periods of Care
In the CY 2026 HH PPS proposed rule (90 FR 29120), we provided a
summary of analysis on FY 2023 HHA cost report data, as this was the
most recent and complete cost report data at the time of rulemaking,
and CY 2024 claims to estimate 30-day period of care costs. Our
analysis showed that the CY 2024 national, standardized 30-day period
payment rate of $2,038.13, was approximately 32 percent more than the
estimated CY 2024 estimated 30-day period cost of $1,548.39.
Using this same process in this proposed rule to compare home
health payment to costs, we examined 2024 HHA Medicare cost reports
(CMS Form 1728-20, OMB No. 0938-0222), as this is the most recent and
complete cost report data at the time of rulemaking. We also examined
CY 2025 home health claims to estimate 30-day period of care costs. We
excluded LUPAs and partial payment adjustments when calculating the
average number of visits. We used the 2024 average NRS costs per visit,
which was $4.89. To update the estimated 30-day period of care costs,
we begin with the 2024 average costs per visit with NRS for each
discipline and multiply that amount by the CY 2025 home health payment
update percentage of 2.7 percent (or a home health payment update
factor of 1.027). We then multiplied that amount for each discipline by
the 2025 average number of visits by discipline to determine the 2025
estimated 30-day period costs. Table 5 shows the estimated average
costs for 30-day periods of care by discipline with NRS and the total
30-day period of care costs with NRS for CY 2025.
[[Page 41226]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.027
The CY 2025 national standardized 30-day period payment rate was
$2,057.35, which is approximately 34 percent more than the CY 2025
estimated 30-day period cost of $1,532.84. Moreover, as shown in table
3 in this proposed rule, HHAs have reduced visits under PDGM in CY
2025.
(c) Clinical Groupings and Comorbidities
Each 30-day period of care is grouped into one of 12 clinical
groups, which describes the primary reason for which a patient is
receiving home health services under the Medicare home health benefit.
The clinical grouping is based on the principal diagnosis reported on
the home health claim. Table 6 shows the distribution of the 12
clinical groups over time.
[GRAPHIC] [TIFF OMITTED] TP06JY26.028
Thirty-day periods of care receive a comorbidity adjustment
category based on certain secondary diagnoses reported on home health
claims. These diagnoses are based on a home health specific list of
clinically and statistically significant secondary diagnosis subgroups
with similar resource use. We refer readers to section II.D. of this
proposed rule and
[[Page 41227]]
the CY 2020 HH PPS final rule with comment period (84 FR 60493) for
further information on the comorbidity adjustment categories. Home
health 30-day periods of care can receive a low or a high comorbidity
adjustment, or no comorbidity adjustment. Table 7 shows the
distribution of 30-day periods of care by comorbidity adjustment
category for all 30-day periods.
[GRAPHIC] [TIFF OMITTED] TP06JY26.029
(d) Admission Source and Timing
Each 30-day period of care is classified into one of two admission
source categories--community or institutional, depending on what
healthcare setting was utilized in the 14 days prior to receiving home
health care. Thirty-day periods of care for beneficiaries with any
inpatient acute care hospitalizations, inpatient psychiatric facility
(IPF) stays, skilled nursing facility (SNF) stays, inpatient
rehabilitation facility (IRF) stays, or long-term care hospital (LTCH)
stays within 14-days prior to a home health admission are designated as
institutional admissions. The institutional admission source category
also includes patients that had an acute care hospital stay during a
previous 30-day period of care and within 14 days prior to the
subsequent, contiguous 30-day period of care and for which the patient
was not discharged from home health and readmitted. All other 30-day
periods of care would be designated as community admissions.
Thirty-day periods of care are classified as ``early'' or ``late''
depending on when they occur within a sequence of 30-day periods of
care. The first 30-day period of care is classified as early and all
subsequent 30-day periods of care in the sequence (second or later) are
classified as late. A subsequent 30-day period of care would not be
considered early unless there is a gap of more than 60 days between the
end of one previous period of care and the start of another.
Information regarding the timing of a 30-day period of care comes from
Medicare home health claims data and not the OASIS assessment to
determine if a 30-day period of care is ``early'' or ``late''. Table 8
shows the distribution of 30-day periods of care by admission source
and period timing.
[[Page 41228]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.030
(e) Functional Impairment Level
Each 30-day period of care is placed into one of three functional
impairment levels (low, medium, or high) based on responses to certain
OASIS functional items associated with grooming, bathing, dressing,
ambulating, transferring, and risk for hospitalization. The specific
OASIS items that are used for the functional impairment level are found
in table 7 in the CY 2020 HH PPS final rule with comment period (84 FR
60490). Responses to these OASIS items are grouped together into
response categories with similar resource use and each response
category has associated points. A more detailed description as to how
these response categories were established can be found in the
technical report, ``Overview of the Home Health Groupings Model''
posted on the HHA web page \1\. The sum of these points results in a
functional impairment score used to group 30-day periods of care into a
functional impairment level with similar resource use. The scores
associated with the functional impairment levels vary by clinical group
to account for differences in resource utilization. A patient's
functional impairment level remains the same for the first and second
30-day periods of care unless there is a significant change in
condition that warrants an ``other follow-up'' assessment prior to the
second 30-day period of care. For each 30-day period of care, the
Medicare claims processing system looks for occurrence code 50 on the
claim to correspond to the M0090 date of the applicable assessment.
Table 9 shows the distribution of 30-day periods by functional
impairment level.
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\1\ https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model.
[GRAPHIC] [TIFF OMITTED] TP06JY26.031
[[Page 41229]]
(f) Therapy and Non-Therapy Visits
Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act
eliminated the use of therapy thresholds in calculating payments for CY
2020 and subsequent years. Prior to implementation of the PDGM, HHAs
could receive an adjustment to payment based on the number of therapy
visits provided during a 60-day episode of care. We examined the
proportion of actual 30-day periods of care with and without therapy
visits. To be covered as skilled therapy, the services must require the
skills of a qualified therapist (that is, PT, OT, or SLP) or qualified
therapist assistant and must be reasonable and necessary for the
treatment of the patient's illness or injury. As shown in table 4, we
monitor the number of visits per 30-day period of care by each home
health discipline. Any 30-day period of care can include both therapy
and non-therapy visits. If any 30-day period of care consisted of only
visits for PT, OT, or SLP, then this 30-day period of care is
considered ``therapy only''. If any 30-day period of care consisted of
only visits for skilled nursing, home health aide, or social worker,
then this 30-day period of care is considered ``no therapy''. If any
30-day period of care consisted of at least one therapy visit and one
non-therapy visit, then this 30-day period of care is considered
``therapy + non-therapy''. Table10 shows the proportion of 30-day
periods of care with only therapy visits, at least one therapy visit
and one non-therapy visit, and no therapy visits. Figure 2 shows the
proportion of 30-day periods of care by the number of therapy visits
(excluding zero) provided during 30-day periods of care.
BILLING CODE 4169-69-P
[GRAPHIC] [TIFF OMITTED] TP06JY26.032
[[Page 41230]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.033
Both figures 2 and 3 indicate there have been changes in the
distribution of both therapy and non-therapy visits in CY 2025 compared
to CY 2024. For example, the proportion of 30-day periods with one
through five therapy visits during a 30-day period increased in CY 2025
compared to prior years. However, when comparing therapy utilization
from before the PDGM (CYs 2018 and 2019) to after the implementation of
the PDGM (CYs 2020-2025), we also see stabilization in overall therapy
visits across all clinical groups, as shown in figure 3.
[[Page 41231]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.034
BILLING CODE 4169-69-C
We also examined the proportion of 30-day periods of care with and
without skilled nursing, social work, or home health aide visits. Table
11 shows the number of 30-day periods of care with only skilled nursing
visits, at least one skilled nursing visit and one other visit type
(therapy or non-therapy), and no skilled nursing visits. Table 12 shows
the number of 30-day periods of care with and without home health aide
or social worker visits.
BILLING CODE 4169-69-P
[[Page 41232]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.035
[GRAPHIC] [TIFF OMITTED] TP06JY26.036
BILLING CODE 4169-69-C
(g) Home Health Services Using Telecommunications Technology
As discussed in the CY 2023 final rule (87 FR 66858), we began
collecting data on the use of telecommunications technology used during
a home health period using three G-codes reported on home health
claims. Collecting data on services furnished via telecommunications
technology on claims allows CMS to analyze the characteristics of
patients using services provided remotely. The monitoring illustrates
which services are most frequently furnished via telecommunication
technology and generally how long remote patient monitoring is
utilized.
We began collecting this information from HHAs on a voluntary basis
on January 1, 2023, and have required this information to be reported
on claims starting on July 1, 2023 (87 FR 66858). The three G-codes
help identify when home health services are furnished using synchronous
telemedicine rendered via a real-time two-way audio and video
telecommunications system
[[Page 41233]]
(G0320); synchronous telemedicine rendered via telephone or other real-
time interactive audio-only telecommunications systems (G0321); and the
collection of physiologic data digitally stored and/or transmitted by
the patient to the HHA, that is, remote patient monitoring (G0322). We
capture the usage and length of remote patient monitoring using the
start date of the remote patient monitoring and the number of days of
monitoring indicated on the claim. We also looked at the disciplines
most often providing remote patient monitoring. We examined the
utilization of telecommunications technology devices during a home
health period and remote patient monitoring by looking at home health
claims that included the three G-codes. Tables 13 and 14 show that the
use of telecommunications services and remote patient monitoring
reported on CY 2025 home health claims have declined from prior year's
monitoring (90 FR 29126 and 29127) and are mainly associated with
skilled nursing.
BILLING CODE 4169-69-P
[GRAPHIC] [TIFF OMITTED] TP06JY26.037
[[Page 41234]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.038
BILLING CODE 4169-69-C
C. Proposed CY 2027 Payment Adjustments Under the HH PPS
1. Proposed Behavior Adjustments Under the HH PPS
a. Background
As discussed in section II.A.1. of this proposed rule, starting in
CY 2020, the Secretary was required by section 1895(b)(2)(B) of the Act
to change the unit of payment under the HH PPS from a 60-day episode of
care to a 30-day period of care. CMS was also required to make
assumptions about behavior changes that could occur as a result of the
implementation of the 30-day unit of payment and the case-mix
adjustment factors that eliminated the use of therapy thresholds. In
the CY 2019 HH PPS final rule with comment period (83 FR 56455), we
finalized three behavior change assumptions which were also described
in the CY 2022 and 2023 HH PPS rules (86 FR 35890, 87 FR 37614, and 87
FR 66795 through 66796). In the CY 2020 HH PPS final rule with comment
period (84 FR 60519), we included these behavior change assumptions in
the calculation of the 30-day budget neutral payment amount for CY
2020, finalizing a negative 4.36 percent behavior change assumption
adjustment (``assumed behaviors''). We did not propose any changes for
CYs 2021 and 2022 related to the behavior change assumptions finalized
in the CY 2019 HH PPS final rule with comment period, or to the
negative 4.36 percent behavior change assumption adjustment, finalized
in the CY 2020 HH PPS final rule with comment period.
In the CY 2023 HH PPS final rule (87 FR 66796), we stated that we
had concluded, based on our annual monitoring at that time, that the
three expected behavior changes did in fact occur as a result of the
implementation of the PDGM and that other behaviors, such as changes in
the provision of therapy and changes in functional impairment levels,
had also occurred. We also reminded readers that in the CY 2020 HH PPS
final rule with comment period (84 FR 60513), we stated we interpret
actual behavior changes to encompass behavior changes that were
previously outlined as assumed by CMS, and other behavior changes not
identified at the time we established the budget-neutral 30-day payment
rate for CY 2020. In the CY 2023 HH PPS final rule (87 FR 66796), we
provided supporting evidence that indicated the number of therapy
visits declined in CYs 2020 and 2021, as well as a slight decline in
therapy visits beginning in CY 2019 after the finalization of the
removal of therapy thresholds, but prior to implementation of the PDGM.
In section II.B.1. of the CY 2025 HH PPS proposed rule (89 FR 55318),
our analysis continued to show the actual 30-day periods are similar
overall to the simulated 30-day periods as well as a continued decline
in therapy visits, indicating that HHAs changed their behavior to
reduce therapy visits. Although the analysis demonstrates evidence of
individual behavior changes (for example, in the volume of visits for
[[Page 41235]]
LUPAs, therapy sessions, etc.), we use the entirety of the behaviors to
calculate estimated aggregate expenditures. The law instructs us to
ensure that estimated aggregate expenditures under the PDGM are equal
to the estimated aggregate expenditures that otherwise would have been
made under the prior system.
Section 4142(a) of the CAA, 2023 required CMS to present, to the
extent practicable, a description of the actual behavior changes
occurring under the HH PPS from CYs 2020 through 2026. This subsection
of the CAA, 2023 also required CMS to provide datasets underlying the
simulated 60-day episodes and discuss and provide time for stakeholders
to provide input on and ask questions about the payment rate
development for CY 2023. CMS complied with these requirements by
posting online both the supplemental limited data set (LDS) and
descriptive files and the description of actual behavior changes that
affected CY 2023 payment rate development. Additionally, on March 29,
2023, CMS conducted a webinar entitled ``Medicare Home Health
Prospective Payment System (HH PPS) Calendar Year (CY) 2023 Behavior
Change Recap, 60-Day Episode Construction Overview, and Payment Rate
Development.'' The webinar was open to the public and discussed the
actual behavior changes that occurred upon implementation of the PDGM;
our approach used to construct simulated 60-day episodes using 30-day
periods; payment rate development for CY 2023; and information on the
supplemental data files containing information on the simulated 60-day
episodes and actual 30-day periods used in calculating the permanent
adjustment to the payment rate. Materials from the webinar, including
the presentation and the CY 2023 descriptive statistics from the
supplemental LDS files containing information on the number of
simulated 60-day episodes and actual 30-day periods in CY 2021 that
were used to construct the permanent adjustment to the payment rate, as
well as information such as the number of episodes and periods by case-
mix group, case-mix weights, and simulated payments, can be found on
the Home Health Patient-Driven Groupings Model web page at https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model.
b. Method to Annually Determine the Impact of Differences Between
Assumed Behavior Changes and Actual Behavior Changes on Estimated
Aggregate Expenditures
In the CY 2023 HH PPS final rule (87 FR 66804), we finalized the
methodology to evaluate the impact of the differences between assumed
and actual behavior changes on estimated aggregate expenditures. In the
CY 2024 HH PPS final rule (88 FR 77687 through 77688), we provided an
overview of the methodology with detailed instructions for each step.
Under the prior 153-group system (and the first three years for
assessments associated with the PDGM completed prior to CY 2023), HHAs
submitted the Outcome and Assessment Information Set (OASIS) instrument
version D. However, OMB approved an updated version of the OASIS
instrument, OASIS-E under OMB control number 0938-1279,\2\ on November
30, 2022, effective January 1, 2023. Therefore, in the CY 2025 HH PPS
final rule (89 FR 88364), we finalized two additional methodological
assumptions related to mapping and imputation of OASIS-D responses from
OASIS-E. We refer readers to the CY 2024 and CY 2025 HH PPS final rules
for further information about the methodology.
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\2\ The current expiration date for this information collection
request is December 31, 2027.
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c. Calculating Permanent and Temporary Payment Adjustments
To adjust the base payment rate based on increases or decreases in
estimated aggregate expenditures that result from differences between
assumed behavior changes and actual behavior changes for 2020 through
2026, we calculate one or more permanent prospective adjustments by
calculating the percent change between the actual 30-day base payment
rate and the recalculated 30-day base payment rate. This percent change
is converted into an adjustment factor and applied in the annual rate
update process.
To account for increases or decreases in estimated aggregate
expenditures that result from differences between assumed behavior
changes and actual behavior changes from 2020 through 2026, we
calculate one or more temporary prospective adjustments by calculating
the dollar amount difference between the estimated aggregate
expenditures from all 30-day periods using the recalculated 30-day base
payment rate, and the aggregate expenditures for all 30-day periods
using the actual 30-day base payment rate for each of those years once
data is available (87 FR 66804). In other words, when determining the
dollar amount of aggregate expenditures in prior years that we must
offset in future years, we use the full dataset of actual 30-day
periods using both the actual and recalculated 30-day base payment
rates to ensure that the utilization and distribution of claims are the
same. In accordance with section 1895(b)(3)(D)(iii) of the Act, each
temporary adjustment is applied prospectively but, as its name
suggests, only with respect to the year for which such temporary
increase or decrease is made. Therefore, after we determine the dollar
amount we plan to reconcile in a given year, we calculate a temporary
adjustment factor to be applied to the base payment rate for that year.
The temporary adjustment factor is based on an estimated number of 30-
day periods in the next year using historical data trends, and as
applicable, controls for any permanent adjustment factor, case-mix
weight recalibration neutrality factor, wage index budget neutrality
factor, and the home health payment update. The temporary adjustment
factor is applied last since the adjustment applies only to the
respective year. That is, the temporary adjustment is not permanently
fixed into future base payment rates. We refer readers to the CY 2024
HH PPS final rule (88 FR 77689 through 77694) for analysis of CYs 2020
through 2022 claims, the CY 2025 HH PPS final rule (89 FR 88366 through
88369) for analysis of CY 2023 claims, and the CY 2026 HH PPS final
rule (90 FR 55365 through 55367) for analysis of CY 2024 claims.
d. CY 2025 Preliminary Claims Results
We stated in the CY 2026 HH PPS final rule (90 FR 55365) that we
were exercising our authority expressly delegated under the statute to
apply permanent adjustments ``at a time and in a manner appropriate''
not to apply any permanent adjustment for CY 2026 based on CY 2023 or
2024 data, as these years may contain data with behaviors attributable
to factors beyond the implementation of the PDGM and a 30-day unit of
payment. However, we also noted 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. While the law requires us to continue to evaluate
the need for any additional permanent
[[Page 41236]]
adjustments in future rulemaking, we reiterate that any additional
permanent adjustment(s) would need to 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. Therefore, we will
continue to compare estimated aggregate expenditures under the PDGM and
the 153-group payment system, using the most recent complete home
health claims data available at the time of rulemaking, as required by
section 1895(b)(3)(D)(i) of the Act. While the CY 2025 analysis
presented in this proposed rule uses the most complete data available
at the time, it is considered preliminary and, as more data become
available from the latter half of CY 2025, we will update our analysis
in the final rule. The CY 2027 HH PPS final rule would use the complete
CY 2025 data to determine any permanent and temporary adjustments
needed to the CY 2027 payment rate. However, while the claims data and
the permanent and temporary adjustments results would be considered
complete for CY 2027, any adjustments to future payment rates may be
subject to additional considerations such as permanent adjustments
taken in previous years.
The claims data used in rulemaking is released in the HH PPS LDS
file twice each year, one with the proposed and one with the final
rule. Accordingly, the HH PPS LDS file released with this proposed rule
includes two files: the actual CY 2025 30-day periods and the CY 2025
simulated 60-day episodes.
We remind readers that a data use agreement (DUA) is required to
purchase the CY 2027 proposed HH PPS LDS file using the CMS-R-0235A
form under OMB control number 0938-0734. Access would be granted for
both the 30-day periods and the simulated 60-day episodes under one
DUA. Visit the HH PPS LDS web page for more information.\3\ In
addition, the proposed CY 2027 Home Health Descriptive Statistics from
the LDS Files spreadsheet is available on the HH PPS Regulations and
Notices web page,\4\ does not require a DUA, and is available at no
cost to interested parties. The spreadsheet contains information on the
number of simulated 60-day episodes and actual 30-day periods in CY
2025 that were used to determine the adjustments. The spreadsheet also
provides information such as the number of episodes and periods by
case-mix group, case-mix weights, and simulated payments.
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\3\ https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds.
\4\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.
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e. Applying the Methodology to CY 2025 Data To Determine the CY 2027
Permanent and Temporary Adjustments
To comply with Section 1895(b)(3)(D)(ii) of the Act, we are
required to annually analyze data from CY 2020 through CY 2026 and show
the calculations to illustrate how the aggregate expenditures differ
from actual and assumed behavior changes. We also continue to analyze
differences in aggregate expenditures and calculate what the budget
neutral rate would be to understand how the budget neutral rate differs
from the actual finalized payment rate for CY 2025. We then determine
whether the difference between the budget neutral rate and actual
finalized payment rate can be directly attributed to behavior from PDGM
implementation as discussed in CY 2026 final rule.
Using the methodology finalized in the CY 2023 HH PPS final rule to
apply for all the years in which an adjustment is appropriate, we
continue to use actual CY 2025 30-day periods to determine what the
proposed permanent and temporary payment adjustments should be to
offset for such increases or decreases in estimated aggregate
expenditures as a result of the impact of differences between assumed
behavior changes and actual behavior changes. We provide tables 15 and
16 to illustrate the same information displayed in prior rules to show
the permanent adjustment that would need to be applied if the
comparison of the aggregate expenditures were a result of behavior
change due to the implementation of the PDGM. However, similar to what
was finalized in the CY 2026 HH PPS final rule (90 FR 55364 through
55365), we believe any behavior changes reflected in preliminary CY
2025 claims for this CY 2027 proposed rule are not directly
attributable to the PDGM but other confounding factors that began in CY
2023 (that is, continued recalibration of case-mix weights, a change to
the OASIS-E, and previous reductions to the home health payment rate).
The permanent adjustment calculated will be illustrative as part of our
analysis of CY 2025 claims; however, we are not proposing to apply a
permanent adjustment to the CY 2027 payment rate, as discussed
previously. We show table 17 as another illustrative example showing a
calculated permanent adjustment, using CY 2025 aggregate expenditures
if we were to determine that the behavior changes that occurred could
be directly attributed to the implementation of the PDGM.
Using the preliminary CY 2025 dataset, we began with 8,228,904 30-
day periods of care and dropped 444,897 30-day periods of care that had
a claim occurrence code 50 date after October 31, 2025. We also
excluded 847,700 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 2026.
Applying the additional exclusions and assumptions as described in the
finalized methodology (87 FR 66804), an additional 60,233 30-day
periods were excluded.
The Company believes the proposed Observer provisions in the
amended By-Laws are consistent with the Act because the Observer
position will provide a means for individuals who are employed by, or
otherwise affiliated with, an Exchange Member but may not be able, or
willing, to serve as a Board member for one reason or another, to now
be able to serve the Company in an advisory role and provide such
valuable expertise and knowledge to help the Company carry out its
business.
Using the preliminary dataset for CY 2025 (6,557,369 actual 30-day
periods which made up the 3,860,954 simulated 60-day episodes) we
determined the estimated aggregate expenditures using the finalized CY
2025 HH PPS payment rate were lower than the actual estimated aggregate
expenditures under the PDGM HH PPS. As shown in table 15, aggregate
expenditures under the PDGM were higher than if the 153-group payment
system were still in place in CY 2025 and therefore, we determined the
CY 2025 30-day base payment rate should have been $1,953.60 based on
actual behavior changes.
We determined that for CYs 2020 through CY 2022 a total of -9.480
percent permanent adjustment was needed (after accounting for the -
3.925 percent applied to the CY 2023 payment rate, the -2.890 percent
applied to the CY 2024 payment rate, and the -1.975 percent applied to
the CY 2025 payment rate). The CY 2026 permanent adjustment was
calculated using the permanent adjustments already applied to CYs 2023,
2024, and 2025 finalized payment rates and to reach the payment rate
reduction needed for CYs 2020 through 2022.
In order to determine behavior changes only applicable to CY 2025,
we simulated what the CY 2025 base payment rate would have been if the
-1.023 percent adjustment that we determined using CY 2024 claims had
been implemented and to compare
[[Page 41237]]
PDGM claims with 153-group priced claims using 60-day simulated
episodes.
To do so, we started with the budget neutral CY 2024 base payment
of $1,914.73 generated by CY 2024 simulated 60-day episodes (as
published in the CY 2026 HH PPS final rule (90 FR 55366)) and applied
the CY 2025 case-mix weights recalibration neutrality factor (1.0039),
the CY 2025 wage index budget neutrality factor (0.9988), the CY 2024
labor-related share budget neutrality factor (1.0), and the CY 2025
home health payment update factor (1.027). We determined the CY 2025
base payment rate for assumed behavior would have been $1,971.73.
For the CY 2025 annual permanent adjustment, we calculated the
percent change between the two payment rates for only CY 2025. For the
CY 2025 annual temporary adjustment we calculated the difference in
aggregate expenditures in dollars for all CY 2025 PDGM 30-day claims
using the two payment rates. This difference is shown as the
retrospective dollar amount we would need to offset payment using one
or more temporary adjustments in future years. Our results for the CY
2025 annual (single year) permanent and temporary adjustment
calculations using CY 2025 preliminary claims data are shown in table
15.
[GRAPHIC] [TIFF OMITTED] TP06JY26.039
As shown in table 15, we illustrate that a permanent prospective
adjustment of -0.919 percent to the CY 2027 30-day payment rate
(assuming all adjustments from prior years were applied) for CY 2025
would be required to offset for such increases in estimated aggregate
expenditures. Again, table 15 is illustrative because we are continuing
to limit the calculation of the permanent adjustments to only include
data from CYs 2020 through 2022 as finalized in the CY 2026 HH PPS
final rule (90 FR 55365 through 55367) and the calculated permanent
adjustment does not include implemented permanent adjustments from
prior years. We reiterate that any additional permanent adjustment(s)
must be determined to 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.
f. CY 2027 Permanent Adjustment and Proposed Temporary Adjustment
Calculations
In the preceding section we describe how we analyzed CY 2025
preliminary claims data to determine the effects of actual behavior
change on estimated aggregate expenditures. Again, that illustrative
analysis included simulations that assumed the full permanent
adjustments were already taken. We note that CMS implemented a payment
adjustment of -1.975 percent for the CY 2025 payment rate, rather than
the -3.95 percent we calculated (89 FR 88373), so the calculations set
forth later in this section reflect the remaining adjustments that
still needed to be recognized.
Therefore, the calculation in this section includes any of the
remaining adjustments not applied in previous years (that is, CYs 2020
through 2024 claims data), as well as the adjustment needed to account
for CY 2025 claims. In calculating the full permanent adjustment needed
to the CY 2027 30-day payment rate, we compare estimated aggregate
expenditures under the PDGM and the prior system. Unlike the annual
adjustments described in table 15, we do not assume we made the full
adjustment from prior years. This section will also include calculation
of a permanent adjustment using the actual CY 2025 payment rate and the
budget neutral rate for CY 2025 using the method discussed in the CY
2026 final rule.
As discussed in section II.C.1.d. of this proposed rule, using the
preliminary dataset for CY 2025 (6,557,369 actual 30-day periods which
made up the 3,860,954 simulated 60-day episodes) we determined the CY
2025 30-day base payment rate should have been $1,953.60 based on
actual behavior. We then compared the repriced 30-day base payment rate
based
[[Page 41238]]
on actual behavior to the CY 2025 30-day base payment rate of $2,057.35
we paid based on assumed behaviors. The percent change, as summarized
in table 16, between the actual CY 2025 base payment rate of $2,057.35
(based on assumed behaviors) and the CY 2025 recalculated base payment
rate of $1,953.60 (based on actual behaviors) illustrates the total
permanent adjustment that would reflect CY 2020 through CY 2025 claims.
We conduct this calculation to satisfy the requirements described in
section 1895(b)(3)(D)(ii) of the Act to illustrate what the permanent
adjustment would be. We consider table 16 illustrative because we are
proposing to limit the calculation of the permanent adjustments to only
include data from CYs 2020 through 2022 as finalized in the CY 2026
final rule (90 FR 55365 through 55367).
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As shown in table 16, a permanent prospective adjustment of -5.043
percent to the CY 2027 30-day payment rate would be required to offset
for such increases in estimated aggregate expenditures. To illustrate
this calculation:
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As we stated in the CY 2026 HH PPS final rule (90 FR 55357),
applying a -1.975 percent (half of the proposed -3.95 percent)
permanent adjustment to the CY 2025 30-day payment rate would not
adjust the rate fully to account for differences in behavior changes on
estimated aggregate expenditures in CYs 2020, 2021, 2022, and 2023.
Using CY 2025 claims data, as shown in table 16, a permanent
prospective adjustment of -5.043 percent to the CY 2027 30-day payment
rate would offset for increases in estimated aggregate expenditures for
CYs 2020 through 2025. We note that 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 illustrative CY 2027
permanent adjustment, which would include estimated aggregate
expenditures in CY 2025, by simply subtracting the -1.975 percent
applied in CY 2025 and the -1.023 percent applied in CY 2026 from the
total permanent adjustment of -5.043 percent as shown in table 16.
Instead, we account for the permanent adjustment applied in prior
years when we calculate the CY 2027 permanent adjustment by solving the
following equation To illustrate this calculation we used the following
approach.
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We note that the -4.062 percent is calculated as a permanent
adjustment for CY 2027 illustrating what we would need if we were to
offset the difference in aggregate expenditures between CY 2025 claims
priced under the PDGM and the 153-group system and adjusting for the
permanent adjustments applied in prior years.
We continue to apply the methodology finalized in the CY 2026 HH
PPS final rule to determine what the permanent adjustment for CY 2025
claims would be even though we stopped comparing claims priced under
PDGM and 153-group after CY 2022 claims for the purposes of applying a
permanent adjustment in this proposed rule. As displayed in table 17,
we calculate the permanent adjustment for CY 2025 by determining the
percent change between the actual CY 2025 30-day payment rate
($2,057.35) and the budget neutral rate for CY 2025
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($2,036.29). The budget neutral rate for CY 2025 is the finalized CY
2024 budget neutral rate discussed in CY 2026 final rule ($1,977.43)
multiplied by the CY 2025 case-mix weights recalibration neutrality
factor (1.0039), the CY 2025 wage index budget neutrality factor
(0.9988), and the CY 2025 home health payment update factor (1.027).
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In section II.C.1.d of this proposed rule, we discussed various
trends that are part of monitoring changes related to the PDGM using
analysis of CY 2025 claims. The data continues to show minimal changes
that could be attributed to the PDGM implementation after CY 2022 by a
large proportion of home health providers. We also continue to
acknowledge the difficulty in attributing any behavior change occurring
from CYs 2023 through 2025 directly to the PDGM implementation and its
effects on expenditures from the other changes occurring in those
years. As discussed in the CY 2026 HH PPS final rule, CMS introduced
several policy changes that make isolating the effect of implementing a
permanent adjustment, with claims data from CYs 2023 through 2025, for
the PDGM difficult. These changes include recalibration of case-mix
weights and LUPA visit thresholds finalized in the CY 2023, 2024, 2025,
and 2026 final rules; reassignment of certain ICD-10-CM codes related
to the PDGM clinical groups and comorbidity groups in the CY 2023 HH
PPS final rule; finalized permanent adjustments in the CY 2023, 2024,
and 2025 HH PPS final rules; the introduction of OASIS-E in 2023 and
finalized mapping of OASIS-E to OASIS-D in the CY 2025 HH PPS final
rule for calculating functional points for functional impairment levels
during repricing; and the expanded HHVBP Model. For these reasons, we
maintain that limiting the application of the permanent adjustment to
analysis of data from CYs 2020 through 2022 continues to be the most
accurate application of the law. However, 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. As a result, we propose to not apply a
permanent adjustment to the CY 2027 payment rate.
The dollar amount that needs to be collected through the temporary
adjustment increased when examining home health claims from CY 2025
because those claims were paid using the actual 30-day payment rate
($2,057.35) instead of the calculated budget neutral payment rate for
CY 2025 ($2,036.29). That is, had the payment rate in CY 2025 been
$2,036.29, there would not be an increase in what needs to be collected
through the temporary adjustment when examining home health claims from
CY 2025. Because the 30-day payment rate was not budget neutral until
the CY 2026 payment rate with the application of the -1.023 percent
permanent adjustment, the temporary adjustment continued to accrue.
As described previously in this proposed rule, to account for such
increases or decreases in estimated aggregate expenditures as a result
of the impact of differences between assumed behavior changes and
actual behavior changes in any given year from CY 2020 to CY 2026, we
calculate the temporary prospective adjustment by calculating the
dollar amount difference between the estimated aggregate expenditures
from all 30-day periods using the recalculated 30-day base payment
rate, and the aggregate expenditures for all 30-day periods using the
actual 30-day base payment rate for 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 2026 HH PPS final rule (90 FR 55366 through
55367) for analysis of CY 2023 and 2024 claims, and section II.C.1.d.
of this proposed rule for the analysis of CY 2025 claims. Table 18
provides a summary of the temporary adjustment dollar amount for CYs
2020 through 2026.
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Therefore, we exercise our authority under section
1895(b)(3)(D)(iii) of the Act to apply ``one or more'' temporary
adjustments to continue recoupment of the retrospective overpayments
for CYs 2020 through 2025. Specifically, we propose to implement a 3.0
percent reduction in CY 2027, that is equivalent to a 0.9700 temporary
adjustment factor, to the CY 2027 national, standardized payment rate.
Using historical trends, we estimated 7,680,775 30-day periods would
occur in CY 2027. Using this estimated utilization, a 3.0 percent
reduction to the CY 2027 30-day payment rate would begin to collect
approximately $500 million of the total temporary adjustment dollar
amount, equating to about 10 percent of the total $4.9 billion shown in
table 18. In doing so; however, we would need to account for the
remaining temporary adjustment dollar amount for CYs 2020 through 2026,
plus any possible adjustments for CY 2027 and 2028, in future years. It
is important to note that the estimated $500 million dollar amount
anticipated to be collected by the implementation of the temporary
adjustment factor is based on an estimate of the number of 30-day
periods that would occur in CY 2027. 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 2027 differ from what was estimated.
In other words, CMS will calculate the actual amount collected from the
temporary adjustment in CY 2027 and credit it to the overall cumulative
temporary dollar amount.
In accordance with section 1895(b)(3)(D)(iii) of the Act, the
temporary adjustment is to be applied on a prospective basis and shall
apply only with respect to the year for which such temporary increase
or decrease is made. This means we would not include the -3.0 percent
temporary adjustment applied for CY 2027 when calculating the CY 2028
base payment rates. However, to continue recoupment of the
retrospective overpayments, we may propose additional temporary
adjustments in future rulemaking and are not proposing that the -3.0
percent temporary adjustment would be applied each year after CY 2027.
Rather, we will continue to analyze the data each year through CY 2026
claims as required by law, and in a time and manner deemed appropriate,
we will propose one or more temporary adjustments to account for
retrospective overpayments. We also note the $4.9 billion does not
account for any monies recouped in CY 2026, as we do not have this
dollar amount at the time of this CY 2027 rulemaking. In future
rulemaking, we will show the remaining balance, accounting for the
previous recoupment amount; however, there will be a lag. We refer
readers to section II.E.3.b. for the CY 2027 base payment rates with
and without the temporary adjustment.
We solicit comments on the proposals to not apply a permanent
adjustment and to apply the -3.0 percent temporary adjustment to the CY
2027 home health base payment rate.
D. Proposed CY 2027 Home Health Low Utilization Payment Adjustment
(LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub-
Groups, and Case-Mix Weights
1. Proposed CY 2027 PDGM LUPA Thresholds
Under the HH PPS, LUPAs are paid when a certain numerical minimum
visit threshold for a payment group during a 30-day period of care is
not met. In the CY 2019 HH PPS final rule with comment period (83 FR
56492), we finalized a policy setting the LUPA thresholds at the 10th
percentile of visits or two visits, whichever is higher, for each
payment group. This means the LUPA threshold for each 30-day period of
care varies depending on the PDGM payment group to which it is
assigned. If the LUPA threshold for the payment group is met under the
PDGM, the 30-day period of care would be paid the full 30-day period
case-mix adjusted payment amount (subject to any partial payment
adjustment or outlier adjustments). If a 30-day period of care does not
meet the PDGM LUPA visit threshold, then payment would be made using
the per-visit payment amounts as described in section II.E.3.c. of this
proposed rule. For example, if the LUPA visit threshold is four, and a
30-day period of care has four or more visits,
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it is paid the full 30-day period payment amount; if the period of care
has three or fewer visits, payment is made using the per-visit payment
amounts.
In the CY 2019 HH PPS final rule with comment period (83 FR 56492),
we finalized our policy that the LUPA thresholds for each PDGM payment
group will be reevaluated every year based on the most current
utilization data available at the time of rulemaking. However, as CY
2020 was the first year of the new case-mix adjustment methodology, we
stated in the CY 2021 HH PPS final rule (85 FR 70305, 70306) that we
would maintain the LUPA thresholds that were finalized and shown in
table 18 of the CY 2020 HH PPS final rule with comment period (84 FR
60522) for CY 2021 payment purposes. We stated that at that time, we
did not have sufficient CY 2020 data to reevaluate the LUPA thresholds
for CY 2021.
In the CY 2022 HH PPS final rule with comment period (86 FR 62249),
we finalized the proposal to recalibrate the PDGM case-mix weights,
functional impairment levels, and comorbidity subgroups while
maintaining the LUPA thresholds for CY 2022. We stated that because
there are several factors that contribute to how the case-mix weight is
set for a particular case-mix group (such as the number of visits,
length of visits, types of disciplines providing visits, and non-
routine supplies) and the case-mix weight is derived by comparing the
average resource use for the case-mix group relative to the average
resource use across all groups, we believe the COVID-19 public health
emergency (PHE) will have impacted utilization within all case-mix
groups similarly. Therefore, the impact of any reduction in resource
use caused by the PHE on the calculation of the case-mix weight will be
minimized since the impact will be accounted for both in the numerator
and denominator of the formula used to calculate the case-mix weight.
However, in contrast, the LUPA thresholds are based on the number of
overall visits in a particular case-mix group (the threshold is the
10th percentile of visits or 2 visits, whichever is greater) instead of
a relative value (like what is used to generate the case-mix weight)
that will control for the impacts of the COVID-19 PHE. We noted that
visit patterns and some of the decrease in overall visits in CY 2020
may not be representative of visit patterns in CY 2022. Therefore, to
mitigate any potential future and significant short-term variability in
the LUPA thresholds due to the COVID-19 PHE, we finalized the proposal
to maintain the LUPA thresholds finalized and displayed in table 18 in
the CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY
2022 payment purposes.
For CY 2024, we proposed to update the LUPA thresholds using CY
2022 Medicare home health claims (as of March 17, 2023) linked to OASIS
assessment data. We believed that CY 2022 data would be more indicative
of visit patterns in CY 2024 rather than continuing to use the LUPA
thresholds derived from the CY 2018 pre-PDGM data. Therefore, we
finalized a policy to update the LUPA thresholds for CY 2024 using data
from CY 2022.
For CY 2027, we are proposing to update the LUPA thresholds using
CY 2025 home health claims utilization data (as of March 15, 2026), 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 2025 home health claims
utilization data, we determined that LUPA visit patterns in 2025 were
similar to visits in 2024 and a total of 18 case-mix groups have a
decline in their LUPA threshold of a single visit and two case-mix
groups have their LUPA threshold increase by a single visit. The
proposed LUPA thresholds for the CY 2027 PDGM payment groups with the
corresponding Health Insurance Prospective Payment System (HIPPS) codes
and the case-mix weights are listed in table 24.
We are soliciting public comments on the proposed updates to the
LUPA thresholds for CY 2027. The proposed LUPA thresholds will be
updated based on more complete CY 2025 claims data in the final rule.
2. Proposed CY 2027 Functional Impairment Levels
Under the PDGM, the functional impairment level is determined by
responses to certain OASIS items associated with activities of daily
living and risk of hospitalization; that is, responses to OASIS items
M1800-M1860 and M1033. A home health period of care receives points
based on each of the responses associated with these functional OASIS
items, which are then converted into a table of points corresponding to
increased resource use. The sum of all these points results in a
functional impairment score which is used to group home health periods
into a functional level with similar resource use. That is, the higher
the points, the more the response is associated with increased resource
use, or increased impairment. The three functional impairment levels of
low, medium, and high were designed so that approximately one-third of
home health periods from each clinical group falls within each level.
This means home health periods in the low impairment level have
responses for the functional OASIS items that are associated with the
lowest resource use, on average. Home health periods in the high
impairment level have responses for the functional OASIS items that are
associated with the highest resource use on average.
For CY 2027, we are proposing to use CY 2025 claims data to update
the functional points and functional impairment levels by clinical
group. The CY 2018 HH PPS proposed rule (82 FR 35320) and the technical
report from December 2016, posted on the Home Health PPS Archive web
page, located at https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive, provides a more detailed explanation as to the
construction of the functional impairment levels using the OASIS items.
We are proposing to use the same methodology previously finalized to
update the functional impairment levels for CY 2027. The proposed
updated OASIS functional points table and the table of functional
impairment levels by clinical group for CY 2027 are listed in tables 19
and 20, respectively.
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We are soliciting public comments on the proposed updates to the
functional points and the functional impairment levels by clinical
group.
3. Proposed CY 2027 Comorbidity Subgroups
Thirty-day periods of care are assigned to 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
[[Page 41244]]
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: There is no secondary diagnosis
or there is a secondary diagnosis that does 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 2027, we are proposing to use the same
methodology used to establish the comorbidity subgroups to update the
comorbidity subgroups using CY 2025 home health data with linked OASIS
data (as of March 15, 2026).
For CY 2027, we are proposing to update the comorbidity subgroups
to include 21 low comorbidity adjustment subgroups and 100 high
comorbidity adjustment interaction subgroups. The proposed CY 2027 low
comorbidity adjustment subgroups and the high comorbidity adjustment
interaction subgroups including those diagnoses within each of these
comorbidity adjustments are shown in tables 21 and 22. The proposed CY
2027 low comorbidity adjustment subgroups and the high comorbidity
adjustment interaction subgroups including those diagnoses within each
of these comorbidity adjustments will also be posted on the HHA Center
web page at https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.
We invite comments on the proposed updates to the low comorbidity
adjustment subgroups and the high comorbidity adjustment interactions
for CY 2027.
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4. Proposed CY 2027 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 2027 case-mix weights, we used
CY 2025 home health claims data with linked OASIS data (as of March 15,
2026). These data are the most current and complete data available at
the time of rulemaking. We believe that recalibrating the case-mix
weights using data from CY 2025 would be reflective of PDGM utilization
and patient resource use for CY 2027. The proposed recalibrated case-
mix weights will be updated in the final rule based on more complete CY
2025 claims data.
The claims data provide visit-level data and data on whether non-
routine supplies (NRS) were provided during the period and the total
charges of NRS. We determine the case-mix weight for each of the 432
different PDGM payment groups by regressing resource use on a series of
indicator variables for each of the categories using a fixed effects
model as described in the following steps:
Step 1: Estimate a regression model to assign a functional
impairment level to each 30-day period. The regression model estimates
the relationship between a 30-day period's resource use and the
functional status and risk of hospitalization items included in the
PDGM, which are obtained from certain OASIS items. We refer readers to
table 19 for further information on the OASIS items used for the
functional impairment level under the PDGM. We measure resource use
with the cost-per-minute + NRS approach that uses information from 2023
home health cost reports. We use 2023 home health cost report data
because it is the most complete cost report data available at the time
of rulemaking. Other variables in the regression model include the 30-
day period's admission source, clinical group, and 30-day period
timing. We also include home health agency level fixed effects in the
regression model. After estimating the regression model using 30-day
periods, we divide the coefficients that correspond to the functional
status and risk of hospitalization items by 10 and round to the nearest
whole number. Those rounded numbers are used to compute a functional
score for each 30-day period by summing together the rounded numbers
for the functional status and risk of hospitalization items that are
applicable to each 30-day period. Next, each 30-day period is assigned
to a functional impairment level (low, medium, or high) depending on
the 30-day period's total functional score. Each clinical group has a
separate set of functional thresholds used to assign 30-day periods
into a low, medium or high functional impairment level. We set those
thresholds so that we assign roughly a third of 30-day periods within
each clinical group to each functional impairment level (low, medium,
or high).
Step 2: A second regression model estimates the relationship
between a 30-day period's resource use and indicator variables for the
presence of any of the comorbidities and comorbidity interactions that
were originally examined for inclusion in the PDGM. Like the first
regression model, this model also includes home health agency level
fixed effects and includes control variables for each 30-day period's
admission source, clinical group, timing, and functional impairment
level. After we estimate the model, we assign comorbidities to the low
comorbidity adjustment if any comorbidities have a coefficient that is
statistically significant (p-value of 0.05 or less) and which have a
coefficient that is larger than the 50th percentile of positive and
statistically significant comorbidity coefficients. If two
comorbidities in the model and their interaction term have coefficients
that sum together to exceed $150 and the interaction term is
statistically significant (p-value of 0.05 or less), we assign the two
comorbidities together to the high comorbidity adjustment.
Step 3: After Step 2, each 30-day period is assigned to a clinical
group, admission source category, episode timing category, functional
impairment level, and comorbidity adjustment category. For each
combination of those variables (which represent the 432 different
payment groups that comprise
[[Page 41252]]
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 23 shows the coefficients
of the payment regression used to generate the weights, and the
coefficients divided by average resource use.
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The proposed case-mix weights for CY 2027 are listed in table 24
and will also be posted on the HHA Center web page at https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center upon
display of this proposed rule.
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Changes to the PDGM case-mix weights are implemented in a budget
neutral manner by multiplying the CY 2027 national standardized 30-day
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period payment rate by a case-mix budget neutrality factor. Typically,
the case-mix weight recalibration neutrality factor is also calculated
using the most recent, complete home health claims data available. For
CY 2027, we would continue the practice of using the most recent
complete home health claims data at the time of rulemaking, which is
currently CY 2025 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 2027 PDGM case-mix weights (developed using CY
2025 home health claims data) are applied to CY 2025 utilization
(claims) data are equal to total payments when CY 2026 PDGM case-mix
weights (developed using CY 2024 home health claims data) are applied
to CY 2025 utilization data. This produces a case-mix budget neutrality
factor for CY 2027 of 1.0045.
We invite public comments on the CY 2027 proposed case-mix weights
and proposed case-mix weight budget neutrality factor.
E. Proposed CY 2027 Home Health Payment Rate Updates
1. Proposed CY 2027 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 is 74.9 percent, and the non-labor-related share is 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 (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. The productivity measure referenced in
section 1886(b)(3)(B)(xi)(II) of the Act is published by BLS as private
nonfarm business total factor productivity (TFP) (previously referred
to as multifactor productivity).\5\ We refer readers to https://www.bls.gov/productivity 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.
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\5\ https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm.
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The proposed home health update percentage for CY 2027 is based on
the estimated home health market basket percentage increase, specified
at section 1895(b)(3)(B)(iii) of the Act of 3.1 percent (based on IHS
Global Inc.'s first quarter 2026 forecast with historical data through
fourth quarter 2025). The estimated CY 2027 proposed home health market
basket percentage increase of 3.1 percent would then be reduced by a
productivity adjustment, in accordance with section 1895(b)(3)(B)(vi)
of the Act. Based on IGI's first quarter 2026 forecast, the proposed
productivity adjustment is currently estimated to be 1.0 percentage
point for CY 2027. Therefore, the proposed productivity-adjusted CY
2027 home health market basket update is 2.1 percent (3.1 percent
market basket percentage increase, reduced by a 1.0 percentage point
productivity adjustment). Furthermore, we are proposing that if more
recent data become available (for example, a more recent estimate of
the market basket percentage increase and/or productivity adjustment),
we would use such data, if appropriate, to determine the CY 2027 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 2027, the proposed
home health payment update percentage is 0.1 percent (2.1 percent minus
2 percentage points).
We invite public comments on the proposed CY 2027 home health
market basket percentage increase and productivity adjustment.
2. Proposed CY 2027 Home Health Wage Index
a. Background
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to provide appropriate adjustments to the proportion of the
payment amount under the HH PPS that account for area wage differences,
using adjustment factors that reflect the relative level of wages and
wage-related costs applicable to the furnishing of home health
services. Since the inception of the HH PPS, we have used inpatient
hospital wage data in developing a wage index to be applied to home
health payments. We are proposing to continue this practice for CY
2027, 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.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.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.
[[Page 41268]]
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). A copy of OMB Bulletin No. 23-01 is
available online at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
According to OMB, the delineations from OMB Bulletin 23-01 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). The OMB ``2020 Standards'' define a
``Metropolitan Statistical Area'' as being associated with at least one
Urban Area that has a population of at least 50,000 and a
``Micropolitan Statistical Area'' as being associated with at least one
Urban Area that has a population of at least 10,000, but less than
50,000 (86 FR 37778).
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. In conjunction with our implementation of the
revised labor market delineations beginning in CY 2025, and consistent
with the treatment of Micropolitan Statistical Areas under the
Inpatient Prospective Payment System (IPPS), we also finalized
continuing to treat Micropolitan Statistical Areas as ``rural'' and
including Micropolitan Statistical Areas in the calculation of each
state's statewide rural wage index. Therefore, the HH PPS statewide
rural wage index is determined using IPPS hospital data from hospitals
located in Micropolitan Statistical Areas and the HH PPS wage index for
each CBSA is determined using IPPS hospital data from hospitals located
in Metropolitan Statistical Areas.
b. Five Percent Cap on Wage Index Decreases
In the CY 2023 HH PPS final rule (87 FR 66851 through 66853), we
finalized a policy that the CY HH PPS wage index will include a
permanent 5 percent cap on wage index decreases for CY 2023 and each
subsequent year. Specifically, we finalized, for CY 2023 and subsequent
years, the application of a permanent 5 percent cap on any decrease to
a geographic area's wage index from its wage index in the prior year,
regardless of the circumstances causing the decline. That is, we
finalized a policy requiring that a geographic area's wage index for CY
2023 will not be less than 95 percent of its final wage index for CY
2022, regardless of whether the geographic area is part of an updated
CBSA, and that for subsequent years, a geographic area's wage index
will not be less than 95 percent of its wage index calculated in the
prior CY.
Previously this methodology was applied to all counties that make
up a CBSA or statewide rural area. However, in the CY 2025 HH PPS final
rule (89 FR 88418 through 88421), because of the adoption of the
revised OMB delineations from OMB Bulletin 23-01, we finalized a policy
applying this methodology to individual counties. Specifically, we
finalized a policy applying the 5 percent cap to counties that moved
from a CBSA or statewide rural area with a higher wage index value into
a new CBSA or statewide 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 2027, 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 and CY 2026 will continue to use the same
transition code for CY 2027, other counties that required a transition
code in CY 2025 and CY 2026 will no longer require a transition code in
CY 2027. The counties that will no longer require a transition code
beginning in CY 2027 have a CY 2027 wage index value in the CBSA or
rural area that the county was redesignated into that is higher than 95
percent of the county's CY 2026 wage index. Therefore, these counties
will use the CBSA or rural county code of the area into which they were
redesignated based on OMB Bulletin No. 23-01.
The complete list of counties and corresponding transition codes
can be found as a separate tab in the calendar year's wage index file
located on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health-pps/home-health-pps-wage-index.
c. Proposed CY 2027 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
[[Page 41269]]
1861(m) of the Act as the beneficiary's place of residence). For CY
2027, we are proposing to base the HH PPS wage index on the FY 2027
hospital pre-floor, pre-reclassified wage index for hospital cost
reporting periods beginning on or after October 1, 2022, and before
October 1, 2023 (FY 2023 cost report data). The proposed CY 2027 HH PPS
wage index would not take into account any geographic reclassification
of hospitals, including those in accordance with sections 1886(d)(8)(B)
or 1886(d)(10) of the Act but would include the 5 percent cap on wage
index decreases as discussed previously.
There exist some geographic areas where there are no hospitals, and
thus, 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 2027 HH PPS wage index, we are proposing to
continue to use the same methodology discussed in the CY 2007 HH PPS
final rule (71 FR 65884) to address those geographic areas in which
there are no inpatient hospitals.
For urban areas without inpatient hospitals, we use the average
wage index of all urban areas within the State as a reasonable proxy
for the wage index for that CBSA. For CY 2027, the only urban area
without inpatient hospital wage data is Hinesville, GA (CBSA 25980).
Using the average wage index of all urban areas in Georgia as a proxy,
we are proposing the CY 2027 wage index value for Hinesville, GA, would
be 0.8797.
For rural areas that do not have inpatient hospitals, we use the
average wage index from all contiguous Core Based Statistical Areas
(CBSAs) as a reasonable proxy. The term ``contiguous'' means sharing a
border (72 FR 49859). In the CY 2025 HH PPS final rule (89 FR 88422),
we finalized a policy that rural North Dakota would become a rural area
without a hospital from which hospital wage data can be derived.
Therefore, in order to calculate the wage index for rural area 99935,
North Dakota, we finalized using as a proxy, the average pre-floor,
pre-reclassified hospital wage data from the contiguous CBSAs: CBSA
13900-Bismark, ND, CBSA 22020-Fargo, ND-MN, CBSA 24220-Grand Forks, ND-
MN, and CBSA 33500, Minot, ND. Using this methodology, we are proposing
that the CY 2027 HH PPS wage index for rural North Dakota would be
0.8210.
Previously, the only rural area without a hospital from which
hospital wage data could be derived was rural Puerto Rico. However, for
rural Puerto Rico, we did not apply this methodology due to the
distinct economic circumstances that exist there (for example, due to
the proximity of almost all of Puerto Rico's various urban and non-
urban areas to one another, this methodology would produce a wage index
for rural Puerto Rico that is higher than that in half of its urban
areas). Instead, we used the most recent wage index previously
available for that area, which was 0.4047. Beginning in CY 2025, due to
the adoption of the revised OMB delineations, there is now a hospital
in rural Puerto Rico from which hospital wage data can be derived.
Therefore, we finalized a policy that the wage index for rural Puerto
Rico would now be based on the hospital wage data for the area instead
of the previously available wage index of 0.4047.
The unadjusted CY 2027 proposed wage index for rural Puerto Rico is
0.2577. However, because 0.2577 is more than a 5 percent decline in the
CY 2026 wage index, we are proposing that the CY 2027 5 percent cap
adjusted wage index for rural Puerto Rico be set equal to 95 percent of
the CY 2026 wage index of 0.3653, which would result in a proposed wage
index value of 0.3470.
Additionally, due to the adoption of the revised OMB delineations
in the CY 2025 HH PPS final rule, Delaware, which was previously an
all-urban state, now has one rural area with a hospital from which
hospital wage data can be derived. As such, we are proposing that the
CY 2026 wage index for rural Delaware would be 0.9590.
Finally, the Northern Mariana Islands and American Samoa are rural
areas with no hospital data from which a wage index can be calculated.
In the CY 2026 HH PPS Wage Index and Rate Update final rule (90 FR
55405), using our established methodology for rural areas with no
hospitals, we finalized that for CY 2026 and subsequent years, HHAs
that provide services in the Northern Mariana Islands and American
Samoa would use CBSA 99965 (Guam) and receive the wage index assigned
to CBSA 99965 (Guam) of 0.9611. While we appreciate that the islands of
the Pacific Rim are not actually contiguous, we believe that same
principle applies here, and that Guam is a reasonable proxy for
American Samoa and the Northern Mariana Islands. We believe that CBSA
99965 (Guam) represents a reasonable proxy because the islands are
located within the Pacific Rim and share a common status as United
States Territories.
The proposed HH PPS wage index file applicable for CY 2027 (January
1, 2027, through December 31, 2027) is available on the CMS website at
https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.
3. Proposed CY 2027 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, HH PPS 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 is 74.9 percent, and the non-
labor-related share is 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 2027:
Multiply the national, standardized 30-day period rate by
the patient's applicable case-mix weight.
Divide the case-mix adjusted amount into a labor (74.9
percent) and a non-labor portion (25.1 percent).
Multiply the labor portion by the applicable wage index
based on the site of service of the beneficiary.
Add the wage-adjusted portion to the non-labor portion,
yielding the case-mix and wage adjusted 30-day period payment amount,
subject to any additional applicable adjustments.
We provide annual updates of the HH PPS rate in accordance with
section 1895(b)(3)(B) of the Act. Section 484.225 sets forth the
specific annual percentage update methodology. In accordance with
section 1895(b)(3)(B)(v) of the Act and Sec. 484.225(i), for an HHA
that does not submit home health quality data, as specified by the
Secretary, the
[[Page 41270]]
unadjusted national prospective 30-day period rate is equal to the rate
for the previous calendar year increased by the applicable home health
payment update percentage, minus two percentage points. Any reduction
of the percentage change will apply only to the calendar year involved
and will not be considered in computing the prospective payment amount
for a subsequent calendar year.
The final claim that the HHA submits for payment determines the
total payment amount for the period and whether we make an applicable
adjustment to the 30-day case-mix and wage-adjusted payment amount. The
end date of the 30-day period, as reported on the claim, determines
which calendar year rates Medicare would use to pay the claim.
We may adjust a 30-day case-mix and wage-adjusted payment based on
the information submitted on the claim to reflect the following:
A LUPA is provided on a per-visit basis as set forth in
Sec. Sec. 484.205(d)(1) and 484.230.
A partial payment adjustment as set forth in Sec. Sec.
484.205(d)(2) and 484.235.
An outlier payment as set forth in Sec. Sec.
484.205(d)(3) and 484.240.
b. Proposed CY 2027 National, Standardized 30-Day Period Payment Amount
Section 1895(b)(3)(A)(i) of the Act requires that the standard
prospective payment rate and other applicable amounts be standardized
in a manner that eliminates the effects of variations in relative case-
mix and area wage adjustments among different home health agencies in a
budget-neutral manner. To determine the CY 2027 national, standardized
30-day period payment rate, we would continue our practice of using the
most recent, complete utilization data at the time of rulemaking; that
is, we are using CY 2025 claims data for CY 2027 payment rate updates.
As discussed in section II.C.1. of the CY 2026 HH PPS final rule
(90 FR 55406), we finalized the implementation of a temporary 3.0
percent reduction to the CY 2026 base payment rate that was equivalent
to a final temporary adjustment factor of 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 will not be included in the starting payment rate for CY
2027. Therefore, we calculated the CY 2026 national, standardized 30-
day period payment with and without the temporary adjustment factor.
To calculate the CY 2027 national, standardized 30-day period
payment amount, we begin with the actual CY 2026 national standardized
30-day period payment amount (with the temporary adjustment factor
included) and apply an adjustment factor of 1.03093 (which is equal to
1 divided by the CY 2026 temporary adjustment factor of 0.97000) to
remove the temporary adjustment factor as shown in table 25.
[GRAPHIC] [TIFF OMITTED] TP06JY26.068
We apply 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 2027
payment rate. 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 2027
national, standardized 30-day period payment rate. The proposed case-
mix weight budget neutrality factor for CY 2027 is 1.0045.
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 2027 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 2026 wage index (with the 5 percent cap) and the
CY 2026 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 2027 wage
index with the 5 percent cap on wage index decreases) by the payment
rate for non-LUPA 30-day periods using the CY 2026 wage index (with the
5 percent cap on wage index decreases), we obtain a wage index budget
neutrality factor of 1.0009. We then apply the wage index budget
neutrality factor of 1.0009 to the 30-day period payment rate.
Next, we update the 30-day period payment rate by the proposed CY
2027 home health payment update percentage of 2.1 percent. As discussed
in section II.C.1. of this proposed rule, we are also proposing to
apply the temporary 3.0 percent reduction to the CY 2027 base payment
rate. The proposed temporary adjustment factor is 0.97000. As discussed
previously, per section 1895(b)(3)(D)(iii) of the Act, the 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 2027 should not be included in
the starting payment rate for CY 2028. Therefore, we have calculated
the CY
[[Page 41271]]
2027 national, standardized 30-day period payment with and without the
temporary adjustment factor. The CY 2027 national standardized 30-day
period payment rate without a temporary adjustment is only for
illustrative purposes. The actual CY 2027 national standardized 30-day
period payment rate includes the proposed temporary adjustment and is
calculated in table 26.
[GRAPHIC] [TIFF OMITTED] TP06JY26.069
The proposed CY 2027 national standardized 30-day period payment
rate for an HHA that does not submit the required quality data would be
updated by 0.1 percent (the proposed CY 2027 home health payment update
percentage of 2.1 percent minus 2 percentage points) and is shown in
table 27.
[GRAPHIC] [TIFF OMITTED] TP06JY26.070
c. Proposed CY 2027 National Per-Visit Rates for 30-day Periods of Care
The national per-visit rates are used to pay LUPAs and are also
used to compute imputed costs in outlier calculations. The per-visit
rates are paid by type of visit or home health discipline. The six home
health disciplines are as follows:
Home health aide (HH aide).
Medical Social Services (MSS).
Occupational therapy (OT).
Physical therapy (PT).
Skilled nursing (SN).
Speech-language pathology (SLP).
To calculate the proposed CY 2027 national per-visit rates, we
start with the CY 2026 national per-visit rates. Then we apply a wage
index budget neutrality factor to ensure budget neutrality for LUPA
per-visit payments. We calculate the wage index budget neutrality
factor by simulating total payments for LUPA 30-day periods of care
using the CY 2027 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 2026 wage index with the 5 percent cap. By
dividing the total payments for LUPA 30-day periods of care using the
CY 2027 wage index by the total payments for LUPA 30-day periods of
care using the CY 2026 wage index, we obtain a wage index budget
neutrality factor of 0.9997. 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
[[Page 41272]]
budget neutrality factor is calculated by simulating payments for non-
LUPA 30-day periods.
The LUPA per-visit rates are not calculated using case-mix weights.
Therefore, no case-mix weight budget neutrality factor is needed to
ensure budget neutrality for LUPA payments. Additionally, we are not
applying the permanent adjustment or the temporary adjustment to the
LUPA per-visit payment rates but only to the case-mix adjusted 30-day
payment rate. Lastly, the per-visit rates for each discipline are
updated by the proposed CY 2027 home health payment update percentage
of 2.1 percent. The national per-visit rates are adjusted by the wage
index based on the site of service of the beneficiary. The per-visit
payments for LUPAs are separate from the LUPA add-on payment amount,
which is paid for periods that occur as the only period or initial
period in a sequence of adjacent periods. The proposed CY 2027 national
per-visit rates for HHAs that submit the required quality data are
updated by the proposed CY 2027 home health payment update percentage
of 2.1 percent and are shown in table 28.
[GRAPHIC] [TIFF OMITTED] TP06JY26.071
The CY 2027 per-visit payment rates for HHAs that do not submit the
required quality data would be updated by 0.1 percent, which is the
proposed CY 2027 home health payment update percentage of 2.1 percent
minus 2 percentage points and are shown in table 29.
[GRAPHIC] [TIFF OMITTED] TP06JY26.072
We are soliciting comments on the proposed CY 2027 30-day home
health payment rates and the per-visit payment rates.
d. LUPA Add-On Factors
Prior to the implementation of the 30-day unit of payment, LUPA
episodes were eligible for a LUPA add-on payment if the episode of care
was the first or only episode in a sequence of adjacent episodes. As
described in the CY 2008 HH PPS final rule, the average visit lengths
in these initial LUPAs are 16 to 18 percent higher than the average
[[Page 41273]]
visit lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes
that occur as the only episode or as an initial episode in a sequence
of adjacent episodes are adjusted by applying an additional amount to
the LUPA payment before adjusting for area wage differences.
In the CY 2014 HH PPS final rule (78 FR 72305), we changed the
methodology for calculating the LUPA add-on amount, whereby we
finalized the approach of multiplying the per-visit payment amount for
the first skilled nursing (SN), physical therapy (PT), or speech
language pathology (SLP) visit in LUPA episodes that occur as the only
episode or an initial episode in a sequence of adjacent episodes by 1 +
the proportional increase in minutes for an initial visit over non-
initial visits. Specifically, we updated the analysis using 100 percent
of LUPA episodes and a 20 percent sample of non-LUPA first episodes
from CY 2012 claims data. At that time, we finalized add-on factors:
1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. In the CY 2019 HH PPS
final rule with comment period (83 FR 56440), in addition to finalizing
a 30-day unit of payment, we finalized our policy of continuing to
multiply the per-visit payment amount for the first SN, PT, or SLP
visit in LUPA periods that occur as the only period of care or the
initial 30-day period of care in a sequence of adjacent 30-day periods
of care by the appropriate add-on factor (using the already established
LUPA add-on factors of 1.8451 for SN, 1.6700 for PT, and 1.6266 for
SLP) to determine the LUPA add-on payment amount for 30-day periods of
care under the PDGM.
In the CY 2025 HH PPS final rule (89 FR 88426 through 88427), in an
effort to enhance the accuracy and relevance of LUPA add-on factors to
reflect current healthcare practices and costs, we finalized updates to
the LUPA add-on factors for PT, SN, and SLP, which had not been revised
since the CY 2014 HH PPS final rule (using CY 2012 claims data). We
finalized using the same methodology to establish the LUPA add-on
amount as used for CY 2014, using updated claims data.
Specifically, in CY 2025, 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. 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
discontinuing the use of the PT LUPA add-on factor as a proxy and
established a definitive LUPA add-on factor for OT. 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] TP06JY26.073
[[Page 41274]]
4. Payments for High-Cost Outliers Under the HH PPS
a. Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the home health payment amount otherwise made
in the case of outliers because of unusual variations in the type or
amount of medically necessary care. Under the HH PPS and the previous
unit of payment (that is, 60-day episodes), outlier payments were made
for 60-day episodes whose estimated costs exceed a threshold amount for
each HHRG. The episode's estimated cost was established as the sum of
the national wage-adjusted per-visit payment amounts delivered during
the episode. The outlier threshold for each case-mix group or PEP
adjustment is defined as the 60-day episode payment or PEP adjustment
for that group plus a fixed-dollar loss (FDL) amount. For the purposes
of the HH PPS, the FDL amount is calculated by multiplying the home
health FDL ratio by a case's wage-adjusted national, standardized 60-
day episode payment rate, which yields an FDL dollar amount for the
case. The outlier threshold amount is the sum of the wage and case-mix
adjusted PPS episode amount and wage-adjusted FDL amount. The outlier
payment is defined as a proportion of the wage-adjusted estimated cost
that surpasses the wage-adjusted threshold. The proportion of
additional costs over the outlier threshold amount paid as outlier
payments is referred to as the loss-sharing ratio.
As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through
70399), section 3131(b)(1) of the Affordable Care Act amended section
1895(b)(3)(C) of the Act to require that the Secretary reduce the HH
PPS payment rates such that aggregate HH PPS payments were reduced by 5
percent. In addition, section 3131(b)(2) of the Affordable Care Act
amended section 1895(b)(5) of the Act by redesignating the existing
language as section 1895(b)(5)(A) of the Act and revised the language
to state that the total amount of the additional payments or payment
adjustments for outlier episodes could not exceed 2.5 percent of the
estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of
the Affordable Care Act also added section 1895(b)(5)(B) of the Act,
which capped outlier payments as a percent of total payments for each
HHA for each year at 10 percent.
As such, beginning in CY 2011, we reduced payment rates by 5
percent and targeted up to 2.5 percent of total estimated HH PPS
payments to be paid as outliers. To do so, we first returned the 2.5
percent held for the target CY 2010 outlier pool to the national,
standardized 60-day episode rates, the national per visit rates, the
LUPA add-on payment amount, and the NRS conversion factor for CY 2010.
We then reduced the rates by 5 percent as required by section
1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the
Affordable Care Act. For CY 2011 and subsequent calendar years we
targeted up to 2.5 percent of estimated total payments to be paid as
outlier payments, and apply a 10-percent agency-level outlier cap.
In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through
43742 and 81 FR 76702), we described our concerns regarding patterns
observed in home health outlier episodes. Specifically, we noted the
methodology for calculating home health outlier payments may have
created a financial incentive for providers to increase the number of
visits during an episode of care in order to surpass the outlier
threshold and simultaneously created a disincentive for providers to
treat medically complex beneficiaries who require fewer but longer
visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR
76702), we finalized changes to the methodology used to calculate
outlier payments, using a cost-per-unit approach rather than a cost-
per-visit approach. This change in methodology allows for more accurate
payment for outlier episodes, accounting for both the number of visits
during an episode of care and the length of the visits provided. Using
this approach, we now convert the national per-visit rates into per 15-
minute unit rates. These per 15-minute unit rates are used to calculate
the estimated cost of an episode to determine whether the claim would
receive an outlier payment and the amount of payment for an episode of
care. In conjunction with our finalized policy to change to a cost-per-
unit approach to estimate episode costs and determine whether an
outlier episode should receive outlier payments, in the CY 2017 HH PPS
final rule we also finalized the implementation of a cap on the amount
of time per day that would be counted toward the estimation of an
episode's costs for outlier calculation purposes (81 FR 76725).
Specifically, we limit the amount of time per day (summed across the
six disciplines of care) to 8 hours (32 units) per day when estimating
the cost of an episode for outlier calculation purposes.
In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we
did not plan to re-estimate the average minutes per visit by discipline
every year. Additionally, the per unit rates used to estimate an
episode's cost were updated by the home health update percentage each
year, meaning we would start with the national per visit amounts for
the same calendar year when calculating the cost-per-unit used to
determine the cost of an episode of care (81 FR 76727). We would
continue to monitor the visit length by discipline as more recent data
becomes available and may propose updating the rates as needed in the
future.
In the CY 2019 HH PPS final rule with comment period (83 FR 56521),
we finalized a policy to maintain the current methodology for payment
of high-cost outliers upon implementation of PDGM beginning in CY 2020
and calculated payment for high-cost outliers based upon 30-day period
of care. Upon implementation of the PDGM and 30-day unit of payment, we
finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020.
In the CY 2021 HH PPS final rule (85 FR 70322), given that CY 2020
was the first year of the PDGM and the change to a 30-day unit of
payment, we finalized maintaining the same FDL ratio of 0.56 in CY 2021
as we did not have sufficient CY 2020 data at the time of CY 2021
rulemaking to propose a change to the FDL ratio for CY 2021. In the CY
2022 HH PPS final rule with comment period (86 FR 62292), we estimated
that outlier payments would be approximately 1.8 percent of total HH
PPS payments in CY 2022 if we maintained an FDL of 0.56. Therefore, in
order to pay up to, but no more than, 2.5 percent of total payments as
outlier payments we finalized an FDL of 0.40 for CY 2022. In the CY
2023 HH PPS final rule (87 FR 66875), using CY 2021 claims utilization
data, we finalized an FDL of 0.35 in order to pay up to, but no more
than, 2.5 percent of the total payment as outlier payments in CY 2023.
In the CY 2024 HH PPS final rule (88 FR 77749), using CY 2022 claims
utilization data, we finalized an FDL of 0.27 for CY 2024. In the CY
2025 HH PPS final rule (89 FR 88354), using CY 2023 claims data (as of
July 11, 2024) we finalized an FDL ratio of 0.35 for CY 2025. In the CY
2026 HH PPS final rule (90 FR 55411), using CY 2024 claims data (as of
July 11, 2025) we finalized an FDL ratio of 0.37 for CY 2026.
b. Proposed FDL Ratio for CY 2027
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
[[Page 41275]]
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). We
use 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 2025 claims data (as of March 12, 2026) and given the
statutory requirement that total outlier payments do not exceed 2.5
percent of the total payments estimated to be made under the HH PPS, we
are proposing an FDL ratio of 0.29 for CY 2027. We also propose to
update the FDL ratio in the final rule based on more complete CY 2025
claims data.
F. Palliative Care Services as Home Health Services
CMS is seeking to advance its broader goal of promoting access to
and utilization of palliative care services, with a particular focus on
expanding opportunities for beneficiaries to receive these services
under the Medicare home health benefit. As part of this effort, CMS
included a Request for Information (RFI) in the FY 2027 Hospice Wage
Index and Payment Rate Update proposed rule (91 FR 17359) to solicit
public input on potential policy, operational, and payment approaches
to strengthen and enhance the delivery of palliative care services
outside of the hospice benefit. We were especially interested in
hearing more about how Medicare practitioners and post-acute care
providers furnish community-based palliative care, well as
opportunities for improvement. We stated we believe that, as palliative
care is a method of care delivery that is provided throughout the
continuum of illness, it can be furnished under various Medicare
benefits. We also stated that the home is an ideal environment for
individuals to receive palliative care services, as remaining in the
home during a serious illness may help alleviate psychological and
mental distress and allow for more intimate caregiving to be provided
by family members. As such, we believe the Medicare home health benefit
can be an important step in the care continuum when a patient needs
palliative care, either during episodes of serious illness or near end
of life, before choosing hospice care.
In accordance with Sec. 409.42(c), to qualify for Medicare
coverage of home health services, a beneficiary must need skilled
services as set out at Sec. 409.32. Section 409.32(a) states that
``[t]o be considered a skilled service, the service must be so
inherently complex that it can be safely and effectively performed only
by, or under the supervision of, professional or technical personnel.''
Under the home health benefit, a beneficiary's unique condition and
individual needs should be considered in deciding whether skilled
nursing care is reasonable and necessary, without regard to whether the
illness or injury is acute, chronic, terminal, or expected to extend
over a long period of time. There are no expectations that life-
prolonging therapies will be avoided or that the patient must be
considered terminally ill, and the restoration potential of a patient
is not the deciding factor in determining whether skilled services are
needed. Even if full recovery or medical improvement is not possible, a
patient may need skilled services to prevent further deterioration or
preserve current capabilities. Further, as discussed in chapter seven
of the Medicare Benefit Policy Manual (BPM),\6\ it is an allowed
practitioner, as defined at Sec. 484.2, who is familiar with the
patient who determines whether a skilled service is reasonable and
necessary based on the patient's individual care needs and goals, and
accepted standards of medical and nursing practice. Therefore, if the
beneficiary meets the qualifications for coverage of services as set
out at Sec. 409.42, he or she could receive palliative care services
under the home health benefit, if ordered by an allowed practitioner.
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\6\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf.
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Often skilled services are determined to be reasonable and
necessary when a patient has multiple medications and comorbidities,
with resultant functional impairments, that leave them homebound with a
need for skilled observation of the patient's condition and medication
management. A discussion on palliative care delivery in the home
emphasizes the importance of home-based care for patients with multiple
morbidities and limited mobility.\7\ The structure of the PDGM allows,
in general, for palliative care services to be most appropriately
grouped into the medication, management, teaching, and assessment
(MMTA) clinical group. As discussed in the CY 2019 HH PPS proposed rule
(83 FR 32402), health teaching; guidance and counseling; case
management, treatments and procedures; and surveillance are integral to
the care of most home health patients. Palliative care is defined at
Sec. 418.3 to mean ``patient and family-centered care that optimizes
quality of life by anticipating, preventing, and treating suffering.
Palliative care throughout the continuum of illness involves addressing
physical, intellectual, emotional, social, and spiritual needs and to
facilitate patient autonomy, access to information, and choice.'' We
believe that this definition encompasses all the services provided
under the Medicare home health benefit. Additionally, these important
interventions are often the primary reason for home health services.
Section 1861(m) of the Act requires the 30-day period to include all
covered home health services: skilled nursing; home health aide;
physical therapy; speech-language pathology; occupational therapy;
medical social services, and medical supplies. Skilled nursing services
can address advanced symptom management, including specialized care to
manage pain, nausea and vomiting, depression and anxiety, and
respiratory distress. This may also include medication management to
monitor therapeutic and adverse effects and review and adjust
medications in coordination with allowed practitioners. Medical social
services can help address advance care planning needs (including
discussion on transition to hospice) as well as offer referrals for
social and emotional support for families and caregivers. Physical
therapists (PTs), occupational therapists (OTs), and speech language
pathologists (SLPs) enhance patient quality of life, comfort, and
dignity by maximizing functional independence and managing symptoms.
PTs focus on mobility, pain management, and safe transfers, while OTs
specialize in adapting activities of daily living (ADLs) and
environments to maintain independence for as long as possible. SLPs
support safe eating and drinking and help facilitate
[[Page 41276]]
communication and decision making for those patients with deficits.
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\7\ National Academies of Sciences, Engineering, and Medicine;
Health and Medicine Division; Board on Health Sciences Policy; Board
on Health Care Services; Roundtable on Quality Care for People with
Serious Illness. Models and Strategies to Integrate Palliative Care
Principles into Care for People with Serious Illness: Proceedings of
a Workshop. Washington (DC): National Academies Press (US); 2017 Oct
24. Proceedings of a Workshop. Available from: https://www.ncbi.nlm.nih.gov/books/NBK538355/.
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Like other skilled services, comprehensive home health clinical
notes are expected to substantiate the need for palliative care
necessitating medication management, teaching, and assessment through
documentation of the patient's achievement of care needs and goals as
outlined in the plan of care. Accordingly, chapter seven of the BPM
includes an example of a patient with malignant melanoma who is
terminally ill and requires skilled observation, assessment, teaching,
and treatment, and who has not elected hospice care. This example
explains that the documentation should describe the goal of the skilled
nursing intervention, and at each visit the services provided should
support that goal. The skilled nursing care that the patient requires
would be covered, notwithstanding that the condition is terminal,
because the documentation and description must support that the needed
services required the skills of a nurse. A palliative care plan for
this type of patient would likely include medication and symptom
management, including expected treatment responses for pain, anxiety,
constipation, nausea, or dyspnea; education and caregiver training on
managing symptoms at home; assessing social risk factors including
caregiver burden and emotional and psychosocial distress; and skilled
therapy for non-pharmacologic pain management strategies and
interventions to maximize functional status and independence.
We plan on adding additional palliative care examples of skilled
care to the BPM following the publication of the CY 2027 HH PPS final
rule to support our goal of encouraging community-based palliative care
services, particularly under the Medicare home health benefit. We
solicit comments on any concerns or suggestions regarding reaching this
goal.
G. Request for Information on the Construction of a Home Health
Specific Wage Index
For CY 2027, we are proposing to continue to use the concurrent
pre-floor, pre-reclassified IPPS hospital wage index as the basis for
the HH PPS wage index. We continue to believe that this is the best
available Medicare data to estimate costs per day, in accordance with
our longstanding wage index policy at Sec. 412.424(a)(2). The purpose
of this comment solicitation is to gain information from the public
regarding the appropriateness of alternative data sources consistent
with our statutory authority and regulatory requirements. We note that
other payment systems have explored and are exploring alternative wage
index methodologies under their specific programmatic and statutory
circumstances. For example, CMS finalized changes to the ESRD PPS wage
index using Bureau of Labor Statistics (BLS) occupation-level wage data
in the CY 2025 ESRD PPS final rule (89 FR 89116). While this approach
was developed under the specific programmatic and statutory
circumstances of the ESRD PPS and may not be directly transferable to
the HH PPS, CMS is interested in exploring whether similar
methodologies using publicly available wage data could be used to
better reflect the geographic variation in labor costs for HHAs. In
addition, we note that we are also considering the potential use of
alternative data sources in other payment systems, including with
respect to hospices (91 FR 17361 through 17363), the Inpatient
Rehabilitation Facilities PPS (91 FR 17206 and 17207), and the Skilled
Nursing Facilities PPS (91 FR 17692).
Furthermore, in its 2023 Report to the Congress,\8\ MedPAC
discussed various conceptual approaches to Medicare wage indexes,
including the use of county-level wage data from BLS with an
occupational mix to construct wage indexes that are more specific to
the payment setting. MedPAC has previously written about using all-
employer, occupation-level wage data to establish different weights for
setting-specific occupational labor mixes as one approach to geographic
adjustments.
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\8\ https://www.medpac.gov/document/chapter-9-reforming-medicares-wage-index-systems-june-2023-report/.
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We are soliciting comments on whether we should consider using
alternative data sources to construct an HHA specific wage index for
potential use in future years. CMS seeks feedback to understand the
potential advantages and limitations of using alternative data sources,
such as BLS data and home health Medicare cost reports, as well as
other methodologies that stakeholders believe could appropriately
reflect the geographic variation in labor costs for HHAs. We also seek
feedback on the unique considerations applicable to HHAs that should
inform how CMS considers the potential use of alternative data sources.
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 of This Proposed Rule
In accordance with the statutory authority at section
1895(b)(3)(B)(v) of the Act, we are proposing the following policies in
this proposed rule:
First, we summarize potential initiatives to improve alignment
between the HH QRP and expanded HHVBP Model. We also propose to revise
the HH QRP data submission deadlines beginning with the CY 2027 HH QRP.
In addition, we are proposing to revise the HH QRP OASIS and HHCAHPs
annual payment update (APU) reporting timeframe to report a calendar
year of data (January 1 through December 31). We propose some revisions
to regulatory text in support of rule proposals and to improve digital
transfer of information during the reconsiderations process. Finally,
we are soliciting public comments on one Request for Information (RFI)
on future measure concepts for the HH QRP.
For a detailed discussion of the considerations we historically use
for measure selection for the HH QRP
[[Page 41277]]
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 18 measures for the CY 2027 program
year. As finalized in the CY 2026 HH PPS final rule, the HH QRP
currently uses thirteen OASIS-based measures, four claims-based
measures, and a HHCAHPS Survey-based composite measure (see table 31).
D. Opportunities for Potential Alignment Between the HH QRP and the
Expanded HHVBP Model
CMS has identified substantial opportunities to better align the HH
QRP and the expanded HHVBP Model. While the HH QRP and expanded HHVBP
Model share similar goals and measures, differences in measure sets,
reporting periods, and performance assessment processes may create
unnecessary complexity and administrative burden for HHAs. For example,
misalignment between HH QRP APU reporting periods and the expanded
HHVBP Model's annual performance period may contribute to confusion.
Greater alignment would support more consistent evaluation of HHA
quality performance and advance CMS quality priorities. Greater
alignment is also consistent with CMS's priority of reducing provider
burden and creating efficiencies across CMS programs. Opportunities for
potential alignment between the HH QRP and expanded HHVBP Model include
the following:
Increasing alignment in expanded HHVBP Model and HH QRP
Quality of Patient Care (QoPC) Star Ratings measure sets.
Aligning HH QRP and expanded HHVBP Model measure reporting
periods.
Aligning HH QRP APU and expanded HHVBP Model annual
payment reporting periods.
Aligning expanded HHVBP Model Interim Performance and HH
QRP QoPC Star Rating Reports.
Aligning timeframe of appeals/suppression review processes
for the expanded HHVBP Model and HH QRP.
Updating scoring methodology to incorporate HH QRP APU
penalties in expanded HHVBP Model payment adjustments and factoring HH
QRP Quality Assessments Only (QAO) values into QoPC Star Ratings
scoring.
We are not seeking comments on this list of opportunities for
potential alignment between the HH QRP and expanded HHVBP Model and is
providing this list for general awareness of potential areas of
alignment that are being considered.
We convened a Technical Expert Panel (TEP) meeting addressing HH
QRP and expanded HHVBP Model alignment in December 2025. Please see the
2025 TEP Summary Report for more information (www.cms.gov/priorities/innovation/files/hhvbp-tep-summary-report.pdf).
Table 31 reflects current and expected usage of measures for both
the expanded HHVBP Model and the HH QRP.
[[Page 41278]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.074
E. Form, Manner, and Timing of Data Submission Under the HH QRP
1. Proposal To Revise HH QRP Data Submission Deadlines Beginning With
the CY 2027 HH QRP
a. Background
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 was not initially 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.
Public reporting of data collected under our quality reporting
programs, such as the HH QRP, is designed to provide consumers and
their families with the most current information to empower them to
make quality-informed decisions about where to receive their care. We
have identified that the time between when data on measures is
submitted to us and when those data are publicly reported
(approximately nine months) may be too long to provide the most
accurate and up to date information for the public.
[[Page 41279]]
We have received feedback from the provider community and TEPs that the
aged data used in publicly reported quality measures diminishes their
value to consumers. Furthermore, we have heard from HHAs that the HH
QRP measure results they receive prior to public reporting are less
useful for their quality improvement efforts due to the aged data and
the delay in when they receive these reports.
Currently, the largest contributing factor to the 9-month lag
between the end of the data collection period and when measures are
publicly reported is the 4.5-month timeframe for data submission.
Reducing the data submission timeframe from 4.5 months to the 15th day
of the second month after the end of the calendar quarter could reduce
this lag by up to 3 months, resulting in more timely public reporting
of data for consumers and increasing the value of publicly reported
data. Additionally, this timeframe provides HHAs with more recent data
in support of their quality improvement activities.
In the CY 2026 HH PPS proposed rule, we included a request for
information (RFI) on reducing the OASIS assessment data submission
deadline from 4.5 months to 45 days (90 FR 29182). We refer readers to
the CY 2026 HH PPS final rule (90 FR 55429 and 55430) for a full
summary of the public comments received.
b. Proposal To Revise the HH QRP Assessment Data Submission Deadline
Beginning with the CY 2027 HH QRP, we are proposing that HHAs be
required to complete their data submissions and make corrections to
their OASIS assessment data where necessary no later than the 15th day
of the second month after the end of the calendar quarter. However, if
the 15th day of the second month falls on a Friday, weekend, or Federal
holiday, the date is delayed until 11:59 p.m. EST on the next business
day. We are proposing that HHAs would follow the deadlines presented in
Table 32 for the CY 2027 HH QRP. We are also proposing that similar
calendar year data submission deadlines would apply to future years'
payment determinations.
[GRAPHIC] [TIFF OMITTED] TP06JY26.075
We believe that requiring HHAs to submit OASIS assessment data by
the 15th day of the second month after the end of the calendar quarter
is reasonable. We conducted an analysis on the potential impact of
reducing the timeframe by determining how many assessments are
currently being submitted by this deadline, which is approximately
within 45 days of the end of the quarter. Using 2024 data, we
identified that 99.27 percent of all OASIS assessments were submitted
to CMS within a 45-day timeframe. Of the remaining 0.63 percent
submitted beyond 45 days, 0.24 percent were submitted after the current
4.5-month data submission deadline and would not be further impacted by
a change in the data submission deadline. Therefore, only 0.49 percent
of OASIS assessments would be impacted by changing the data submission
deadline from 4.5 months to require data submission by the 15th day of
the second month after the end of the calendar quarter.
We invite comment on this proposal to require that HHAs complete
their data submissions and make corrections to their OASIS assessment
data where necessary no later than the 15th day of the second month
after the end of the calendar quarter beginning with the CY 2027 HH
QRP.
2. Proposal To Revise the OASIS Annual Payment Update Reporting
Timeframe
a. Background
HHAs are required to submit OASIS data in a timely manner as
outlined under section 1895(b)(3)(B)(v) of the Act, as amended by the
Deficit Reduction Act (Pub. L. 109-117). Failure to submit OASIS data
in a timely manner with respect to a HH QRP year would result in the
reduction of the annual home health market basket percentage increase
otherwise applicable to an HHA for the corresponding calendar year by 2
percentage points. This annual payment update (APU) was initiated for
the HH QRP on January 1, 2007. The HH QRP APU requirements were
finalized in the CY 2007 HH PPS Final Rule (71 FR 44087 through 44088)
outlining data collection of 12 months of data beginning July 1, 2005
and running through July 1, 2026. This timeframe allowed a full 12
months of data and provided CMS the time necessary to analyze and make
any necessary payment adjustments to the CY 2007 payment rates (71 FR
44087 through 44088). The timing for APU reporting has remained on this
data calculation cadence since this update.
The current OASIS APU reporting timeframe differs from that used by
other major CMS payment updates. Notably, the expanded HHVBP Model
annual payment adjustment and the HH PPS updates are both based on a
calendar year timeline. To improve alignment between HH payment
policies and OASIS QRP reporting requirements, CMS is proposing to
revise the OASIS APU data reporting timeframe to reflect a January 1
through December 31 reporting timeframe, or the calendar year. We
believe this update would provide clarity to HH payment updates and
facilitate the alignment of the HH pay-for-reporting policies with
other HH payment policies.
[[Page 41280]]
b. Proposal
The proposed revision of the OASIS APU data reporting to a calendar
year timeframe would require a transition year in which the current
reporting timeframe is moved to the new proposed reporting timeframe.
We propose the transition occur with the 2028 APU and further propose
that the 6 months data collected from July 1, 2026 through December 31,
2026 would serve as the OASIS APU data reporting timeframe to determine
the HH QRP 2028 OASIS APU. We also propose that the 2029 OASIS APU
would be the first iteration in which the OASIS APU data reporting
timeframe will be based on the calendar year, from January 1, 2027
through December 31, 2027. We would continue this new pattern for each
subsequent OASIS APU with effective dates for data reporting of January
1 through December 31. OASIS assessments will be considered complete if
they comply with the HH Conditions for Payment (COPs) that apply to the
applicable year. Please see table 33 that outlines the current OASIS
APU data reporting timeframe, the proposed transition reporting
timeframe, and the revised OASIS APU timeframe used for the CY 2029 APU
and later.
[GRAPHIC] [TIFF OMITTED] TP06JY26.076
In the CY 2024 HH PPS final rule, CMS proposed adding the following
language to the regulatory text at Sec. 484.245(b)(2)(ii)(A): ``A home
health agency must meet or exceed the data submission threshold for
each submission year (July 1-June 30) set at 90 percent of all required
OASIS or successor instrument records and submitted through the CMS
designated data submission systems '' (88 FR 77676). With the proposed
change to a calendar year reporting timeframe, CMS proposes to revise
the language in Sec. 484.245(b)(2)(ii)(A) that currently states
``(July 1-June 30)'' to state ``(January 1 through December 31)''.
3. Proposal To Revise the HHCAHPS Annual Payment Update Reporting
Timeframe
a. Background
HHAs are required to submit quality data in a timely manner as
outlined under section 1895(b)(3)(B)(v) of the Act. Failure to submit
HHCAHPS data in a timely manner with respect to a HH QRP year could
result in the reduction of the annual home health market basket
percentage increase otherwise applicable to an HHA for the
corresponding calendar year by 2 percentage points. HHCAHPS data
inclusion in the HHQRP was finalized with the CY 2010 HH PPS Final Rule
(FR 74 58098 through 58104). Adding a HHCAHPS annual payment update
(APU) to the current HH QRP requirements was also finalized with the CY
2010 HH PPS Final Rule where CMS finalized the policy that HHCAHPS
would be included in the APU reporting for the CY 2012 APU based on 6
months of data from October 2010 to March 2011 (FR 74 58103). In the CY
2011 HH PPS final rule, CMS finalized a policy that HHCAHPS APU
calculations would require four quarters of data collection from April
1, 2011 to March 31, 2012 for the CY 2013 HH CAHPS APU (FR 75 70406).
The timing for HHCAHPS APU reporting has remained on this cadence since
this update.
The current HHCAHPS APU reporting timeframe differs from that used
by other annual HH CMS payment updates. The expanded HHVBP Model
payment adjustment percentage and the HH PPS updates are both based on
a calendar year timeline. The OASIS APU data reporting timeframe is
also different from a calendar year timeline and we are also proposing
an update to a calendar year timeframe in a previous proposal. To
improve alignment between home health payment policies and HH QRP pay-
for-reporting requirements, we are proposing to revise the HHCAHPS APU
data reporting timeframe to reflect a January 1 through December 31
reporting timeframe, or the calendar year. We believe this update would
provide clarity related to HH payment updates and facilitate the
alignment of CMS HH pay-for-reporting policies with other HH payment
policies.
b. Proposal
The proposed revision of the HHCAHPS APU data reporting to a
calendar year timeframe would require a transition year in which the
current reporting timeframe was moved to the new proposed reporting
timeframe. We propose the transition occur with the 2028 HHCAHPS APU
and further propose that the nine months of data collected from April
1, 2026 through December 31, 2026 would serve as the HHCAHPS APU data
reporting timeframe to determine the HHQRP 2028 APU. We also propose
that the 2029 HHCAHPS APU data reporting timeframe would be the first
iteration in which the HHCAHPS APU data reporting timeframe would be
for a calendar year, from January 1, 2027 through December 31, 2027. We
would continue this new pattern for each subsequent HHCAHPS APU with
effective dates for data reporting of January 1 through December 31.
HHA OASIS assessments would be considered complete if they complied
with the HH CoPs and Conditions for Payment that apply to the
applicable year. Please see Table 34 that outlines the HHCAHPS current
APU data reporting timeframe, the proposed transition reporting
timeframe, and the revised APU timeframe used for the CY 2029 APU and
later.
[[Page 41281]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.077
We invite comment on the proposals to revise the OASIS APU and
HHCAHPS APU reporting timeframes to a calendar year period beginning
with the CY 2027 HH QRP.
4. Proposed Updates to Regulation Text Related to Reconsiderations
In the CY2026 HH PPS final rule, CMS updated regulation text
language to codify how a provider may request an extension to file a
reconsideration (90 FR 55342). We are proposing to further clarify
aspects of the reconsideration process to facilitate more timely,
digital transmission of information. Specifically, section
484.245(d)(1)(i) currently states, ``HHAs that do not meet the quality
reporting requirements under this section for a program year will
receive a letter of noncompliance via the United States Postal Service
and the CMS-designated data submission system''. We propose to revise
this language to specify that HHAs that do not meet the quality
reporting requirements under this section for a program year would
receive a notification of noncompliance via the CMS-designated data
submission system. Section 484.245(d)(1)(ii) currently states, an HHA
may request reconsideration no later than 30 calendar days after the
date identified on the letter of non-compliance. We propose to revise
this language to state that an HHA may request reconsideration no later
than 30 calendar days after the date identified on the notification of
non-compliance. Section 484.245(d)(2)(v) currently states, CMS
identified reason(s) for non-compliance as stated in the non-compliance
letter. We propose to revise this language to state, CMS identified
reason(s) for non-compliance as stated in the non-compliance
notification.
Section 484.245(d)(4)(i) currently states that CMS notifies the
HHA, in writing, of its final decision regarding any reconsideration
request through at least one of the following methods:
CMS designated data submission system.
The United States Postal Service.
Email from the CMS Medicare Administrative Contractor
(MAC).
We propose to revise this language to state that CMS would notify
the HHA of its final decision regarding any reconsideration request
through a CMS designated data submission system.
We invite comments on these proposed updates to the regulations
text related to the reconsideration process.
F. HH QRP Measure Concepts Under Consideration for Future Years--
Request for Information (RFI)
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 are seeking input on the importance, relevance, appropriateness,
and applicability of the quality measure concepts related to advanced
care planning. Advance care planning is a continuous process that
supports people in understanding and communicating their goals, values,
and preferences regarding future medical decisions.\9\ The Patient Self
Determination Act of 1990 \10\ supports this process by requiring
healthcare facilities to inform patients of their rights regarding
medical decisions, including advance directives and end of life
care.\11\ In post-acute care (PAC) settings, where patients recover
from acute illness, injury, or major procedures, their needs and goals
may evolve as their condition changes. Factors such as clinical
stability, functional status, therapy tolerance, cognition function,
prognosis, and personal preferences can all shift during recovery.
Regular reassessment and transparent communication are essential to
maintaining person-centered care, while advance care planning
facilitates shared decision-making by documenting patient preferences
and ensuring goal-concordant care throughout care transitions.\12\
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\9\ McMahan, R.D., Tellez, I., & Sudore, R.L. (2021).
Deconstructing the Complexities of Advance Care Planning Outcomes:
What Do We Know and Where Do We Go? A Scoping Review. Journal of the
American Geriatrics Society, 69(1), 234-244. https://doi.org/10.1111/jgs.16801.
\10\ Public Law 101-508, Sec. Sec. 4206, 4751.
\11\ https://www.congress.gov/bill/101st-congress/house-bill/4449https://www.congress.gov/bill/101st-congress/house-bill/5835.
\12\ McMahan RD, Tellez I, Sudore RL. Deconstructing the
Complexities of Advance Care Planning Outcomes: What Do We Know and
Where Do We Go? A Scoping Review. J Am Geriatr Soc. 2021
Jan;69(1):234-244. doi: 10.1111/jgs.16801. Epub 2020 Sep 7. PMID:
32894787; PMCID: PMC7856112.
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As we review new measure concepts, we would prioritize evidence-
based outcome measures that promote person-centered care practices. We
are seeking input on the relevant aspects of advanced care planning and
measures appropriate for the HH setting.
IV. The Expanded Home Health Value-Based Purchasing (HHVBP) Model
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.
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.\13\ 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
[[Page 41282]]
States, territories, and District of Columbia beginning January 1,
2022. CY 2022 was a pre-implementation year. Payment adjustments under
the Model are calculated in the year after each performance year and
applied two years following each performance year. Therefore, payment
adjustments for the first performance year of CY 2023 were implemented
in CY 2025. 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. The following description of existing HHVBP
performance feedback reports is included for background and to provide
context for the discussion of potential alignment between the HH QRP
and the expanded HHVBP Model in section III of this proposed rule.
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\13\ https://www.cms.gov/newsroom/press-releases/cms-takes-action-improve-home-health-care-seniors-announces-intent-expand-home-health-value-based.
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CMS publishes two types of routine performance feedback reports
that provide HHAs with information on their measure performance:
The first report type is the Interim Performance Report
(IPR), which is issued quarterly. The information in the IPR reflects
calculation of the TPS based on rolling data periods that are updated
each quarter. CMS issues two versions of the IPR--a preliminary version
and a final version that reflects any changes made as a result of the
recalculation request process. The IPRs provide interim performance
scores, achievement and improvement points, and TPS.
The second report is the Annual Performance Report (APR).
The APR provides HHAs with information on their measure performance
using data from the prior calendar year. Like the IPR, the APR provides
feedback to HHAs about performance relative to quality measure
achievement thresholds, benchmarks, and improvement thresholds.
Additionally, the APR includes the HHA's payment adjustment percentage
for the upcoming CY, an explanation of when the adjustment will apply,
and how CMS determined the adjustment.
We are not proposing any changes for the expanded HHVBP Model.
For more information on the policies we have adopted previously for
the expanded HHVBP Model, we refer readers to the following:
CY 2022 HH PPS final rule (86 FR 62240).
CY 2023 HH PPS final rule (87 FR 66790).
CY 2024 HH PPS final rule (88 FR 77676).
CY 2025 HH PPS final rule (89 FR 88354).
CY 2026 HH PPS final rule (90 FR 55342).
CY 2027 will be the fifth performance year for the expanded HHVBP
Model. As finalized in the CY 2026 HH PPS final rule, the expanded
HHVBP Model currently uses six OASIS-based measures, three claims-based
measures, and two HHCAHPS Survey-based measures (see Table 31 in the HH
QRP section (section III.) of this proposed rule). We continue to
address the number of measures needed to maximize the number of HHAs in
each cohort eligible for a payment adjustment.
CMS has identified substantial opportunities to better align the HH
QRP and the expanded HHVBP Model, including measure-set alignment.
Table 31 in section III. of this proposed rule reflects current and
expected usage of measures for both the expanded HHVBP Model and the HH
QRP. For more details on the potential alignment between the HH QRP and
expanded HHVBP Model, see section III.D. of this proposed rule.
V. Durable Medical Equipment and Provider Enrollment Provisions
A. Overview
In this section of the proposed rule, we are proposing changes and
seeking comment on the following DME and provide enrollment provisions:
In section V.B. of the proposed rule, we would clarify the
application of the DMEPOS face-to-face encounter requirements and the
related documentation necessary to support the replacement of DMEPOS
items.
In section V.C. of the proposed rule, we are proposing a
number of Medicare provider enrollment provisions to strengthen and
clarify certain aspects of the provider enrollment process.
In section V.D. of the proposed rule, we propose to make
changes to the Medicare Part B definition of DME regulations in
accordance with the statutory changes implemented via section 6222(a)
of the CAA, 2026.
In section V.E. of the proposed rule, we discuss
requesting revisions to the information collection requirements that
would require DMEPOS CBP contract suppliers to report the country of
origin for the lead items furnished during the contract's period of
performance.
B. DMEPOS Encounter Requirements for Identical Replacement Items
1. Background
Section 1834(a)(11)(B)(ii) of the Social Security Act, as amended
by section 504 of MACRA and codified in the Code of Federal Regulation
(CFR) at 42 CFR 410.38, outlines a condition of payment for certain
items of durable medical equipment, prosthetics, orthotics, and
supplies (DMEPOS). Specifically, it requires a physician, physician
assistant (PA), nurse practitioner (NP), or clinical nurse specialist
(CNS) (as these four terms are defined in section 1861 of the Act) to
write an order that is communicated to the supplier prior to delivery
and document that the physician, PA, practitioner, or specialist has
had a face-to-face encounter (including through use of telehealth under
section 1834(m) of the Act) with the individual involved, during the 6-
month period preceding such written order.
On November 8, 2019 (84 FR 60648), we published a process whereby
items identified as potential vulnerabilities to the Trust Fund may be
placed on the Master List of DMEPOS Items Potentially Subject to Face-
to-Face Encounter and Written Orders Prior to Delivery and/or Prior
Authorization Requirements (``Master List''). We analyze the Master
List and select items from the Master List to be placed on the Required
Face-to-Face Encounter and Written Orders Prior to Delivery List
(``Required F2F/WOPD List'') via Federal Register notice. The face-to-
face encounter requirements outlined in 42 CFR 410.38 are only
applicable to items that are selected and placed on the Required F2F/
WOPD List via Federal Register notice.
For the identified items, the treating practitioner must document
and communicate to the DMEPOS supplier that the treating practitioner
has had a face-to-face encounter with the beneficiary within the 6
months preceding the date of the written order/prescription. The
regulation requires the supporting documentation to include the
subjective and objective beneficiary specific information used for
diagnosing, treating, or managing a clinical condition for which the
DMEPOS is ordered.
Separately, in our Medicare Benefit Policy Manual (100-02) (Chapter
15, Section 110.2--Repairs, Maintenance, Replacement, and Delivery), we
define replacement as the provision of an identical or nearly identical
item. Replacements may occur as a result of loss, theft, or irreparable
damage, which may be due to a specific incident or event, or
irreparable wear, in consideration of the reasonable useful lifetime of
the equipment.
Section 414.210(f) discusses payment for replacement of equipment.
As specified at 42 CFR 414.210(f)(1), the reasonable useful lifetime of
durable medical equipment is generally determined through program
instructions, or in the absence of
[[Page 41283]]
program instructions, may be determined by the Medicare Administrative
Contractors and be no less than 5 years. If the item of equipment has
been in continuous use by the beneficiary for the equipment's useful
lifetime or if the contractor determines that the item is lost, stolen,
or irreparably damaged, the beneficiary may elect to obtain a new piece
of equipment. Replacement may be paid when the practitioner reaffirms
the medical necessity of the item through a new order.
2. Proposed Provisions
The proposed regulatory change would clarify that while an order
would continue to be required for replacement DMEPOS items, a new face-
to-face encounter would not need to occur to support payment for these
DMEPOS items. We further clarify that, for purposes of proposed 42 CFR
410.38(d)(2)(iii), a ``replacement'' refers to the provision of an item
that replaces an item falling under the same Healthcare Common
Procedure Coding System (HCPCS) code; it does not include those
situations involving the provision of a different item, for example,
because of a change in medical condition. In other words, for
paragraph(d) the replacement would be the same type of item (that is,
the same HCPCS code as that originally ordered and rendered) with no
change to the type of item ordered and rendered. When an order is
written to replace an item falling under the same HCPCS code, requiring
a new face-to-face examination to document subjective and objective
beneficiary specific information regarding how the DMEPOS item will
continue to be used in relation to the beneficiary's clinical condition
seems burdensome and redundant. If the item is not a replacement item
identified by the same HCPCS code, then a new face-to-face encounter
would continue to be required, as described in existing 42 CFR 410.38.
This clarification does not eliminate the need for a new order, nor
does it supersede or eliminate any other coverage instruction--
including those iterated in national or local coverage determinations.
C. Provider Enrollment
1. Background and Applicability
a. Enrollment Process
Section 1866(j)(1)(A) of the Act requires the Secretary to
establish a process for the enrollment of providers and suppliers into
the Medicare program. The overarching purpose of the enrollment process
is to help confirm that providers and suppliers (hereafter collectively
``providers'' unless otherwise noted) seeking to bill Medicare for
services and items furnished to Medicare beneficiaries meet all
applicable Federal and State requirements to do so. The process is, to
an extent, a ``gatekeeper'' that prevents unqualified and potentially
fraudulent individuals and entities from entering and inappropriately
billing Medicare. Since 2006, we have undertaken rulemaking efforts to
outline our enrollment procedures. These regulations are generally
codified in 42 CFR part 424, subpart P (currently Sec. Sec. 424.500
through 424.575 and hereafter occasionally referenced as subpart P).
They address, among other things, requirements that providers must meet
to obtain and maintain Medicare billing privileges.
As outlined in Sec. 424.510, one such requirement is that the
provider must complete, sign, and submit to its assigned Medicare
Administrative Contractor (MAC) the appropriate enrollment form,
typically the Form CMS-855 (OMB Control No.: 0938-0685). The Form CMS-
855, which can be submitted via paper or electronically through the
internet-based Provider Enrollment, Chain, and Ownership System (PECOS)
process (SORN: 09-70-0532, PECOS), collects important information about
the provider. Such data includes, but is not limited to, general
identifying information (for example, legal business name), licensure
and certification data, and practice locations. The application is used
for a variety of provider enrollment transactions, including all of the
following:
Initial enrollment--The provider is--(1) enrolling in
Medicare for the first time; (2) enrolling in another Medicare
contractor's jurisdiction; or (3) seeking to enroll in Medicare after
having previously been enrolled.
Change of ownership--The provider is reporting a change in
its ownership.
Revalidation--The provider is revalidating its Medicare
enrollment information in accordance with Sec. 424.515. (Suppliers of
durable medical equipment, prosthetics, orthotics, and supplies
(DMEPOS) must revalidate their enrollment every 3 years; all other
providers and suppliers must do so every 5 years.)
Reactivation--The provider is seeking to reactivate its
Medicare billing privileges after it was deactivated in accordance with
Sec. 424.540.
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.
As previously mentioned, over the years we have issued various
final rules pertaining to provider enrollment. These rules were
intended not only to clarify or strengthen certain components of the
enrollment process but also to enable us to take further action against
providers: (1) engaging (or potentially engaging) in fraudulent or
abusive behavior; (2) presenting a risk of harm to Medicare
beneficiaries or the Medicare Trust Funds; or (3) that are otherwise
unqualified to furnish Medicare services or items. Consistent with
this, and as we discuss in this section V.C. of this proposed rule, we
propose several changes to our existing Medicare provider enrollment
regulations.
b. Legal Authorities
There are two principal categories of legal authorities for our
proposed Medicare provider enrollment provisions:
Section 1866(j) of the Act furnishes specific authority
regarding the enrollment process for providers and suppliers; and
Sections 1102 and 1871 of the Act provide general
authority for the Secretary to prescribe regulations for the efficient
administration of the Medicare program.
c. Applicable Provider and Supplier Types
The provisions in section V.C. of this proposed rule apply to all
Medicare provider and supplier types except as specifically indicated
otherwise. The most prominent proposed provisions that would apply only
to certain types of providers or suppliers include the following:
New Sec. 424.530(a)(20), which would permit denial of a
hospice's enrollment application for the reasons specified therein.
New Sec. Sec. 424.530(a)(22) and 424.535(a)(25), which
would allow denial or revocation of a hospice's, home health agency's,
or DMEPOS supplier's enrollment for failing to comply with the change
in majority ownership provisions in Sec. Sec. 424.550(b) or 424.551.
[[Page 41284]]
Revised Sec. 424.540(b)(3)(i), which would require
reactivating hospices to undergo a State survey or accreditation prior
to reactivation.
Revisions to our DMEPOS accreditation requirements in
Sec. 424.58.
d. Comment Solicitation
We solicit and welcome comments on all of the proposed provider
enrollment provisions that follow.
2. Revocations and Denials of Enrollment
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: (1) failure to adhere to
Medicare enrollment requirements; (2) exclusion by the HHS Office of
Inspector General (OIG); (3) felony conviction within the previous 10
years; (4) pattern of improper or abusive billing; and (5) termination
by another Federal health care program. A revocation helps safeguard
the Medicare program, the Trust Funds, and beneficiaries by removing
from (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).
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 or
revising revocation and denial reasons in subpart P to address
particular program integrity vulnerabilities and types of provider
conduct. We have also used rulemaking to refine other revocation and
denial policies, such as the effective dates of revocations. With our
continuing obligation to establish strong payment safeguards, we
believe that changes to our revocation and denial policies in subpart P
are needed.
a. Modifications of Current Revocation Provisions
(1) Abuse of Billing Privileges (Sec. 424.535(a)(8)(ii))
Section 424.535(a)(8) permits revocation based on the provider's
abuse of billing privileges. Per Sec. 424.535(a)(8)(ii), this includes
situations where CMS determines that the provider has a pattern or
practice of submitting claims that fail to meet Medicare requirements.
In making this determination, CMS considers, as appropriate or
applicable, the following factors (outlined in Sec.
424.535(a)(8)(ii)(A) through (D)):
The percentage of submitted claims that were denied during
the period under consideration (paragraph (a)(8)(ii)(A)).
Whether the provider or supplier has any history of final
adverse actions and the nature of any such actions (paragraph
(a)(8)(ii)(B)).
The type of billing non-compliance and the specific facts
surrounding said non-compliance (to the extent this can be determined)
(paragraph (a)(8)(ii)(C)).
Any other information regarding the provider or supplier's
specific circumstances that CMS deems relevant to its determination
(paragraph (a)(8)(ii)(D)).
As we noted in the December 5, 2014, final rule that promulgated
Sec. 424.535(a)(8)(ii), a provider ``should be responsible for
submitting valid claims at all times and that the provider or
supplier's repeated failure to do so poses a risk to the Medicare Trust
Funds.'' \14\
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\14\ ``Medicare Program; Requirements for the Medicare Incentive
Reward Program and Provider Enrollment'' (79 FR 72500).
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We propose the following two revisions to Sec. 424.535(a)(8)(ii):
Remove all the factors in Sec. 424.535(a)(8)(ii)(A)
through (D).
Remove the second sentence of Sec. 424.535(a)(8)(ii) that
reads ``In making this determination, CMS considers, as appropriate or
applicable, the following''.
We have seen a wide variety of potential Sec. 424.535(a)(8)(ii)
cases over the years. However, our existing factors often constrain our
ability to effectively address all these factual scenarios. To
illustrate, we note the following:
Final Adverse Actions--Most aberrant billing we have seen
is done by providers with no history of adverse actions (for example,
Medicare revocations or OIG exclusions). Yet the adverse action factor
in Sec. 424.535(a)(8)(ii) essentially requires us to weigh against a
finding of improper billing for such providers. That is, this factor
assists non-compliant providers so long as the provider lacks an
adverse history, which it often will; this hinders our efforts to
invoke Sec. 424.535(a)(8)(ii) against the provider.
Percentage of Claims Denied--This factor, too, is
problematic. Non-compliant billing often occurs notwithstanding a low
percentage of denied claims, especially with providers that submit many
claims. Similar to the adverse history factor, the claim denial
criterion thus makes it more difficult to use Sec. 424.535(a)(8)(ii)
even if a pattern of abusive billing exists. Moreover, the factor is
limited to claim denials and does not consider other types of non-
compliant claims (such as rejected claims). In our view, it is the lack
of compliance itself, rather than the type of claim involved, that is
pertinent.
In sum--and given our responsibility to protect the Trust Funds and
taxpayers from improper billing--we must have the maximum flexibility
to address all possible Sec. 424.535(a)(8)(ii) scenarios without the
rigid constraints of our existing factors. Even with the ``as
appropriate or applicable'' qualifier in the opening paragraph of Sec.
424.535(a)(8)(ii), there could still be an implication that we must
consider all the factors in our determinations, which, as indicated,
hampers the usefulness of Sec. 424.535(a)(8)(ii).
Despite the proposed removal of the criteria in Sec.
424.535(a)(8)(ii), a ``pattern or practice'' within the meaning of
revised Sec. 424.535(a)(8)(ii) might be established, for example, by a
simple finding that several of the provider's claims do not meet
Medicare requirements. In addition, and similar to what we have stated
in past regulations when we have proposed new or revised revocation
grounds, we would invoke revised Sec. 424.535(a)(8)(ii) only when
legitimately warranted under the facts and circumstances and not as a
matter of course. Furthermore, interested parties should not conclude
that our proposed example: (1) means we would always revoke in that
situation; (2) is the only scenario in which we would revoke; and (3)
establishes any kind of minimum threshold for CMS action.
(2) False or Misleading Information (Sec. 424.535(a)(4))
Section 424.535(a)(4) permits revocation if the provider or
supplier certified as ``true'' misleading or false information on the
enrollment application to be enrolled or maintain enrollment in the
Medicare program. We propose to revise Sec. 424.535(a)(4) to allow
revocation based on the submission of false or misleading information
on or associated with any CMS or Medicare enrollment-related form
(including enrollment-related forms created by and/or submitted to CMS
contractors). This would also include false or misleading documentation
furnished as part of the completion or submission of the CMS or
[[Page 41285]]
Medicare enrollment-related form. (The current parenthetical in Sec.
424.535(a)(4) regarding potential penalties would remain.)
This proposed expansion has three main components. One is that
Sec. 424.535(a)(4) would include certain documents other than Form
CMS-855 or Form CMS-20134 (Medicare Enrollment Application: Medicare
Diabetes Prevention Program (MDPP) Suppliers) provider enrollment
forms. Providers and suppliers must always submit truthful enrollment
and enrollment-related information to CMS and its contractors
regardless of the form or document involved. Any false or misleading
information could lead to improper payments based on inaccurately
submitted data and generate doubts about the provider's/supplier's
veracity. Additional documents that would fall within the purview of
the proposed revisions to Sec. 424.535(a)(4) include, but are not
limited to the following:
Form CMS-588 (Electronic Funds Transfer (EFT)
Authorization Agreement; OMB Control Number 0938-0626), which must be
submitted with the enrollment application.
Documents required to demonstrate compliance with HHA
capitalization requirements in Sec. 489.28.
Opt-out affidavits under 42 CFR part 405, subpart D.
Letters from a provider demonstrating that a particular
provider official qualifies as an authorized or delegated official
under Sec. 424.502.
Any other required or requested enrollment-related
documentation.
No less than false/misleading data submitted on the application
itself, such information furnished via other documentation could result
in a non-compliant provider being inadvertently enrolled in Medicare.
Another component is that the submission need not be intended to
gain or maintain Medicare enrollment. For Sec. 424.535(a)(4) purposes,
the ultimate aim of the submission--be it to enroll, revalidate
enrollment, reactivate enrollment, voluntarily terminate enrollment,
report changed EFT data, etc.--is not, in our view, as crucial as the
truthfulness of the submission. If we continued to limit Sec.
424.535(a)(4) to ``gain or maintain enrollment'' situations, providers
might believe they can submit false information on other enrollment-
related documents without concern about possible revocation.
The third component is that the information need not have been
certified as ``true'' for Sec. 424.535(a)(4) to apply. The correctness
of the information is the salient point and not whether it was
certified as ``true.''
We believe that our Sec. 424.535(a)(4) expansion would help ensure
that providers furnish truthful and accurate enrollment-related data to
Medicare. As with current Sec. 424.535(a)(4), though, we would invoke
proposed Sec. 424.535(a)(4) only when justified and necessary under
the case's facts.
(3) Extension of Revocation (Sec. 424.535(i))
Section 424.535(i) states that if a provider's enrollment is
revoked under Sec. 424.535(a), CMS may revoke any and all of the
provider's other enrollments. This provision is designed to ensure that
individuals and entities revoked for inappropriate behavior are not
permitted to remain enrolled Medicare--and, hence, potentially able to
continue their conduct via their other Medicare enrollments--in any
capacity. We propose to expand Sec. 424.535(i) such that we could also
revoke a provider's other enrollments if the provider's triggering
enrollment is denied under Sec. 424.530(a). Some enrollment denials,
in our experience, have been based on conduct as concerning to us as
that leading to a revocation. Suppose Supplier X has three separate
enrollments. It submits a fourth application for a new supplier site.
The application is denied because CMS discovers that--(1) the new site
is actually a false storefront; and (2) X furnished misleading
information on its application. Although this conduct reflects on
Supplier X as a whole, we could not take action against X's other
enrollments under existing Sec. 424.535(i), since the fourth
enrollment was denied rather than revoked. This is disconcerting
because X could repeat this behavior via its three remaining
enrollments, hence placing the Trust Funds and Medicare beneficiaries
at risk. Under our proposed Sec. 424.535(i) revision, though, we would
eliminate this vulnerability, for X's recent denial could result in its
other enrollments being revoked.
We emphasize that Sec. 424.535(i) would remain a discretionary
authority. A denial would not automatically lead to the revocation of
the provider's current enrollments.
(4) Expansion and Reorganization of Retroactive Revocation Grounds
(Sec. 424.535(g))
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 (xv) list situations
where the revocation effective date is retroactive. This generally
means that the revocation's effective date is retroactive back to the
date on which the provider's non-adherence to Medicare requirements
commenced.
The purpose of paragraph (g)(2) is to prevent payments to a
provider while it is out of compliance. Assume a provider's medical
license is revoked by the state on March 1. CMS learns of this and
sends a revocation notice to the provider on March 15. If we applied
the prospective ``30 days after mailing'' timeframe in paragraph
(g)(1), the provider could bill and be paid for services furnished
between March 1 and April 15 while unlicensed, resulting in potentially
thousands of dollars in improper Medicare payments. Preventing improper
payments is a cornerstone of provider enrollment, and retroactive
revocation effective dates are crucial mechanisms for ensuring that
taxpayer monies are paid only to compliant providers. As Sec. 424.500
makes clear: ``Providers and suppliers must meet and maintain [part
424, subpart P's] enrollment requirements to bill either the Medicare
program or its beneficiaries for Medicare-covered services or
supplies.'' This means, by extension, that if said requirements are not
met, the provider cannot bill--or, in turn, receive payment--for
Medicare services or supplies.
Our concerns about paying non-adherent providers are why we have
increased the number of retroactive revocation grounds over the years.
In the CY 2026 HH PPS final rule (90 FR 55342), we finalized numerous
revisions to Sec. 424.535(g) such that many of our existing revocation
reasons are now retroactive.\15\ So critical is it to make payments
only to qualified providers and to comply with the aforementioned
requirement in Sec. 424.500 that we now propose to make the remainder
of current prospective revocation grounds retroactive. We also believe
that the prospect of a retroactive revocation no matter the Sec.
424.535(a) reason could help spur providers to ensure constant
[[Page 41286]]
compliance with Medicare requirements.
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\15\ ``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'', published in the Federal
Register on December 2, 2025 (90 FR 55342).
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There would be two sets of changes to Sec. 424.535(g). First, we
would add new retroactive revocation bases. Second, we would
restructure Sec. 424.535(g) to remove current Sec. 424.535(g)(1)
(which addresses prospective revocations) and realign the existing
retroactive grounds to correspond to the numerical order of our Sec.
424.535(a) revocation reasons. To illustrate, current paragraph
(g)(2)(i) (which addresses exclusions and debarments) would become
paragraph (g)(1)(ii) to correspond to Sec. 424.535(a)(2), which also
addresses exclusions and debarments.
(a) General Non-Compliance, Licensure, and Provider Agreements
CMS may revoke a provider under Sec. 424.535(a)(1) if the provider
is not in compliance with the enrollment requirements in Title 42 of
the Act or in the enrollment application applicable to its provider
type. We propose in new Sec. 424.535(g)(1)(i)(A) that said revocation
would be effective on the date the non-compliance began (per CMS' or
the CMS contractor's determination). This is consistent with several
other current retroactive grounds for which the commencement of non-
compliance is the effective date; for said current grounds--as well as
proposed Sec. 424.535(g)(1)(i)(A)--the rationale is that payments
should not be made to non-adherent providers.
State licensure revocations, suspensions, and surrenders (in lieu
of further disciplinary action) are also grounds for revocation. As
stated in existing Sec. 424.535(g)(2)(iii) and (v), these revocation
effective dates are the dates of the revocation, suspension, or
surrender. We propose to consolidate paragraphs (g)(2)(iii) and (v)
within new Sec. 424.535(g)(1)(i)(B), retaining their current effective
dates.
In addition, current Sec. 424.535(g)(2)(vii) addresses effective
dates for revocations based on a provider agreement termination under
part 489. We propose to retain these dates and incorporate them into
new Sec. 424.535(g)(1)(i)(C).
(b) Exclusions/Debarments, Felony Convictions, False Information, and
Non-Operational Status
These revocation grounds are addressed in Sec. 424.535(a)(2), (3),
(4), and (5)(i), with their concomitant effective dates outlined in
existing Sec. 424.535(g)(2)(i), (ii), (ix), and (iv), respectively.
With our proposed reorganization of Sec. 424.535(g), Sec.
424.535(g)(2)(i), (ii), (ix), and (iv) would become new Sec.
424.535(g)(1)(ii), (iii), (iv), and (v)(A), respectively.
(We note that due to our proposed expansion of Sec. 424.535(a)(4)
(discussed previously), new Sec. 424.535(g)(1)(iv) would include an
additional effective date for paragraph (a)(4) revocations based on the
submission of false or misleading data not involving the signature of a
provider enrollment application certification statement. Specifically,
these other false/misleading communications would trigger a revocation
effective date of the date the false/misleading information was
submitted.)
(c) Failure To Satisfy Enrollment Requirements
Section 424.535(a)(5)(ii) permits revocation if the provider fails
to satisfy any Medicare enrollment requirement. We propose in new Sec.
424.535(g)(1)(v)(B) that a Sec. 424.535(a)(5)(ii) revocation becomes
effective on the date the Medicare enrollment requirement was not
satisfied. This is somewhat akin to our proposed ``date of non-
compliance'' effective date for Sec. 424.535(a)(1), but we would
instead use ``not satisfied'' to conform to the use of ``satisfy'' in
existing Sec. 424.535(a)(5)(ii).(d) Application Fee Payment.
CMS can revoke a provider's enrollment under Sec. 424.535(a)(6) in
any of the following four bulleted instances:
Under Sec. 424.535(a)(6)(i)(A) and (B)--
++ An institutional provider (as defined in Sec. 424.502) fails to
submit with its Medicare revalidation application an application fee or
hardship exception request that complies with Sec. 424.514; or
++ The hardship exception is not granted, and the institutional
provider fails to submit the applicable application form or application
fee within 30 days of being notified of the hardship exception
request's denial.
Under Sec. 424.535(a)(6)(ii)(A)(1) and (2):
++ CMS is unable to deposit the full application fee amount into a
government-owned account; or
++ The funds are unable to be credited to the United States
Treasury.
Under Sec. 424.535(a)(6)(ii)(B), the provider lacks
sufficient funds in the account at the banking institution whose name
is imprinted on the check or other banking instrument to pay the
application fee.
Under Sec. 424.535(a)(6)(ii)(C), there is any other
reason why CMS or its Medicare contractor is unable to deposit the
application fee into a government-owned account.
Unlike with most of our other revocation reasons, the variety and
types of scenarios in Sec. 424.535(a)(6) make it infeasible to
establish a uniform revocation effective date based on provider non-
compliance or other definitive point (for example, date on which
license or state authority to prescribe drugs was revoked, date of
felony conviction, etc.) For this reason, we propose in new Sec.
424.535(g)(1)(vi) that a revocation under Sec. 424.535(a)(6) is
effective on the date on which CMS or its contractor determines that
the provider or supplier should be revoked under this paragraph; the
date, in other words, would be that of the CMS or contractor
determination instead of, for instance, the date on which CMS could not
deposit the funds. This would still allow for retroactivity because of
the provider's non-compliance with Sec. 424.514--that is, its failure
to pay a full, depositable fee or have a hardship exception approved.
Yet it would be flexible enough to address all the various Sec.
424.535(a)(6) situations.
(e) Misuse of Billing Number
CMS may revoke a provider's enrollment under Sec. 424.535(a)(7) if
the provider knowingly sells to or allows another individual or entity
to use its billing number. (This excludes providers who enter into a
valid reassignment of benefits under Sec. 424.80 or a Sec. 489.18
change of ownership.) Given the seriousness of this conduct--with its
significant potential for fraud--we believe that the revocation
effective date should be the date on which the conduct resulting in the
revocation occurred. This would be included in new Sec.
424.535(g)(1)(vii).
(f) Abuse of Billing Privileges
The effective dates for revocations under Sec. 424.535(a)(8)(i)
and (ii) are addressed in Sec. 424.535(a)(8)(iii). So that all
revocation effective dates can be found in one paragraph, we propose to
move and redesignate Sec. 424.535(a)(8)(iii) as new Sec.
424.535(g)(1)(viii). Paragraph (iii) would be deleted from Sec.
424.535(a)(8).
(g) Reporting Enrollment Data Changes
Section 424.535(a)(9) permits revocation if the provider failed to
comply with the change of information reporting requirements in
Sec. Sec. 424.516(d) or (e), 410.33(g)(2), or 424.57(c)(2). These four
paragraphs collectively address all Medicare provider and supplier
types (except Medicare Diabetes Prevention Programs (MDPPs), which are
dealt with in Sec. 424.205)) and all types of enrollment data changes.
Current Sec. 424.535(g)(2)(x) partially
[[Page 41287]]
addresses the effective date of a Sec. 424.535(a)(9) revocation. For
revocations based on the provider's failure to timely report a change
of ownership or adverse legal action, or a change, addition, or
deletion of a practice location, the effective date under Sec.
424.535(g)(2)(x) is day the after the date by which the provider was
required to report the change, addition, or deletion. All other changes
are prospective under current Sec. 424.535(g)(1).
We propose in new Sec. 424.535(g)(1)(ix) to make all Sec.
424.535(a)(9) revocations retroactive to the day following the due date
for reporting the change. While ownership, adverse legal action, and
practice location changes are important (hence their inclusion in
existing Sec. 424.535(g)(2)(x)), other data changes are as well. A
failure to timely report a new managing employee or corporate officer,
for example, could result in CMS unknowingly paying a provider with a
high-level official who poses a program integrity risk based on past or
current conduct. In addition, if we do not timely learn of a provider's
new bank, billing agency, or correspondence address, CMS risks sending
funds or information to--or receiving claims from--the wrong entity or
individual; this could lead to incorrect payments or the inadvertent
release of confidential data. The point is that outdated or erroneous
enrollment information of any type--not simply ownership, adverse
action, or location data--can threaten the Trust Funds, and any failure
to timely report such changes means the provider is non-compliant with
enrollment requirements. For these reasons--and because the prospect of
a retroactive revocation could encourage providers to timely report all
enrollment changes--we believe Sec. 424.535(g)(1)(ix) is warranted.
Although the provider is ultimately responsible for ensuring that
its enrollment data is timely updated and always accurate, we welcome
stakeholder comment on any administrative difficulties in reporting
changes in enrollment information and ideas on how they could be
addressed.
(h) Failure To Document or Furnish Documentation
CMS can revoke a provider under Sec. 424.535(a)(10) if the
provider fails to comply with the documentation or CMS access
requirements in Sec. 424.516(f). In general, Sec. 424.516(f) requires
providers (including physicians and eligible professionals) to: (1)
retain for 7 years all documents regarding written orders,
certifications, referrals, prescriptions and requests for payments for
Part A or B services, items, or drugs; and (2) furnish access to that
documentation upon CMS or CMS contractor request.
We propose in new Sec. 424.535(g)(1)(x)(A) and (B) that a Sec.
424.535(a)(10) effective date is as follows:
For revocations based on a failure to retain
documentation, the date on which CMS or the CMS contractor found that
the provider has not complied with this retention requirement.
For revocations based on a failure to provide access to
that documentation, the day after the date by which the provider was
required to give access.
We believe proposed Sec. 424.535(g)(1)(x)(A) soundly balances the
need for retroactivity--due to, for instance, the provider's non-
compliance and our inability to make payment to non-adherent
providers--and the need for a clear effective date. To illustrate,
suppose CMS discovered several years after a particular service was
ordered or certified that the provider lacks documentation thereof. CMS
would have no means of knowing whether the documentation was never
kept, discarded after 2 years or 4 years, etc. It is therefore
difficult to establish an effective date in this scenario, hence the
need to use the proposed--and much more precise--Sec.
424.535(g)(1)(x)(A) date. Regarding Sec. 424.535(g)(1)(x)(B), the
provider's failure to provide the documentation constitutes non-
compliance, similar to a provider's failure to timely report changes in
information. We thus believe that the day after the due date for
furnishing access is an appropriate effective date.
(i) Initial Reserve Operating Funds (IROF)
Under 42 CFR 489.28, HHAs must demonstrate that they have
sufficient available funds upon application submission and for the 3-
month period following the conveyance of Medicare billing privileges to
operate the HHA for this 3-month period. CMS can revoke the HHA under
Sec. 424.535(a)(11) if, within 30 days of a CMS or Medicare contractor
request, the HHA cannot furnish supporting documentation verifying that
it meets the IROF requirement. For the same reasons behind proposed
Sec. 424.535(g)(1)(x)(B)--specifically, the provider's non-compliance
with Sec. 489.28 based on its failure to demonstrate adequate funds--
we propose in new Sec. 424.535(g)(1)(xi) that the Sec. 424.535(a)(11)
revocation effective date is the day after the date by which the HHA
was required to submit the requested documentation.
(j) Other Program Termination
CMS under Sec. 424.535(a)(12) may revoke a provider's Medicare
enrollment if the provider is terminated, revoked, or otherwise barred
from participation in a State Medicaid program or any other federal
health care program. The effective date of a Sec. 424.535(a)(12)
revocation is, consistent with existing Sec. 424.535(g)(2)(vi), the
date of the termination, revocation, or bar (from the other program).
As part of our previously discussed restructuring of Sec. 424.535(g),
we propose to redesignate Sec. 424.535(g)(2)(vi) as new Sec.
424.535(g)(1)(xii); however, we would include the terms ``revocation''
and ``bar'' within the latter to correspond to Sec. 424.535(a)(12).
(Current Sec. 424.535(g)(1)(vi) only references terminations.)
(k) Drug Enforcement Administration (DEA) Certificates
Section 424.535(a)(13)(i) and (ii) permit revocation if--
A physician or other eligible professional's DEA
Certificate of Registration to dispense a controlled substance is
currently suspended or revoked or is surrendered in response to a show
cause order; or
The applicable licensing or administrative body for any
state in which the physician or eligible professional practices
suspends or revokes the individual's ability to prescribe one or more
drugs.
Existing Sec. 424.535(g)(2)(xi) permits retroactive revocation
based on the surrender of the provider's DEA certificate of
registration in response to a show cause order. (The revocation
effective date is the date the certificate was surrendered.) We propose
to include DEA certificate revocations and suspensions within this
paragraph, with the date of the revocation or suspension as the
effective date. It is the permanent or temporary loss of the
certificate itself--rather than the form of loss (for example,
revocation or surrender)--that is important for program integrity
purposes; it would be illogical for certificate surrenders to be part
of paragraph (g)(2)(xi) but not revocations or suspensions. As we
stated in the CY 2026 HH PPS final rule that promulgated paragraph
(g)(2)(xi), meeting all applicable federal and state requirements is
necessary for enrollment.\16\ If a provider is prescribing or
dispensing drugs while non-compliant, we believe the risk this presents
to beneficiaries after the
[[Page 41288]]
certificate loss warrants a revocation back to the date said loss
occurred.
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\16\ 90 FR 55342.
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Per current Sec. 424.535(g)(2)(xii), the effective date of a
revocation based on a State's suspension or revocation of the
physician's or practitioner's ability to prescribe one or more drugs is
the date of the suspension or revocation. We propose to redesignate
this paragraph without change as new paragraph (g)(1)(xiii)(B), with
existing (g)(2)(xi) redesignated as new paragraph (g)(1)(xiii)(A). This
would better correspond numerically with (a)(13)(i) and (ii).
(l) Improper Prescribing Practices
Section 424.535(a)(14) permits revocation if the physician or
practitioner has a pattern or practice of prescribing Medicare-covered
drugs that is abusive, represents a threat to the health and safety of
Medicare beneficiaries, or fails to meet Medicare requirements. We
propose in new Sec. 424.535(g)(1)(xiv) that the effective date of a
Sec. 424.535(a)(14) revocation would be the last date of the
prescription(s) in question; for instance, if there were three
prescriptions dated March 1, March 15, and March 30, the last date--
March 30 would be the revocation effective date. This approach mirrors
that for Sec. 424.535(a)(8)(ii)'s revocation effective date, which, as
noted, is the last date of service on the claims in question.
We have in past enrollment rules expressed our concerns about
abusive and improper prescribing. Such conduct could cause serious
patient harm (for instance, the prescription of unnecessary but
dangerous medications). Applying a prospective effective date to a
Sec. 424.535(a)(14) revocation would run counter to our obligation to
help protect Medicare beneficiaries; we would essentially be allowing
the individual to continue prescribing for at least another 30 days,
during which time additional beneficiaries might be placed as risk. We
thus believe a retroactive revocation in this circumstance is proper.
(m) False Claims Act (FCA)
Revocation is permissible under Sec. 424.535(a)(15) if the
provider (or owner, managing employee or organization, officer, or
director thereof) has had an FCA civil judgment against them within the
previous 10 years. Considering the seriousness of false claims and the
threat this poses to the Medicare program, we believe a retroactive
revocation effective date back to the date of the judgment is
necessary; this would be reflected in new paragraph (g)(1)(xv).
Allowing the provider to remain enrolled for 30 or more days via a
prospective effective date could result in the continuation of the
provider's behavior, at potentially great cost to the Trust Funds.
(Proposed new Sec. 424.535(g)(1)(xvi) is addressed later in this
section V.C. of this proposed rule.)
(n) Debts Referred to Treasury
Section 424.535(a)(17) permits revocation if the provider failed to
repay a debt that CMS appropriately referred to the United States
Department of Treasury. (Paragraph (a)(17) does not apply if: (1) the
debt has been discharged by a bankruptcy court; or (2) the
administrative appeals process regarding the debt has not been
exhausted or the timeframe for filing the appeal (at the appropriate
appeal level) has not expired.)
All providers are responsible for satisfying their financial
obligations to Medicare. Consistent with our rationale for the original
promulgation of Sec. 424.535(a)(17), we believe that referral to the
Department of Treasury may indicate the provider's unwillingness to
repay a debt, which raises doubts regarding whether the provider is a
reliable participant in the Medicare program.
With the need to protect the Medicare program's financial
integrity, we propose in new Sec. 424.535(g)(1)(xvii) that the
effective date of Sec. 424.535(a)(17) would be retroactive back to the
date on which CMS referred the debt to Treasury. A prospective
effective date, in our view, would give the provider more time to incur
additional debts that it also might not repay, placing taxpayers at
considerable financial risk. We also believe that the prospect of a
retroactive revocation under Sec. 424.535(g)(1)(xvii) could spur
providers to ensure that it repays all debts before they are sent to
Treasury.
(o) Revoked Under Different Name or Identity
CMS under Sec. 424.535(a)(18) may revoke a provider that is
currently revoked under a different name, numerical identifier, or
business identity, and the applicable reenrollment bar period under
Sec. 424.535(c) has not expired. The objective is to prevent
situations where a revoked provider changes its identity in order to
re-enter Medicare and thus circumvent its existing bar on reenrollment.
Such conduct is not only dishonest but also threatens the Medicare
program's integrity and beneficiaries, for the provider's activity that
generated the prior revocation--such as abusive billing or prescribing,
fraudulent behavior, etc.--could be repeated in its subsequent
enrollment under the different name.
Accordingly, we believe that a retroactive revocation effective
date is proper. This date in new Sec. 424.535(g)(1)(xviii) would be
the same as the effective date of the provider's current enrollment.
Suppose Provider X was revoked effective February 1. It changes its
name to Provider Y and re-enrolls in Medicare effective July 1. CMS
becomes aware of the provider's current revocation under the Provider X
name on September 1 and revokes Provider Y under Sec. 424.535(a)(18).
The revocation effective date would be July 1, the effective date of
Y's enrollment. We do not believe Provider Y should effectively be
rewarded for its circumvention with a revocation effective date that is
later than its enrollment effective date. This is because it should
not: (1) have attempted to reenroll under the new name to begin with
(since it was prohibited from doing so under the original reenrollment
bar); and (2) receive payment stemming from what amounts to an improper
subsequent enrollment. We believe the severity of the provider's
behavior warrants the earliest feasible retroactive revocation date,
which could also deter revoked providers from attempting to maneuver
around their re-enrollment bar.
(p) Undue Risk
Per Sec. 424.535(a)(19), CMS may revoke a provider or supplier
that has or has had an affiliation under Sec. 424.519 that poses an
undue risk of fraud, waste, or abuse to the Medicare program. There are
many different scenarios that could fall within Sec. 424.535(a)(19) in
terms of, for example, the type, time, and length of the affiliation.
As with Sec. 424.535(a)(6), this makes it challenging to establish a
uniform retroactive revocation effective date applicable to every
factual situation. We hence propose in new Sec. 424.535(g)(1)(xix)
that a revocation under Sec. 424.535(a)(19) is effective on the date
on which CMS or its contractor determines that the provider or supplier
should be revoked under this paragraph. This would still remove the
risks posed by a prospective effective date--for instance, the
continuation of a problematic affiliation that could threaten the
Medicare program for another 30 or more days--while ensuring
consistency in the application of Sec. 424.535(a)(19) revocation
effective dates.
[[Page 41289]]
(q) Billing From Non-Compliant Location
CMS may revoke enrollment under Sec. 424.535(a)(20) if the
provider billed for services performed at or items furnished from a
location that it knew or should have known did not comply with Medicare
enrollment requirements. This provision is partly analogous to Sec.
424.535(a)(5)(i), which addresses non-operational locations; Sec.
424.535(a)(5)(i)'s revocation effective date is the date on which the
practice location was no longer operational. Yet it perhaps has more
similarities to Sec. 424.535(a)(8)(ii) because it references billing
(that is, submission of claims) for services. In light of the
previously noted importance of maintaining constant compliance with
enrollment requirements, we believe a retroactive effective date for
Sec. 424.535(a)(20) aligning with that in Sec. 424.535(a)(8)(ii) is
needed. Per new Sec. 424.535(g)(1)(xx), this date would be the
earliest date on the claims for the non-compliant location that are
triggering the revocation.
(r) Abusive Ordering, Certifying, Referring, or Prescribing
Section 424.535(a)(21) permits revocation if the physician or
eligible professional has a pattern or practice of ordering,
certifying, referring, or prescribing Part A or B services, items, or
drugs that is abusive, represents a threat to the health and safety of
Medicare beneficiaries, or otherwise fails to meet Medicare
requirements. As with proposed Sec. 424.535(g)(1)(xiv) regarding Sec.
424.535(a)(14), the seriousness of the conduct described in Sec.
424.535(a)(21) and the threats it can present to Medicare patients and
the Trust Funds (for instance, ordering unnecessary tests) warrants a
retroactive effective date. This date under proposed Sec.
424.535(g)(1)(xxi) would be the date of the last order, certification,
referral, or prescription in the applicable pattern or practice, akin
to the proposed Sec. 424.535(a)(14) effective date.
(s) Patient Harm
Revocation under Sec. 424.535(a)(22) is permissible if the
physician or other eligible professional has been subject to prior
action from a State oversight board, Federal or State health care
program, Independent Review Organization (IRO) determination(s), or any
other equivalent governmental body or program that oversees, regulates,
or administers the provision of health care with underlying facts
reflecting improper conduct that led to patient harm. We believe a
retroactive revocation effective date for Sec. 424.535(a)(22) is
appropriate due to the need to protect Medicare beneficiaries from
potential harm. We propose that this effective date per new Sec.
424.535(g)(1)(xxii) would be the date of the prior action that resulted
in the revocation.
(t) Supplier Standard and Condition Violation
Several provider and supplier types have certain standards and
conditions they must meet in addition to all other enrollment
requirements. These types--and their corresponding standard/condition
regulatory sections--include independent diagnostic testing facilities
(IDTFs) (Sec. 410.33(g)), DMEPOS suppliers (Sec. 424.57(b) and (c)),
opioid treatment programs (OTP) (Sec. 424.67(b) and (e)), home
infusion therapy suppliers (Sec. 424.68(c) and (e)), and MDPPs (Sec.
424.205(b) and (c)). Except for Sec. 424.57(b) violations, CMS under
Sec. 424.535(a)(23) may revoke the provider or supplier for non-
compliance with any of the standards or conditions applicable to their
provider/supplier type. (Revocation is permissible for Sec. 424.57(b)
violations (as well as Sec. 424.57(c) non-compliance) under Sec.
424.57(e)(1).) The current Sec. 424.535(a)(23) revocation effective
dates (outlined in Sec. 424.535(g)(2)(xv)(A) through (D),
respectively) are as follows:
For standard or condition violations involving the
suspension, revocation, or termination (or surrender in lieu of further
disciplinary action) of the provider's Federal or State license,
certification, accreditation, or MDPP recognition, the date of the
suspension, revocation, termination, or surrender.
For standard or condition violations involving a non-
operational practice location, the date the non-operational status
began.
For OTP standard violations involving a felony conviction
of a party described in Sec. 424.67(b)(6)(i), the date of the felony
conviction.
For all standard violations not addressed in existing
paragraph (g)(2) (which, as discussed, would be incorporated within
revised (g)(1)), the prospective effective date in current paragraph
(g)(1) applies if the effective date in existing paragraph (g)(3)
(discussed shortly) does not.
We propose to retain the dates in Sec. 424.535(g)(2)(xv)(A)
through (C), though we would re-designate them as new Sec.
424.535(g)(1)(xxiii)(A)(1) through (3). In new Sec.
424.535(g)(1)(xxiii)(B)--and consistent with the foregoing concerns
about paying non-compliant providers--we propose that the effective
date of all other revocations based on a condition or standard
violation would be the date of non-compliance with the condition or
standard.
We propose two other organizational changes. First, existing Sec.
424.535(g)(2)(viii) states that the effective date of a revocation
based on a lapse in the IDTF's comprehensive liability insurance under
Sec. 410.33(g)(6) is the date the insurance lapsed. We are not
proposing to include a separate effective date for this revocation in
revised Sec. 424.535(g)(1) because we believe it would fall within new
Sec. 424.535(g)(1)(xxiii)(B), with the lapse date being the standard
violation date. Second, existing Sec. 424.535(g)(2)(xiv) states that
the effective date of a revocation based on a DMEPOS supplier's non-
compliance with a condition or standard in Sec. 424.57(b) or (c) is
the date on which the non-compliance began. This provision would not be
included in revised Sec. 424.535(g)(1), for new Sec.
424.535(g)(1)(xxiii) would cover Sec. 424.57(b) or (c) violations.
(u) Extension of Revocation
As already noted, Sec. 424.535(i) states that if a provider's
Medicare enrollment is revoked, CMS may revoke any and all of the
provider's Medicare enrollments, including those under different names,
numerical identifiers or business identities and those under different
types. The effective date of the revocation(s) of the other
enrollment(s) is--per existing Sec. 424.535(g)(2)(xiii)--the effective
date of the revocation that triggered the other revocation(s). We
propose to retain this effective date provision with two modifications.
First, we would redesignate it as Sec. 424.535(g)(2)(xxvi). Second,
and consistent with our aforementioned proposed modification of Sec.
424.535(i), the effective date of the other revocation(s) would be the
date of the triggering revocation or denial.
(Proposed new Sec. 424.535(g)(1)(xxiv) and (xxv) will be addressed
later.)
In conclusion, existing Sec. 424.535(g)(3) states that if the
action that resulted in the revocation occurred prior to the effective
date of the provider's enrollment, the revocation effective date is the
same as the effective date of enrollment. To accommodate our
restructuring of Sec. 424.535(g), we propose to re-designate Sec.
424.535(g)(3) as Sec. 424.535(g)(2).
(5) Claim Submissions After Revocation (Sec. 424.535(h))
Under Sec. 424.535(h)(1)(i) (and excluding HHAs), a revoked
provider must--within 60 calendar days after the revocation's effective
date--submit all claims for items and services furnished
[[Page 41290]]
before the date of the revocation letter. For revoked HHAs, Sec.
424.535(h)(1)(ii) states that claims must be submitted within 60 days
after the later of the following: (1) the revocation effective date;
and (2) the date that the HHA's last payable episode ends.
This general 60-day post-revocation policy was first established in
the CY 2009 Physician Fee Schedule final rule (73 FR 69726), published
in the Federal Register on November 19, 2008.\17\ We noted therein that
revoked physicians, non-physician practitioners (NPP), physician and
NPP groups, and IDTFs had historically been allowed to continue billing
for services furnished prior to revocation for up to 27 months after
the revocation's effective date.\18\ We explained in that rule that:
(1) such a long, post-revocation billing period posed significant risk
to the Medicare program; and (2) a 60-day post-revocation timeframe for
these five general supplier categories (established in new Sec.
424.535(h)) was necessary to limit the Medicare program's exposure to
future vulnerabilities.\19\
---------------------------------------------------------------------------
\17\ ``Medicare Program; Payment Policies Under the Physician
Fee Schedule and Other Revisions to Part B for CY 2009; E-
Prescribing Exemption for Computer-Generated Facsimile
Transmissions; and Payment for Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS).''
\18\ Ibid.
\19\ Ibid.
---------------------------------------------------------------------------
Consistent with this theme, we later expanded Sec. 424.535(h) to
apply to all provider and supplier types in a December 5, 2014, final
rule titled, ``Medicare Program; Requirements for the Medicare
Incentive Reward Program and Provider Enrollment'' (79 FR 72500). In
the proposed version of that rule, we:
Cited the concerns we expressed in the CY 2009 PFS final
rule regarding the 27-month period.
Expressed our view that the longer the post-revocation
claim submission timeframe, the more opportunity the provider or
supplier would have to submit false claims.
Noted that under Sec. 424.518(c)(3)(ii), a revoked
provider falls within the ``high'' categorical risk level. This
heightened risk posed by revoked providers threatened the Trust Funds,
hence warranting a much shorter 60-day period for all provider and
supplier types.\20\
---------------------------------------------------------------------------
\20\ ``Medicare Program; Requirements for the Medicare Incentive
Reward Program and Provider Enrollment'' Proposed Rule'' (78 FR
25013), published in the Federal Register on April 29, 2013.
---------------------------------------------------------------------------
Despite this reduction to 60 days, we have remained concerned about
possible fraudulent, improper, or other non-compliant activity by
revoked providers. If a provider engaged in such conduct before the
revocation, it may continue it afterwards--and 2 months is still an
extensive timeframe in which to do so. Indeed, a revoked provider could
submit hundreds of improper claims for hundreds of thousands of dollars
during this period. If other providers did the same after their
revocations, many millions of Trust Fund dollars would be threatened.
With the need to protect taxpayer monies from such parties, we believe
that further reducing the submission timeframe could correspondingly
lessen the program integrity risk, for providers would have less time
to engage in inappropriate billing. For these reasons, we propose to
change the 60-day timeframe referenced in Sec. 424.535(h) to 15 days.
While we recognize that this would be a substantial time reduction, we
believe the risk warrants it.
We propose an additional change to Sec. 424.535(h). In 2014, many
of our revocations were prospective, meaning they did not become
effective until 30 days after the revocation letter was sent. This made
Sec. 424.535(h) easier to operationalize, for the revocation effective
date in most cases would be in the future; the provider would have 60
days from the prospective effective date to submit its claims. Now,
though, many revocation reasons have retroactive effective dates (and,
as discussed previously, we are proposing that all revocation reasons
be retroactive). Under existing Sec. 424.535(h), therefore, if a
provider had 60 days from the revocation effective date to submit its
claims but the effective date was more than 60 days retroactive, the
submission period might well have expired before the provider even
received the revocation letter. To ensure that the provider actually
has an opportunity to submit its claims, we propose to change:
Section 424.535(h)(1)(i) to state that a revoked provider
must--within 15 calendar days of the date of the revocation letter--
submit all claims for items and services furnished before the
revocation effective date.
Section 424.535(h)(1)(ii) to state that a revoked HHA
must--within 15 calendar days of the date of the revocation letter--
submit all claims for items and services furnished before the later of
the following:''.
Sections 424.535(h)(1)(i)(A) and (B) and (h)(2) (which references
the timely filing requirements of Sec. 424.44) need not be revised.
(6). New Revocation Reasons
We also propose to add several new grounds for revocation in Sec.
424.535(a).
(a) High-Risk Enrollments (Sec. 424.535(a)(24))
We have seen an alarming increase in situations where numerous
providers and suppliers--sometimes of the same type--are simultaneously
operating within a very small geographic area (for instance, a multi-
block sector), the same complex or building, or even the same suite.
Examples include: (1) several dozen hospices within a four-block area
of Los Angeles County; (2) 18 HHAs within the same building in
Columbus, Ohio; (3) at least nine cases in Ohio where at least five
HHAs have the same practice location address, with four of these nine
situations involving at least nine HHAs in one location; and (4)
similar situations with several certified providers of the same type
operating out of one building in Michigan, Nevada, North Carolina, and
Texas. Los Angeles County has been a particularly serious concern. Per
CMS data, the number of HHAs in the county between 2019 and 2023 rose
over 45 percent, and at least 1,400 new HHAs have enrolled in the
county since 2019. There was no medical need for such an increase,
which was entirely out of proportion with any increase in the county's
beneficiary population and can be a strong indicator of widespread
fraud. Others share our concerns about this, including the Medicare
Payment Advisory Commission,\21\ members of Congress,\22\ and even
several national HHA and hospice organizations.\23\
---------------------------------------------------------------------------
\21\ https://www.medpac.gov/wp-content/uploads/2025/12/Tab-H-HHA-update-Dec-2025.pdf.
\22\ Letter from United States House Representatives Brett
Guthrie, John Joyce, M.D., Morgan Griffith, Jason Smith, David
Schweikert, and Vern Buchanan to T. March Bell, Inspector General,
HHS-OIG, January 9, 2026, https://energycommerce.house.gov/posts/chairmen-guthrie-joyce-griffith-smith-schweikert-and-buchanan-ask-hhs-oig-about-ongoing-hha-and-hospice-fraud-in-los-angeles-county-1.
\23\ Letter from LeadingAge and the National Alliance for Care
at Home Letter to Dr. Mehmet Oz, CMS Administrator, December 22,
2025, https://allianceforcareathome.org/wp-content/uploads/Final-Alliance-and-LeadingAge-Home-Health-and-Hospice-Program-Integrity-Recommendations.pdf.
---------------------------------------------------------------------------
We recognize that many medical facilities and complexes have large
numbers of providers and suppliers located therein. To illustrate, a
medical center comprising three adjacent buildings may have seven
physician practices with different specialties, two laboratories, etc.
Also, some areas may have several types of providers and suppliers
within a particular neighborhood. The vast preponderance of these
situations do not, in and of themselves, necessarily mean that fraud,
waste, and abuse exists or that program integrity risks are otherwise
present. Yet
[[Page 41291]]
we believe those cases mentioned in the previous paragraph--as well as
other situations--can and do. Fraud schemes can indeed involve
problematic (or potentially problematic) providers operating in same
general vicinity, as shown in the Los Angeles County and Columbus
situations. Although having, for example, four organizational
providers/suppliers of the same type (such as ambulance companies) in a
seven-block area does not automatically signify fraud, waste, and
abuse, it does--based on our experience--raise questions as to whether
there is a patient need for all these providers or whether other
considerations, such as fraud, are involved.
With tens of millions of Medicare dollars at risk in any fraud
scheme, our role in safeguarding the Trust Funds requires the ability
to take revocation action--if circumstances warrant--to address such
situations. This is especially important because we currently lack
authority under Sec. 424.535(a) to revoke providers/suppliers based on
program integrity threats stemming from an excessive number of enrolled
providers/suppliers within a particular area. We accordingly propose in
new Sec. 424.535(a)(24) that CMS may revoke a provider's or supplier's
enrollment if it deems the enrollment as presenting a high risk of
fraud, waste, or abuse due to the provider's or supplier's location
within a limited geographic area that has an excessive number of
providers and suppliers. We note the following concerning this
proposal.
First, the term ``high risk'' for purposes of Sec. 424.535(a)(24)
does not mean the provider must be in: (1) the high screening level
under Sec. 424.518(c); or (2) a region that has traditionally posed a
high risk of fraud, waste, and abuse, such as south Florida. To be
sure, Sec. 424.518(c) providers--as well as providers in known program
integrity hotspots--pose elevated risks, a matter we may consider in
Sec. 424.535(a)(24) determinations. Yet other provider types in other
areas can present threats as well. The risk that a particular provider
poses based on its proximity to other providers--somewhat more so than
the provider type and historic geographic risk--is the main
consideration under proposed Sec. 424.535(a)(24).
Second, and in a similar vein, a potential fraud scheme can involve
multiple provider and supplier types; for instance, several HHAs,
hospices, DMEPOS suppliers, physicians, etc., might be participating in
a single operation. A Sec. 424.535(a)(24) revocation therefore would
not require the provider in question and the other providers/suppliers
in the area to be of the same type.
Third, the terms ``limited geographic area'' or ``excessive
number'' in the context of Sec. 424.535(a)(24) will have their
ordinary, plain-language meanings. This is due to the many factual
situations that could arise and our need for flexibility in addressing
them--something that thresholds such as minimum/maximum distance or
numbers of providers would obstruct. Moreover, such thresholds would
alert potentially problematic providers as to how to circumvent a Sec.
424.535(a)(24) revocation. If, for example, we stated that Sec.
424.535(a)(24) only applies if there are at least X number of providers
within a radius of X miles, providers seeking to engage in fraud might
enroll immediately outside said radius and/or within an area with fewer
providers. This would defeat purpose of Sec. 424.535(a)(24). That
said, our primary focus is on providers in smaller areas--common
buildings and complexes, city and town blocks, neighborhoods, etc.
Although we reserve the right to apply Sec. 424.535(a)(24) to
providers in larger areas (especially if there is an abnormally high
number of providers therein), the application of Sec. 424.535(a)(24)
would typically be more geographically limited.
Fourth, an actual finding of fraud, waste, or abuse by the provider
or another provider in the area would not be required for a Sec.
424.535(a)(24) revocation. This is akin to section 1866(j)(5) of the
Act (codified in Sec. 424.519), which permits denial or revocation if:
(1) the provider has or has had a certain type of affiliation with
another provider or supplier; and (2) the affiliation poses an undue
risk of fraud, waste, or abuse; no determination of actual fraud,
waste, or abuse is needed. Section 424.535(a)(24) revocations would be
based on the assessed risk and not whether the provider or nearby
providers have actually engaged in fraudulent conduct.
Fifth, while several existing revocation reasons in Sec.
424.535(a) require CMS to consider specified factors in its revocation
decisions, we are not proposing the same for Sec. 424.535(a)(24).
Consistent with our prior discussion regarding Sec. 424.535(a)(8)(ii),
we must be able to address all potential Sec. 424.535(a)(24) scenarios
without the rigid restrictions of required criteria and based solely on
the unique facts and circumstances of each case.
Sixth, and notwithstanding the foregoing, we emphasize that
proposed Sec. 424.535(a)(24) is not designed to revoke good-faith
providers who otherwise present no apparent risks even though they
might, for example, be in an area with numerous other providers. We
especially reiterate our understanding that many physicians and
practitioners practice in the same building, complex, or other small
area. Providers should not assume they would be revoked under Sec.
424.535(a)(24) merely because they operate near other providers.
Section 424.535(a)(24) would only be applied when the circumstances
involved and the risk presented truly justify it.
Seventh, some interested parties may detect certain similarities
between Sec. 424.535(a)(24) and our authority under section 1866(j)(7)
of the Act (codified in Sec. 424.570) to impose a temporary enrollment
moratorium. Although we address temporary moratoria in greater detail
later in section V.C. of this proposed rule, we state here that a
moratorium differs from Sec. 424.535(a)(24) in many ways. The latter,
for instance: (1) is a revocation reason rather than a prohibition on
new enrollments; and (2) takes into account the provider's proximity to
other providers of all types, not simply the number of (or risk posed
by) providers of the same type.
(b) Certain Misdemeanor Convictions (Sec. 424.535(a)(16))
In the CY 2024 PFS proposed rule (88 FR 52262), we proposed in new
Sec. Sec. 424.530(a)(16) and 424.535(a)(16) to deny or revoke
enrollment if the provider--or any owner, managing employee or
organization, officer, or director thereof--was convicted of a Federal
or State misdemeanor within the past 10 years that CMS deems
detrimental to the best interests of the Medicare program and its
beneficiaries. We stated that offenses would include (but not be
limited in scope or severity to):
Fraud or other criminal misconduct involving the
provider's participation in a Federal or State health care program or
the delivery of services or items thereunder.
Assault, battery, neglect, or abuse of a patient
(including sexual offenses).
Any other misdemeanor that places the Medicare program or
its beneficiaries at immediate risk, such as a malpractice suit that
results in a conviction of criminal neglect or misconduct.\24\
---------------------------------------------------------------------------
\24\ ``Medicare and Medicaid Programs; CY 2024 Payment Policies
Under the Physician Fee Schedule and Other Changes to Part B Payment
and Coverage Policies; Medicare Shared Savings Program Requirements;
Medicare Advantage; Medicare and Medicaid Provider and Supplier
Enrollment Policies; and Basic Health Program'', published in the
Federal Register on August 7, 2023.
---------------------------------------------------------------------------
[[Page 41292]]
We outlined in that CY 2024 proposed rule our increasing concern
about providers convicted of misdemeanors for conduct that could
endanger the Trust Funds and beneficiaries. We stated that our
responsibility in overseeing the Medicare program requires that we be
able to take protective action in such instances.
We also noted that while some States may designate a particular
crime as a misdemeanor while others deem it a felony, this does not
lessen the risk that the former can pose to Medicare and its
beneficiaries.\25\ It is the conduct itself, not its classification
under State law, that concerns us. This is particularly true since
restricting our revocation authority for criminal convictions to
felonies could leave us unable to address situations where a felony
charge results in a misdemeanor plea.
---------------------------------------------------------------------------
\25\ Ibid.
---------------------------------------------------------------------------
As explained in the CY 2024 PFS final rule (88 FR 78818), we
received numerous comments on this proposal. One of the commenters'
concerns was that the proposal was too broad, potentially encompassing
many types of misdemeanors involving comparatively modest conduct.\26\
Based on the comments received, we did not finalize the proposal. We
stated in the CY 2024 PFS final rule that: (1) we would continue to
monitor cases of misdemeanor convictions involving significant
misconduct; (2) we might pursue future rulemaking to address them; and
(3) many misdemeanors--especially those involving assault, battery,
neglect, or abuse of a patient (including sexual offenses)--could
involve disturbing activity.\27\
---------------------------------------------------------------------------
\26\ ``Medicare and Medicaid Programs; CY 2024 Payment Policies
Under the Physician Fee Schedule and Other Changes to Part B Payment
and Coverage Policies; Medicare Shared Savings Program Requirements;
Medicare Advantage; Medicare and Medicaid Provider and Supplier
Enrollment Policies; and Basic Health Program'', published in the
Federal Register on November 16, 2023.
\27\ Ibid.
---------------------------------------------------------------------------
Two particularly disconcerting categories of misdemeanor
convictions we have recently seen involve sexual assault and financial
misconduct. The former can endanger Medicare beneficiaries while the
latter can threaten the Trust Funds--both of which we must safeguard.
In line with our aforementioned willingness to pursue future rulemaking
if warranted, we propose in Sec. 424.535(a)(16) (currently designated
as ``Reserved'') to revoke enrollment if the provider or supplier--or
any owner, managing employee or organization, officer, or director
thereof--was convicted of a Federal or State misdemeanor related to
sexual assault or financial misconduct within the past 10 years that
CMS deems detrimental to the best interests of the Medicare program and
its beneficiaries.
While parts of this proposal duplicate those in the CY 2024
proposed rule (for example, the 10-year period, the applicability to
owners, directors, etc.), there is one critical difference: it is much
narrower in scope. Whereas the CY 2024 proposal was rather open-ended
in terms of potential misdemeanors, the present one is limited to
sexual assault and financial misconduct. We believe this would reduce
interested parties' possible concerns that proposed Sec.
424.535(a)(16) is too broad. In addition, we stress that: (1) terms
such as financial misconduct would be based on their plain meanings;
and (2) the misdemeanor convictions described in this paragraph must be
detrimental to Medicare's (and Medicare beneficiaries') best interests,
meaning that not every such conviction would result in revocation.
(c) Effective Dates of New Revocation Reasons
Consistent with our proposed retroactive effective dates for all
revocation reasons, we propose the following effective dates for
proposed Sec. 424.535(a)(16) and (24). The Sec. 424.535(a)(16)
effective date would be the date of the conviction, which mirrors the
effective date for felony conviction revocations under Sec.
424.535(a)(3); this date would be referenced in new Sec.
424.535(g)(1)(xvi). For Sec. 424.535(a)(24), we propose in new Sec.
424.535(g)(1)(xxiv) an effective date that is the date on which CMS or
its contractor determines that the provider should be revoked under
Sec. 424.535(a)(24). This aligns with our proposed effective date for
our other risk-based revocation reason in Sec. 424.535(a)(19) and is
based on the difficulty in establishing a concrete date as to when the
risk addressed in Sec. 424.535(g)(1)(xxiv) commenced.
(7) Revised and New Denial Reasons (Sec. 424.530(a))
We also propose a number of revised and new denial reasons in Sec.
424.530(a).
(a) Changes to Existing Denial Reasons
(i) Debt (Sec. 424.530(a)(6))
Current Sec. 424.530(a)(6)(i) and (ii) permit denial if the
enrolling provider or owner (as defined in Sec. 424.502) thereof--
Has an existing Medicare debt; or
Was previously the owner of a provider that had a Medicare
debt when the latter provider's enrollment was voluntarily terminated,
involuntarily terminated, or revoked (and additional criteria in Sec.
424.530(a)(6)(ii)(A) through (C) are met).
We propose to include within the scope of Sec. 424.530(a)(6)
managing employees, managing organizations, and individuals and
entities with any other form of business or financial relationship with
the provider.
Section 424.530(a)(6)(i)'s purpose is to prevent providers (and
owners thereof) from enrolling additional locations when they have
debts to Medicare via their current enrollments that they have not
paid. Indeed, if they have not fulfilled these financial obligations,
we cannot be certain they will do so with their new enrollments, hence
threatening the Trust Funds. The goal of Sec. 424.530(a)(6)(ii),
meanwhile, is to address situations where a party--often via their
ownership of a provider--(1) incurs a substantial debt to Medicare; (2)
exits the Medicare program, shuts down operations altogether, and
attempts to re-enter Medicare through another vehicle or under a new
business identity. The party's objective often is to avoid paying the
prior debt while incurring additional debts through their ownership of
the new provider. Section 424.530(a)(6)(ii) helps prevent this by
blocking the new provider's enrollment.
Gaps remain, though. As noted in prior rulemaking efforts, managing
employees and managing organizations (as defined in Sec. 424.502)
often have as much or more influence over a provider's day-to-day
operations as an owner. Yet Sec. 424.530(a)(6) only references the
provider itself and its owners. Section 424.530(a)(6) thus cannot
prevent enrollment if, for instance, a managing employee or
organization of the prior provider ran its daily operations, was
responsible for its accumulation of large debts, and now seeks to re-
enter Medicare through their ownership of the new provider. Moreover,
we have seen instances where parties other than owners and managing
employees/organizations were substantially involved with the former
provider in some capacity; as examples, this includes: (1) parties that
furnished services or provided financing for the prior provider; and
(2) closely associated health care providers. The core issue,
therefore, is not the precise form or label of the relationship with
the former provider--that is, whether it was ownership, financial, etc.
It is instead the relationship itself and the party's effort to enroll
new locations or reenter Medicare through the new provider.
We emphasize that we do not intend to deny enrollment in all
scenarios
[[Page 41293]]
involving revised Sec. 424.530(a)(6). Each case would be carefully
judged on its own circumstances, and denial would only occur when
warranted.
(ii) Payment Suspension (Sec. 424.530(a)(7))
Denial is permitted under Sec. 424.530(a)(7) if the provider, or
any owning or managing employee or organization of the provider, is
currently under a Medicare or Medicaid payment suspension (as defined
in Sec. Sec. 405.370 through 405.372 or in Sec. 455.23). For the same
reasons behind our proposed addition to Sec. 424.530(a)(6), we propose
at Sec. 424.530(a)(7) to include within scope individuals and entities
with any form of business or financial relationship with the provider.
A payment suspension is a serious matter and, as noted, parties other
than owners and managing employees/organizations can have relationships
with the provider. In addition, restricting Sec. 424.530(a)(7) to
owning/managing individuals and entities could encourage these parties
to circumvent application of Sec. 424.530(a)(7) by redefining,
changing, or limiting their roles within the provider organization even
though they would still influence or deal with the provider in some
capacity; that is, they would purposely modify or eliminate their
ownership or reduce their role in the organization to, they might
believe, fall outside the managing employee/organization definitions.
Given both this and our responsibility to protect the Trust Funds
against problematic parties, we believe our proposed expansion to Sec.
424.530(a)(7) is a prudent measure.
(iii) Program Terminations/Suspensions (Sec. 424.530(a)(14))
CMS may deny enrollment under current Sec. 424.530(a)(14)(i) if--
The provider is currently terminated or suspended (or
otherwise barred) from participation in a State Medicaid program or any
other Federal health care program; or
The provider's license is currently revoked or suspended
in a State other than that in which the provider is enrolling.
We propose two changes to Sec. 424.530(a)(14)(i). One would
include the provider's owners, managing employees, and managing
organizations within its purview. This aligns with several other denial
reasons--such as existing Sec. 424.530(a)(3) and (a)(7)--that include
actions against owners and managing employees/organizations. Similar to
these other denial grounds, revised Sec. 424.530(a)(14)(i) would help
prevent situations where the owning/managing party's conduct that led
to the licensure action or the other program termination/suspension
could be repeated with the prospective Medicare provider, especially
considering (as noted) the significant influence such parties typically
have over a provider's operations. Furthermore, it could keep such
parties from entering Medicare via a new provider, hoping to shield
themselves from application of Sec. 424.530(a)(14)(i) due to the
provision's current limitation to providers.
The other change would expand licenses to include those voluntarily
surrendered in lieu of further disciplinary action. We have provisions
in Sec. Sec. 424.530 and 424.535 whose scope includes voluntary
surrenders, and we believe the same approach for Sec.
424.530(a)(14)(i) is needed because our overriding concern is the loss
of the provider's license rather than the type of loss. Voluntary
surrenders in lieu of further disciplinary action, in our view, are as
much a threat to the Trust Funds and beneficiaries as revocations and
suspensions, since they all involve problematic conduct.
(iv) False or Misleading Data (Sec. 424.530(a)(4))
Section 424.530(a)(4) allows denial based on the provider's/
supplier's submission of false or misleading information on the
enrollment application to gain enrollment in the Medicare program. We
propose to expand Sec. 424.530(a)(4) in the same manner as with
proposed Sec. 424.535(a)(4) and for the same reasons. (The
parenthetical concerning OIG referral would be retained in existing
Sec. 424.530(a)(4).)
(b) New Denial Reasons
(i) Misdemeanor Convictions (Sec. 424.530(a)(16))
(A) New Sec. 424.530(a)(16)
We propose to duplicate proposed Sec. 424.535(a)(16) in Sec.
424.530(a)(16) (also presently designated as ``Reserved'') as a new
denial ground. The same rationale is involved: the need to protect
beneficiaries and the Trust Funds against parties convicted of sexual
assault or financial misconduct misdemeanors.
(B) ``Final Adverse Action'' Definition
Section 424.502 defines ``final adverse action'' as any of the
following: (1) Medicare revocation; (2) State health care license
suspension or revocation; (3) revocation or suspension by an
accreditation organization; (4) felony conviction; or (5) exclusion or
debarment. Given our proposed denial and revocation reasons based on a
misdemeanor conviction for sexual assault or financial misconduct, we
propose to add such misdemeanors as new paragraph (6) in the ``final
adverse action'' definition. (As with felony convictions in paragraph
(4), the 10-year period would be that preceding enrollment,
revalidation, or reenrollment.)
(ii) Revocation or Denial in Same Suite (Sec. 424.530(a)(19))
We propose a new denial ground in Sec. 424.530(a)(19) based on the
provider having its practice location in the same suite or office as
another provider whose Medicare enrollment has been revoked or denied.
Sharing a suite or office with a provider who has been deemed non-
compliant with Medicare requirements could spur concerns about the
newly enrolling provider's own willingness to retain compliance if
enrolled. This is particularly true when--in situations we have seen--
several providers in the same suite engage (or seek to engage) in a
fraud scheme, have their Medicare enrollments revoked or denied, and
another provider aims to enroll in that same office. Considering the
risks posed by the revoked or denied provider, we maintain that we must
have the authority to prevent the new enrollment if circumstances
justify it.
Though they might appear similar, Sec. 424.530(a)(19) would differ
from proposed Sec. 424.535(a)(24) in that the latter: (a) is a
revocation reason and not a denial ground; and (b) is partly based on
the number of nearby providers, whereas Sec. 424.530(a)(19) is based
on shared suites and offices. Sections 424.530(a)(19) and Sec.
424.535(a)(24) thus complement but do not duplicate each other.
We recognize that, for example, physicians that are part of a group
frequently share the same suite. If 10 physicians are in the group and
one (Dr. X) has their enrollment revoked, this does not automatically
mean that a prospective (and Medicare enrolling) 11th group member will
be denied enrollment based on Dr X's revocation. Every situation is
different, and CMS will only invoke Sec. 424.530(a)(19) when proper.
(iii) Hospice Medical Directors and Administrators (Sec.
424.530(a)(20))
As previously discussed, we have seen serious program integrity
issues involving hospices. Indeed, the Office of Inspector General
(OIG) has included hospice care among the services posing
[[Page 41294]]
a high risk of fraud.\28\ It has also recently stated: ``[T]here are
significant problems with the [hospice] program. Our reports and
investigations have revealed several concerning issues, including
poor--sometimes harmful--quality of care, fraud schemes that involve
enrolling beneficiaries without their consent, inappropriate billing
practices, limited transparency for patients and their families, a
payment system that creates incentives to minimize services, and a
rapid growth in the number of new hospices, often to take advantage of
these conditions.'' \29\ In response to these concerns, CMS in recent
years has taken numerous steps to address hospice fraud, waste, and
abuse. Some have been directed towards persons who operate, control, or
manage the hospice, such as the hospice's individual owners, medical
directors, and administrators. These initiatives included, but were not
limited to--
---------------------------------------------------------------------------
\28\ HHS-OIG Fiscal Year 2025 Report, ``Top Management &
Performance Challenges Facing HHS'' (https://oig.hhs.gov/reports/all/2025/2025-top-management-performance-challenges-facing-hhs/.)
\29\ https://oig.hhs.gov/reports/featured/hospice/.
---------------------------------------------------------------------------
Under Sec. 424.518(c), requiring persons who directly or
indirectly own 5 percent or more of a newly enrolling hospice (or a
hospice undergoing any ownership change) to submit fingerprints for a
criminal background check.
Requiring hospice medical directors who certify a
patient's terminal illness under 418.22(c) to be enrolled in or opted
out of Medicare, which enables CMS to screen the medical director.
Clarifying that hospice medical directors and
administrators are ``managing employees'' (as that term is defined in
Sec. 424.502) and thus must be reported on the hospice's Form CMS-855A
enrollment application (OMB Control No. 0938-0685). This helps ensure
that CMS knows the identities of these parties and can vet them for
potential issues.
In light of medical directors' and administrators' managing control
over hospices, we believe that closer oversight of these individuals
was necessary--especially considering: (1) the numerous criminal and
False Claims Act cases we have seen involving hospice operators; \30\
and (2) reports of physicians falsely certifying patients' terminal
status.\31\ Despite the aforementioned steps, we continue to have
program integrity concerns about hospice operators. We still see
instances of false physician certifications, kickbacks to certifying
physicians, criminal cases involving administrators, hospices billing
Medicare while non-compliant with enrollment requirements, etc. On a
more specific level, three problematic issues have arisen.
---------------------------------------------------------------------------
\30\ See, for example, the proposed rule titled, ``Medicare
Program; Calendar Year (CY) 2024 Home Health (HH) Prospective
Payment System Rate Update; HH Quality Reporting Program
Requirements; HH Value-Based Purchasing Expanded Model Requirements;
Home Intravenous Immune Globulin Items and Services; Hospice
Informal Dispute Resolution and Special Focus Program Requirements,
Certain Requirements for Durable Medical Equipment Prosthetics and
Orthotics Supplies; and Provider and Supplier Enrollment
Requirements'' (88 FR 43654), published in the Federal Register on
July, 10, 2023.
\31\ See, for example, the proposed rule titled, ``Medicare
Program; FY 2024 Hospice Wage Index and Payment Rate Update, Hospice
Conditions of Participation Updates, Hospice Quality Reporting
Program Requirements, and Hospice Certifying Physician Provider
Enrollment Requirements'' (88 FR 20022), published in the Federal
Register on April 4, 2023.
---------------------------------------------------------------------------
First, there are individuals who serve as medical director or
administrator of numerous hospices. Ensuring (1) quality care to
hospice patients, (2) the efficiency of the hospice's operations, (3)
compliance with Medicare requirements, and (4) hospice program
integrity requires the full attention and oversight of the medical
director and administrator. We believe that having these roles at
numerous facilities limits the time the individual can spend on each
facility's operations and raises questions about the person's
commitment to oversight; this, in our view, places hospice
beneficiaries and program integrity at risk.
Second, we have seen cases where the medical director or
administrator is very far from the physical hospice facility; several
instances, in fact, involved the hospice and medical director being on
opposite sides of the country (for instance, the medical director is in
New York, and the hospice is in California). This, too, generates
significant concerns about the individual's oversight of the hospice.
Third, certain hospices have been using medical directors with
inactive licenses. Section 418.22(c), as noted, requires the medical
director who initially certifies the beneficiary's terminal status to
be enrolled in or opted-out of Medicare. However, if the medical
director is not certifying Medicare beneficiaries' terminal status--and
said physician is neither billing Medicare nor ordering/certifying the
services/items outlined in Sec. 424.507--enrollment is not required.
CMS therefore might not know whether the medical director's license is
active and only learn of the inactive status later. Since the medical
director Conditions of Participation (CoPs) at Sec. 418.102 and
personnel requirements for physicians Sec. 418.114(b)(1) require
hospice medical directors to be physicians (and thus licensed),
hospices with medical directors with inactive licenses are not
compliant with the CoP Medicare requirements.
To address hospice program integrity and to protect beneficiaries,
we thus propose new Sec. 424.530(a)(20). This would permit denial of a
hospice's enrollment application if any of the following apply:
The enrolling hospice's medical director is--
++ The medical director of multiple other hospices, or
++ Practices at such a distance (for example, in a different state)
from the enrolling hospice that the medical director cannot
realistically perform all medical director functions required under 42
CFR part 418.
The enrolling hospice's administrator is--
++ The administrator of multiple other hospices; or
++ Located at such a distance from the enrolling hospice that the
administrator cannot realistically perform all administrator functions
required under 42 CFR part 418.
The hospice's medical director does not have an active
physician medical license in the state in which they are practicing.
Section 424.530(a)(20) would not: (1) formally prohibit medical
directors and administrators from serving at more than one hospice; or
(2) change hospice CoPs or other hospice policies in 42 CFR part 418.
It would simply help us address situations where the hospice's
prospective enrollment raises the program integrity concerns outlined
in this section V.C. of this proposed rule.
(iv) Misuse of Identity (Sec. 424.530(a)(21))
We noted previously that Sec. 424.535(a)(7) permits revocation if
the provider knowingly sells to or allows another individual or entity
to use its billing number. (This does not include providers or
suppliers who enter into a valid Sec. 424.80 reassignment of benefits
or a Sec. 489.18 change of ownership.) Yet there is no denial reason
that specifically addresses misuse of identifiers. This is problematic
given situations we have recently seen where a party (X) steals the
identity of another party (Y) (for example, another physician or
practitioner) and enrolls Y without Y's knowledge and using Y's
credentials and identifiers. X then bills and receives payment from
Medicare under Y's name. To address this and other situations involving
prospective enrollees using compromised identities,
[[Page 41295]]
we propose in new Sec. 424.530(a)(21) that CMS can deny enrollment if
the prospective provider or supplier is attempting to enroll under
another party's identity.
(8) Reapplication Bar (Sec. 424.530(f))
Under Sec. 424.530(f), CMS may prohibit a prospective provider
from enrolling in Medicare for up to 10 years if its enrollment
application is denied because the provider submitted false or
misleading information on or with (or omitted information from) its
application to gain enrollment in Medicare. The goal is to prevent
dishonest providers from submitting false information on their initial
application and, after being denied enrollment on this ground under
Sec. 424.530(a)(4), simply submitting a new application with correct
data.
We believe that restricting Sec. 424.530(f) to instances involving
false information limits its potential effectiveness, for there are
other Sec. 424.530(a) denial reasons that could involve similarly
inappropriate provider behavior. Assume a prospective provider's
enrollment is denied because the provider is: (1) unlicensed; (2) OIG
excluded or has a recent felony conviction; (3) using a false
storefront as its practice location; (4) under a current Medicare and
Medicaid payment suspension based on a credible allegation of fraud;
(5) terminated from another Federal health care program; or (6) revoked
from Medicare and attempting to enroll under a different identity. This
casts serious doubt as to the provider's honesty and trustworthiness,
since the provider likely knows it cannot enroll but is nonetheless
hoping to somehow ``sneak into'' the program; indeed, without a
reapplication bar in these and similar situations, the provider might
routinely submit more such applications with this nefarious objective
in mind.
Accordingly, and to safeguard the Medicare program, we propose to
revise the introductory text of Sec. 424.530(f) to allow CMS to impose
a reapplication bar for up to 10 years based on any Sec. 424.530(a)
denial reason (not merely Sec. 424.530(a)(4)). We also propose to
delete factors at Sec. 424.530(f)(2) that CMS currently must consider
in determining whether to impose a reapplication bar (and the length
thereof) for a denial at Sec. 424.530(a)(4). There are two related
reasons for this. First, being tailored exclusively to Sec.
424.530(a)(4) situations, these factors would be inapplicable to other
denial grounds. Second, proposing different Sec. 424.530(a)(4)
criteria would essentially present the same problem mentioned in the
previous sentence--specifically, a single set of Sec. 424.530(f)
factors could not possibly apply to all Sec. 424.530(a) denial reasons
considering the varying facts of each.
Unlike reenrollment bars under Sec. 424.535(c), reapplication bars
are discretionary. CMS need not impose them, and we are not proposing
to change this. We recognize that less serious denial situations--such
as, but not limited to, failure to pay an application fee--might not
warrant a reapplication bar. Our focus is mostly on providers whose
conduct raises significant program integrity concerns.
We would retain current Sec. 424.530(f)(1) and (f)(3), which
address, respectively, the bar's: (1) applicability to the provider's
other names, identities, etc.; and (2) impact on the ordering,
referral, certification, or prescription of services, items, or drugs.
Paragraph (f)(3), though, would be redesignated as revised paragraph
(f)(2).
(9) Changes in Majority Ownership (CIMOs)
We previously mentioned Sec. 424.550(b) and Sec. 424.551, the
former pertaining to HHAs and hospices and the latter to DMEPOS
suppliers (hereafter collectively ``providers''). Under these
provisions, if the provider undergoes a CIMO within 36 months of its
initial enrollment--or within 36 months of its most recent CIMO--and no
exception applies, the provider's enrollment is terminated. (For HHAs
and hospices, moreover, the provider agreement is terminated and does
not transfer to the new owner.) The provider under its new majority
ownership must enroll as a new provider and undergo a state survey or
accreditation. (DMEPOS suppliers must obtain a new accreditation.)
There are two main purposes of this ``36-month rule''. First, it
enables CMS to undertake a complete screening and vetting of the
provider under its new ownership. This is critical for ensuring that
the provider is compliant with all Medicare requirements. Second, it
helps prevent ``flipping''. This involves a party enrolling a provider
for the sole purpose of quickly selling it to another party without the
latter having to newly enroll or undergo a survey/accreditation. This
makes the provider more financially attractive to the prospective buyer
and, in turn, helps the seller generate more revenue from the sale. In
short, the seller's exclusive objective is profit, not patient care.
This places beneficiaries at risk and allows parties to enter Medicare
without the program safeguard of a survey or accreditation.
We have found the 36-month rule helpful in stemming flipping and
facilitating greater scrutiny of new owners. Yet we have also seen
provider efforts to circumvent or ignore the rule. These include, but
are not limited to:
Failing to notify CMS of the ownership change--meaning the
sale occurs and the buyer assumes ownership under the existing
enrollment without enrolling the entity as a new provider with a new
survey/accreditation. Only later does CMS learn of the sale.
Using a management (or similar) agreement in lieu of a
formal sales agreement. Here, the management agreement states that: (1)
managerial (and effectively all other) authority over the provider is
transferred to Party X; and (2) X intends to later purchase the
provider. Once the 36-month period expires, the sale occurs. In
essence, Party X is purchasing the provider within the 36-month period
but under the guise of a ``management agreement''.
Such inappropriate attempts to avoid the 36-month rule undercut the
latter's critical aim of protecting beneficiaries and the Trust Funds
from unvetted and potentially problematic entities. To deter these
efforts, we propose in new Sec. Sec. 424.530(a)(22) and 424.535(a)(25)
that we may deny or revoke enrollment if CMS determines that the HHA,
hospice, or DMEPOS supplier failed to comply with the provisions and
requirements of, as applicable, Sec. Sec. 424.550(b) or 424.551. The
Sec. 424.535(a)(25) revocation effective date under new Sec.
424.535(g)(1)(xxv) would be the date on which CMS or its contractor
determined that the provider should be revoked.
3. Preclusion List (42 CFR 422.2 and 423.100)
Addressed primarily in 42 CFR 422.222 and 423.120, the preclusion
list is a compilation of providers and prescribers who are prohibited
from receiving payment for furnished, ordered, or prescribed MA items/
services and Part D drugs. The list's objective is to effectively bar
from the MA and Part D programs various entities and persons that pose
program integrity risks. Per the definition of ``preclusion list in
Sec. Sec. 422.2 and 423.100, a party may be placed on the preclusion
list if they fall into one of the following three categories:
Currently revoked under Medicare for a reason other than
that in Sec. 424.535(a)(3) (which addresses felony convictions), the
reenrollment bar has not expired, and CMS determines that the
underlying conduct that led to the
[[Page 41296]]
revocation is detrimental to the Medicare program's best interests.
Engaged in behavior, other than that described in Sec.
424.535(a)(3): (1) for which CMS could have revoked the provider/
prescriber to the extent applicable had they been enrolled in Medicare;
and (2) that CMS determines is detrimental to the Medicare program's
best interests.
Regardless of whether the provider/prescriber is or was
enrolled in Medicare, has been convicted of a felony under Federal or
State law within the previous 10 years that CMS deems detrimental to
the Medicare program's best interests.
We propose to expand this third category to include felony
convictions against the provider/prescriber's owner, managing employee,
managing organization, corporate director, or corporate officer. As
already stated, these parties typically exercise considerable influence
over a provider/prescriber's operations, and a felony conviction
against said party greatly concerns us; indeed, this is precisely why
Sec. Sec. 424.530(a)(3) and 424.535(a)(3) permit denial or revocation
based on felony convictions against owners, managing employees/
organizations, and corporate officers/directors. Our proposed change
would not only ensure greater consistency with Sec. Sec. 424.530(a)(3)
and 424.535(a)(3) but also help protect the MA and Part D programs from
program integrity risks.
The specific regulatory revisions would be to paragraph (3) of the
``preclusion list'' definitions in Sec. Sec. 422.2 and 423.100. The
language therein stating that the prescriber/provider, ``regardless of
whether they are or were enrolled in Medicare, has been convicted of a
felony. . . .'' would be changed to the prescriber/provider,
``regardless of whether they are or were enrolled in Medicare--or an
owner, managing employee, managing organization, director, or officer
(as those terms are defined in Sec. 424.502) thereof--has been
convicted of a felony. . . . .''.
4. Temporary Moratoria (Sec. 424.570)
Pursuant to section 1866(j)(7) of the Act and Sec. 424.570, we
imposed several temporary enrollment moratoria between 2013 and 2019,
and--as of May 13, 2026--there are national moratoria on the enrollment
of new HHAs, hospices, and DMEPOS medical supply companies. All
moratoria (including a moratorium extension) are announced via a notice
published in the Federal Register. Also, under Sec.
424.570(a)(1)(iii)(A) through (C) a temporary moratorium does not apply
to any of the following:
Changes in practice location (except if the location is
changing from a location outside the moratorium area to a location
inside the moratorium area).
Changes in provider or supplier information, such as phone
number.
Changes in ownership (except changes in ownership of HHAs
that would require an initial enrollment).
Since restarting the moratorium process in 2026 after more than 6
years, we have seen several issues that we believe must be addressed in
regulation.
a. Effective Date
Per Sec. 424.570(a)(1)(iv), a temporary moratorium does not apply
to any enrollment application received by the Medicare contractor prior
to the date the moratorium is imposed. We have received questions from
interested parties regarding: (1) when the imposition date is; and (2)
whether this is the same as the moratorium's effective date. We
accordingly propose to revise Sec. 424.570(a)(1)(iv) as follows:
Existing Sec. 424.570(a)(1)(iv) would be redesignated as
new Sec. 424.570(a)(1)(iv)(A).
New Sec. 424.570(a)(1)(iv)(B) would state that the date
the moratorium is imposed is the moratorium's effective date, which is
the date on which the moratorium notice was filed for public inspection
at the Office of the Federal Register (OFR).
There are often gaps between when a document (such as a proposed
rule) is filed for OFR public inspection and when it is published in
the Federal Register. If we used the latter as the moratorium's
imposition/effective date, the affected providers/suppliers might have
several days to submit their initial applications in order to ``beat
the deadline.'' This would partly obstruct the moratorium's goal of
halting all new enrollments and could lead to a rush of new applicants
during this gap, some of whom may present program integrity problems.
Using the OFR filing date would prevent this scenario, for the
moratorium's imposition would be immediate.
b. Ownership Changes
We propose to change the aforementioned parenthetical in Sec.
424.570(a)(1)(iii)(C) from ``(except changes in ownership of home
health agencies that would require an initial enrollment)'' to
``(except changes in ownership that require an initial enrollment, such
as, but not limited to, an HHA, hospice, or DMEPOS supplier change in
majority ownership under Sec. Sec. 424.550(b) or 424.551)''. This
update would conform to other regulations that address this topic and
codify existing CMS policy that--like HHAs--hospices and DMEPOS
suppliers that undergo a non-exempt CIMO under Sec. Sec. 424.550(b) or
424.551 must enroll as a new provider/supplier and are thus subject to
the moratorium.
c. Other Applicability
Section 424.570(a)(1)(i) states CMS may impose a moratorium on the
enrollment of new Medicare providers and suppliers of a particular type
or the establishment of new practice locations of a particular type in
a particular geographic area. Stakeholders have asked what qualifies as
a ``new'' provider/supplier or practice location under the moratorium.
To address these, we propose to outline in new Sec.
424.570(a)(1)(i)(A) through (E) the application types that--solely for
purposes of Sec. 424.570(a)--are considered ``new'' and to which a
moratorium applies:
Initial enrollment applications
Change of ownership applications that require an initial
enrollment per Sec. 424.570(a)(1)(iii)(C)
Enrollment applications from revoked providers/suppliers whose
reenrollment bars under Sec. 424.535(c) have expired and are seeking
to re-enter the Medicare program
Reactivation applications
Enrollment applications from voluntarily terminated providers/
suppliers seeking to enroll again in the Medicare program
Initial and change of ownership applications are currently
referenced in Sec. 424.570. Revoked providers (proposed Sec.
424.570(a)(1)(i)(C)) are removed from the Medicare program altogether;
we have thus always considered their applications to reenroll in
Medicare to be new enrollments.
Reactivation involves the provider restoring their active
enrollment status and Medicare billing privileges after being
deactivated per Sec. 424.540. Deactivation means the provider's
billing privileges are stopped but can be restored (or ``reactivated'')
upon the submission of information required under Sec. 424.540.
Deactivation grounds include, but are not limited to, failure to submit
a Medicare claim for 6 consecutive months, failure to timely report a
change in enrollment information, non-compliance with enrollment
requirements, and a non-operational practice location. Although a
deactivated provider is not revoked from Medicare, the provider's: (1)
ability to bill the program is halted pending its reactivation; (2)
enrollment is effectively
[[Page 41297]]
shut down; and (3) participation in Medicare is blocked in a manner
akin to a revocation. (In fact, the only material differences between a
revoked and a deactivated provider are that the former is subject to a
reenrollment bar and a potentially more exhaustive reentry process (for
instance, undergoing a state survey or accreditation)). Furthermore,
the bases for both revocations and deactivations typically involve
concerning provider behavior. Even if the deactivation was based on
non-billing with no nefarious conduct, said conduct could have ensued
if, for example, an unscrupulous party attempted to access the
provider's billing number during the non-billing period. We hence
believe that the significant similarities between deactivations and
revocations warrant including reactivations within Sec.
424.570(a)(1)(i).
The same rationale applies to voluntary terminations, which involve
a provider departing Medicare on their own volition. The provider is
consciously severing their relationship with Medicare. While Sec.
424.540(a)(7) permits CMS to deactivate a voluntarily terminating
provider rather than outright terminating it, the provider in either
case is essentially no longer in the program. It is considered a new
provider should it seek to reenter Medicare. The incorporation of
voluntary terminations within Sec. 424.570(a)(1)(i) is therefore
proper.
5. Hospice Reactivations (Sec. 424.540(b)(3))
We mentioned earlier that hospices (like HHAs) that undergo a non-
exempt CIMO within 36 months of their initial enrollment (or within 36
months of their previous CIMO) must initially enroll as a new hospice
and have a state survey or accreditation. A new enrollment and survey/
accreditation help confirm that the hospice under its new ownership is
fully vetted, is committed to furnishing quality care, meets all
enrollment requirements and CoPs, and does not pose program integrity
risks. The substantial program integrity and quality of care benefits
of a state survey/accreditation are why in 2009 we promulgated Sec.
424.540(b)(3)(i), which requires a deactivated HHA to obtain an initial
state survey/accreditation before it can be reactivated.
We believe the payment safeguard and patient care protections
afforded by Sec. 424.540(b)(3) should be extended to hospices. The
previously noted hospice fraud we have seen requires, in our view, much
closer scrutiny of reactivating hospices--especially since, as already
noted, deactivated hospices are blocked from Medicare. We must ensure
that the reentering hospice is compliant with all Medicare
requirements. We thus propose to revise Sec. 424.540(b)(3)(i) to
include hospices.
6. Opt-Out (42 CFR Part 405, Subpart D)
Section 1802(b)(1) of the Act permits certain physicians and
practitioners to opt-out of Medicare. Under opt-out, neither the
physician/practitioner nor the beneficiary submits a bill to Medicare
for services performed. Instead, the beneficiary pays the physician/
practitioner out-of-pocket and neither party is reimbursed by Medicare.
A private contract is signed between the physician/practitioner and the
beneficiary that states, in essence, that neither can receive payment
from Medicare for the services performed. The physician/practitioner
must also submit an affidavit to Medicare expressing a decision to opt-
out of the program and confirming, as further described in Sec.
405.420, compliance with opt-out requirements. Opt-out periods are for
2 years.
Provisions in 42 CFR part 405, subpart D, govern Medicare opt-out.
We are proposing the following two regulatory clarifications, both of
which reflect current policy.
First, opt-out periods are automatically renewed pursuant to
section 1802(b)(3) of the Act unless the physician/practitioner--
consistent with Sec. 405.445(a)--notifies the appropriate MAC not
later than 30 days before the end of the 2-year period indicating that
the physician/practitioner does not want to extend the affidavit's
extension for a subsequent 2-year period. In outlining the types of CMS
opt-out determinations that are considered ``initial'' under Sec.
498.3(b) (and thus appealable under 42 CFR part 498), Sec. 405.450(a)
includes the individual's failure to ``timely renew opt-out''. Since
opt-out is automatically extended absent the occurrence in Sec.
405.445(a), we propose to change the quoted language in Sec.
405.450(a) to ``timely cancel automatic renewal''; a similar change
would be made to Sec. 498.3(b)(19), which lists various initial opt-
out-related determinations.
Second, Sec. 405.400 defines ``opt-out period'' as meaning, in
part--with respect to an affidavit that meets the requirements of Sec.
405.420--a 2-year period beginning on the date the affidavit is signed
(as specified by Sec. 405.410(c)(1) or (2)). There are instances where
the MAC, in reviewing and processing the physician/practitioner's
submitted affidavit, needs and requests additional information or
clarification from the physician/practitioner. Interested parties have
asked whether--if a new affidavit must be submitted per the MAC's
request and it is subsequently approved--the opt-out period begins on
the signature date of the second or the first submitted affidavit. In
Sec. 405.400, we propose to change the ``opt-out period'' definition
that states ``the date the affidavit is signed'' to ``the date the
first submitted affidavit is signed.'' This reflects our existing
policy on this issue, and it aligns with our assignment of effective
dates of Medicare billing privileges for most Medicare suppliers
(including physicians/practitioners). Under Sec. 424.520(d)(i) and
(ii), this effective date for these suppliers is the later of the
following: (1) the date of filing of a Medicare enrollment application
that was subsequently approved by a Medicare contractor; or (2) the
date that the provider or supplier first began furnishing services at a
new practice location. With Sec. 424.520(d)(i), even if the MAC needs
the supplier to submit additional/clarifying information on the
submitted enrollment application with a newly signed certification
statement, the effective date is generally based on the initially
submitted application rather than the date on which the additional data
was submitted.
7. Private Equity Companies (PECs) and Real Estate Investment Trusts
(REITs)
In a November 17, 2023, final rule published in the Federal
Register titled, ``Medicare and Medicaid Programs; Disclosures of
Ownership and Additional Disclosable Parties Information for Skilled
Nursing Facilities and Nursing Facilities; Medicare Providers' and
Suppliers' Disclosure of Private Equity Companies and Real Estate
Investment Trusts'' (88 FR 80141), we implemented section 1124(c) of
the Act. This provision--promulgated in Sec. 424.516(g)--requires SNFs
to report detailed information about their ownership, management, and
associated parties. The regulation's purpose was to gain further
insight into the SNF's operators and affiliates--a vital need given
concerns about nursing home quality of care.
We expressed particular concern in the November 17, 2023, final
rule about the prevalence of PEC and REIT ownership of SNFs. We cited
reports indicating links between such ownership and substandard SNF
care, primarily due to these entities' emphasis on maximizing
profits.\32\ One report stated, ``Our estimates show that private
equity (PE) ownership increases the short-term mortality of Medicare
[[Page 41298]]
patients by 10 percent, implying 20,150 lives lost due to PE ownership
over our twelve-year sample period. This is accompanied by declines in
other measures of patient well-being, such as lower mobility, while
taxpayer spending per patient episode increases by 11 percent.'' \33\
We hence stated in the November 17, 2023, final rule our intention to
revise the Form CMS-855A enrollment application \34\ to require all
certified providers and certified suppliers (not simply SNFs) that
complete said form to identify whether an entity they have disclosed
thereon is a PEC or a REIT.\35\
---------------------------------------------------------------------------
\32\ 88 FR 80144.
\33\ Ibid.
\34\ Medicare Enrollment Application--Institutional Providers
(OMB Control No. 0938-0635).
\35\ 88 FR 80146.
---------------------------------------------------------------------------
The issue goes well beyond SNFs, though. PECs and REITs are
involved in other health care sectors, too, including physician
practices. The May 2025 edition of the American Medical Association's
(AMA) Journal of Ethics (JOE) noted the continued increase in PEC
ownership of providers and suppliers and the concerns associated
therewith. The AMA JOE website (via which the May 2025 edition could be
accessed) stated that private equity ``aim(s) to maximize profitability
while minimizing long-term holdings in such investments. . . . One
reason private equity investment in the health sector deserves close
ethical attention is that private equity firms are, generally, not
interested in managing patient panels, clinician personnel, or making
service delivery streams work for patients. Another reason is that
influx of private equity investment in health care tends to consolidate
markets for health services, undermining competition and driving up
costs for patients''.\36\ Various articles in the May 2025 edition
expounded on this theme. Statements therein included:
---------------------------------------------------------------------------
\36\ https://journalofethics.ama-assn.org/issue/private-equity-health-care.
---------------------------------------------------------------------------
``Physicians have fiduciary duties to respond with care to
patient's clinical needs and vulnerabilities, whereas private equity
companies have no such ethical or legal duties to patients and strive
to maximize financial returns for their investors.'' \37\
---------------------------------------------------------------------------
\37\ Lucy Xu, MD, and Matthew R. Naunheim, MD; ``What Are
Physicians' Duties to Patients When They Sell Their Practices?'';
May 2025.
---------------------------------------------------------------------------
``Studies on the impact of PE investment in health care
have increased in the last decade, with the preponderance of data
suggesting that PE acquisitions are associated with reduced staffing
levels and on-hand medical supplies. A 2023 systematic review concluded
that PE ownership was associated with increased costs to payers and
patients.\38\
---------------------------------------------------------------------------
\38\ Ibid.
---------------------------------------------------------------------------
``Private equity firms' acquisition and management of
health service delivery entities, such as specialty physicians'
practices, have been associated with increased cost and diminished
quality of care.'' \39\
---------------------------------------------------------------------------
\39\ Cheryl Erwin and Sheryl Tatar Dacso; ``When and How Should
Patients Be Informed About Clinicians' or Organizations' Sale of a
Clinical Practice to a Private Equity Buyer?'' May 2025.
---------------------------------------------------------------------------
``Private equity margin maximization and profit-making
strategies focus on acquisition, short-term ownership, and sale of
health care entities, including residency program opportunities. PE
ownership durations generally have 3 purposes: reduce staff, sell
assets, and refinance debt.'' \40\
---------------------------------------------------------------------------
\40\ Mark Varvares, MD, et al.; ``Should Private Equity Firms
Own Residency Slots?'' May 2025.
---------------------------------------------------------------------------
In light of the foregoing, we believe CMS should ascertain the
prevalence of PEC and REIT involvement with Medicare Part B suppliers
no less than with Part A providers such as SNFs. This is a Medicare-
wide issue. Consequently--and like our approach in the November 17,
2023, final rule--we announce our intention to revise the following
provider enrollment applications to require all suppliers completing
these forms to identify whether any organizations disclosed thereon are
PECs or REITs:
Form CMS-855B (Medicare Enrollment Application--Clinics/
Group Practices and Certain Other Suppliers; OMB Control No. 0938-
1377).
Form CMS-855S (Medicare Enrollment Application--Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Suppliers; OMB Control No. 0938-1056).
Form CMS-20134 (Medicare Diabetes Prevention Program
(MDPP) Suppliers).
We note that we are relying upon sections 1102, 1866(j), and 1871
of the Act (rather than section 1124(c)) as authority for this
proposal.
As with the November 17, 2023, final rule, our intended form
revisions would not involve regulatory changes.
8. Definition of ``Operational'' (Sec. 424.502)
a. Background and Provisions
Per Sec. 424.510(d)(6), a provider must be ``operational'' to
obtain Medicare billing privileges. ``Operational'' is defined in Sec.
424.502 as meaning the provider meets all of the following:
Has a qualified physical practice location.
Is open to the public for the purpose of providing health
care related services.
Is prepared to submit valid Medicare claims.
Is properly staffed, equipped, and stocked (as applicable,
based on the type of facility or organization, provider or supplier
specialty, or the services or items being rendered) to furnish these
items or services.
Over the years, we have received numerous queries about the meaning
and scope of these requirements, such as ``properly staffed'',
``properly stocked'', and ``open to the public''. For instance, assume
a provider has an adequate number of personnel at its site. This could
appear to meet the ``properly staffed'' requirement, but perhaps many
of these employees are unqualified for their positions (such as being
unlicensed). The question thus becomes whether ``properly staffed''
refers to the number of employees, the employees' credentials, both, or
something else entirely. The term ``open to the public,'' meanwhile,
does not address (1) timeframes in which the provider must be open or
(2) physical accessibility to the location. Indeed, it is possible that
a provider might, on the surface, meet the letter of the existing
``open to the public'' criterion by being briefly ``open'' to the
public but not the definition's intent if it is only open 1 hour per
day. These issues are important, for the ``operational'' definition's
core purpose is to help confirm that the provider is bona fide. We
have, in fact, seen situations where a provider appears to meet the
definition but turns out to be a fraudulent operation.
Our concerns about the definition are therefore twofold: that it
lacks clarity and is too narrow. We believe additional criteria in the
definition would better ensure the provider's operational status and
legitimacy and assist us in preventing sham providers from entering
Medicare. Therefore, we propose the following changes to our
definition.
First, we propose an opening sentence to the definition that would
read ``Operational means (as applicable, based on the type of facility
or organization, provider or supplier specialty, or the services or
items being rendered) the provider or supplier meets all of the
following:''. The parenthetical--which is in the current definition--
would clarify for stakeholders that: (1) certain components of our
revised definition may not apply to all provider types; and (2) CMS
would account for this in applying the definition.
[[Page 41299]]
Second, the previously referenced four bulleted components of the
existing definition would be designated as new paragraphs (1) through
(4) therein. This would improve the definition's readability. (We are
not proposing changes to the first requirement concerning a qualified
practice location.)
Third, proposed paragraph (2) would explain that the requirement
that the provider ``[i]s open to the public for the purpose of
providing health care related services'' includes, but is not limited
to, all of the following:
The provider's location is fully accessible to all
patients and lacks safety hazards.
The provider's hours of business are sufficient to
regularly serve patients.
Medicare beneficiaries can contact and locate the
provider's location based on publicly available information (for
example, the internet).
We believe these three requirements would help verify the
provider's compliance with this criterion. In our view, a provider
whose location threatens patient safety, is inaccessible to
beneficiaries, or cannot be found via public means raises doubts as to
whether the location is truly ``open.''
To assist interested parties in understanding the term
``accessible'' for purposes of the ``operational'' definition, proposed
paragraph (2)(i) would define it as meaning both of the following:
The provider is located in an area and a building that
patients can enter with reasonable ease.
The location is compliant with all Federal Americans with
Disabilities Act regulations and all applicable and equivalent State
and local laws.
These requirements would make clear that providers must--from an
accessibility standpoint--accommodate beneficiaries with disabilities
and those without. We note that the phrase ``located in an area'' does
not mean the provider's location must be, for instance, within a short
drive or a mere 5-mile radius of the beneficiary's home. ``Area'' in
this context would mean the location's immediate vicinity, such as the
parking lot or a larger, multi-building complex in which the provider
has its office. Also, nothing in the first bullet would prevent the
provider from having security locks or security personnel between its
office(s) and the building entrance. It instead references the
beneficiary's ability to enter the building once access is granted (for
instance, security staff signs in the beneficiary and directs the
beneficiary to the provider's office).
Third, we propose in new paragraph (3) to change ``prepared'' to
``prepared and able''. If the provider lacks the administrative or
logistical ability to submit valid claims--even if it may be
``prepared'' to do so--we do not believe the provider can be considered
operational for purposes of Medicare enrollment.
Fourth, and similar to proposed paragraph (2), proposed paragraph
(4) would include the following additional requirements concerning the
``properly staffed, properly equipped. . . .'' criterion:
Provider staff must be qualified (such as licensed or
certified if required under state law) to perform their health care-
related functions.
Equipment must be functional, appropriate for the services
and items the provider intends to furnish, and in sufficient quantity
to provide these items and services.
Appropriate medications for the services and items the
provider intends to furnish and in sufficient quantity to provide these
items and services.
Each of these three requirements, to some extent, already fall
within the existing ``properly staffed, properly equipped. . . .''
category. To illustrate, we do not believe that a provider with little
to no working equipment that is needed to treat beneficiaries--or whose
medical equipment has nothing to do with the services the provider
plans to furnish--can be considered ``properly'' equipped under the
current ``operational'' definition. We believe that specifying these
three requirements in regulation would help interested parties
understand the purview of this criterion.
We also maintain, though, that operationality should require more
than proposed paragraphs (1) through (4), particularly with respect to
administration, safety, and patient care. If, for instance, a provider
lacks any written procedures or policies for these and related
activities, this can indicate an inefficient, unprepared provider that
is not ready to safely treat Medicare patients or to accurately bill
Medicare--in short, one that is not genuinely ``operational''. Again,
we believe the current ``operational'' definition's narrowness can
enable questionable providers to meet it. To thus further strengthen
it, we propose in new paragraph (5) that operationality requires the
provider to have adequate written policies and records regarding its
operations, such as, but not limited to, procedures for patient care,
patient safety, medical and patient recordkeeping, and general
administration.
b. Additional Considerations
We understand that our clarified and expanded definition may raise
concerns about its breadth, applicability, and relationship to other
CMS requirements. We wish to address these in advance. As already
noted, there are numerous types of providers and suppliers, practice
locations, and factual scenarios. Again, therefore, not every
requirement in our revised definition would be applicable to every
provider or situation. We seek to assure providers that while they must
be operational under our proposed definition to enroll in Medicare, we
would continue to account for situations where a particular requirement
cannot realistically apply to the provider based on its type or
circumstances. On the other hand, the reverse could also occur--
specifically, the wide variety of provider types and scenarios might at
times require us to consider information not addressed in our revised
definition in order to determine the provider's operationality. Suppose
a case arises where most of the definition's requirements are
inapplicable to the provider, but this leaves insufficient remaining
criteria for us to determine operational status. We believe we must
have the ability to contemplate other information in this and other
cases. We hence propose an additional (though un-numerated) paragraph
at the end of our revised definition stating that CMS may consider any
information in determining whether the provider is operational.
Proposed paragraph (2)--including the term ``regularly'' therein--
does not establish an across-the-board, minimum hour requirement for
providers to be open for business (for example, Provider X must be open
50 hours a week to be considered ``operational''). Our determination as
to whether the provider meets paragraph (2) would, as presently, be
made on a case-by-case basis.
Perhaps most importantly, our expanded definition would not--and is
not intended to--supplant or supersede existing conditions of
participation, conditions for coverage, certified provider or supplier
survey or accreditation procedures, DMEPOS supplier and quality
standards, and other provider or supplier-specific requirements (such
as IDTF standards in Sec. 410.33(g) and OTP conditions in Sec.
424.67(b) and (e)). ``Operational'' status for purposes of provider
enrollment is, and has always been, an entirely separate and distinct
requirement, which the provider must meet along with all others needed
for enrollment.
[[Page 41300]]
9. Signage (Sec. 424.510(f))
Sections 424.57(c)(7)(i)(D) and 410.33(g)(14)(ii) require DMEPOS
suppliers and IDTFs, respectively, to maintain a visible sign posting
its normal business hours. The former adds that if the supplier's place
of business is located within a building complex, the sign must be
visible at the main entrance of the building (or the hours can be
posted at the entrance of the supplier). We propose in new Sec.
424.510(f) to expand this requirement to include all providers and
suppliers; Sec. 424.510(f) would mirror the current language of Sec.
424.57(c)(7)(i)(D). This would assist beneficiaries and site visit
personnel in locating the provider's business, something that has
occasionally proven difficult because the location contains no signage.
To ensure consistency, we would also revise Sec. 410.33(g)(14)(ii) to
duplicate the language in proposed Sec. 424.510(f).
Consistent with our proposed revisions to the definition of
``operational'' definition; however, Sec. 424.510(f) is not intended
to supersede any other Medicare requirements regarding signage. Section
424.510(f) is strictly an enrollment requirement. In addition, we
recognize that our proposed signage requirement may not be practicable
in all circumstances. This could be due to, for instance, the type of
provider involved, its particular business circumstances, etc. Thus, we
propose the following exceptions to the signage requirement:
The provider shares office space with another provider
(for example, physicians in a group practice sharing a common suite,
though the group itself must have signage).
The provider treats patients in the patients' homes.
The provider treats patients in the provider's home and
only uses the provider's address for administrative purposes.
The provider performs telehealth services from home.
10. Retention and Furnishing of Documentation (Sec. 424.516)
We explained previously that under Sec. 424.516(f)(1), providers
and suppliers that furnish covered ordered, certified, referred, or
prescribed Part A or B services, items or drugs are required to:
Maintain the documentation described in Sec.
424.516(f)(1)(ii) for 7 years from the date of service; and
Upon CMS' or a Medicare contractor's request, provide
access to that documentation.
The documentation described in Sec. 424.516(f)(1)(ii) includes
written and electronic documents (including the NPI of the physician
or, when permitted, other eligible professional who ordered, certified,
referred, or prescribed the Part A or B service, item, or drug)
relating to written orders, certifications, referrals, prescriptions,
and requests for payments for Part A or B services, items or drugs.
Section 424.516(f)(2) contains a similar documentation retention
and submission requirement for physicians (or, when permitted, eligible
professionals) who order, certify, refer, or prescribe Part A or B
services, items or drugs. In addition, Sec. 424.516(a)(10) permits
revocation if the provider or supplier fails to comply with Sec.
424.516(f) documentation and CMS access requirements. Section
424.516(f) helps CMS determine, for instance, whether the service was
reasonable and necessary, whether fraud, waste, or abuse is involved,
and whether the provider is compliant with Medicare requirements.
We propose to add new Sec. 424.516(f)(3) clarifying that all
documentation required to be retained and furnished under Sec.
424.516(f) must be accurate, complete, and compliant with all CMS
requirements. In our documentation reviews, we have seen: (1) patient
charts missing medical director signatures; (2) hospice certifications
signed before the face-to-face encounter; (3) certification end dates
preceding the certification start dates; and (4) other types of
inaccurate records. This makes it difficult for CMS and its contractors
to verify the provider's adherence and the service's necessity; the
program integrity benefits of Sec. 424.516(f) are greatly reduced if
the documentation is inaccurate or non-compliant. We accordingly
believe Sec. 424.516(f)(3) is necessary. However, we emphasize that
our proposal is not intended to establish any new condition of payment.
It would be restricted to the scope of the documents addressed in Sec.
424.516(f).
11. Managing Employees (Sec. 424.502)
The term ``managing employee'' is defined in Sec. 424.502. It
means, in part, a general manager, business manager, administrator,
director, or other individual who exercises operational or managerial
control over, or who directly or indirectly conducts, the day-to-day
operation of the provider. Managing employees have long been required
to be disclosed on the provider's Medicare enrollment application.
Since, as stated, managing employees sometimes have as much or more
influence over a provider's daily operations as an owner, we must know
whether such persons present risks to the Trust Funds.
Yet the risks are not merely financial. We have repeatedly noted
over the years our obligation to protect the health and safety of
Medicare beneficiaries. The provider enrollment process has assisted in
this regard by collecting information on certain medical professionals
within a provider organization. This includes, for example: (1) IDTF
supervising physicians, interpreting physicians, and technicians; (2)
ordering OTP personnel; and (3) hospice and SNF medical directors. The
purpose is to ensure that such persons not only pose no payment
safeguard threats but also are qualified for their roles (such as
meeting State licensure requirements). Unqualified or unvetted medical
personnel can harm Medicare patients.
So great is our concern about this matter that we believe
additional clinical parties should be disclosed on the provider
enrollment application. We hence propose to expand upon our
aforementioned inclusion of hospice and SNF medical directors within
the ``managing employee'' definition. The following persons would be
added:
Medical directors (not merely those at SNFs and hospices)
Clinical directors
Departmental heads (for example, a hospital's chief of
cardiology)
Supervising physicians (not simply those at IDTFs)
Nursing directors
Alternate administrators
All other clinical personnel that meet the ``managing
employee'' definition.
We note four things. First, these categories apply to all provider
and supplier types, including SNFs and hospices. Second, we believe the
persons in these categories already qualify as ``managing employees''
and should have always been reported. They clearly have direct or
indirect control of the provider's day-to-day operations, and the fact
that they are clinical personnel (rather than administrative) is
irrelevant for purposes of determining whether a person is a managing
employee. Our inclusion of them within the ``managing employee''
definition is, in large part, a reminder to stakeholders that clinical
staff must be disclosed if the definition is met. Third, these seven
new bulleted categories do not establish any minimum threshold for
disclosure; for example, even if an individual has less influence than
a departmental head, the person must still be reported as long as the
managing employee definition is met. Fourth, and on the other hand,
this does not mean that every clinical employee regardless of influence
must be reported. Disclosure is only required if the person is a
managing employee.
[[Page 41301]]
12. Corrective Action Plans (CAPs), Rebuttals, and Appeals
In certain situations, a provider or supplier may have an
opportunity to correct a deficiency or contest a CMS finding regarding
its enrollment by submitting, as applicable: (1) a CAP in response to a
Sec. Sec. 424.530(a)(1) or 424.535(a)(1) denial or revocation,
respectively; (2) a rebuttal to a stay or deactivation of enrollment
under Sec. Sec. 424.541 or 424.546, respectively; or (3) an appeal of
an initial determination under 42 CFR 498.3. We propose several
revisions to these processes.
a. CAPs (Sec. 405.809)
Sections 424.530(a)(1) and 424.535(a)(1) permit CMS to deny or
revoke enrollment, respectively, if the provider is not compliant with
the enrollment requirements in Title 42 or in the enrollment
application applicable for its provider type. The provider may submit a
CAP in response to this denial or revocation, which allows the provider
to remedy the deficiency or deficiencies in question and achieve
compliance. As has long been CMS practice, though, Sec. Sec.
424.530(a)(1) and 424.535(a)(1) are the only denial or revocation
reasons under Sec. Sec. 424.530 and 424.535 for which the provider may
submit a CAP. While Sec. 405.809(a)(1) makes this clear with respect
to Sec. 424.535(a)(1), it is silent as to Sec. 424.530(a)(1). To
incorporate this CAP policy into regulation, we propose to add Sec.
424.530(a)(1) denials to Sec. 405.809's purview. This would involve
the following revisions:
Section 405.809's title would change from ``Reinstatement
of provider or supplier billing privileges following corrective
action'' to ``Granting or reinstatement of provider or supplier billing
privileges following corrective action.''
In paragraph (a)(1), the language ``revocation for
noncompliance under Sec. 424.530(a)(1)'' would change to ``denial or
revocation for non-compliance under Sec. 424.530(a)(1) or Sec.
424.535(a)(1)''.
In paragraph (a)(2), ``revocation'' would change to
``denial or revocation''.
In paragraph (b)(1), ``Reinstates'' would change to
``Approves or reinstates''.
Paragraph (b)(1)(i) would be redesignated as paragraph
(b)(1)(i)(B).
Under new paragraph (b)(1)(i)(A), the effective date of
the approval is based on the applicable timeframes described in
Sec. Sec. 424.520 and 424.521. This is consistent with existing
practice.
In paragraph (b)(1)(ii), ``reinstatement'' would change to
``approval or reinstatement''.
In paragraph (b)(2), ``reinstate'' would change to
``approve or reinstate''.
b. Notification of Determinations
Section 498.3(b) lists several CMS or MAC provider enrollment
decisions that are considered ``initial determinations''. These
include, for example, enrollment denials, enrollment revocations, and
inclusion of a provider on the preclusion list. The affected provider
under Sec. 498.5 may request a reconsideration of the initial
determination, for which CMS or, if applicable, the MAC issues a
reconsideration determination. Under Sec. Sec. 498.20(a)(1) and
498.25(a)(1), CMS mails notice of the initial determination or
reconsidered determination, respectively, to the provider. Furthermore,
Sec. Sec. 405.800 requires that denial and revocation notices (as well
as notice regarding the addition of years to a reenrollment bar) be
sent by certified mail. We propose to revise Sec. Sec. 405.800(a),
(b)(1), and (c)(1), 498.20(a)(1) and 498.25(a)(1) to include email as
an acceptable form of notice. We believe this would facilitate faster
notice to the provider without the expense of paper mailing.
c. Appeals of Reactivation Effective Dates
Along with listing types of initial determinations, paragraph (d)
of Sec. 498.3 outlines administrative actions that are not initial
determinations and thus not appealable under part 498. One type of
provider enrollment finding that is not mentioned in either Sec.
498.3(b) or (d) is the effective date of a reactivation under Sec.
424.540(b). Under Sec. 424.540(d)(2), a reactivation effective date is
the date on which the Medicare contractor received the provider's
reactivation submission that the Medicare contractor processed to
approval. Due to lack of clarity among some stakeholders as to whether
an assigned reactivation effective date may be appealed or rebutted, we
propose several regulatory changes.
First, we propose to add new paragraph (3) to Sec. 424.540(d)
stating that a provider or supplier may rebut their assigned
reactivation effective date via the general deactivation rebuttal
procedures in Sec. 424.546. As deactivations are not considered
initial determinations--and to ensure consistent approaches--we do not
believe reactivation effective dates should, either. Yet we also
believe the provider should have an opportunity to be heard on the
matter, and a rebuttal would provide that.
To accommodate reactivation effective date rebuttals within Sec.
424.546, we also propose to revise the latter as follows:
Change the title from ``Deactivation rebuttals'' to
``Rebuttals of deactivations and of reactivation effective dates''.
In paragraph (a)(1), insert the following between ``under
Sec. 424.540,'' and ``the provider or supplier has 15 calendar days'':
``or is assigned a reactivation effective date by CMS or its contractor
under Sec. 424.540(d)(2),''.
In paragraph (b)(2), insert the following between
``effective date,'' and ``and the reasons'': ``(or with the assigned
reactivation effective date)''.
In paragraph (b)(3), insert the following after
``deactivation'': ``or the reactivation effective date''.
Delete existing paragraph (d) and replace with the
following: ``Upon receipt of a timely and compliant deactivation (or
reactivation effective date) rebuttal, CMS reviews the rebuttal to
determine whether the imposition of the deactivation and/or the
designated effective date (or the assigned reactivation effective date)
are correct.''
In this vein, we would also revise Sec. 424.545(b) to include
assignments of reactivation effective dates as a ground for rebuttal.
13. Fingerprinting (Sec. 424.518(c))
Section 424.518(c)(2)(ii)(A) states that 5 percent or greater
individual owners of providers and suppliers in the ``high'' screening
category must submit fingerprints for a national criminal background
check. We propose to revise this paragraph to clarify that individuals
subject to fingerprinting must use the CMS-designated fingerprinting
contractor for this task. This would: (1) facilitate consistency in the
fingerprinting process; and (2) inform individuals as to which
fingerprinting entity to use, a matter that has caused some uncertainty
in the provider community.
14. DMEPOS Accreditation (Sec. 424.58)
Consistent with Sec. Sec. 424.57(c)(22) and 424.58, DMEPOS
suppliers must be accredited by a CMS-approved accrediting organization
(AO) to enroll and remained enrolled in Medicare. Section 424.58
details the general procedures and policies associated with DMEPOS
accreditation. Many of these were added to Sec. 424.58 in the CY 2026
HH PPS final rule (90 FR 55342) in an effort to strengthen CMS'
oversight of the DMEPOS accreditation program in general and the DMEPOS
AOs in particular. This included requirements regarding information and
agreements that AOs must submit to CMS as part of their application/
reapplication process.
[[Page 41302]]
Three of these requirements are as follows:
Per Sec. 424.58(c)(1)(xxiii)(D), agreeing to notify CMS
in writing of any decision to terminate, revoke, withdraw, or amend the
accreditation status of a specific DMEPOS supplier within 3 business
days of the date the AO took action.
Per Sec. 424.58(c)(1)(xxii), describing the AO's
processes for--
++ Detecting and addressing DMEPOS supplier fraud, waste, and abuse
(including identifying the AO's definitions of fraud, waste, and
abuse); and
++ Reporting this activity to CMS and, as applicable, law
enforcement.
Per Sec. 424.58(c)(1)(vii)(D), outlining the AO's
policies and procedures for avoiding conflicts of interest and the
appearance thereof involving individuals who conduct surveys or
participate in accreditation decisions.
Upon further reflection since these three provisions were
promulgated, we propose the following changes.
One revision would change the 3-business day period in Sec.
424.58(c)(1)(xxiii)(D) to 5 calendar days. This would better align with
Sec. 424.58(e)(5)(i), which requires approved AOs to report the same
information to CMS within 5 calendar days. Having two different
timeframes for reporting similar data has led to some confusion.
In addition, there currently is no timeframe in Sec. 424.58 for
reporting the fraud, waste, and abuse described Sec.
424.58(c)(1)(xxii). We propose in new Sec. 424.58(c)(1)(xxiii)(N) that
the AO must agree to notify CMS in writing (and, if applicable, law
enforcement) of suspected fraud, waste, and abuse--consistent with the
AO's CMS-approved definitions of those terms--within 3 calendar days of
the date on which the AO determines that fraud, waste, or abuse may
have occurred. (Current Sec. 424.58(c)(1)(xxiii)(N) would be
redesigned as new Sec. 424.58(c)(1)(xxiii)(O)). Given the seriousness
of such conduct and the current lack of a reporting timeframe Sec.
424.58, we believe a 3-calendar day requirement is warranted.
Notwithstanding the provisions of Sec. 424.58(c)(1)(vii)(D)
regarding conflicts of interest, none of them actually require the AO
to report in its application/reapplication whether it has such
conflicts. To help ensure that CMS makes fully informed AO approval
decisions, we propose to revise Sec. 424.58(c)(1)(vii)(D)(4) to
require the AO to also disclose to CMS all conflicts of interest (as
described in Sec. 424.58(c)(1)(vii)(D)(3)) it currently has and
explain how and when it will terminate them.
15. Affiliations
As indicated previously, and consistent with section 1866(j)(5) of
the Act, Sec. 424.519 states that upon a CMS request, an initially
enrolling or revalidating provider or supplier (hereafter collectively
``provider'' unless otherwise noted) must disclose any and all
affiliations that it or any of its owning or managing employees or
organizations (per Sec. 424.502's definitions of ``owner'' and
``managing employee'') has or, within the previous 5 years, had with a
currently or formerly enrolled Medicare, Medicaid, or CHIP provider
that has a disclosable event (as defined in Sec. 424.502). If CMS
determines that the affiliation poses an undue risk of fraud, waste, or
abuse, CMS may deny or revoke the provider's enrollment under
Sec. Sec. 424.530(a)(13) or Sec. 424.535(a)(19), respectively.
Section 424.502 describes a disclosable event as any of the
following: (1) a current uncollected debt to Medicare, Medicaid, or
CHIP; (2) a payment suspension under a federal health care program; (3)
an OIG exclusion; or (4) a denial, revocation or termination of a
Medicare, Medicaid, or Children's Health Insurance Program enrollment.
For purposes of Sec. 424.519, an ``affiliation'' under Sec.
424.502 includes any of the following (outlined in paragraphs (1)
through (5) of the ``affiliation'' definition, respectively):
A 5 percent or greater direct or indirect ownership
interest that an individual or entity has in another organization.
A general or limited partnership interest (regardless of
the percentage) that an individual or entity has in another
organization.
An interest in which an individual or entity exercises
operational or managerial control over, or directly or indirectly
conducts, the day-to-day operations of another organization (including
sole proprietorships)--either under contract or through some other
arrangement, regardless of whether or not the managing individual or
entity is a W-2 employee of the organization.
An interest in which an individual is acting as an officer
or director of a corporation.
Any reassignment relationship under Sec. 424.80.
These provisions were established via regulation in a final rule
published in the Federal Register on September 10, 2019 (84 FR
47794).\41\
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\41\ ``Medicare, Medicaid, and Children's Health Insurance
Programs; Program Integrity Enhancements to the Provider Enrollment
Process.''
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Since establishing the affiliation regulations, CMS has emphasized
identifying current and past relationships between and among different
providers and suppliers and, if an undue risk exists, denying or
revoking the applicable provider(s). This helps protect the Trust Funds
and beneficiaries from threats that certain provider associations can
pose. Nevertheless, we have found three issues in Sec. 424.519 that we
believe hinder the provision's effectiveness.
One involves the aforementioned 5-year lookback period. We have
seen situations where a relationship from more than 5 years ago still
presents an undue risk of fraud, waste, abuse. In not requiring
disclosure of these affiliations--and, in turn, being unable to deny or
revoke enrollment under Sec. Sec. 424.530(a)(13) or 424.535(a)(19)--we
are effectively permitting a potentially significant fraud, waste, or
abuse risk to remain. This is antithetical to our duty to protect the
Medicare program.
The second pertains to the ``affiliation'' definition in Sec.
424.502. While it covers several types of associations, there are other
conceivably problematic relationships we have encountered in our
program integrity efforts. Consider these hypotheticals:
An individual or entity operates a small building with
over 30 HHAs and hospices that list the building address as their
practice location. Considering our earlier discussion of the high
payment safeguard risk in such situations, the building operator might
be involved with these providers in some type of fraud scheme.
Based on CMS data, five physicians in a known geographic
hotspot for fraud appear to be the primary physician for the same
beneficiary, raising questions as to whether these doctors are sharing
patients for improper purposes.
A provider had a relationship with a financial services
company that had several high-level officials convicted of fraudulent
activity.
A provider hired Marketing Firm X. X had solicited
beneficiaries for four DMEPOS suppliers, all of which were later
revoked with a 10-year reenrollment bar.
These and other scenarios demonstrate that numerous associations
beyond those listed in the ``affiliation'' definition can endanger the
Medicare program, for nefarious parties of all types constantly seek
new means of perpetuating Medicare fraud.
[[Page 41303]]
The third issue also involves the ``affiliation'' definition,
though on a narrower level--specifically, paragraph (3) thereof. As
noted, paragraph (3) addresses relationships where an individual or
entity has operational or managerial control over (or directly or
indirectly conducts) the day-to-day operations of another organization.
(This mirrors our current definitions of ``managing employee'' and
``managing organization in Sec. 424.502.) A recent situation arose
where an individual was a medical director (Dr. A) of two providers--B
and C. C was revoked from Medicare. Since a medical director is a
managing employee under Sec. 424.502, B was revoked under Sec.
424.535(a)(19) consistent with paragraph (3) of the affiliation
definition; that is, Dr. X was an individual with operational or
managerial control over another entity--Providers B and C. This
established the affiliation between B and C, with Dr. X as the clear
link--a view that aligns not only with our longstanding interpretation
of paragraph (3) but also with section 1866(j)(5) of the Act. Moreover,
we believe our position helps ensure the usefulness of section
1866(j)(5) of the Act. A provider generally acts through its owners,
managers, and other personnel. If we applied paragraph (3) only to
situations where a provider operates or manages another provider, we
would be unable to address other cases where the real fraud, waste, and
abuse risk is posed by parties affiliated with both providers. In other
words, we need the ability to go within the provider organization to
the operators and managers to address threats they present.
With all three issues, we believe the fraud, waste, and abuse risk
itself is much more important than when the relationship triggering the
risk occurred, whether the provider entity poses the risk or, instead,
the managing employee, etc. Accordingly, we propose the following
revisions to our affiliation provisions in part 424, subpart P:
We propose to remove the 5-year period from Sec.
424.519(b). So long as the requirements for disclosure are otherwise
met, the affiliation would have to be reported regardless of how long
ago it occurred or ended.
We propose to add new paragraph (6) to the ``affiliation''
definition. Consistent with the second issue, this paragraph would
include any marketing, business, fulfillment, financial, managerial, or
beneficiary relationship. (The ``managerial'' relationships in
paragraph (6) would be those not otherwise falling within paragraph (3)
of the ``affiliation'' definition.)
To reiterate the scope of our affiliation provisions (per
our interpretation of the aforementioned paragraph (3)), we propose to
do the following:
++ In paragraph (3), insert the following language between
``individual or entity,'' and ``exercises operational'': ``or any of
its owning or managing employees or organizations,''.
++ In Sec. Sec. 424.530(a)(13) and Sec. 424.535(a)(19), insert
the following language between ``provider or supplier'' and ``has or
has had'': ``or any of its owning or managing employees or
organizations,''.
16. Savings, Costs, and Other Impacts Concerning the Provider
Enrollment Provisions
a. Monetary Effects
As explained in the RIA section of this proposed rule, we project
annual savings from our proposed enrollment provisions of approximately
$82 million. This would stem from our expansion of retroactive
revocation grounds. Additional savings could accrue from several
proposed new and expanded revocation reasons; however, we are unable to
devise an estimate because we cannot predict how frequently these
authorities would be utilized.
Per our discussion in the ICR section of this proposed rule, we do
not anticipate any ICR costs stemming from our proposed provisions. Yet
we project approximately $1.4 million in annual survey or accreditation
costs due to our revision to Sec. 424.540(b)(3).
b. Additional Impacts
The following discusses other possible impacts of our most
prominent proposals.
(1) New and Expanded Grounds for Revocation or Denial
We do not anticipate a significant impact on providers, suppliers,
or beneficiaries resulting from our proposed denial and revocation
grounds. We have in numerous past rules proposed and finalized new
denial/revocation reasons with no real effect on the universe of
enrolled providers or on the availability of health care. Only a very
small percentage of providers (roughly 3 percent, though this can vary
somewhat) are revoked at least once during their Medicare enrollment,
leaving well over 2 million enrolled providers able to continue
furnishing services. Too, we do not anticipate a substantial increase
in the number of denials and revocations stemming from our proposals;
as we have repeatedly stated in prior rules, we only take denial/
revocation action when appropriate and not as a matter of course.
(2) Retroactive Revocation Reasons
We recognize that some revoked providers and suppliers would be
impacted by our expansion of retroactive revocation effective date
provisions. The $82 million in aforementioned savings might otherwise
be paid to these providers if the prospective effective date were
retained. Again, though, revocations are infrequent, and the annual
number of affected providers would--as explained in this proposed
rule's RIA--be estimated at a mere 337 out of the 2 million-plus
provider universe. The overall impact would therefore be quite limited,
and health care availability would remain robust. Indeed, we also
expanded the number of retroactive revocation effective dates in the CY
2026 HH PPS final rule (90 FR 55342), projecting savings of nearly $2.2
billion resulting from 1,442 annual revocations that would have new
retroactive effective dates. However, this did not cause a material
impact on the provider community or beneficiaries.
Perhaps the largest impact of our denial, revocation, and
retroactive revocation proposals would be on the Trust Funds and, by
extension, the American taxpayers via the saving of monies that should
not have been paid to these providers due to their non-compliance with
enrollment requirements.
(3) Reapplication Bar
While we are proposing to expand our bases for a reapplication bar
to include any denial reason, reapplication bars would remain
discretionary, meaning that not every denial would necessarily invoke
said bar. Moreover, many providers would remain ineligible to enroll in
Medicare long after the denial with or without a reapplication bar;
this is because they would still not meet Medicare requirements. We
hence do not foresee an appreciable impact on providers, suppliers, or
beneficiaries from this proposal, as there would be little change in
the number of enrolled and qualified providers.
(4) Temporary Moratoria
We do not expect a notable impact on providers and beneficiaries
from our temporary moratoria modifications. Moratoria are rare (even
with our three aforementioned current moratoria) and typically limited
to certain provider types and, between 2013 and 2019, geographic
regions. They also do not apply to currently enrolled providers
[[Page 41304]]
and suppliers but only to new enrollments. In addition, our changes to
Sec. 424.570 would be very restricted in scope. Healthcare access
should thus remain unaffected.
(5) Hospice Reactivations
As discussed in more detail in the RIA, we project that only 226
hospices would be affected by our proposal that they must undergo a
State survey or accreditation prior to reactivation. Given this very
small number, we do not foresee this proposal having a substantial
impact on hospices or beneficiaries.
(6) Expansion of ``Operational'' and ``Managing Employee'' Definitions,
Signage, and Documentation Accuracy
We do not believe these proposals would have a material impact on
providers or beneficiaries. In our experience, many providers likely:
(1) meet the parameters of our proposed expanded ``operational''
definition and signage requirements; and (2) retain documentation under
Sec. 424.516(f) that is accurate and complete. We also previously
noted that providers and suppliers should already be reporting the
seven categories of individuals in our proposed ``managing employee''
definition expansion. Health care access should thus remain strong
notwithstanding these proposals.
E. DME Benefit Expansion for Infusion Pumps and Drugs
1. Background
a. Home Infusion Therapy Benefit
In section 5012 of the 21st Century Cures Act (Pub. L. 114-255),
Congress amended section 1861(s)(2) of the Act and added sections
1834(u) and 1861(iii) of the Act to establish a new Medicare home
infusion therapy benefit effective January 1, 2021. This benefit covers
certain professional services associated with the provision of home
infusion therapy to a beneficiary who is under the care of a physician,
nurse practitioner, or physician assistant. Home infusion therapy
involves the intravenous or subcutaneous administration of drugs or
biologicals to an individual at home through an external infusion pump.
As indicated in a final rule, we published in the Federal Register on
November 8, 2019, titled ``Medicare and Medicaid Programs; CY 2020 Home
Health Prospective Payment System Rate Update; Home Health Value-Based
Purchasing Model; Home Health Quality Reporting Requirements; and Home
Infusion Therapy Requirements,'' the external infusion pump and other
supplies, including home infusion drugs, necessary for the effective
use of the pump are covered under the Part B DME benefit rather than
the home infusion therapy benefit (84 FR 60612). Pursuant to section
1861(iii) of the Act, we published a final rule in the Federal Register
on November 13, 2018, titled ``Medicare and Medicaid Programs; CY 2019
Home Health Prospective Payment System Rate Update and CY 2020 Case-Mix
Adjustment Methodology Refinements; Home Health Value-Based Purchasing
Model; Home Health Quality Reporting Requirements; Home Infusion
Therapy Requirements; and Training Requirements for Surveyors of
National Accrediting Organizations'' (83 FR 56406) to define the scope
of ``home infusion therapy,'' ``home,'' ``qualified home infusion
therapy supplier,'' and ``home infusion drug'' at 42 CFR 486 Subpart I.
Section 486.525(a) implements the definition of ``home infusion
therapy'' set forth at section 1861(iii)(1) of the Act, defining the
term to include professional services, including nursing services,
furnished in accordance with the plan of care described under 42 CFR
486.520, patient training and education (not otherwise paid for as
DME), remote monitoring and monitoring services for the provision of
home infusion therapy services and home infusion drugs furnished by a
qualified home infusion therapy supplier in the individual's home.
Section 486.505 implements the definition of ``home'' set forth at
section 1861(iii)(3)(B) of the Act, defining the term as a place of
residence used as the home of an individual, including an institution
that is used as a home. An institution that is used as a home may not
be a hospital, critical access hospital (CAH), or skilled nursing
facility (SNF) as defined in section 1861(e)(1), 1861(mm)(1), or
1819(a)(1) of the Act, respectively.
Section 486.505 implements the definition of ``qualified home
infusion therapy supplier'' set forth at section 1861(iii)(3)(D)(i) of
the Act, defining the term to mean a supplier of home infusion therapy
that meets all of the following criteria which are set forth at section
1861(iii)(3)(D)(i) of the Act: (1) furnishes infusion therapy to
individuals with acute or chronic conditions requiring administration
of home infusion drugs; (2) ensures the safe and effective provision
and administration of home infusion therapy on a 7-day-a-week, 24-hour-
a-day basis; (3) is accredited by an organization designated by the
Secretary in accordance with section 1834(u)(5) of the Act; and (4)
meets such other requirements as the Secretary determines appropriate.
A qualified home infusion therapy supplier may subcontract with a
pharmacy, physician, provider of services, or supplier to meet these
requirements.
Section 486.505 implements the definition of ``home infusion drug''
set forth at section 1861(iii)(3)(C) of the Act, currently defining the
term as a parenteral drug or biological administered intravenously, or
subcutaneously for an administration period of 15 minutes or more, in
the home of an individual through a pump that is an item of DME,
excluding insulin pump systems and self-administered drugs or
biologicals on a self-administered drug exclusion list.
b. Durable Medical Equipment Benefit
Under the Medicare Part B benefit for DME, a limited number of home
infusion drugs (as defined under 42 CFR 486.505) are covered if it is
determined that it is medically necessary to use an external infusion
pump classified as DME for administration of the home infusion drug,
and the home infusion drug being used with the pump is, itself,
reasonable and necessary for the treatment of an illness or injury (84
FR 60612).
For an external infusion pump and associated supplies to be covered
under the Part B DME benefit, the pump must, among other statutory and
regulatory requirements, be ``appropriate for use in the home'' (see 42
CFR 414.202). This requirement means that the equipment must be capable
of being safely and effectively used by the beneficiary or caregiver in
the home without the assistance of a healthcare professional (84 FR
60628). As noted previously, section 1861(iii)(3)(C) of the Act limits
the home infusion therapy benefit to drugs administered in the
patient's home through a pump covered under the DME benefit as defined
under section 1861(n) of the Act. Therefore, historically, external
infusion pumps and associated home infusion drugs that do not meet the
``appropriate for use in the home'' requirement have not been eligible
for coverage under the DME benefit and services associated with
administering the home infusion have not been covered under the Part B
home infusion therapy benefit.
2. Current Issues
Section 6222(a) of the Consolidated Appropriations Act, 2026 (CAA,
2026) (Pub. L. 119-75) amended section 1861(n) of the Act to expand the
scope of the Medicare Part B benefit for DME to include certain
external infusion pumps and associated home infusion drugs (as defined
in section
[[Page 41305]]
1861(iii)(3)(C) of the Act) or other associated supplies that would not
otherwise qualify as DME because the use of such device would not meet
the ``appropriate for use in the home'' requirement applied to the DME
definition at 42 CFR 414.202. As stated in section V.E.1. of this
proposed rule, CMS has historically interpreted the requirement that
DMEPOS must be ``appropriate for use in the home'' to mean that the
equipment must be capable of being safely and effectively used by the
beneficiary or caregiver in the home without the assistance of a
healthcare professional.
Effective for items furnished on or after April 1, 2027, section
6222(a) of the CAA, 2026, states an external infusion pump and
associated home infusion drug (as defined in section 1861 (iii)(3)(C)
of the Act) or other associated supplies that do not meet the
appropriate for use in the home requirement applied to the definition
of DME under 42 CFR 414.202 (or any successor to such regulation) shall
be treated as meeting such requirement if each of the following
criteria is satisfied:--
The prescribing information approved by the FDA for the
home infusion drug associated with the pump instructs that the drug
should be administered by or under the supervision of a health care
professional;
A qualified home infusion therapy supplier, as defined in
section 1861(iii)(3)(D) of the Act, administers or supervises the
administration of the drug or biological in a safe and effective manner
in the patient's home, as defined in section 1861(iii)(3)(B) of the
Act; and
The FDA-approved prescribing information instructs that
the home infusion drug be infused at least 12 times per year:
++ Intravenously or subcutaneously; or
++ Infusion rates that the Secretary determines would require the
use of an external infusion pump.
Section 6222(a) of the CAA, 2026 does not define the term ``health
care professional''. We propose that the term ``health care
professional'' would refer to any of the following clinicians, provided
that such clinician is permitted to administer or supervise the
administration of a home infusion drug in accordance with Federal and
State law: physician (as defined in section 1861(r) of the Act); a
clinical nurse specialist, nurse practitioner, or a physician assistant
(as such terms are defined in section 1861(aa)(5) of the Act and
regulations at 42 CFR 410.74 through 410.76); or a registered nurse
otherwise licensed to practice nursing in the State in which the home
infusion drug is administered. To ensure consistency across the
Medicare program, we propose to define physician, clinical nurse
specialist, nurse practitioner, and physician assistant as such terms
are defined under the Medicare home health benefit. Given that sections
1861(r) and (aa)(5) of the Act (as codified at 42 CFR 410.74 through
410.76) do not define ``registered nurse'', we propose to define
``registered nurse'' as a clinician licensed to practice nursing in the
State in which the home infusion drug is administered.
Because of the risks associated with administering certain home
infusion drugs in the home under the expanded DME benefit, we propose
limiting the definition of ``health care professional'' to these
practitioners. We are aware of at least one drug, patisiran, that
presents heighted safety risks and that may meet the new criteria and
definition of home infusion drug under the revised definition of DME at
section 1861(n) of the Act. In accordance with the prescribing
information for the drug patisiran, adverse reactions during clinical
trials included upper respiratory tract infections as well as infusion-
related reaction symptoms including dizziness, headaches, chest pain,
and other symptoms. Four serious adverse reactions of atrioventricular
(AV) heart block (2.7 percent) occurred in patients treated with
patisiran, including three cases of complete AV block. Warnings and
precautions regarding infusion-related reactions under the highlights
of prescribing information include the need to monitor for signs and
symptoms of reactions during infusion, slow or interrupt the infusion
if clinically indicated, and discontinue the infusion if a serious or
life-threatening infusion-related reaction occurs. Infusion-related
reactions for other home infusion drugs that may be covered under the
expansion of the DME benefit could be even more serious and require
emergency medical assistance in certain situations. Based on our
review, we believe that such safety concerns may be adequately
monitored and mitigated if either a physician, clinical nurse
specialist, nurse practitioner, physician assistant, or registered
nurse administers or supervises the administration of the home infusion
drug. We believe any of these clinicians, if available on hand, could
address any emergency medical events that occur during the course of
the infusion of the drug. We are soliciting comments on this proposal,
including whether there are other clinicians that may be equally
qualified to administer or supervise the infusions of the drugs in the
home and also address any emergency medical events that occur during
the course of the infusion of the drug.
Note, we are not proposing that the term ``health care
professional'' be defined to include a licensed practical nurse (LPN)
or licensed vocational nurse (LVN) under the supervision of a
registered nurse or physician. State law varies in terms of whether an
LPN or LVN can perform certain emergency services such as delivering
emergency medications. Thus, it is not clear that addressing the
adverse affects associated with the administration of certain home
infusion drugs would consistently fall under an LPN's or LVN's scope of
practice. Additionally, as LPNs and LVNs practice under supervision
without the same level of independent clinical authority as the
professionals identified above, we believe they are less suited to
serve as a health care professional for administering complex home
infusion drugs under the expanded Medicare DME benefit. In addition, we
do not believe that supervising the administration of the drug in the
home should be done remotely as this could violate state laws and
compromise the safety of the home infusion therapy as a health care
professional would not be present to perform any necessary emergency
services. In order to be present and able to perform emergency services
in the home setting if necessary for the safety and health of the
beneficiary, we are proposing that the health care professional be on
site at the home to administer or directly supervise the administration
of a home infusion drug covered under the expanded DME benefit. We are
soliciting comments on this proposal.
As stated previously, section 6222(a) of the CAA, 2026 expands the
DME benefit category to include external infusion pumps and associated
home infusion drugs to include home infusion drugs that: (1) are
infused at least 12 times per year intravenously or subcutaneously
(section 1861(n)(3)(A) of the Act); or (2) infused at infusion rates
that the Secretary determines would require the use of an external
infusion pump (section 1861(n)(3)(B) of the Act). Based on our review,
there do not currently appear to be any home infusion drugs that must
be infused at rates that would require the use of an external infusion
pump that do not otherwise already fall under the criterion set forth
under section
[[Page 41306]]
1861(n)(3)(A) of the Act. Therefore, we are not proposing at this time
to include additional drugs under the scope of this DME benefit
category expansion that do not already meet the criterion set forth
under section 1861(n)(3)(A) of the Act. The criterion specified in
section 1861(n)(3) of the Act is that the drug must be infused at least
12 times per year. Because of the way dosing information is typically
framed in the prescribing information, we propose that to meet this
requirement, the drug must be infused at least once per month. We
believe such limitation would be appropriate given that it is aligned
with how home infusion drugs are typically framed in the prescribing
information. We therefore propose that home infusion drugs covered
under this expanded DME benefit must be infused at least once a month.
We are soliciting comments on this proposal.
Note, we are not proposing a minimum or maximum number of times a
drug must be infused to qualify as a ``home infusion drug''. The
duration of treatment is not always clear and is often patient-
dependent. Prescribing information for infusion drugs will often call
for infusions to continue indefinitely, until toxicity, or until
adverse reactions preclude further treatment.
Finally, section 6222(b) of the CAA, 2026 requires the Secretary to
ensure that patients are notified of the cost sharing for electing home
infusion therapy compared to other applicable settings of care for the
furnishing of infusion drugs under the Medicare program. We plan to
implement this provision through sub regulatory guidance.
3. Provisions of the Proposed Regulation
We propose to revise the definition of DME under 42 CFR 414.202 to
incorporate the amendments to section 1861(n) of the Act for
implementation of section 6222(a) of the CAA, 2026, effective April 1,
2027. Specifically, we propose to provide that certain external
infusion pumps, associated home infusion drugs, and related supplies
will be treated as meeting the ``appropriate for use in the home''
requirement when the following three criteria under paragraphs (1)
through (3) of section 1861(n) of the Act are satisfied:
The prescribing information approved by the FDA for the
home infusion drug (as defined in Sec. 486.505) associated with the
pump instructs that the drug should be administered by or under the
supervision of a health care professional. The health care professional
must be a clinical nurse specialist (as defined Sec. 410.76), nurse
practitioner (as defined Sec. 410.75), physician assistant (as defined
Sec. 410.74), physician as defined in section 1861(r) of the Act, or a
registered nurse otherwise licensed to practice nursing in the State in
which the home infusion drug is administered. The health care
professional must be on site at the home to administer or supervise the
administration of the home infusion drug.
A qualified home infusion therapy supplier (as defined in
Sec. 486.505) administers or supervises the administration of the home
infusion drug in a safe and effective manner in the patient's home (as
defined in Sec. 486.505)
The prescribing information instructs that the home
infusion drug be infused at least 12 times per year (at least once a
month), either intravenously or subcutaneously, or at infusion rates
that the Secretary determines would require the use of an external
infusion pump. We are soliciting comments on this proposal.
D. DMEPOS Competitive Bidding Program--Country of Origin
CMS is planning to request to revise the information collection for
the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Competitive Bidding Program (CBP), under OMB Control Number
0938-1408 (CMS-10744), to collect from DMEPOS CBP contract suppliers
the country of origin for the lead items furnished during the DMEPOS
CBP contract's period of performance.
DMEPOS CBP contract suppliers are required to use a reporting form,
known as Form C, to provide product information (manufacturer name,
model name, and model number) for the lead item they furnish. During an
active round of the DMEOPS CBP, the information provided in the form is
included in the Supplier Directory on the Medicare.gov website with the
products the supplier plans to provide during the next 6-month period.
Contract suppliers are required, as a term of their contracts, to
maintain the accuracy of their product information for the lead item
they furnish using Form C. Form C includes an attestation that all the
reported information is accurate and up to date. This attestation needs
to be completed to fulfill a Form C submission requirement.
We plan to request to revise the information collection to include
the country of origin for each lead item they report on a new ``country
of origin'' field on Form C. As done historically with the product
information reported on Form C by a contract supplier, the reported
country of origin information would be populated on the Medicare
Supplier Directory for the contract supplier during the contract period
of performance. This information would allow beneficiaries and
interested parties to have access to the information on the country
from which the DMEPOS item originated, if interested.
Contract suppliers would identify the country of origin based on
the markings on the product for the lead item, or where an exemption to
marking applies, obtain documentation from the manufacturer or
distributor. Under U.S. Customs and Border Protections rules, imported
goods must be properly marked with: ``Made in [Country],'' unless an
exemption applies (for example, an item that is incapable of being
marked, like a catheter), as explained at 19 CFR 134.32.
To correctly identify the country of origin for a product in the
absence of a marking or to verify a marking, contract suppliers may
need to obtain documentation from the manufacturer or distributor
indicating the country of origin for its product, which could include
one or a combination of the following: manufacturer certifications,
bills of materials, manufacturing process descriptions, commercial
invoices, U.S. Customs and Border Protection entry documentation, or a
Harmonized Tariff Schedule classification.
The details for this update to Form C will be included under OMB
Control Number 0938-1408 (CMS-10744).
VI. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
Under the Paperwork Reduction Act of 1995, we are required to
provide a notice in the Federal Register and solicit public comment
before a collection of information requirement is submitted to the
Office of Management and Budget (OMB) for review and approval. In order
to fairly evaluate whether an information collection should be approved
by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
[[Page 41307]]
B. Information Collection Requirements (ICRs)
In this HH PPS proposed rule, we are soliciting public comment on
each of these issues for the following sections of this document that
contain information collection requirements (ICRs). Failure to submit
HH QRP data required under section 1895(b)(3)(B)(v) of the Act with
respect to a program year would result in the reduction of the annual
home health market basket percentage increase otherwise applicable to
an HHA for the corresponding calendar year by 2 percentage points.
1. ICRs for HH QRP
As discussed in section III of this proposed rule, we are proposing
to revise the HH QRP data submission deadlines beginning with the CY
2027 HH QRP. CMS is also proposing to revise the HH QRP OASIS and
HHCAHPS Annual Payment Update (APU) reporting timeframe to report a
calendar year of data (January 1 through December 31). CMS proposes
some revisions to regulatory text in support of rule proposals or to
improve digital transfer of information during the reconsiderations
process. Finally, we are soliciting public comments on one Request for
Information (RFI) on future measure concepts for the HH QRP.
The net effect of these proposals is no changes to expected burden
associated with OASIS data collection.
2. ICRs for the Expanded HHVBP Model
There are no proposals for the expanded HHVBP Model.
3. ICRs for DMEPOS Requirements for Identical Replacement Items
This proposed clarification neither imposes new information
collection requirements nor eliminates existing ones. Rather, it
further explains and reinforces the intent of this section when the
item furnished is a replacement item. The PRA package for Medicare Fee-
for-Service Prepayment Review of Medical Records is CMS-10417 and
approved under OMB control number 0938-0969. In section V.B. of this
proposed rule, we clarify that a new face-to-face encounter and related
documentation are not required to support payment for replacement
durable medical equipment, prosthetic, orthotic and supply (DMEPOS)
items. Under existing Medicare requirements, suppliers and providers
are already obligated to maintain documentation sufficient to
demonstrate compliance with coverage requirements under 42 CFR 410.38
at the time the item is furnished. This rule clarifies that CMS does
not consider an additional comprehensive beneficiary examination
necessary to ``gather[ ] subjective and objective information
associated with diagnosing, treating, or managing a clinical condition
for which the DMEPOS is ordered'' when the item being furnished is a
replacement item. If a claim for a replacement DMEPOS item is subject
to audit, the provider must nevertheless submit documentation from the
original face-to-face encounter to demonstrate that medical necessity,
billing and coverage requirements have been satisfied. Accordingly, the
intent of 42 CFR 410.38, which requires a face-to-face encounter for
certain DMEPOS items, would continue to apply when the item is
initially furnished; however, the requirement would not need to be
repeated solely for replacement items. Therefore, we assume this
clarification would have a negligible monetary impact.
4. ICRs for Provider Enrollment
We do not believe that any of our proposed provider enrollment
regulatory revisions would impose an information collection burden on
interested parties. However, there are several provisions about which
clarification on this matter is needed.
a. Signage
Proposed Sec. 424.510(f) would require all providers and suppliers
(regardless of type) to maintain a permanent visible sign in plain view
and post their hours of operation. We believe the vast majority of
providers and suppliers already do so; in accordance with the
implementing regulations of the PRA at 5 CFR 1320.3(b)(2), providers
and suppliers typically maintain such policies and records as a usual
and customary business practice. Therefore, we have not assigned any
burden to this requirement.
b. Clarification of ``Managing Employee'' Definition
All providers and suppliers must report their managing employees
(and any changes in their managing employees) to CMS. This reporting
requirement falls within the overall OMB-approved ICR burden for the
following forms:
Form CMS-855A (Medicare Enrollment Application for
Institutional Providers; OMB Control No. 0938-0685).
Form CMS-855B (Medicare Enrollment Application--Clinics/
Group Practices and Certain Other Suppliers; OMB Control No. 0938-
1377).
Form CMS-855I (Medicare Enrollment Application--Physicians
and Non-Physician Practitioners; Clinics/Group Practices and Certain
Other Suppliers; OMB Control No. 0938-1355).
Form CMS-855S (Medicare Enrollment Application--Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Suppliers; OMB Control No. 0938-1056).
We are proposing to revise the definition of ``managing employee''
in Sec. 424.502 to identify certain individuals who fall within this
definition. This would not impose an additional ICR burden, though,
because these persons have always qualified as managing employees and
thus must be reported. We are simply identifying them in Sec. 424.502
to reiterate this point.
c. Documentation
(1) ``Operational''
Proposed paragraph (5) of our proposed revised definition of
``operational'' in Sec. 424.502 would require, in part, that the
provider or supplier have adequate written policies and records
regarding its operations. We do not believe this would impose an
additional information collection burden on providers and suppliers. In
accordance with the implementing regulations of the PRA at 5 CFR
1320.3(b)(2), providers and suppliers typically maintain such policies
and records as a usual and customary business practice. Therefore, we
have not assigned any burden to this requirement.
(2) Section 424.516(f)
Section 424.516(f) requires providers and suppliers to maintain
certain types of documentation. We are proposing to revise this
paragraph to make clear that said documentation must be accurate,
complete, and consistent with CMS requirements. We do not believe this
would impose an additional information collection burden on providers
and suppliers. In accordance with the implementing regulations of the
PRA at 5 CFR 1320.3(b)(2), providers and suppliers typically maintain
such policies and records as a usual and customary business practice.
Therefore, we have not assigned any burden to this requirement.
d. Private Equity Companies (PECs) and Real Estate Investment Trusts
(REITs)
The Form CMS-855A enrollment application for certified providers
and certain certified suppliers (Medicare Enrollment Application for
Institutional Providers OMB Control No. 0938-0685) requires providers
and suppliers to report whether any party listed on the
[[Page 41308]]
application is a PEC or a REIT. We are announcing in this proposed rule
our intention to expand this requirement to the following Medicare
provider and supplier enrollment forms:
Form CMS-855B (Medicare Enrollment Application--Clinics/
Group Practices and Certain Other Suppliers; OMB Control No. 0938-
1377).
Form CMS-855S (Medicare Enrollment Application--Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Suppliers; OMB Control No. 0938-1056).
Form CMS-20134 (Medicare Diabetes Prevention Program
(MDPP) Suppliers).
Although this announcement would not, in and of itself, impose an
information collection burden, the revisions of the Forms CMS-855B and
CMS-855S, to collect PEC and REIT data would do so. The Forms CMS-855B
and CMS-855S burdens will be addressed in the information collection
requests that CMS will submit to the Office of Management and Budget to
request revisions to these two forms. However, the Form CMS-20134 is
exempt under section 1115(a) of the Affordable Care Act.
e. Disclosure of Affiliations
As discussed in section V.C. of this proposed rule, we are
proposing to revise our affiliation provisions in Sec. Sec. 424.502
and 424.519. We solicit comment from interested parties as to whether
any additional ICR burden would ensue from these changes.
f. Reactivation Effective Dates
We are proposing to permit providers that have been assigned an
effective date for their reactivation to submit a rebuttal if they
disagree with said date. We believe the rebuttal and the associated
burden would be incurred subsequent to an administrative action. In
accordance with the implementing regulations for the PRA (5 CFR
1320.4(a)(2) and (c)), the burden associated with any information
collected subsequent to the administrative action is exempt from the
requirements of the PRA (that is, the rebuttal submitted subsequent to
the assignment of the reactivation effective date).
5. ICRs for Country of Origin
When ready, the following changes will be submitted to OMB for
review under control number 0938-1408 (CMS-10744) using the standard,
non-rule related PRA process (which includes the publication of 60- and
30-day Federal Register notices) to facilitate the change.
As discussed in section V.E. of this proposed rule, we plan to
revise Form C (Semi-Annual Report) to collect the country of origin
information for the lead items furnished during the DMEPOS CBP
contract's period of performance. Because contract suppliers are
required to submit Form C once every 6 months during January and July
throughout the DMEPOS Competitive Bidding Program contract's period of
performance, contract suppliers would be required to report this
information twice a year. A DMEPOS CBP contract supplier would continue
to be required as a term of its contract to maintain the accuracy of
its product information (manufacturer name, model name, and model
number) for the lead item it furnishes on Form C, and they would now be
required to also maintain the accuracy of the country of origin for
each product it reports in a newly added ``country of origin'' field on
Form C. Form C would continue to require an attestation that all the
reported information is accurate and up to date.
Contract suppliers should be able to identify the country of origin
based on the markings on the product for the lead item. For example,
under U.S. Customs and Border Protections rules, imported goods must be
properly marked with: ``Made in [Country],'' unless an exemption
applies (for example an item that is incapable of being marked, like a
catheter), as explained at 19 CFR 134.32. To correctly identify the
country of origin for a product in the absence of a marking or to
verify a marking, contract suppliers may need to refer to readily
available documentation from the manufacturer or distributor indicating
the country of origin for its product, which could include a
combination of the following: manufacturer certifications, bills of
materials, manufacturing process descriptions, commercial invoices,
U.S. Customs and Border Protection entry documentation, or a Harmonized
Tariff Schedule classification.
At this time, we estimate that each annual response would take 0.2
hours (1 bidder/year x 0.1 hr/response x 2 responses/year) at a cost of
$20.84 (0.2 hr x $104.22/hr). Given that the number of suppliers that
will be awarded a Round 2028 DMEPOS CBP contract is not yet finalized,
we are providing an estimated annual response time as opposed to an
aggregate figure that considers the total number of awarded suppliers.
Our proposed number of respondents and other burden estimates will be
revised once the number of DMEPOS CBP contracts for Round 2028 is
finalized, and will be restated when we publish our 60- and 30-day
Federal Register notices. This information will be updated when the
final rule is published.
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VII. Regulatory Impact Analysis
A. Statement of Need
1. HH PPS
Section 1895(b)(1) of the Act requires the Secretary to establish
an HH PPS for all costs of home health services paid under Medicare. In
addition, section 1895(b) of the Act requires: (1) the computation of a
standard prospective payment amount include all costs for home health
services covered and paid for on a reasonable cost basis and that such
amount be initially based on the most recent audited cost report data
available to the Secretary; (2) the prospective payment amount under
the HH PPS to be an appropriate unit of service based on the number,
type, and duration of visits provided within that unit; and (3) the
standard prospective
[[Page 41309]]
payment amount be adjusted to account for the effects of case-mix and
wage levels among HHAs. Section 1895(b)(3)(B) of the Act addresses the
annual update to the standard prospective payment amounts by the home
health applicable percentage increase. Section 1895(b)(4) of the Act
governs the payment computation. Sections 1895(b)(4)(A)(i) and
(b)(4)(A)(ii) of the Act require the standard prospective payment
amount be adjusted for case-mix and geographic differences in wage
levels. Section 1895(b)(4)(B) of the Act requires the establishment of
appropriate case-mix adjustment factors for significant variation in
costs among different units of services. Lastly, section 1895(b)(4)(C)
of the Act requires the establishment of wage adjustment factors that
reflect the relative level of wages, and wage-related costs applicable
to home health services furnished in a geographic area compared to the
applicable national average level.
Section 1895(b)(3)(B)(iv) of the Act provides the Secretary with
the authority to implement adjustments to the standard prospective
payment amount (or amounts) for subsequent years to eliminate the
effect of changes in aggregate payments during a previous year or years
that were the result of changes in the coding or classification of
different units of services that do not reflect real changes in case-
mix. Section 1895(b)(5) of the Act provides the Secretary with the
option to make changes to the payment amount otherwise paid in the case
of outliers because of unusual variations in the type or amount of
medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires
HHAs to submit data for purposes of measuring health care quality and
links the quality data submission to the annual applicable percentage
increase.
Sections 1895(b)(2) and 1895(b)(3)(A) of the Act, as amended by
sections 51001(a)(1) and 51001(a)(2) of the BBA of 2018 respectively,
required the Secretary to implement a 30-day unit of payment, for 30-
day periods beginning on and after January 1, 2020. Section
1895(b)(3)(D)(i) of the Act, as added by section 51001(a)(2)(B) of the
BBA of 2018, requires the Secretary to annually determine the impact of
differences between assumed behavior changes, as described in section
1895(b)(3)(A)(iv) of the Act, and actual behavior changes on estimated
aggregate expenditures under the HH PPS with respect to years beginning
with 2020 and ending with 2026. Section 1895(b)(3)(D)(ii) of the Act
requires the Secretary, at a time and in a manner determined
appropriate, through notice and comment rulemaking, to provide for one
or more permanent increases or decreases to the standard prospective
payment amount (or amounts) for applicable years, on a prospective
basis, to offset for such increases or decreases in estimated aggregate
expenditures, as determined under section 1895(b)(3)(D)(i) of the Act.
Additionally, 1895(b)(3)(D)(iii) of the Act requires the Secretary, at
a time and in a manner determined appropriate, through notice and
comment rulemaking, to provide for one or more temporary increases or
decreases to the payment amount for a unit of home health services for
applicable years, on a prospective basis, to offset for such increases
or decreases in estimated aggregate expenditures, as determined under
section 1895(b)(3)(D)(i) of the Act. The HH PPS wage index utilizes the
wage adjustment factors used by the Secretary for purposes of sections
1895(b)(4)(A)(ii) and (b)(4)(C) of the Act for hospital wage
adjustments.
2. HH QRP
Section 1895(b)(3)(B)(v) of the Act authorizes the HH QRP, which
requires HHAs to submit data in accordance with the requirements
specified by CMS. Failure to submit data required under section
1895(b)(3)(B)(v) of the Act with respect to a program year will result
in the reduction of the annual home health market basket percentage
increase otherwise applicable to an HHA for the corresponding calendar
year by 2 percentage points.
3. Expanded HHVBP Model
In the CY 2022 HH PPS final rule (86 FR 62292 through 62336) and
codified at 42 CFR part 484, subpart F, we finalized our policy to
expand the HHVBP Model to all Medicare certified HHAs in the 50 States,
territories, and District of Columbia beginning January 1, 2022. CY
2022 was a pre-implementation year. CY 2023 was the first performance
year in which HHAs individual performance on the applicable measures
affects their Medicare payments in CY 2025. We are not proposing any
expanded HHVBP Model-specific changes in this proposed rule.
4. DMEPOS Requirements for Identical Replacement Items
In this proposed rule, we would clarify that a new face-to-face
encounter and related documentation, as described in 42 CFR 410.38, is
not necessary to support the payment of replacement DMEPOS items.
5. Provider Enrollment
Consistent with section 1866(j) of the Act, we are proposing a
number of Medicare provider enrollment provisions to strengthen and
clarify certain aspects of the provider enrollment process. These
include but are not limited to: (1) adding and modifying grounds for
denying or revoking 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.
6. DMEPOS Coverage of External Infusion Pumps
With section 6222 of the Consolidated Appropriations Act, 2026,
Congress modified section 1861(n) of the Act to expand the scope of the
DME benefit to enable coverage for home infusion of drugs that: (1)
must be administered by or under the supervision of a health care
professional; (2) are administered by a qualified home infusion therapy
supplier; and (3) have prescribing information that requires infusion
at least 12 times per year. This regulatory action implements the
changes made by section 6222 of the CAA, 2026 to the definition of DME.
7. DMEPOS Competitive Bidding--Country of Origin
For the DMEPOS CBP, we discuss requesting to revise the information
collection under OMB Control Number 0938-1408 (CMS-10744) to collect
from DMEPOS Competitive Bidding contract suppliers the country of
origin for the lead items furnished during the DMEPOS CBP contract's
period of performance.
The reported country of origin information would be populated on
the Medicare Supplier Directory for the contract supplier during the
contract period of performance so beneficiaries and interested parties
may learn where the DMEPOS item originated, if interested.
B. Overall Impact
We have examined the impacts of this proposed rule as required by
Executive Order 12866, ``Regulatory Planning and Review''; Executive
Order 13132, ``Federalism''; Executive Order 13563, ``Improving
Regulation and Regulatory Review''; Executive Order 14192, ``Unleashing
Prosperity Through Deregulation''; the Regulatory Flexibility Act (RFA)
(Pub. L. 96 354);
[[Page 41310]]
section 1102(b) of the Social Security Act; and section 202 of the
Unfunded Mandates Reform Act of 1995.
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; and distributive
impacts). Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as any regulatory action that is likely to result
in a rule that may: (1) have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1) of
Executive Order 12866. Based on our estimates, OMB's Office of
Information and Regulatory Affairs has determined this rulemaking is
significant per section 3(f)(1) of Executive Order 12866. Accordingly,
we have prepared a regulatory impact analysis that presents the cost
and benefit of the rulemaking to the best of our ability.
C. Detailed Economic Analysis
1. Effects of the Proposed Changes for the CY 2027 HH PPS
This rule proposes to update Medicare payments under the HH PPS for
CY 2027. The net transfer impact related to the changes in payments
under the HH PPS for CY 2027 is estimated to be $420 million (2.4
percent) above the current projected CY 2026 baseline of $17.575
billion, leading to total projected spending of approximately $18
billion for 2027. The $420 million increase in estimated payments for
CY 2027 reflects the effects of the proposed CY 2027 home health
payment update percentage of 2.1 percent ($370 million increase), and
an estimated 0.3 percent increase that reflects the updated FDL ($50
million increase).
We use the latest data and analysis available. However, we do not
adjust for future changes in such variables as number of visits or
case-mix. This analysis incorporates the latest estimates of growth in
service use and payments under the Medicare home health benefit, based
primarily on Medicare claims data for periods that ended on or before
December 31, 2025. We note that certain events may combine to limit the
scope or accuracy of our impact analysis, because such an analysis is
future-oriented and, thus, susceptible to errors resulting from other
changes in the impact time period assessed. Some examples of such
possible events are newly legislated general Medicare program funding
changes made by the Congress or changes specifically related to HHAs.
In addition, changes to the Medicare program may continue to be made as
a result of new statutory provisions. Although these changes may not be
specific to the HH PPS, the nature of the Medicare program is such that
overall changes may interact, and the complexity of the interaction of
these changes could make it difficult to predict accurately the full
scope of the impact upon HHAs.
Table 36 represents how HHA revenues are likely to be affected by
the proposed policy changes for CY 2027. For this analysis, we used an
analytic file with linked CY 2025 OASIS assessments and home health
claims data for dates of service that ended on or before December 31,
2025. The first column of table 36 classifies HHAs according to a
number of characteristics including provider type, geographic region,
and urban and rural locations. The second column shows the number of
facilities in the impact analysis. The third column shows the payment
effects of the recalibration of the case-mix weights offset by the
case-mix weight budget neutrality factor. The fourth column shows the
payment effects of updating the CY 2027 wage index (that is, the FY
2027 hospital pre-floor, pre-reclassified wage index for hospital cost
reporting periods beginning on or after October 1, 2022, and before
October 1, 2023 (FY 2023 cost report data) with a 5-percent cap on wage
index decreases. The aggregate impact of the changes in the fourth
column is zero percent, due to the wage index budget neutrality factor.
The fifth column shows the payment effects of the proposed CY 2027 home
health payment update percentage. The sixth column shows the payment
effects of the proposed FDL. The seventh column shows the payment
effects of the proposed temporary adjustment on all payments. The
aggregate impact of the proposed temporary adjustment reflected in the
seventh column equals zero percent because both the CY 2026 and CY 2027
payment rates would include a 3.0 percent temporary adjustment. The
last column shows the combined effects of all the proposed provisions.
Overall, it is projected that aggregate payments in CY 2027 would
increase by 2.4 percent, which reflects the proposed 2.1 percent
increase to the home health payment update percentage and the 0.3
percent increase from the updated FDL. As illustrated in table 36, the
combined effects of all changes vary by specific types of providers and
by location. We note that some individual HHAs within the same group
may experience different impacts on payments than others due to the
distributional impact of the CY 2027 wage index, the percentage of
total HH PPS payments that were subject to the LUPA or paid as outlier
payments, and the degree of Medicare utilization.
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BILLING CODE 4169-69-C
2. Effects of the Proposed Changes for the HH QRP for CY 2027
Failure to submit HH QRP data required under section
1895(b)(3)(B)(v) of the Act with respect to a program year will result
in the reduction of the annual home health market basket percentage
increase otherwise applicable to an HHA for the corresponding calendar
year by 2 percentage points. For the CY 2023 program year, 820 of the
11,549 active Medicare-certified HHAs, or approximately 7.1 percent,
did not receive the full annual percentage increase because they did
not meet assessment submission requirements. The 820 HHAs that did not
satisfy the reporting requirements of the HH QRP for the CY 2023
program year represent $149 million in home health claims payment
dollars during the reporting period out of a total $16.4 billion for
all HHAs.
This proposed rule proposes to revise the HH QRP data submission
deadlines beginning with the CY 2027 HH QRP. We also propose to revise
the HH QRP OASIS and HHCAHPs annual payment update (APU) reporting
timeframe to report a calendar year of data (January 1 through December
31). We propose revisions to regulatory text in support of rule
proposals to improve digital transfer of information during the
reconsiderations process. Finally, we are soliciting public comments on
one Request for Information (RFI) on future measure concepts for the HH
QRP. The net effect of these proposals is no change in burden for OASIS
data collection.
3. Effects of the Expanded HHVBP Model
In the CY 2022 HH PPS final rule (88 FR 77676), we estimated that
the expanded HHVBP Model would generate a total projected 5-year gross
FFS savings of $3,376,000,000. Given that we are not proposing any
expanded HHVBP Model specific changes in this proposed rule, these
estimates are unchanged.
4. DMEPOS Requirements for Identical Replacement Items
This proposed provision would clarify that a face-to-face encounter
and related documentation, as described in 42 CFR 410.38, is not
necessary to support the payment of replacement DMEPOS items. The
fiscal impact of this clarification cannot be estimated as this rule
only identifies whether a face-to-face encounter is required for
payment for replacement of DMEPOS items. Given the volume of Medicare
beneficiaries and associated claims for payment, we do not audit all
claim submissions for compliance with Medicare conditions of payment--
including the face-to-face encounter. In addition, for those claims
audited, it is one of many Medicare coverage requirements, and
therefore delineating its compliance rate is not operationally
feasible. This situation can only be identified upon medical record
review, and replacements were not the sole focus of a medical review
audit. Rather, varied medical review decision-making and the need for
this clarification was identified anecdotally. As such, we cannot
reliably forecast any cost for this limited subset of claims for
replacement items
5. Provider Enrollment
As previously noted, we are proposing a number of provider
enrollment provisions to strengthen and clarify certain aspects of the
provider enrollment process. This RIA addresses provisions that: (1) we
believe would have a financial impact; and (2) would not, in our view,
have such an impact but which require explanation.
a. Revocation Effective Dates
Existing Sec. 424.535(g)(1) states that except as described in
Sec. 424.535(g)(2) and (3), a revocation becomes effective 30 days
after CMS or its contractor mails notice of its determination to the
provider or supplier (hereafter occasionally and collectively
``providers''). Under current Sec. 424.535(g)(2)(i) through (xv),
there are grounds for which CMS can revoke a provider's enrollment
retroactively to the date the provider's non-compliance commenced.
Retroactive revocation allows CMS to collect monies that have been paid
to the provider since the beginning of its non-compliance. We explained
in section V.C. of this proposed rule that we are proposing to make the
effective dates of all of our revocation reasons in Sec. 424.535
retroactive. Existing revocation grounds that are currently applied
prospectively but would become retroactive are listed as follows (along
with their proposed retroactive effective dates):
Sec. 424.535(a)(1) (Noncompliance with enrollment
requirements): The date the non-compliance began (per CMS' or the CMS
contractor's determination).
Sec. 424.535(a)(5)(b)(ii) (Noncompliance with enrollment
requirements): The date the Medicare enrollment requirement was not
satisfied.
Sec. 424.535(a)(7): The date on which the conduct
resulting the revocation occurred.
Sec. 424.535(a)(6) (Application fee noncompliance): The
date on which CMS or its contractor determines that the provider should
be revoked under paragraph (a)(6).
Sec. 424.535(a)(10)(i) (Document retention): The date on
which CMS or the CMS contractor determines that the provider has not
complied with this retention requirement.
Sec. 424.535(a)(10)(ii) (Document access to CMS): The day
after the date by which the provider was required to furnish access.
Sec. 424.535(a)(11) (Capitalization): The day after the
date by which the provider was required to furnish the requested
documentation.
Sec. 424.535(a)(14) (Abusive prescribing): The date of
the last prescription in the applicable pattern or practice.
Sec. 424.535(a)(15) (False Claims Act judgments): The
date of the judgment.
Sec. 424.535(a)(17) (Referral of debt to Treasury): The
date on which CMS referred the debt to the Department of Treasury.
Sec. 424.535(a)(18) (Revoked under different name or
identifier): The effective date of the provider's current enrollment.
Sec. 424.535(a)(19) (Undue risk): The date on which CMS
or its contractor determines that the provider should be revoked under
paragraph (a)(19).
Sec. 424.535(a)(20) (Billing from non-compliant
location): The earliest date on the claims for the non-compliant
location that are triggering the revocation.
Sec. 424.535(a)(21) (Abusive ordering, certifying, etc.):
The date of the last order, certification, referral, or prescription in
the applicable pattern or practice.
Sec. 424.535(a)(22) (Patient harm): The date of the prior
action resulting in the revocation.
Sec. 424.535(a)(23) (Condition or standard
noncompliance): Under Sec. 424.535(g)(xv)(D), the current paragraph
(a)(23) revocation effective date for all standard orcondition
violations other than those listed in Sec. 424.535(g)(xv)(A) through
(C) is prospective; that is, it is 30 days after the date that CMS or
the CMS contractor mails the revocation letter to the provider or
supplier. We are proposing to make these (a)(23) prospective effective
dates retroactive back to the date of the violation or non-compliance
(per CMS' or the CMS contractor's determination).
[[Page 41314]]
Table 37 contains several data categories. The first identifies
those new retroactive revocation grounds for which we are able to
calculate savings to the Medicare program. The second is the average
annual number of revocations that occur for each of these revocation
grounds. The third is the average length of time between when the non-
compliance begins in these situations and 30 days after the revocation
letter is sent to the provider in question. For instance, suppose a
provider undergoes a change in its billing agency's address effective
May 1 but fails to report it to CMS within 90 days. The provider is
revoked under Sec. 424.535(a)(9). The revocation letter is mailed to
the provider on August 15, meaning the effective date under existing
Sec. 424.535(g)(1) is September 15. The period between the date of
non-compliance and the effective date under current paragraph (g)(1) is
thus 45 days (that is, the period between July 31 (the day after the
90-day reporting deadline) and September 15). Under our proposal,
though, the provider would be ineligible for payments for services
furnished during this 45-day period because its revocation would now be
retroactive back to the date of non-compliance (July 31).
The last two categories address the savings that would accrue to
Medicare from the proposed retroactive grounds listed in the first
column. Based on internal CMS data, we calculated in the fourth column
of table 37 the average amount of actual payments made to the providers
in each of the table's proposed retroactive revocation reasons during
the time period in the table's third column. To illustrate, table 37
indicates that 17 providers per year are revoked under Sec.
424.535(a)(22), with the third column identifying a 95-day period. The
fourth column reflects the average annual payments each of these 17
providers receive during their respective 95-day periods (or $20,586).
The fifth column estimates the total savings for each of our
proposed retroactive revocation reasons--specifically, we multiplied
the figures in the second column by those in the fourth. Using our
Sec. 424.535(a)(22) example, the total annual savings figure is
$349,962 (or 17 x $20,586).
We used this same approach when calculating projected savings for
the new retroactive revocation grounds we finalized in the CY 2026 HH
PPS final rule (90 FR 55342).
[GRAPHIC] [TIFF OMITTED] TP06JY26.081
Accordingly, we project annual savings of $81,963,430 stemming from
our retroactive revocation proposals.
b. Expanded and New Revocation Reasons
As discussed in section V.B. of this proposed rule, we are
proposing the following expanded and new revocation grounds:
We would expand existing Sec. 424.535(a)(4) to permit
revocation if the provider submits false or misleading information on
or associated with any provider enrollment-related CMS or Medicare form
(including forms created by and/or submitted to CMS contractors).
Section 424.535(a)(4) would no longer be limited to false or misleading
information on the enrollment application.
Revised Sec. 424.535(a)(16) would include a new
revocation ground permitting enrollment if the provider--or any owner,
managing employee, managing organization, officer, or director
thereof--was convicted of a Federal or State misdemeanor related to
sexual assault or financial misconduct within the past 10 years that
CMS deems detrimental to the best interests of the Medicare program and
its beneficiaries.
New Sec. 424.535(a)(24) would permit revocation if CMS
determines that the provider's enrollment presents a high risk of
fraud, waste, or abuse due to the provider's location within a limited
geographic area that has an excessive number of providers and
suppliers.
New Sec. 424.535(a)(25) would permit revocation if CMS
determines that the HHA, hospice, or DMEPOS supplier did not comply
with the provisions and requirements of, as applicable, Sec.
424.550(b) or Sec. 424.551.
[[Page 41315]]
As we cannot predict the number of instances in which we would
utilize these new and expanded, we are unable to establish a savings
estimate.
c. Preclusion List
The preclusion list is a compilation of providers that are
prohibited from receiving Medicare Advantage or Part D payments. One
ground for which a provider can be placed on the preclusion list if it
has a felony conviction with the past 10 years. We are proposing to
expand this to include felony convictions of the provider's owner,
managing employee/organization, or corporate officer/director. As with
our proposed revocation provisions, though, we are unable to establish
a savings estimate for this expansion. This is because we cannot
predict the number of instances where we would place a provider on the
preclusion based on an owner's, managing employee's, etc., felony
conviction.
d. Hospice Reactivations
Section 424.540(b)(3)(i) states that an HHA whose Medicare billing
privileges are deactivated under Sec. 424.540 must obtain an initial
State survey or accreditation before its Medicare billing privileges
can be reactivated. We are proposing to expand Sec. 424.540(b)(3)(i)
to include hospices.
An average of roughly 226 hospices each year seek to reactivate
their enrollments. Although hospice surveys and accreditation costs
vary widely, we project--solely for purposes of this estimate--that the
average cost would be $6,000. This results in an annual cost of our
proposed Sec. 424.540(b)(3)(i) expansion of $1,356,000. We welcome
comments on this projection.
e. Conclusion
We do not believe our proposals would negatively impact access to
care, including in rural areas. We have promulgated numerous denial and
revocation provisions in prior CMS provider enrollment regulations with
no such impact, and we do not anticipate that our new denial and
revocation grounds (and expansions of existing ones) would result in
large numbers of denial and revocations.
We solicit comment from interested parties regarding any additional
costs that may arise from our proposed enrollment provisions.
6. DMEPOS Coverage of External Infusion Pumps
This proposed rule would expand the scope of the Medicare Part B
benefit for DME by revising the interpretation of the ``appropriate for
use in the home'' requirement in the definition of DME at 42 CFR
414.202 for certain drugs or biologicals infused in the home that
fulfill specific requirements outlined in the statute. Since drugs or
biologicals administered through an external infusion pump that is
classified as DME can be covered under the Medicare Part B benefit as
supplies necessary for the effective use of the external infusion pump,
expanding the scope of the DME benefit has the effect of expanding
coverage to drugs or biologicals that were not previously covered
through home infusion. At this time, we expect that there is only one
drug that did not previously meet the requirements for coverage through
home infusion but does meet the requirements as modified by section
6222 of the Consolidated Appropriations Act, 2026, and will be used by
a sufficient number of Medicare beneficiaries to warrant consideration:
patisiran. While there may be other drugs that meet the basic
requirements for coverage, we believe that use through home infusion
would be negligible. In addition, it is possible that pharmaceutical
makers may introduce new drugs or biologicals, or reformulate existing
products, that will qualify for coverage under this expanded scope, but
we cannot predict or estimate what impact this may have.
This expanded scope mirrors changes that had been proposed in 2020
rulemaking, ``Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS) Policy Issues and Level II of the Healthcare Common
Procedure Coding System (HCPCS)'' (85 FR 70358). At that time, we had
estimated Medicare savings of roughly $3 million per year. Since then,
claims data show that significantly fewer beneficiaries have been
receiving patisiran infusions. Claims data for 2025 show that only 69
beneficiaries received patisiran infusions. As we noted in the previous
proposed rule, the primary impact of this expanded scope relates to the
difference in beneficiary cost sharing between infusion therapy
received in an outpatient clinic setting and home infusion therapy:
cost sharing for each outpatient infusion is the normal 20 percent Part
B coinsurance limited to the Part A deductible ($1,736 in 2026), while
cost sharing for home infusion therapy is not limited.
Claims data show that the annual cost of patisiran for each
beneficiary receiving it in 2025 was approximately $313,000. Based on
the typical infusion every three weeks, these patients likely received
17 infusions each year. When received in an outpatient setting, the
capped cost sharing would apply, so each beneficiary would pay $1,736
per infusion or approximately $29,500 for the year. If, instead,
patisiran were received as home infusion, cost sharing for the
patisiran alone would be approximately $3,700 per infusion, or $62,900
per year. There would also be additional charges for home infusion (for
example, home infusion services, pump rental, other supplies) that
exceed the charges for outpatient infusion, and CMS believes these
would cost Medicare approximately $7,000 per beneficiary per year, and
the beneficiary approximately $2,000 in cost sharing (additional
charges for outpatient infusion would cost Medicare approximately
$4,000). Taken together, a beneficiary that receives patisiran through
home infusion instead of outpatient infusion would save Medicare
approximately $31,000 per year because of the higher cost sharing (the
beneficiary would pay an additional $34,000) offset by the higher total
cost of home infusion (additional $3,000 net cost to Medicare).
Given this substantial cost sharing difference, we believe it is
unlikely that beneficiaries would consider home infusion for patisiran
unless they are either enrolled in Medicaid or have purchased Medicare
supplement insurance (Medigap). While CMS does not directly track how
many beneficiaries have enrolled in private Medigap plans, a recent
report from the Kaiser Family Foundation (``Key Facts About Medigap
Enrollment and Premiums for Medicare Beneficiaries,'' 2024. Retrieved
from https://www.kff.org/medicare/key-facts-about-medigap-enrollment-and-premiums-for-medicare-beneficiaries/) suggests that approximately
40 percent of original Medicare beneficiaries have Medigap plans. CMS
data show that approximately 17 percent of Medicare beneficiaries are
also enrolled in Medicaid. CMS has no practical way of knowing,
specifically, whether beneficiaries receiving infusion therapy are more
or less likely than the overall Medicare population to have non-
Medicare insurance that limits the impact of Medicare cost sharing. For
purposes of estimating regulatory impact, we assume that approximately
one-third of beneficiaries receiving patisiran would not consider home
infusion because of the higher cost sharing. Of the remainder, we
estimate that approximately 50 percent may not switch to home infusion,
either because they prefer to receive it in an outpatient setting or
because, in consultation with their medical providers, they have
concluded that home infusion is not
[[Page 41316]]
appropriate for them. Therefore, we estimate that roughly one-third of
beneficiaries receiving patisiran would switch to home infusion
therapy, although there is substantial uncertainty associated with this
estimate. Based on this estimate of the number who might switch, and
the savings to Medicare of $31,000 per beneficiary who switches, we
estimate initial aggregate savings to the Medicare program would be
approximately $800 thousand per year.
We note that many Medicare beneficiaries have chosen to receive
their Medicare benefits through Part C (Medicare Advantage). The
differences in cost sharing discussed here apply strictly to those who
have chosen original Medicare (Parts A and B). Medicare Advantage plans
set their own cost sharing policies, and we have no way to estimate
whether and how these changes in coverage for home infusion therapy
would lead Medicare Advantage plans to change their policies and the
cost sharing beneficiaries may face in different settings.
We also note that, by definition, infusion drugs that were not
previously covered by Part B in the home infusion setting would have
been covered by Part D. However, the drugs that are covered by this new
benefit require infusion under the supervision of a medical
professional, and the service charges related to such supervised
infusion, together with rental of the infusion equipment, would not
have previously been payable under Part B or Part D. Therefore, we do
not believe that a significant number of beneficiaries would be
switching from Part D coverage to this new benefit under Part B, given
the significant out of pocket payments that would have been required.
7. DMEPOS Competitive Bidding--Country of Origin
As explained earlier, for the DMEPOS CBP, we are proposing to
revise the collection currently approved under OMB Control Number 0938-
1408 (CMS-10744) to collect from DMEPOS Competitive Bidding contract
suppliers the country of origin for the lead items furnished during the
DMEPOS CBP contract's period of performance.
Specifically, contract suppliers under a DMEPOS CBP contract will
continue to be required as a term of their contracts to maintain the
accuracy of the product information (manufacturer name, model name, and
model number) for the lead item the supplier furnishes on Form C, and
would now be required to also include the country of origin for each
product it reports on a new ``country of origin'' field on Form C.
Contract suppliers are required to submit Form C once every 6 months
during January and July throughout the DMEPOS Competitive Bidding
Program Contract's period of performance, and Form C includes an
attestation that all the reported information is accurate and up to
date. This attestation would need to be completed to fulfill a Form C
submission requirement. The details for this update to Form C would be
included in advance of the required reporting through an updated CMS-
1074.
As done historically with the product information reported on Form
C by a contract supplier, the reported country of origin information
would be populated on the Medicare Supplier Directory for the contract
supplier during the contract period of performance. This information
would allow beneficiaries and interested parties to learn the country
from which the DMEPOS item originated, if interested.
Contract suppliers should be able to identify the country of origin
based on the markings on the product for the lead item. Under US
Customs and Border Protections rules, imported goods must be properly
marked with: ``Made in [Country],'' unless an exemption applies (for
example, an item that is incapable of being marked, like a catheter),
as explained at 19 CFR 134.32. To correctly identify the country of
origin for a product in the absence of a marking or to verify a
marking, contract suppliers may need to refer to available
documentation from the manufacturer or distributor indicating the
country of origin for its product, which could include a combination of
the following: manufacturer certifications, bills of materials,
manufacturing process descriptions, commercial invoices, U.S. Customs
and Border Protection entry documentation, or a Harmonized Tariff
Schedule classification.
D. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this rule, we should
estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on last year's proposed rule will be the number of reviewers
of this proposed rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's rule in detail,
and it is also possible that some reviewers chose not to comment on the
proposed rule. For these reasons we thought that the number of past
commenters would be a fair estimate of the number of reviewers of this
rule. We welcome any comments on the approach used in estimating the
number of entities reviewing this proposed rule.
We recognize that different types of entities are in many cases
affected by mutually exclusive sections of this proposed rule.
Therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. Finally, in our
estimates, we have used the 347 number of timely pieces of
correspondence on the CY 2026 HH PPS proposed rule as our estimate for
the number of reviewers of this rule. We continue to acknowledge the
uncertainty involved with using this number, but we believe it is a
fair estimate due to the variety of entities affected and the
likelihood that some of them choose to rely (in full or in part) on
press releases, newsletters, fact sheets, or other sources rather than
the comprehensive review of preamble and regulatory text. We seek
comments on this assumption. Using the median hourly wage information
from the BLS for medical and health service managers (Code 11-9111), we
estimate that the cost of reviewing the proposed rule is $96.36 per
hour, including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average reading speed, we estimate
that it would take approximately 2.77 hours for the staff to review
half of this proposed rule. For each entity that reviews this proposed
rule, the estimated cost is $266.92 (2.77 hours x $96.36). Therefore,
we estimate that the total cost of reviewing this proposed rule is
$92,621 ($266.92 x 347 reviewers).
E. Alternatives Considered
1. HH PPS
In section II.C.1.e. of this proposed rule, we describe that to
achieve budget neutrality as required by law, we calculated an
illustrative permanent adjustment by determining what the 30-day base
payment amount should have been in CYs 2020, 2021, 2022, 2023, 2024,
and 2025 in order to achieve the same estimated aggregate expenditures
as obtained from the simulated 60-day episodes as required by statute.
We proposed not implementing a permanent adjustment to the CY 2027 30-
day base payment rate. One alternative to not proposing a permanent
adjustment included proposing a -1.024 percent permanent adjustment for
CY 2027 if we could
[[Page 41317]]
show that the observed behavior changes in CY 2025 claims could be
directly attributed to the implementation of the PDGM as we discussed
in the CY 2026 final rule (90 FR 55366 through 55367). However, we
continue to believe that implementing a permanent adjustment would not
be appropriate because our analysis suggests that the majority of the
behavior change related to the implementation of the PDGM occurred in
CYs 2020 through 2022 and that the behavior change observed in CYs 2023
through 2025 is related to factors other than the implementation of the
PDGM.
We are proposing to implement a temporary adjustment to continue
reconciling retrospective overpayments from CYs 2020, 2021, 2022, 2023,
2024 and 2025, as discussed in section II.C.1.f. of this proposed rule.
Section 1895(b)(3)(D)(iii) of the Act gives CMS the authority to make a
temporary adjustment in a time and manner appropriate through notice
and comment rulemaking.
We considered not proposing implementing a temporary adjustment.
However, due to the growing temporary adjustment amount calculated from
CYs 2020 through 2025, to delay the implementation of a temporary
adjustment would lead to many more years of reductions to the payment
rate to reach budget neutrality. Another alternative would be to apply
a temporary adjustment factor to the CY 2027 payment rate that would
recoup the full calculated temporary adjustment dollar amount, to date,
of $4.9 billion. However, we believe that applying a temporary
adjustment factor accounting for the temporary adjustment dollar amount
of $4.9 billion to the CY 2027 payment rate may adversely affect HHAs
given the magnitude of this adjustment to the payment rate in a single
year. Although we are not establishing a timeframe to recoup the
calculated temporary adjustment dollar amount of $4.9 billion (to
date), we believe it is prudent to continue implementing an adjustment
to account for some of this amount to slow its continued growth.
Postponing any collection of this large dollar amount would lead to an
extended duration of temporary adjustments or larger reductions to the
payment rates in future years to reach budget neutrality sooner.
Therefore, we believe it is best to propose implementing a
temporary adjustment decrease of 3.0 percent to the CY 2027 base
payment rate.
2. HH QRP
With regard to the proposal to revise the HH QRP assessment data
submission deadline from 4.5 months to no later than the 15th day of
the second month after the end of each quarter, we considered keeping
the deadline unchanged. We determined that the revised timeframe is a
reasonable amount of time for HHAs to submit data and make any
necessary corrections, and that the benefits of this shortened
timeframe include making the data timelier and more actionable which
increases the value of publicly reported data both for consumers and
their families and for HHAs to use in their quality improvement
activities.
With regard to the proposal to revise the HH QRP OASIS and HHCAHPs
annual payment update (APU) reporting timeframe to report a calendar
year of data (January 1 through December 31), we believe this update
will provide clarity to HH payment updates and facilitate the alignment
of the HH QRP pay-for-reporting policies with other HH payment policies
without adding burden to providers.
3. Provider Enrollment
There were two principal alternatives we considered. First, we
considered retaining the existing prospective effective dates for some
of our revocation grounds. However, as explained in section V.C. of
this proposed rule, we do not believe that providers are entitled to
payment for services and items furnished while non-compliant. Second,
and in a similar vein, we contemplated adding no more than a few denial
grounds as bases for a reapplication bar. Yet because of the concerning
provider conduct behind some denials, we believe we must have the
discretion to bar such providers from repeatedly attempting to enter
Medicare by submitting multiple applications.
4. DMEPOS Competitive Bidding--Country of Origin
We considered having all DMEPOS suppliers submit the country of
information for their product at the time they submit a bid for the
DMEPOS CBP, instead of first submitting it on day one of their DMEPOS
CBP contract, if awarded. However, this would have presented two
issues. First, because the purpose is to make the country of origin
available to beneficiaries and interested parties on the Supplier
Directory, it would be unnecessary to require all bidders to submit
this information at the time they submit a bid when only a subset of
bidders will ultimately receive a DMEPOS CBP contract (and have its
information available on the Supplier Directory). Secondly, we believe
it would be unnecessary to require this information at the time of bid
submission, approximately 1 year before contracts are awarded, as it
would not be used in the bid evaluation process. As a result, we
believe it is most appropriate that only contract suppliers be required
on a routine basis to submit accurate and up-to-date country of origin
information for its products on Form C.
F. Accounting Statement and Table
Consistent with OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf) in table
38, we have prepared an accounting statement showing the classification
of the impacts associated with the provisions of this proposed rule.
[[Page 41318]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.082
G. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. In addition, HHAs are small entities, as
that is the term used in the RFA. Individuals and States are not
included in the definition of a small entity.
The North American Industry Classification System (NAICS) was
adopted in 1997 and is the current standard used by the Federal
statistical agencies related to the U.S. business economy. We utilized
the NAICS U.S. industry title ``Home Health Care Services'' and
corresponding NAICS code 621610 in determining impacts for small
entities. The NAICS code 621610 has a size standard of 19 million \42\
and approximately 96 percent of HHAs are considered small entities. We
estimate that almost all home infusion therapy suppliers are,
similarly, small entities. Table 39 shows the number of firms, revenue,
and average revenue per firm for the home health care services category
(NAICS 621610). Table 40 shows the number of nonemployer
establishments, total, and average revenue per nonemployer
establishment.
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\42\ https://www.sba.gov/sites/sbagov/files/2023-03/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023.xlsx.
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[[Page 41319]]
[GRAPHIC] [TIFF OMITTED] TP06JY26.083
[GRAPHIC] [TIFF OMITTED] TP06JY26.084
The economic impact assessment is based on estimated Medicare
payments (revenues) and HHS's practice in interpreting the RFA is to
consider effects economically ``significant'' only if greater than 5
percent of providers reach a threshold of 3 to 5 percent or more of
total revenue or total costs. The majority of HHAs' visits are Medicare
paid visits and therefore the majority of HHAs' revenue consists of
Medicare payments. Based on our analysis, we conclude that the policies
proposed in this rule would result in an estimated total impact of 3 to
5 percent or more on Medicare revenue for greater than 5 percent of
HHAs. Therefore, the Secretary has determined that the payment policies
in this proposed HH PPS rule would have a significant positive economic
impact on a substantial number of small entities.
Specifically, we estimate that the net impact of the payment
policies in this proposed rule would be a positive 2.4 percent impact
in the aggregate for CY 2027 or approximately $420 million. As
discussed in the preamble, the net increase in CY 2027 is mostly driven
by the impact of the proposed CY 2027 home health payment update
percentage and proposed updated FDL. Table 36 details the total
percentage payment increase by number of 30-day periods and impact by
facility type, size, and location. As shown in table 36, when examining
the distribution of projected payment impacts across individual agency
groups, a substantial share of HHAs are projected to receive a payment
increase of 3 percent or more. For example, agencies in the New England
(299 agencies, 3.0 percent), Mid-Atlantic (360 agencies, 3.6 percent),
Pacific (2,880 agencies, 3.0 percent), and outlying (44 agencies, 3.6
percent) census regions alone account for approximately 3,583 agencies.
This represents roughly 36 percent of all 9,975 HHAs which are each
projected to receive a total payment impact of at least 3.0 percent.
Additional groups projected to receive impacts of 3 percent or more
include free-standing/other government (97 agencies, 3.4 percent),
facility-based proprietary (20 agencies, 3.4 percent), facility-based
government (159 agencies, 3.7 percent), and several rural and urban
facility subcategories. Collectively, these groups confirm that more
than 5 percent of HHAs are projected to experience a payment impact of
3 percent or more. We estimate that smaller HHAs (those with less than
100 periods of care and thereby lower overall revenues) would
[[Page 41320]]
receive a 2.9 percent payment impact in CY 2027. Also, we estimate that
larger HHAs (those with more than 1,000 periods of care and thereby
higher overall revenues) would receive a 2.3 percent payment impact in
CY 2027. We estimate that HHAs located in the Mid-Atlantic and outlying
regions would receive the largest impact reflecting a 3.6 percent
payment impact. The East South Central and West South Central region
would receive the lowest impact reflecting a 1.7 percent increase.
In summary, the payment policies in this proposed rule would
increase Medicare payments to home health agencies, with small agencies
receiving a slightly larger percentage increase than large ones. We
solicit comments on this RFA analysis on small entities.
Regarding options for regulatory relief, we note that section
1895(b)(3)(D)(i) of the Act requires CMS to annually determine the
impact of differences between the assumed behavior changes finalized in
the CY 2019 HH PPS final rule with comment period (83 FR 56455) and
actual behavior changes on estimated aggregate expenditures under the
HH PPS with respect to years beginning with 2020 and ending with 2026.
Additionally, section 1895(b)(3)(D)(ii) and (iii) of the Act requires
us to make permanent and temporary adjustments to the payment rate to
offset for such increases or decreases in estimated aggregate
expenditures through notice and comment rulemaking.While our analysis
of claims suggests that the majority of the behavior change related to
the implementation of the PDGM occurred in CYs 2020 through 2022 and
that the behavior change observed in CYs 2023 through 2025 is related
to factors other than the implementation of the PDGM, we determined
that it was not necessary to propose implementing a permanent
adjustment because we do not consider behavior changes directly
attributed to the implementation of PDGM We include the calculations
described in section II.C.1.f. of this proposed rule to illustrate the
impact of differences between the assumed behavior changes and actual
behavior changes if such behaviors were attributable to the
implementation of the PDGM. We note that the law requires us to
annually calculate the impact of differences between the assumed
behavior changes and actual behavior changes through 2026 claims. We
will also continue to reprice claims, per the finalized methodology,
and make any additional adjustments at a time and manner deemed
appropriate in future rulemaking.
As discussed previously in the Alternatives Considered section of
this proposed rule, we explored alternatives to the proposed 3.0
percent temporary adjustment including proposing a temporary adjustment
factor to the CY 2027 payment rate that would recoup the full
calculated temporary adjustment dollar amount, to date, of $4.9
billion. However, we believe that applying a temporary adjustment
factor accounting for the temporary adjustment dollar amount of $4.9
billion to the CY 2027 payment rate may adversely affect HHAs given the
magnitude of this adjustment to the payment rate in a single year. We
solicit comments on the overall HH PPS RFA analysis.
This rule does not affect health care enterprises operated by small
government entities such as counties or towns with populations 50,000
or less. HHS generally uses a revenue impact of 3 to 5 percent as a
significance threshold under the RFA. The RFA threshold analysis,
therefore, indicates that there is not a significant economic impact on
a substantial number of small entities. Furthermore, the regulation
review costs mentioned previously, is de minimis and will not impose
any additional burden on these small businesses. The statement of need
for the various proposed policies in this rule is discussed in section
VII.A. of the proposed rule. Additionally, the alternatives considered
for the various proposed policies in this rule are discussed in section
VII.E. of the proposed rule. We considered potential alternatives for
the policies proposed in this rule, including routine technical rate-
setting updates and temporary adjustment. The home health payment
update percentage is established annually in accordance with existing
statutory requirements of section 1895(b) of the Act. We maintain that
limiting the application of the permanent adjustment to analysis of
data from CYs 2020 through 2022 continues to be the most accurate
application of the law. The data continues to show minimal changes that
could be attributed to the PDGM implementation after CY 2022 by a large
proportion of home health providers. We also continue to acknowledge
the difficulty in attributing any behavior change occurring from CYs
2023 through 2025 directly to the PDGM implementation and its effects
on expenditures from the other changes occurring in those years. After
completing the analysis required by law, we determined that it was not
necessary to apply a permanent adjustment. For the temporary
adjustment, we explored alternatives to delay, reduce, or increase the
temporary adjustments; however, this would delay progress on the BBA of
2018 requirement and may adversely affect HHAs if reductions to the
payment rate are too high in a single year. The proposed policy is
expected to increase revenue for small HHAs. Therefore, the Secretary
has determined that this proposed HH PPS rule would have a significant
positive economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and the Secretary certifies, that this proposed rule will not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
H. Unfunded Mandates Reform Act (UMRA)
Section 202 of UMRA of 1995 UMRA also requires that agencies assess
anticipated costs and benefits before issuing any rule whose mandates
require spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2026, that threshold is approximately $193
million. This proposed rule would not impose a mandate that will result
in the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector, of more than $193 million in any 1
year.
I. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct
[[Page 41321]]
requirement costs on State and local governments, preempts State law,
or otherwise has Federalism implications. We have reviewed this
proposed rule under these criteria of Executive Order 13132 and have
determined that it would not impose substantial direct costs on State
or local governments.
J. Unleashing Prosperity Through Deregulation
Executive Order 14192, titled ``Unleashing Prosperity Through
Deregulation'' was issued on January 31, 2025, and requires that ``any
new incremental costs associated with new regulations shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least 10 prior regulations''
K. Conclusion
In conclusion, we estimate that the provisions in this proposed
rule would result in an estimated net increase in home health payments
of 2.4 percent for CY 2027 ($420 million). The $420 million increase in
estimated payments for CY 2027 reflects the effects of the proposed CY
2027 home health payment update percentage increase of 2.1 percent
($370 million increase), and an estimated 0.3 percent increase that
reflects the effects of an updated FDL ($50 million).
VII. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid
Services, approved this document on July 1, 2026.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Diseases, Health facilities,
Health professions, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
42 CFR Part 410
Diseases, Health facilities, Health professions, Laboratories,
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.
42 CFR Part 414
Administrative practice and procedure, Biologics, Diseases, Drugs,
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 422
Administrative practice and procedure, Health facilities, Health
maintenance organizations (HMO), Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.
42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professionals, Incorporation by reference, Medicare, Penalties,
Privacy, Reporting and recordkeeping requirements.
42 CFR Part 424
Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.
42 CFR Part 484
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 498
Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR parts 405, 410, 414, 422,
423, 424, 484, and 498 as set forth below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
0
X. The authority for part 405 continues to read as follows:
Authority: 42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x,
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).
Sec. 405.400 [Amended]
0
X. Section 405.400 is amended in the definition of ``opt-out period''
by removing the phrase ``the date the affidavit is signed'' and adding
in its place the phrase ``the date the first submitted affidavit is
signed''.
Sec. 405.450 [Amended]
0
X. Section 405.450 is amended in paragraph (a) by removing the phrase
``renew opt-out'' and adding in its place the phrase ``cancel automatic
renewal''.
Sec. 405.800 [Amended]
0
X. Section 405.800 is amended by removing the term ``certified mail''
and adding in its place the phrase ``certified mail or email'' in
paragraphs (a), (b)(1), and (c)(1).
0
X. Section 405.809 is amended as follows:
0
a. Revising the section heading and paragraph (a)(1);
0
b. In paragraph (a)(2), removing the term ``revocation'' and adding in
its place the phrase ``denial or revocation'';
0
c. In paragraph (b)(1) introductory text, removing the term
``Reinstates'' and adding in its place the phrase ``Approves or
reinstates'';
0
d. Revising paragraph (b)(1)(i);
0
e. In paragraph (b)(1)(ii), removing the term ``reinstatement'' and
adding in its place the phrase ``approval or reinstatement'';
0
f. In paragraph (b)(2), removing the term ``reinstate'' and adding in
its place the phrase ``approve or reinstate''.
The revisions are as follows:
Sec. 405.809 Granting or reinstatement of provider or supplier
billing privileges following corrective action.
(a)(1) May only submit a corrective action plan for a denial or
revocation for non-compliance under Sec. Sec. 424.530(a)(1) or
424.535(a)(1) of this chapter; and
* * * * *
(b) * * *
(1) * * *
(i) The effective date of the--
(A) Approval is based on the applicable timeframes described in
Sec. Sec. 424.520 and 424.521; and
(B) Reinstatement is based on the date the provider or supplier is
in compliance with all Medicare requirements.
* * * * *
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.
0
X. Section 410.33 is amended by revising paragraph (g)(14)(ii) to read
as follows:
Sec. 410.33 Independent diagnostic testing facility.
* * * * *
(g) * * *
(14) * * *
(ii) Maintain a permanent visible sign in plain view and posts
hours of operation. If the IDTF's place of business is located within a
building complex, the sign must be visible at the main entrance of the
building or the
[[Page 41322]]
hours can be posted at the entrance of the IDTF.
* * * * *
0
X. Section 410.38 is amended by adding paragraph (d)(2)(iii) to read as
follows:
Sec. 410.38 Durable medical equipment, prosthetics, orthotics and
supplies (DMEPOS): Scope and conditions.
* * * * *
(d) * * *
(2) * * *
(iii)(A) For purposes of Sec. 410.38(d), replacement item means an
item identified by the same Healthcare Common Procedure Coding System
(HCPCS) code as the original item, that has been--
(1) In continuous use by the same beneficiary and is at the end of
its reasonable useful lifetime; or
(2) Lost, stolen, or irreparably damaged.
(B) Items ordered as replacement items do not require a new face-
to-face encounter. All other requirements specified in Sec. 410.38
continue to apply.
* * * * *
PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
0
X. The authority citation for part 414 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).
0
X. Section 414.202 is amended by revising the definition of ``Durable
medical equipment'' to read as follows:
Sec. 414.202 Definitions.
* * * * *
Durable medical equipment means:
(1) Equipment, furnished by a supplier or a home health agency that
meets the following conditions:
(i) Can withstand repeated use.
(ii) Effective with respect to items classified as DME after
January 1, 2012, has an expected life of at least 3 years.
(iii) Is primarily and customarily used to serve a medical purpose.
(iv) Generally is not useful to an individual in the absence of an
illness or injury.
(v) Is appropriate for use in the home except as provided in
paragraph (2) of this definition.
(2) On or after April 1, 2027, an external infusion pump that meets
all conditions in paragraphs (1)(i) through (iv) of this definition
provided that the following criteria are satisfied:
(i) The prescribing information approved by the FDA for the home
infusion drug (as defined in Sec. 486.505) associated with the pump
instructs that the drug should be administered by or under the
supervision of a health care professional.
(A) The health care professional must be one of the following:
(1) A registered nurse licensed to practice nursing in the State in
which the home infusion drug is administered.
(2) A clinical nurse specialist as defined in section 1861(aa)(5)
of the Act.
(3) Nurse practitioner as defined in section 1861(aa)(5) of the
Act.
(4) Physician assistant as defined in section 1861(aa)(5) of the
Act.
(5) A physician as defined in section 1861(r) of the Act; and
(B) The health care professional must be on site at the home to
administer or supervise the administration of the home infusion drug.
(ii) A qualified home infusion therapy supplier (as defined in
Sec. 486.505) administers or supervises the administration of the home
infusion drug in a safe and effective manner in the patient's home (as
defined in Sec. 486.505).
(iii) The prescribing information instructs that the home infusion
drug be infused at least 12 times per year (at least once a month)--
(A) Either intravenously or subcutaneously; or
(B) At infusion rates that the Secretary determines would require
the use of an external infusion pump.
* * * * *
PART 422--MEDICARE ADVANTAGE PROGRAM
0
X. The authority continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and
1395hh.
0
X. Section 422.2 is amended by revising paragraph (3) introductory text
for the definition of ``Preclusion list'' to read as follows:
Sec. 422.2 Definitions.
* * * * *
Preclusion list * * *
(3) The individual or entity--or any owner, managing employee,
managing organization, officer, or director thereof (as those terms are
defined in Sec. 424.502)--regardless of whether they are or were
enrolled in Medicare, has been convicted of a felony under Federal or
State law within the previous 10 years that CMS deems detrimental to
the best interests of the Medicare program. Factors that CMS considers
in making such a determination under this paragraph (3) are--
* * * * *
PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT
0
X. The authority citation continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152,
and 1395hh.
0
X. Section 423.100 is amended by revising paragraph (3) introductory
text for the definition of ``Preclusion list'' to read as follows:
Sec. 423.100 Definitions.
* * * * *
Preclusion list * * *
(3) The prescriber--or any owner, managing employee, managing
organization, officer, or director thereof (as those terms are defined
in Sec. 424.502)--regardless of whether they are or were enrolled in
Medicare, has been convicted of a felony under Federal or State law
within the previous 10 years that CMS deems detrimental to the best
interests of the Medicare program. Factors that CMS considers in making
such a determination under this paragraph (3) are--
* * * * *
PART 424--CONDITIONS FOR MEDICARE PAYMENT
0
X. The authority for part 424 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
X. Section 424.58 is amended by--
0
a. Revising paragraph (c)(1)(vii)(D)(4);
0
b. In paragraph (c)(1)(xxiii)(D), removing the phrase ``3 business
days'' and adding in its place the phrase ``5 calendar days'';
0
c. Redesignating paragraph (c)(1)(xxiii)(N) as paragraph
(c)(1)(xxiii)(O); and
0
d. Adding new paragraph (c)(1)(xxiii)(N).
The revision and addition read as follows:
Sec. 424.58 Accreditation.
* * * * *
(c) * * *
(1) * * *
(vii) * * *
(D) * * *
(4) For notifying CMS when a conflict of interest is discovered.
This includes disclosing to CMS all conflicts of interest (as defined
in Sec. 424.58(c)(1)(vii)(D)(5)) it currently has and explaining how
and when it will terminate them.
* * * * *
(xxiii) * * *
(N) Agrees to notify CMS in writing (and, if applicable, notify
other law enforcement) of suspected fraud, waste,
[[Page 41323]]
or abuse--consistent with the accrediting organization's CMS-approved
definitions of those terms per paragraph (c)(1)(xxii) of this section--
within 3 calendar days of the date on which the accrediting
organization determines that fraud, waste, or abuse may have occurred.
* * * * *
0
X. Section 424.502 is amended by--
0
a. In the definition of ``Affiliation''--
0
i. Republishing the introductory text;
0
ii. Revising paragraph (3); and
0
iii. Adding new paragraph (6);
0
b. In the definition of ``Final adverse action'';
0
i. Republishing the introductory text; and
0
ii. Adding new paragraph (6);
0
c. Revising paragraph (1) of the definition of ``Managing employee'';
and
0
d. Revising the definition of ``Operational''
The additions and revisions are as follows:
Sec. 424.502 Definitions.
* * * * *
Affiliation means, for purposes of applying Sec. 424.519, any of
the following:
* * * * *
(3) An interest in which an individual or entity--or any of its
owning or managing employees or organizations--exercises operational or
managerial control over, or directly or indirectly conducts, the day-
to-day operations of another organization (including, for purposes of
this paragraph (3), sole proprietorships), either under contract or
through some other arrangement, regardless of whether or not the
managing individual or entity is a W-2 employee of the organization.
* * * * *
(6) Any marketing, business, fulfillment, financial, managerial, or
beneficiary relationship
* * * * *
Final adverse action means one or more of the following actions--
* * * * *
(6) Misdemeanor conviction. A conviction of a Federal or State
misdemeanor related to sexual assault or financial misconduct within
the past 10 years preceding enrollment, revalidation or reenrollment.
* * * * *
Managing employee means--
(1) A general manager, business manager, administrator, director,
or other individual that exercises operational or managerial control
over, or who directly or indirectly conducts, the day-to-day operation
of the provider or supplier, either under contract or through some
other arrangement, whether or not the individual is a W-2 employee of
the provider or supplier. For purposes of this definition, this
includes not only a hospice or skilled nursing facility administrator
and a hospice or skilled nursing facility medical director but also any
of the following:
(i) Medical directors other than skilled nursing facility and
hospice medical directors.
(ii) Clinical directors.
(iii) Departmental heads (for example, a hospital's chief of
cardiology).
(iv) Supervising physicians (not simply those at independent
diagnostic testing facilities).
(v) Nursing directors.
(vi) Alternate administrators.
(vii) All other clinical personnel not listed in paragraphs (1)(i)
through (vi) of this definition who meet the ``managing employee''
definition.
* * * * *
Operational means (as applicable, based on the type of facility or
organization, provider or supplier specialty, or the services or items
being rendered) the provider or supplier meets all of following
requirements:
(1) Has a qualified practice location.
(2) Is open to the public for the purpose of providing health care
related services, which includes, but is not limited to, all of the
following:
(i) The provider's or supplier's location is fully accessible to
all patients and lacks safety hazards. For purposes of this paragraph
(2)(i), accessible means--
(A) The provider or supplier is located in an area and a building
that patients can enter with reasonable ease; and
(B) The location is compliant with all federal Americans with
Disabilities Act regulations and all applicable and equivalent state
and local laws.
(ii) The provider's or supplier's hours of business are sufficient
to regularly serve patients.
(iii) Medicare beneficiaries can contact and locate the provider's
or supplier's location based on publicly available information (for
example, the internet).
(3) Is prepared and able to submit valid Medicare claims.
(4) Is properly staffed, equipped, and stocked (as applicable,
based on the type of facility or organization, provider or supplier
specialty, or the services or items being rendered, to furnish these
items or services. This includes, but is not limited to, the following:
(i) Provider or supplier staff must be qualified (such as licensed
or certified if required under state law) to perform their health care-
related functions.
(ii) Equipment must be functional, appropriate for the services and
items the provider or supplier intends to furnish, and in sufficient
quantity to provide these items and services.
(iii) Appropriate medications for the services and items the
provider or supplier intends to furnish and in sufficient quantity to
provide these items and services.
(5) Has adequate written policies and records regarding its
operations, such as, but not limited to, procedures for patient care,
patient safety, medical and patient recordkeeping, and general
administration.
* * * * *
0
X. Section 424.510 is amended by adding paragraph (f) to read as
follows:
Sec. 424.510 Requirements for enrolling in the Medicare program.
* * * * *
(f) Signage. (1) The provider or supplier must maintain a permanent
visible sign in plain view and post hours of operation. If the
provider's or supplier's place of business is located within a building
complex, the sign must be visible at the main entrance of the building
or the hours can be posted at the entrance of the provider or supplier.
(2) The requirement in paragraph (f)(1) of this section does not
apply if the provider or supplier--
(i) Shares office space with another provider or supplier (for
example, physicians in a group practice sharing a common suite, though
the group itself must have signage);
(ii) Treats patients in the patients' homes;
(iii) Treats patients in the provider's or supplier's home and only
uses the provider's or supplier's address for administrative purposes.
(iv) Performs telehealth services from home.
0
X. Section 424.516 is amended by adding paragraph (f)(3) to read as
follows:
Sec. 424.516 Additional provider and supplier requirements for
enrolling and maintaining active enrollment status in the Medicare
program.
* * * * *
(f) * * *
(3) All documentation required to be retained and furnished under
this paragraph (f) must be accurate, complete, and compliant with all
CMS requirements.
* * * * *
0
X. Section 424.518 is amended by revising paragraph (c)(2)(ii)(A) to
read as follows:
[[Page 41324]]
Sec. 424.518 Screening levels for Medicare providers and suppliers
* * * * *
(c) * * *
(2) * * *
(ii)(A) Using the CMS-designated fingerprinting contractor,
requires the submission of a set of fingerprints for a national
background check from all individuals who maintain a 5 percent or
greater direct or indirect ownership interest in the provider or
supplier; and
* * * * *
Sec. 424.519 [Amended]
0
X. Section 424.519 is amended in paragraph (b) by removing the phrase
``has or, within the previous 5 years, had'' and adding in its place
the phrase ``has or had''.
0
X. Section 424.530 is amended by--
0
a. Revising paragraph (a)(4); (6)(i), (ii) introductory text, (ii)(A),
and (iii) introductory text; (7)(i) and (ii); (13); (14); and (16);
0
b. Adding paragraphs (a)(19) through (22);
0
c. Revising paragraph (f) introductory text;
0
d. Removing paragraphs (f)(2)(i) through (iv); and
0
e. Redesignating paragraphs (f)(3)(i) and (ii) as revised paragraphs
(f)(2)(i) and (ii).
The revisions and additions read as follows:
Sec. 424.530 Denial of enrollment in the Medicare program.
(a) * * *
(4) False or misleading information. The provider or supplier
submits false or misleading information on or associated with any CMS
or Medicare provider enrollment-related form. (Offenders may be
referred to the Office of Inspector General for investigation and
possible criminal, civil, or administrative sanctions.) This includes
but is not limited to:
(i) Enrollment-related forms created by or submitted to CMS
contractors;
(ii) Documentation furnished as part of the completion or
submission of the CMS or Medicare enrollment-related form.
(iii) Form CMS-588 (Electronic Funds Transfer (EFT) Authorization
Agreement; OMB Control Number 0938-0626).
(iv) Documents required to demonstrate compliance with HHA
capitalization requirements in Sec. 489.28.
(v) Opt-out affidavits under 42 CFR part 405, subpart D.
(vi) Letters from a provider demonstrating that a particular
provider official qualifies as an authorized or delegated official
under Sec. 424.502.
(vii) Any other required or requested enrollment-related
documentation.
* * * * *
(6) Medicare debt. (i) The enrolling provider or supplier--or any
owner, managing employee, managing organization, or individual or
entity with any other form of business or financial relationship with
the provider or supplier (hereafter collectively ``associated party''
for purposes of paragraph (a)(6) of this section)--has an existing
Medicare debt.
(ii) The enrolling provider or supplier or associated party thereof
was previously an associated party of a provider or supplier that had a
Medicare debt that existed when the latter's enrollment was voluntarily
terminated, involuntarily terminated, or revoked, and all of the
following criteria are met:
(A) The associated party left the provider or supplier with the
Medicare debt within 1 year before or after that provider or supplier's
voluntary termination, involuntary termination or revocation.
* * * * *
(iii) A denial of Medicare enrollment under this paragraph (a)(6)
of this section can be avoided if the enrolling provider or supplier
(or associated party thereof) does either of the following:
* * * * *
(7) Payment suspension. (i) The provider or supplier--or any owner,
managing employee, managing organization, or individual or entity with
any other form of business or financial relationship with the provider
or supplier (hereafter collectively ``associated party'' for purposes
of paragraph (a)(7) of this section)--is currently under a Medicare or
Medicaid payment suspension as defined in Sec. Sec. 405.370 through
405.372 or in Sec. 455.23 of this chapter.
(ii) CMS may apply this paragraph (a)(7) of this section to the
provider or supplier under any of the provider's, supplier's, or
associated party's current or former names, numerical identifiers, or
business identities or to any of its existing enrollments.
* * * * *
(13) Affiliation that poses undue risk. CMS determines that the
provider or supplier--or any of its owning or managing employees or
organizations--has or has had an affiliation under Sec. 424.519 that
poses an undue risk of fraud, waste, or abuse to the Medicare program.
* * * * *
(14) Other program termination or suspension. (i) The provider or
supplier--or any owner, managing employee, or managing organization
thereof--is currently terminated or suspended (or otherwise barred)
from participation in a State Medicaid program or any other federal
health care program, or the provider's or supplier's license is
currently revoked or suspended (or voluntarily surrendered in lieu of
further action) in a State other than that in which the provider or
supplier is enrolling. In determining whether a denial under this
paragraph (a)(14) is appropriate, CMS considers the following factors:
(A) The reason(s) for the termination, suspension, revocation, or
surrender.
(B) Whether, as applicable, the provider or supplier--or owner,
managing employee, or managing organization thereof--is currently
terminated or suspended (or otherwise barred) from more than one
program (for example, more than one State's Medicaid program), or has
been subject to any other sanctions during its participation in other
programs or by any other State licensing boards.
(C) Any other information that CMS deems relevant to its
determination.
(ii) CMS may apply paragraph (a)(14)(i) of this section to the
provider or supplier under any of the provider's or supplier's--or
owner's, managing employee's, or managing organization's--current or
former names, numerical identifiers or business identities, and
regardless of whether any appeals are pending.
* * * * *
(16) Misdemeanor conviction. The provider or supplier--or any
owner, managing employee, managing organization, officer, or director
thereof--was convicted of a Federal or State misdemeanor related to
sexual assault or financial misconduct within the past 10 years that
CMS deems detrimental to the best interests of the Medicare program and
its beneficiaries.
* * * * *
(19) Same suite. The provider's or supplier's practice location is
in the same suite or office as another provider or supplier whose
Medicare enrollment has been revoked or denied under Sec. 424.535 or
Sec. 424.530.
(20) Hospice medical director or administrator. A hospice's
enrollment may be denied if any of the following apply:
(i) The hospice's medical director is either of the following:
(A) The medical director of multiple other hospices.
(B) Practices at such a distance (for example, in a different
state) from the enrolling hospice that the medical director cannot
realistically perform all medical director functions required under 42
CFR 418.
[[Page 41325]]
(ii) The hospice's administrator is either of the following:
(A) The administrator of multiple other hospices.
(B) Located at such a distance from the enrolling hospice that the
administrator cannot realistically perform all administrator functions
required under 42 CFR 418.
(ii) The hospice's medical director does not have an active
physician medical license in the State in which they are practicing.
(21) Misuse of identity. The provider or supplier is attempting to
enroll under another party's identity.
(22) Change in majority ownership non-compliance. CMS determines
that the HHA, hospice, or DMEPOS supplier has failed to comply with the
provisions and requirements of, as applicable, Sec. 424.550(b) or
Sec. 424.551.
* * * * *
(f) Reapplication bar. CMS may prohibit a prospective provider or
supplier from enrolling in Medicare for up to 10 years if their
enrollment application is denied for any reason under Sec. 424.530.
* * * * *
0
X. Section 424.535 is amended by--
0
a. Revising paragraph (a)(4);
0
b. Revising paragraph (a)(8)(ii) introductory text;
0
c. Removing paragraphs (a)(8)(ii)(A) through (D) and (a)(8)(iii);
0
d. Revising paragraph (a)(16);
0
e. Revising paragraph (a)(19);
0
f. Adding paragraphs (a)(24) and (25).
0
g. Revising paragraph (g)(1);
0
h. Removing paragraph (g)(3);
0
i. Redesignating paragraph (g)(3) as (g)(2);
0
j. Revising paragraphs (h)(1)(i) and (ii).
0
k. Revising paragraph (i)(1).
The revisions and additions read as follows:
Sec. 424.535 Revocation of enrollment in the Medicare program.
* * * * *
(a) * * *
(4) False or misleading information. The provider or supplier
submits false or misleading information on or associated with any CMS
or Medicare provider enrollment-related form. (Offenders may be
referred to the Office of Inspector General for investigation and
possible criminal, civil, or administrative sanctions.) This includes
but is not limited to--
(i) Forms created by and/or submitted to CMS contractors.
(ii) Documentation furnished as part of the completion or
submission of the CMS or Medicare enrollment-related form.
(iii) Form CMS-588 (Electronic Funds Transfer (EFT) Authorization
Agreement; OMB Control Number 0938-0626), which must be submitted with
the enrollment application.
(iv) Documents required to demonstrate compliance with HHA
capitalization requirements in Sec. 489.28.
(v) Opt-out affidavits under 42 CFR part 405, subpart D.
(vi) Letters from a provider demonstrating that a particular
provider official qualifies as an authorized or delegated official
under Sec. 424.502.
(vii) Any other required or requested enrollment-related
documentation.
* * * * *
(8) * * *
(ii) CMS determines that the provider or supplier has a pattern or
practice of submitting claims that fail to meet Medicare requirements.
* * * * *
(16) Misdemeanor conviction. The provider or supplier--or any
owner, managing employee, managing organization, officer, or director
thereof--was convicted of a Federal or State misdemeanor related to
sexual assault or financial misconduct within the past 10 years that
CMS deems detrimental to the best interests of the Medicare program and
its beneficiaries.
* * * * *
(19) Affiliation that poses undue risk. CMS determines that the
provider or supplier--or any of its owning or managing employees or
organizations--has or has had an affiliation under Sec. 424.519 that
poses an undue risk of fraud, waste, or abuse to the Medicare program.
* * * * *
(24) High-risk based on excess providers in area. CMS determines
that the provider's or supplier's enrollment presents a high risk of
fraud, waste, or abuse due to the provider's or supplier's location
within a limited geographic area that has an excessive number of
providers and suppliers.
(25) Change in majority ownership non-compliance.--CMS determines
that the HHA, hospice, or DMEPOS supplier did not comply with the
provisions and requirements of, as applicable, Sec. 424.550(b) or
Sec. 424.551.
* * * * *
(g)(1) Except as described in paragraph (g)(2) of this section, the
effective dates of the revocations identified in this section are as
follows:
(i) For revocations under paragraph (a)(1) of this section:
(A) If the revocation is based on non-compliance with the
enrollment requirements in Title 42 or in the enrollment application
applicable to the provider or supplier type, the date the non-
compliance began (per CMS' or the CMS contractor's determination).
(B) If the revocation is based on a State license revocation,
suspension, or surrender in lieu of further disciplinary action, the
date of the license revocation, suspension, or surrender.
(C) For revocations based on termination of a provider agreement
under part 489 of this chapter, and as applicable to the type of
provider involved, the later of--
(1) The date of the provider agreement termination; or
(2) The date that CMS establishes under Sec. 489.55.
(ii) For revocations under paragraph (a)(2) of this section, the
date of the exclusion or debarment.
(iii) For revocations under paragraph (a)(3) of this section, the
date of the felony conviction.
(iv) For revocations under paragraph (a)(4) of this section, and as
applicable to the situation, the date the certification statement was
signed or the false or misleading information was submitted.
(v)(A) For revocations under paragraph (a)(5)(i) of this section,
the date on which the provider's or supplier's practice location was no
longer operational (per CMS' or the CMS contractor's determination).
(B) For revocations under paragraph (a)(5)(ii) of this section, the
date the Medicare enrollment requirement was not satisfied.
(vi) For revocations under paragraph (a)(6) of this section, the
date on which CMS or its contractor determines that the provider or
supplier should be revoked under paragraph (a)(6).
(vii) For revocations under paragraph (a)(7) of this section, the
date on which the conduct resulting in the revocation occurred.
(viii)(A) For revocations under paragraph (a)(8)(i) of this
section, the earliest date of service on the claim or claims that is or
are triggering the revocation.
(B) For revocations under paragraph (a)(8)(ii) of this section, the
last date of service on the claims in the applicable pattern or
practice.
(ix) For revocations under paragraph (a)(9) of this section, the
day following the date by which the provider or supplier was required
to report the applicable change, addition, or deletion.
(x)(A) For revocations under paragraph (a)(10) of this section
based on a failure to retain documentation, the date on which CMS or
the CMS contractor determines that the provider or supplier has not
complied with this retention requirement.
[[Page 41326]]
(B) For revocations under paragraph (a)(10) of this section based
on a failure to provide access to the documentation, the day after the
date by which the provider or supplier was required to furnish access.
(xi) For revocations under paragraph (a)(11) of this section, the
day after the date by which the HHA was required to submit the
requested documentation.
(xii) For revocations under paragraph (a)(12) of this section, the
date of the termination, revocation, or bar.
(xiii)(A) For revocations under paragraph (a)(13)(i) of this
section, the date of the certificate revocation, suspension, or
surrender.
(B) For revocations under paragraph (a)(13)(ii) of this section,
the date of the revocation or suspension of the ability to prescribe.
(xiv) For revocations under paragraph (a)(14) of this section, the
date of the last prescription in the applicable pattern or practice.
(xv) For revocations under paragraph (a)(15) of this section, the
date of the judgment.
(xvi) For revocations under paragraph (a)(16) of this section, the
date of the conviction.
(xvii) For revocations under paragraph (a)(17) of this section, the
date on which CMS referred the debt to the Department of Treasury.
(xviii) For revocations under paragraph (a)(18) of this section,
the effective date of the provider's or supplier's current enrollment.
(xix) For revocations under paragraph (a)(19) of this section, the
date on which CMS or its contractor determines that the provider or
supplier should be revoked under this paragraph.
(xx) For revocations under paragraph (a)(20) of this section, the
earliest date on the claims for the non-compliant location that are
triggering the revocation.
(xxi) For revocations under paragraph (a)(21) of this section, the
date of the last order, certification, referral, or prescription in the
applicable pattern or practice.
(xxii) For revocations under paragraph (a)(22) of this section, the
date of the prior action resulting in the revocation.
(xxiii)(A) For revocations under paragraph (a)(23) of this
section--
(1) If the standard or condition violation involves the suspension,
revocation, or termination (or surrender in lieu of further
disciplinary action) of the provider's or supplier's Federal or State
license, certification, accreditation, or MDPP recognition, the
effective date is the date of the license, certification,
accreditation, or MDPP recognition suspension, revocation, termination,
or surrender.
(2) If the standard or condition violation involves a non-
operational practice location, the effective date is the date the non-
operational status began (per CMS' or the CMS contractor's
determination).
(3) If the standard violation involves a felony conviction of an
individual or entity described in Sec. 424.67(b)(6)(i), the effective
date is the date of the felony conviction.
(B) For all other revocations under paragraph (a)(23) of this
section based on a condition or standard violation, the effective date
is the date of non-compliance with the condition or standard.
(xxiv) For revocations under paragraph (a)(24) of this section, the
date on which CMS or its contractor determines that the provider or
supplier should be revoked under paragraph (a)(24).
(xxv) For revocations under paragraph (a)(25) of this section, the
date on which CMS or its contractor determines that the provider or
supplier should be revoked under paragraph (a)(25).
(xxvi) For revocations under paragraph (i) of this section, the
effective date of the revocation (or date of the denial) that triggered
the revocation(s) of the other enrollment(s).
* * * * *
(h)(1)(i) Except for HHAs as described in paragraph (h)(1)(ii) of
this section, a revoked provider or supplier must, within 15 calendar
days of the date of the revocation letter, submit all claims for items
and services furnished before the date of the effective date of the
revocation.
(ii) A revoked HHA must, within 15 calendar days of the date of the
revocation letter, submit all claims for items and services furnished
before the later of the following:
* * * * *
(i) * * *
(1) If a provider's or supplier's Medicare enrollment is revoked
under paragraph (a) of this section or denied under Sec. 424.530, CMS
may revoke any and all of the provider's or supplier's Medicare
enrollments, including those under different names, numerical
identifiers or business identities and those under different types.
* * * * *
0
X. Section 424.540 is amended by--
0
a. In paragraph (b)(3)(i), removing the term ``HHA'' and adding in its
place the phrase ``HHA or hospice''; and
0
b. Adding paragraph (d)(3).
The addition reads as follows:
Sec. 424.540 Deactivation of Medicare billing privileges.
* * * * *
(d) * * *
(3) A provider or supplier may rebut their assigned reactivation
effective date via the procedures in Sec. 424.546.
* * * * *
0
X. Section 424.545 is amended by revising paragraph (b) to read as
follows:
Sec. 424.545 Provider and supplier appeal rights
* * * * *
(b) A provider or supplier whose billing privileges are deactivated
or has been assigned a reactivation effective date may file a rebuttal
in accordance with Sec. 424.546 of this chapter.
* * * * *
0
X. Section 424.546 would be amended as follows:
0
a. Revising the section heading, and paragraphs (a)(1) and (b)(2);
0
d. In paragraph (b)(3), removing the term ``deactivation'' and adding
in its place the phrase ``deactivation or reactivation effective
date''; and
0
e. Revising paragraph (d).
The revisions read as follows:
Sec. 424.546 Rebuttals of deactivations and of reactivation
effective dates.
(a)(1) If a provider or supplier receives written notice from CMS
or its contractor that the provider's or supplier's billing privileges
are to be or have been deactivated under Sec. 424.540 or is assigned a
reactivation effective date by CMS or its contractor under Sec.
424.540(d)(2), the provider or supplier has 15 calendar days from the
date of the written notice to submit a rebuttal to CMS as permitted
under Sec. 424.545(b).
* * * * *
(b) * * *
(2) Specify the facts or issues about which the provider or
supplier disagrees with the deactivation's imposition and/or the
effective date (or with the assigned reactivation effective date), and
the reasons for disagreement.
* * * * *
(d) Upon receipt of a timely and compliant deactivation (or
reactivation effective date) rebuttal, CMS reviews the rebuttal to
determine whether the imposition of the deactivation and/or the
designated effective date (or the assigned reactivation effective date)
are correct.
* * * * *
0
X. Section 424.570 is amended as follows:
0
a. Revising paragraphs (a)(1)(i) and(1)(iii)(C);
0
b. Redesignating paragraph (a)(1)(iv) as paragraph (a)(1)(iv)(A).
[[Page 41327]]
0
c. Adding paragraph (a)(1)(iv)(B).
The revisions and addition read as follows:
Sec. 424.570 Moratoria on newly enrolling Medicare providers and
suppliers.
(a) * * *
(1) * * *
(i) CMS may impose a moratorium on the enrollment of new Medicare
providers and suppliers of a particular type or the establishment of
new practice locations of a particular type in a particular geographic
area. Solely for purposes of this section, the term ``new'' means any
of the following application types:
(A) Initial enrollment applications.
(B) Change of ownership applications that require an initial
enrollment per Sec. 424.570(a)(1)(iii)(C).
(C) Enrollment applications from revoked providers or suppliers
whose reenrollment bars under Sec. 424.535(c) have expired and are
seeking to enroll again in the Medicare program.
(D) Reactivation applications.
(E) Enrollment applications from voluntarily terminated providers/
suppliers seeking to enroll again in the Medicare program.
* * * * *
(iii) * * *
(C) Changes in ownership (except changes in ownership that require
an initial enrollment, such as, but not limited to, an HHA, hospice, or
DMEPOS supplier change in majority ownership under Sec. 424.550(b) or
Sec. 424.551).
(iv)(A) A temporary moratorium does not apply to any enrollment
application that has been received by the Medicare contractor prior to
the date the moratorium is imposed.
(B) The date the moratorium is imposed is the moratorium's
effective date, which is the date on which the moratorium notice is
filed for public inspection at the Office of the Federal Register
(OFR).
* * * * *
PART 484--HOME HEALTH SERVICES
0
X. The authority citation for part 484 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
X. Section 484.245 is amended by--
0
a. In paragraph (b)(2)(ii)(A), removing the parenthetical phrase
``(July 1 through June 30)'' and adding in its place the parenthetical
phrase ``(January 1 through December 31)'';
0
b. In paragraph (d)(1)(i), removing the phrase ``a letter of
noncompliance'' and adding in its place the phrase ``receive
notification of non-compliance'';
0
c. In paragraph (d)(2) introductory text, removing the hyperlink
``[email protected] '' and adding in its place the
hyperlink ``[email protected]'';
0
d. In paragraph (d)(2)(v), removing the phrase ``non-compliance
letter'' and adding in its place the phrase ``non-compliance
notification''; and
0
e. Revising paragraph (d)(4)(i);
The revision reads as follows:
Sec. 484.245 Requirements under the Home Health Quality Reporting
Program (HH QRP).
* * * * *
(d) * * *
(4)(i) CMS notifies the HHA of its final decision regarding any
reconsideration request through a CMS designated data submission
system.
* * * * *
PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT
AFFECT THE PARTICIPATION OF ICFs/IID AND CERTAIN NFs IN THE
MEDICAID PROGRAM
0
X. The authority for part 498 continues to read as follows:
Authority: 42 U.S.C. 1302, 1320a-7j, and 1395hh.
Sec. 498.3 [Amended]
0
X. Section 498.3 is amended in paragraph (b)(19) by removing the term
``renew opt-out'' and add in its place the phrase ``cancel automatic
renewal''.
Sec. 498.20 [Amended]
0
X. Section 498.20 is amended in paragraph (a)(1) by removing the term
``mails'' and add in its place the phrase ``mails or emails''.
Sec. 498.25 [Amended]
0
X. Section 498.25 is amended by revising paragraph (a)(1) to remove the
term ``mails'' and add in its place the phrase ``mails or emails''.
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2026-13602 Filed 7-1-26; 4:15 pm]
BILLING CODE 4169-69-P