The Centers for Medicare & Medicaid Services (CMS) Suggests a 4% Reduction in Home Health Medicare Payments by 2025

The U.S. Centers for Medicare & Medicaid Services (CMS) recently released its proposed payment rule for home health services for FY 2025. In this proposal, CMS indicated that there could be significant cuts for providers in the near future.

To address budgetary concerns and rebalance the Patient-Driven Groupings Model (PDGM), CMS is suggesting a permanent adjustment to the home health payment rate for CY 2025. This adjustment would result in a -4.067% reduction in payments. In previous years, CMS implemented reductions of 3.925% for CY 2023 and 2.890% for CY 2024.

The proposed rule aims to align assumed behavior changes with actual changes in home health expenditures following the implementation of the PDGM in CY 2020. The update includes a 2.5% payment increase for CY 2025, but this is offset by a 3.6% decrease related to PDGM rebalancing and a 0.6% decrease due to a proposed fixed dollar loss.

Overall, CMS estimates that Medicare payments to home health agencies could decrease by 1.7% in CY 2025, totaling approximately $280 million less than in 2024. This situation is fluid, and updates may be forthcoming as the rulemaking process continues.