The U.S. Centers for Medicare & Medicaid Services (CMS) released its FY 2023 home health proposed payment rule late Friday.

It comes with a decrease to payment rates by 4.2%, or $810 million less compared to 2022 rates. Overall, the proposed rule looks to be one that will be disappointing to providers, and one they will refute heavily in the public comment period.

“This decrease reflects the effects of the proposed 2.9% home health payment update percentage ($560 million increase), an estimated 6.9% decrease that reflects the effects of the proposed prospective, permanent behavioral assumption adjustment of -7.69% ($1.33 billion decrease), and an estimated 0.2% decrease that reflects the effects of a proposed update to the fixed-dollar loss ratio used in determining outlier payments ($40 million decrease),” CMS wrote in its fact sheet.

The proposed rule validated concerns that providers have had since the hospice proposed rule and skilled-nursing-facility proposed rules came out earlier this year.

“We are very disappointed in the CMS proposed rule issued today,” William A. Dombi, the president of the National Association for Home Care & Hospice (NAHC), wrote in a comment shared with Home Health Care News. “The stability of home health care is at risk as a consequence of CMS proposing the application a fatally flawed methodology for assessing whether the PDGM payment model led to budget neutral spending in 2020. That has been made clear to CMS in the 2021 rulemaking and in multiple discussions since.”

They will likely argue that the proposal clearly does not take into account multiple factors currently hindering providers, including: raised labor costs, a severely high inflation rate and other ongoing heightened expenses related to COVID-19.

“With significantly rising costs for staff, transportation, and more, home health agencies across the country cannot withstand the impact of the proposed rate cut,” Dombi added. “Reliable analyses proves that PDGM underpaid home health agencies. We will be taking all steps to protect the home health benefit as this proposed rule advances and have fully prepared for Congressional action and more. “

On the hospice side, CMS recently proposed a 2.7% pay increase for 2023. Meanwhile, SNF operators saw a proposed downward adjustment to SNF payment rates by 4.6%.

The latter rate adjustment is partly to balance out the Patient-Driven Payment Model (PDPM), which is similar to the home health industry, in that adjustments are being made to the Patient-Driven Groupings Model (PDGM).

In that vein, CMS is proposing to apply a permanent prospective payment adjustment to the home health 30-day period payment rate. That would be to account for any increases or decreases in aggregate expenditures as a result of the “difference between assumed behavior changes and actual behavior changes,” due to the implementation of the PDGM and 30-day unit of payment.

The full fact sheet from CMS can be viewed here.

This is a developing story. Please check back later for updates.