The Centers for Medicare & Medicaid Services (CMS) has proposed a new rule that would decrease Medicare payments to Home Health Agencies (HHAs) in CY 2025 in the aggregate by 1.7%, or $280 million, compared to CY 2024, according to an agency news release.

RT’s Three Key Takeaways

  1. The Centers for Medicare & Medicaid Services (CMS) issued the proposed rule for the Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS), which includes a -4.067% adjustment to the home health payment rate to account for the implementation of the Patient-Driven Groupings Model (PDGM).
  2. CMS proposes updates such as recalibrating the PDGM case-mix weights, adjusting the fixed dollar loss (FDL) for outlier payments, and modifying the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups for CY 2025.
  3. Despite a proposed 2.5% payment update, the rule includes other adjustments leading to an estimated aggregate decrease of 1.7% or $280 million in Medicare payments to Home Health Agencies (HHAs) in CY 2025 compared to CY 2024.


On June 26, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS) proposed rule, which would update Medicare payment policies and rates for Home Health Agencies (HHAs). These changes can support timely admission to home health services, which has demonstrated improvements for patient outcomes and reducing risk of hospital readmissions. 

As required by the Bipartisan Budget Act of 2018, which amended section 1895(b) of the Social Security Act, this rule proposes a permanent prospective adjustment to the CY 2025 home health payment rate of -4.067%, to account for the impact of implementing the Patient-Driven Groupings Model (PDGM). This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY 2020 implementation of the PDGM and the change to a 30-day unit of payment. For CY 2023 and CY 2024, CMS previously applied a 3.925% reduction and a 2.890% reduction, respectively, which were half of the estimated required permanent adjustment.

In addition, CMS is proposing to: recalibrate the PDGM case-mix weights; update the fixed dollar loss (FDL) for outlier payments; update the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups for CY 2025; establish a home health occupational therapy (OT) LUPA add-on factor; and update other LUPA add-on factors. This rule also proposes to adopt the core-based statistical area (CBSA) delineations for the home health wage index using the 2020 Decennial Census. Additionally, this rule includes a proposed rate update for the CY 2025 intravenous immune globulin (IVIG) items and services’ payment under the IVIG benefit. It discusses how the CY 2025 payment rate update for the negative pressure wound therapy disposable device (dNPWT) will be applied.

The actions CMS is taking in this proposed rule would help improve patient care and protect the Medicare program’s sustainability for future generations. 

This rule proposes routine, statutorily required updates to the home health payment rates for CY 2025. The CY 2025 updated rates include the proposed CY 2025 home health payment update of 2.5% ($415 million increase), which is offset by an estimated 3.6% decrease and required by statute, that reflects the proposed permanent behavior adjustment ($595 million decrease) and an estimated 0.6% decrease that reflects a proposed FDL ($100 million decrease). CMS estimates that Medicare payments to HHAs in CY 2025 would decrease in the aggregate by 1.7%, or $280 million, compared to CY 2024, based on the proposed policies. 

Source: CMS