Episode Transcript
[00:00:02] Welcome to Home Health Revealed, where we share real stories from industry leaders about home health, palliative and hospice care brought to you by Velocity. Grow your home health or hospice agency with the power of Velocity. Velocity's easy to read coding and revenue cycle dashboards let you grab your cup of coffee and quickly see the health of your organization.
[00:00:21] Hello everyone. Welcome back to the Home Health Revealed podcast. I am Hannah Vale and listen and if you were easing into that Thanksgiving Leftovers nap On November 28, the tryptophan was just wearing off. Hold on, because CMS had other plans right in the middle of our post Turkey Drowsiness, they released the calendar year 2026 final rules. So let's unwrap that first. Let's start with the big headline and then talk a little bit about how it affects the revenue cycle and what you should do to prepare.
[00:00:56] Most of what I'm going to be saying in the next few minutes comes from the fact sheet on the CMS website, so I'm going to be reading directly just to make sure that what I'm saying is exactly factual. What we're looking at here with the calendar year 2026 Home Health Perspective Payment System Final Rule they announced policy changes under the Home Health HH Prospective Payment System. So HHPPS is the nice short little cute term for it. This fact sheet that I'm going over really just discusses the major provisions given in the final rule and you can find all of it for your nice bedside reading on the CMS website.
[00:01:33] So policy updates for home health agencies Updates to the home health payment rates for calendar year 2026. Updated rates include the final calendar year 2026 home health payment update of an estimated 2.4% increase, which is $405 million increase, offset by an estimated 0.9% decrease that reflects the final permanent adjustment, which is $150 million of a decrease, an estimated 2.7% decrease. So we're just kind of adding all of this up here that reflects the final temporary adjustment or $460 million decrease, and an estimated 0.1% decrease that reflects the updated fixed dollar loss ratio for outlier payments, which is a $15 million decrease. All right, let's add all that up here. CMS estimates that Medicare payments to HHAs in the calendar year 2026 will decrease in the aggregate by an estimated 1.3% or $220 million compared to the calendar year 2025 based on these finalized policies. So overall, we're looking at a 1.3% decrease in addition, CMS is finalizing recalibrated PDGM models so the Patient Driven Groupings model, the case mix weights updated low utilization payment adjustments or the LUPA thresholds, updated functional impairment levels and comorbidity adjustment subgroups for calendar year 2026. This rule also finalizes changes to the Face to Face Encounter policy.
[00:03:14] So that I think is a good thing to align with the language of the Coronavirus Aid, Relief and Economic Security act or CARES act regarding which physicians can perform the Face to face encounter. So let's start talking a little bit about those permanent and temporary adjustments to the home health payment rates.
[00:03:36] So for calendar years 2023, 2024 and 2025, CMS applied reductions of 3.925%, 2.89% and 1.975% respectively for those years which were half of the estimated required permanent adjustments. For this final rule, the permanent adjustment was modified from the proposal after commenters raised concerns that behavior change after the calendar year 20 might be attributable to factors unrelated to the implementation of the pdgm, such as the introduction of OASIS E assessment, the expansion of home health value based purchasing, and increased Medicare Advantage penetration.
[00:04:28] It's really nice to know that our comments and the things that we gave as far as feedback were at least reviewed and considered. This final rule finalizes a permanent adjustment to the calendar year 2026 home health payment rate of negative 1.023% to account for the impact of implementing the PDGM for calendar years 2020 through 2022. This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to those implementations of the PDGM during that time period period and the change to the 30 day unit of payment. Additionally, to mitigate a significant single year payment reduction, financial instability and potential access to care issues, CMS is finalizing a negative 3% temporary adjustment to be applied to the calendar year 2026 payment rate. The temporary adjustment amount 2020 through 2022 again is 4.76 billion.
[00:05:33] The impact of differences will continue to be evaluated and these are the differences again between the assumed behavior and the actual behavior changes on the expenditures through calendar year 2026.
[00:05:47] So continuing to monitor and make changes, let's talk about the recalibration of PDGM case mix weights. So each of the 432 payment groups under PDGM has an associated case mix weight and LUPA threshold. CMS's policy is to annually recalibrate the case mix weights and the LUPA thresholds. So in this final rule CMS is finalizing to recalibrate those case mix weights, including the functional levels and comorbidity adjustment subgroups. The LUPA thresholds using the calendar year 2024 data to more accurately pay for the types of patients that home health agencies are serving now.
[00:06:33] Changes to the Face to Face Encounter Policy CMS is finalizing a changing to the face to face regulation to allow physicians, including or I'm sorry, physicians in addition to NPCnses and PAs to perform the face to face encounter regardless of whether they are the certifying practitioner or whether they cared for the patient in the acute or post acute facility from which the patient was directly admitted to home health and who is different from the certifying practitioner. This change will align the current regulations with the CARES act language.
[00:07:11] Switching gears here, talking a little bit about the Quality Reporting Program or QRP for home health, CMS is finalizing the proposals to remove Items from the HHQRP, removing the COVID 19 vaccine so percentage of patients who are up to date measure and the corresponding OASIS data element beginning with the calendar year 2026. CMS is also removing four assessment items in the standardized patient assessment one living situation item, two food items and one utilities item beginning with the 2026 HHQRP.
[00:07:49] This rule also finalizes changes to the reconsideration policy to allow providers to submit a request for reconsideration of an initial determination of non compliance if they can demonstrate compliance in very limited circumstances. This is not something we should be depending on. HHAS will be permitted to request an extension to file a reconsideration request if the HHA was affected by an extraordinary circumstance beyond the control of the hhs. A and this fact sheet gives some examples here that is A natural or man made disaster such as a cyber attack, hurricane, tornado or earthquake during the 30 day reconsideration period.
[00:08:31] CMS is also finalizing a revised Home Health Consumer Assessment of Health Care Providers and Systems more affectionately known as HCAHPS Survey beginning with the April 2026 sample month. This rule also finalizes as proposed updates to the regulatory text to account for all payer data. Submission of OASIS Data CMS is providing a summary of comments received in response to the RFIs contained in the proposed rule pertaining to changing the final data submission deadline period from four and a half months to 45 days. It's quite a cut. The Digital Quality Measurement or DQM transition for HHAS and the adoption of health information technology, IT and standards including FAST healthcare Interoperability Resources or FHIR and future HH QRP quality measures, concepts of interoperability, cognitive function, nutrition and patient well being Expanded Home Health Value Based Purchasing Model or HHVBP Changes to the applicable Measure Set Beginning In April of 2026, CMS is finalizing changes to the HCAHPS survey. These changes affect the survey questions used to calculate three measures that are currently used in the expanded value based Purchasing model. Due to the finalized changes to the HCAHPS survey, CMS is removing these three survey based measures, care of patients, communications between providers and patients, and specific care issues.
[00:10:08] CMS is also finalizing as proposed the addition of four measures to the applicable measure set. This includes three OASIS based measures related to bathing and dressing and one claims based measure, the Medicare Spending per Beneficiary for the Post Acute Care or PAC setting measure. CMS is finalizing as proposed alterations to the current weights of individual measures and measure categories Medicare Provider Enrollments in its ongoing efforts to prevent fraud, waste and abuse, which is what all of this is supposed to be doing, CMS is finalizing several new and revised provider enrollment provisions. CMS believes these changes will help reduce improper Medicare payments and protect the beneficiaries.
[00:10:55] One is retroactive revocations. Under current regulations, certain Medicare enrollment revocations become effective prospectively.
[00:11:04] Specifically 30 days after the date that CMS or the CMS contractor mails notice of the revocation to the affected provider or supplier. However, there are now several grounds for which CMS can revoke a provider's enrollment retroactively to the date the provider's non compliance began.
[00:11:24] Retroactive revocation allows CMS to collect monies that have been paid to the provider since the beginning of its non compliance.
[00:11:32] For this reason, the proposal is being finalized to increase the number of grounds for which CMS can revoke a provider retroactively.
[00:11:43] Again, this is all helped to ensure that taxpayer money is going to only legit compliant providers. CMS has seen situations where one the enrolled physicians or practitioners have not ordered or certified services for 12 consecutive months, leaving their billing numbers vulnerable to use by bad actors and two beneficiaries attest that a provider did not furnish them the services they claimed. So CMS is amending its regulations to deactivate the physician or practitioner's medical or Medicare billing privilege privileges in the first situation so when they've not ordered or certified services for 12 consecutive months, and to reiterate the existing authority to revisit revoke providers in the second, where beneficiaries say that the provider did not furnish them the services that were claimed. Another piece of this final rule deals with durable medical equipment, prosthetic devices, prosthetics, orthotics and supplies or DME POS Accreditation DME POS suppliers must be accredited by a CMS approved accrediting organization or AO to enroll in and bill Medicare. The purpose of this accreditation is to confirm that the supplier meets the DME POS quality standards.
[00:13:02] They are going to be revisiting the original regulations from 2006 to make sure that the program integrity is still in place. They are finalizing several updates and enhancements to those regulations so that they can exercise greater scrutiny over the DME POS suppliers and the aos.
[00:13:22] The specific provisions center around two general principles, one being the more frequent DME POS supplier surveys and RE accreditations.
[00:13:32] Right now that's taking place every three years.
[00:13:36] So DME POS suppliers will now have to be resurveyed and reaccredited annually as opposed to every three and then stricter requirements for becoming and remaining a DME positive accredited organization.
[00:13:50] So increasing the amount, specificity and frequency of data that AOS must submit to CMS, expanding CMS's ability to closely monitor and review AO's operations and strengthening CMS's ability to respond to poorly performing AOs. The exemption process for the prior AUTH of certain DME POS items so CMS is finalizing additional specificity to the DME POS prior authorization exemption process modeled on a similar exemption process in the hospital outpatient department. Prior AUTH program suppliers achieving a target approval rate of 90% will be offered an exemption from required prior authorization to determine supplier eligibility for continued exemption. The DME Medicare Administrative Contractors or MAX would complete a post payment medical review sample from this claim sample suppliers must again meet a claim approval rate of 90%. 90% is the key target there or greater to to continue their exemption. Suppliers who did not meet the compliance rate threshold must continue submitting prior authorization requests as required.
[00:15:04] So here is how this affects the revenue cycle and what you should do.
[00:15:11] Quality reporting is definitely a key piece of this. Do not fail to report quality data because that's an avoidable revenue loss. Start by assigning a single owner to ensure your OASIS and your HCAP submission accuracy. Level up your coding under pdgm. This is where you can regain your leverage. Audit your coding for your comorbidity, capture your primary diagnosis accuracy and specificity and your therapy thresholds and LUPAs. Your documentation precision is going to equal denial prevention with CMS's added flexibility on face to face encounters which is great, but documentation must clearly show who, when and why.
[00:16:03] DME documentation stays high risk, so if you don't have an intake checklist it is time to get that in place and then prepare for audit pressure. And this is something you really should do at any time. I think we're going to see an increase and can expect more medical review.
[00:16:22] So build yourself a fast track denial and appeal response process to shorten your AR cycles. That DSO the day sales outstanding number from when you see that patient to when you get paid for that patient should be a top of mind and everyone in your organization really should have that number in their head. Make it a target.
[00:16:45] Involve everybody early. Involve your clinical experts early even with the revenue cycle which sometimes can feel very separate from your clinical. But really it cannot be with CMS Tightening your enrollment verification. Make sure you clean your records now to avoid any future payment disruptions when it comes to your provider enrollment.
[00:17:09] And run yourself a financial stress Test Model 2026 using a negative 1.3% baseline according to the number and layer in any labor inflation possible denials.
[00:17:27] Plan with built in buffer and kind of plan for the worst is what my suggestion would be because everything is up from there.
[00:17:37] But agencies that plan proactively really can protect their margins and all of this comes down to patient access. There is still concern and rumblings among people within this industry.
[00:17:49] There's concern about access to patient care, especially your smaller agencies. Even your midsize agencies are really going to feel this squeeze and it's going to make decision making about taking patients and things at the forefront of your mind. In closing, DMS may have delivered this final rule like a little sneaky post holiday surprise it felt like. But if you act now you can turn this into more of a strategic opportunity throughout the rest of this calendar year 2025. Really start planning heavily for your 2026.
[00:18:24] I'm Hannah Vail. Thanks for listening.
