The National Association for Home Care and Hospice filed a lawsuit Thursday against the Centers for Medicare and Medicaid Services and the Health and Human Services Department over reductions in home health payment rates.
The association is challenging a 3.9% payment cut that went into effect this year and an additional 5.7% cut CMS proposed last week for 2024. The reductions stem from overpayments CMS said it made to home health agencies following the introduction of a new payment model in 2020. The Home Health Patient-Driven Groupings Model is intended to reduce unnecessary care by tying reimbursements to the complexity of care.
The payment model was intended to be budget-neutral, but CMS assumed providers would respond by upcoding to compensate for the changes. The lawsuit contends CMS and HHS used an “illogical and invalid” methodology in determining projecting expenditures under the new payment model.
“We have done everything possible to get Medicare to understand the disastrous consequences of its actions,” NAHC President William Dombi said in a news release. “We have presented hard facts, deep legal analyses and extensive data to Medicare that demonstrate the errors in its policies to no avail. As a last resort, we have filed this lawsuit to protect Medicare beneficiaries and the home health agencies that care for them.”
CMS did not respond to a request for comment on the lawsuit.
The proposed rates, which would reduce overall payments to home health providers by $375 million in 2024, have drawn criticism from home health companies.
Enhabit Home Health and Hospice President and CEO Barbara Jacobsmeyer said the cuts would create financial headwinds for the Dallas-based organization in an already challenging labor environment. Enhabit operates more than 350 facilities in 34 states.
“Making repeated cuts to Medicare’s home health benefit on a year-after-year basis creates obstacles against operational realities and patient care preferences that our providers navigate every day in the communities we serve,” Jacobsmeyer said. "It is critical that the government understands how cuts like these can negatively impact seniors’ access to home-based care.”
CMS is accepting public comment on the proposed payment cuts until the end of August. The agency is likely to issue a final rule in the fall.