The Biden administration has asked a federal judge to throw out a lawsuit by the National Association for Home Care and Hospice challenging how the agency sets payments to providers.
The motion filed Friday in U.S. District Court for the District of Columbia by the Health and Human Services Department claims the lawsuit should be dismissed “for lack of subject-matter jurisdiction.”
Related: Home health association sues CMS, HHS over proposed payment cuts
In the lawsuit filed in July, the trade association alleges HHS and the Centers for Medicare and Medicaid Services used flawed methodology under a payment model introduced in 2020 that was designed to reduce unnecessary care by tying reimbursements to the complexity of care.
The Patient-Driven Groupings Model was intended to be budget neutral, but CMS expected home health firms would upcode to compensate for changes under the new model, requiring payment cuts down the road. The trade association alleged Congress never intended budget neutrality between the old and new payment models, but to freeze payments at $16.6 billion, the amount CMS would have spent under the old model.
“If overall usage of home health services in Medicare drops precipitously or home health agencies decide to provide fewer services for the same spell of illness, under NAHC’s theory, CMS should still pay home health agencies collectively $16.6 billion—a windfall for the industry,” attorneys stated in the document.
Last month, CMS said it would raise home health reimbursement rates a modest 0.8% in 2024, reversing itself from a proposed 2.2% rate cut in June. However, the agency said it might still claw back $3.5 billion in overpayments it made to providers between 2020 and 2022.
The association said the cuts could drive many home health companies out of business.
