Biggest challenges Home Health agencies face in 2025- proposed decrease in Medicare reimbursement rates.

Running a home health agency is tough. Documentation challenges, denied claims, keeping up with changing insurance regulations and navigating staffing shortages can feel overwhelming. But it doesn’t have to be that way.

To add to the insult, Medicare payments to home health agencies (HHAs) in calendar year (CY) 2025 would decrease in the aggregate by 1.7%, or $280 million, compared to CY 2024, under the Home Health Prospective Payment System proposed rule issued June 26.

The rates in the proposed rule, which is slated for Federal Register publication on July 3, reflect a 2.5% home health payment update ($415 million increase), an estimated 3.6% decrease from a payment behaviour adjustment ($595 million decrease), and an estimated 0.6% decrease ($100 million decrease) from a proposed update to the fixed-dollar loss ratio used in determining outlier payments, the Centers for Medicare & Medicaid Services (CMS) said in fact sheet.

Here’s a brief overview:

On June 26, 2024, the Canter for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS) proposed rule. This update aims to refine Medicare payment policies and rates for Home Health Agencies.

Key Proposals Include:

• CMS is proposing a permanent prospective adjustment of negative 4.067% for 2025 to account for the transition to the patient-driven groupings model.

• CMS estimates a 2.5% increase, but when combined with the behavioural offset and other payment changes in the rule, the update is estimated to be a 1.7% decrease — approximately $280 million — compared to calendar year 2024.

• CMS is proposing to replace the current COVID-19 reporting standards with a new standard that covers a broader range of acute respiratory illnesses.

• CMS is proposing updates to the enrolment process for providers reactivating Medicare billing privileges to reduce fraud, waste, and abuse.

• A decrease in the 30-day payment rate from $2,038.15 to $2,008.12 after application of the PDGM budget neutrality adjustment, market-basket update, wage-index budget neutrality factor, and case-mix recalibration neutrality factor adjustments. Agencies that do not submit required quality data will have that rate reduced by 2 percent.

For more information or to download the final rule from the Federal Register, visit Federal Register Link. 

Preparing for the proposed changes to the Home Health Prospective Payment System (HH PPS), which was issued on June 26, requires a multi-step approach to ensure your agency remains compliant and financially stable. 

Here are some strategies you can consider as a home health agency owner:

1. Understand the Proposed Changes

• Rate Adjustments: Review the proposed payment rate adjustments to understand how they may impact your revenue. The CMS often updates the base payment rates and wage index adjustments.

• Case-Mix Weights: Check for any changes to the case-mix weights, as these will affect payments based on the complexity and resource needs of your patient population.

• Quality Reporting Updates: Note any new requirements or changes in the Home Health Quality Reporting Program (HH QRP). These may affect your reimbursement based on quality performance metrics.

2. Evaluate Your Current Patient Population

• Assess the distribution of your patients based on case-mix categories and clinical characteristics. This can help you predict how the proposed changes might affect your revenue based on your typical patient profiles.

• Consider adjusting your patient mix or services if the proposed rule suggests favoring certain types of cases or if specific adjustments could disproportionately impact your agency’s bottom line.

3. Review Your Clinical and Operational Processes

• Documentation Standards: Ensure your agency is compliant with the latest documentation standards, especially as they relate to PDGM (Patient-Driven Groupings Model) and Home Health Value Based Purchasing (HHVBP). CoLab Note Pro leverages AI to address these common issues by extracting and prioritizing critical information from medical records, ensuring that documentation meets the required standards.

• Remote Patient Monitoring and Telehealth: If the proposed rule includes provisions for telehealth and remote patient monitoring, consider integrating or expanding these services. This not only prepares you for regulatory compliance but also can improve patient outcomes and agency efficiency.

4. Optimize Resource Utilization

• Evaluate your current staffing model and resource allocation to maximize efficiency. Changes in payment may necessitate shifts in how and where resources are allocated.

• Invest in technology solutions like robotic process automation (RPA) and AI-driven documentation tools like CoLab Note Pro to streamline operations and reduce administrative burdens.

5. Focus on Quality Improvement

• Given the increased focus on quality measures, initiate or strengthen programs aimed at improving patient satisfaction, reducing rehospitalizations, and enhancing outcomes. CoLab Note Pro can assist your agency to tackle  some of these challenges.

• Conduct internal audits and monitor your agency's performance on key quality metrics. Identify areas where you can improve to meet or exceed the new benchmarks.

6. Educate and Train Your Staff

• Hold training sessions to educate your clinicians and administrative staff about the proposed rule changes and what they mean for their daily tasks and responsibilities.

• Focus on compliance training, especially concerning documentation requirements, as these often change with new rules.

7. Engage with Professional Networks and Advocacy Groups

• Stay connected with home health advocacy groups, such as the National Association for Home Care & Hospice (NAHC), to stay informed on industry responses and advocacy efforts regarding the proposed changes.

• Engage in public comment periods or join webinars that review the proposed rule to gain insights and voice concerns.

8. Prepare Financial Models and Scenarios

• Use financial modeling to project how different scenarios under the proposed changes might impact your agency's finances. This can help you strategize how to offset potential revenue decreases or leverage possible increases.

• Consider consulting with financial advisors who specialize in healthcare reimbursement to guide your preparation and long-term planning.

9. Submit Feedback During the Comment Period

• Take advantage of the CMS comment period to submit feedback. Agency owners often provide valuable insights that can influence final rulemaking. Your experiences and concerns can help shape a final rule that considers the realities of home health care delivery.

By understanding the proposed changes and adapting your strategies accordingly, you’ll be better equipped to handle the implications and stay competitive and compliant within the evolving home health landscape.

 is here to simplify clinical documentation for home health clinicians with the use of AI and robotic process automation (RPA). We help home health agencies speed up chart completion, reduce denials, and improve clinician productivity ; all while maintaining the highest standards of accuracy and compliance.