CMS Issues Final Rules to Sustain Healthcare Provider Operations and Access
On November 6, 2023, the Centers for Medicare & Medicaid Services (CMS) released its final payment rules for calendar year 2024, adjusting reimbursement rates for home health agencies, hospital outpatient departments, and ambulatory surgical centers (ASCs). These updates are designed to reflect changes in the healthcare cost environment while maintaining access to quality care for Medicare beneficiaries.
The finalized rules represent a modest but strategic investment in key care settings, particularly for older adults and patients with chronic conditions. The adjustments will influence how providers manage care delivery, staffing, and service expansion in the year ahead.
Home Health Prospective Payment System (HH PPS) for 2024
CMS finalized a 0.8% net increase in payments for home health agencies, amounting to approximately $140 million in additional Medicare spending in 2024. This update includes:
- A 3.0% market basket increase to account for inflation and cost growth.
- A -2.2% behavioral adjustment, reflecting CMS’s ongoing efforts to correct for anticipated changes in coding and utilization behavior under the Patient-Driven Groupings Model (PDGM).
While the payment increase is relatively small, it offers some relief for agencies facing rising labor and supply costs. However, industry stakeholders have expressed concerns about sustainability, particularly in rural and underserved regions where home health services play a vital role in supporting aging-in-place strategies.
CMS also finalized policies to advance data collection on health equity and improve the Home Health Quality Reporting Program (HH QRP), including the continued implementation of the OASIS-E assessment instrument.
Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System
For outpatient hospital services and ASCs, CMS finalized a 3.1% payment rate update. This figure is based on:
- A 3.3% hospital market basket update, reflecting anticipated increases in input costs.
- A 0.2 percentage point productivity adjustment, required by statute.
Key elements of the OPPS and ASC rule include:
- Expanded behavioral health access: CMS finalized proposals to allow intensive outpatient program (IOP) services to be billed under OPPS for the first time, enhancing care options for patients with mental health and substance use disorders.
- Remote behavioral health flexibility: Telehealth provisions for certain behavioral services will remain in place through 2024, helping preserve access in underserved areas.
- ASC payment parity: CMS reaffirmed its commitment to aligning ASC payment updates with OPPS to ensure a level playing field and encourage migration of appropriate procedures to outpatient settings.
The rule also includes updates to the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program, advancing CMS’s goals for transparency and value-based care.
Strategic Goals Behind the Updates
These payment policy changes support CMS’s broader objectives to:
- Ensure adequate provider reimbursement to support access to care.
- Encourage care delivery in lower-cost, community-based settings like home health and ASCs.
- Promote health equity through data collection and stratification.
- Foster behavioral health integration and expand access to mental health services.
The 2024 updates aim to strike a balance between fiscal responsibility and the need to stabilize provider operations amid persistent workforce and cost challenges.
Industry Reaction and Implications
While CMS’s updates were met with measured approval by some provider organizations, several industry groups—including the National Association for Home Care & Hospice (NAHC) and the Ambulatory Surgery Center Association (ASCA)—continue to advocate for more substantial reimbursement increases and policy flexibility to address rising operational demands and inflationary pressures.
Stakeholders are also closely monitoring how these payment changes will affect Medicare Advantage plans, which frequently contract with home health agencies and outpatient providers.
Looking Ahead
The finalized payment rules take effect on January 1, 2024, and will shape how millions of Medicare beneficiaries receive care across home and outpatient settings. CMS is expected to continue its focus on equity, transparency, and value-based care models throughout 2024, while responding to evolving cost and utilization patterns across the healthcare system.
Source:
Sachs Policy Group – CMS Finalizes 2024 Home Health and Outpatient Payment Updates
