What the Home Health Final Rule Means for 2023

December 7, 2022

On November 1st, 2022, the Centers for Medicare, and Medicaid Services (CMS) issued the home health final rule, which will initiate sweeping updates to Medicare payment policies and rates for home health agencies (HHAs). The home health final rule 2023 will have several pros and cons for both Medicare and Home Health providers. Below will be a brief breakdown of some of those impacted areas.

Payment Rates for CY 2023

CMS predicts that the home health final rule will see an increased cost of 0.7%, or $125 million, during 2023 compared to the lower rates of 2022. This increase resulted in CMS estimating the cost of assumed aggregate changes, starting with a 4% updated HHA payment rate ($725 million increase), resulting in an estimated 3.5% decrease in 30-day payment plans. CMS suggested further permanent -3.925% ($635 million reduction) changes to pricing models based on assumed behavioral differences after deeming the proposed -7.85 percent to be too significant of an impact on current Medicare payments.

CMS took these findings and estimated a last 0.2 % increase reflecting an updated FDL’s effects ($35 million increase) to account for outlier payments. Overall, the home health final rule has compromised to support providers, but it’s left the door open for long-term policy changes related to the national home health value-based purchasing model (HHVBP) and quality reporting, which can be worrying.

Integration of Technology

During the height of the COVID-19 pandemic, CMS temporarily offered 151 new Medicare services provided using telehealth. CMS created an entirely new tier called category 3 for this purpose. Following the home health final rule 2023, CMS has created 59 additional services to Category 3 and full coverage to the end of 2023. Notably, the Consolidated Appropriations Act of 2022 requires that CMS still offer telehealth services to patients who cannot leave their homes in rural areas or need audio-only options available.

A potential benefit of this outcome is that CMS now has time to consider whether to keep telehealth services or drop the coverage plan. One indicator that CMS might support telehealth is its integration with Medicare mental health services. CMS has stopped requiring at least one in-person visit with therapists to grant full coverage, making it easier to obtain behavioral health services.

New Methodology for Medication

Section 2003 of the SUPPORT Act mandates that all licensed physicians must prescribe schedule II-IV controlled substances under a Medicare drug prescription plan using EPCS. Final rule 2023 now enables CMS to collect Prescription Drug Event (PDE) data voluntarily via telecommunication networks starting Jan 1st, 2023, and on a mandatory basis in July 2023.

Once this 2023 data becomes available, it will determine 2024 pricing scales based on compliance levels. The current CMS policy of sending letters to non-compliant parties will continue until penalties become finalized in 2025.

Impacts to Behavioral Health

Before this ruling, mental health services had to be regulated directly through Medicare. By pairing the home health final rule with the 2022 CMS Behavioral Health Strategy, CMS has taken a whole-person approach to patient care. CMS can now integrate licensed therapists and social workers (counselors) into a patient’s primary health team, enabling Medicare to dedicate a monthly fund for these professionals to provide comprehensive treatment and pain management under general supervision.

Improved Opioid Treatment Programs

CMS has concluded that the voluntary collection of the average sales price (ASP) data isn’t reliable enough to produce accurate metrics for new pricing models on the pain management drug methadone. In response, CMS has adopted their 2021 payment rates (the current model would decrease their estimated payments) and plans to adjust costs annually for inflation.

Under the home health final rule, CMS has considered lowering the costs of specific Opioid Treatment Programs (OTPs). Medicare will start issuing payments for programs using telehealth to treat buprenorphine. CMS will even allow the prescription of buprenorphine via two-way audio-only telehealth calls on a case-by-case basis, provided it’s with a licensed mental care provider.


The home health final rule 2023 is objectively a mixed bag. The laws governing any adjustments to the current Patient-Driven Groupings Model (PDGM) required CMS to keep its payment budget neutral. That meant legally estimated aggregate expenditures under the new system, PDGM, had to match the aggregate payment Medicare or ome Health Agencies would’ve made under the old 153 group system. CMS must conduct annual reviews to prove that those 30-day payment plans have met neutrality standards, which forced CMS to cut their proposed -7.69% permanent adjustment to HHA in half.

However, this issue becomes morally grey because CMS can now justify any pricing models for future changes. This methodology is a slippery slope as it takes “assumed” behavior for how providers might act in the future, using data taken from telecommunications. Which, as mentioned, is only “sometimes” absolute when staying within budget neutrality. The potential to do good for Medicare and Home Health patients is there, but it will need to be observed closely.

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