The CY 2025 Home Health Prospective Payment System (HHPPS) Final Rule that the Centers for Medicare and Medicaid Services (CMS) recently finalized includes significant updates for home health agencies. The rule introduced adjustments to payment rates, Conditions of Participation (CoPs), quality reporting program (QRP) and the expanded Value-Based Purchasing (VBP) model, aligning with CMS’s goal of refining care delivery and addressing budget neutrality.
Financial Updates
The CY 2025 final rule offers modest adjustments to reimbursement rates, reflecting CMS’s emphasis on budget neutrality. The net aggregate increase for home health agencies is about $460 million, primarily driven by a 2.7% inflation adjustment. This is offset though by a $305 million permanent behavioral adjustment and a $70 million reduction related to outlier payment adjustments, resulting in a net reimbursement increase of just 0.5%.
The Patient-Driven Groupings Model (PDGM) continues to shape payment structures. PDGM modifies case-mix weights and Low-Utilization Payment Adjustment (LUPA) thresholds annually. For 2025, updated thresholds aim to align payments more accurately with the types of patients served. Wage index changes are also finalized, adopting new labor market classifications to reflect population and labor shifts, although adjustments are capped at -5% to try and reduce drastic financial impacts.
Functional and Clinical Updates
Changes to clinical metrics include updates to comorbidity adjustments. While the high comorbidity interaction list now includes 33 new pairings, others have been removed to enhance clinical relevance. Functional impairment level distributions remain largely stable, but the finalized OASIS points table for 2025 reinstates points for certain activities like bathing, while reducing points for others to better reflect patient needs.
CMS also finalized the addition of occupational therapy-specific LUPA add-on factors, promoting equitable compensation for OT services in LUPA scenarios. This change aims to balance clinical needs with financial constraints while still promoting high-quality care.
Quality Reporting Program (QRP) and Value-Based Purchasing (VBP) Changes
The QRP introduces new standardized patient assessment data elements focusing on social determinants of health (SDOH). Things like living situation, food security and transportation are set to become mandatory by CY 2027, with voluntary reporting beginning earlier. These measures aim to boost health equity and address barriers that influence patient outcomes.
In the VBP model, CY 2025 will feature new claims-based and OASIS-based measures. The claims-based measures, the Potentially Preventable Hospitalization (PPH) and Discharge to Community-PAC (DTC-PAC), emphasize keeping the patients out of the hospital both during the home health stay and after discharge. The newest OASIS-based measure, the Discharge Function Score, assesses agencies on improving patient functionality upon discharge. Notably, 55% of an agency’s Total Performance Score will come from these new measures, emphasizing the importance of data accuracy and timely reporting. Agencies must prioritize education and preparation for these new metrics.
Changes to OASIS and Conditions of Participation (CoPs)
The OASIS remains the primary assessment tool for home health, though it is evolving. The transition to OASIS-E1 brings updates like the imputation of discontinued elements to align with PDGM methodologies. The inclusion of new SDOH questions starting January 2027 reflects broader goals of addressing health disparities.
On the CoPs front, home health agencies are required to develop consistent patient acceptance policies, addressing staffing, caseloads and competencies. These updates aim to reduce care delays and improve transparency for referral sources and prospective patients. All-payer OASIS data submission becomes mandatory by mid-2025, a move designed to enhance accountability and data comprehensiveness.
The biggest change to OASIS is a minor change to a regulation set to be implemented in 2025. The change known as all-payor OASIS is set to be mandatory July 1, 2025, but agencies may choose to begin collection and submission of OASIS on all clients (with exemptions) as of SOC M0090 of January 1. For more information, check out our recent blog, Preparing for OASIS All-Payor Reporting in Home Health: Key Updates for 2025.
The CY 2025 HH PPS Final Rule is part of CMS’s ongoing efforts to refine home health care. While the adjustments provide modest financial relief, the broader changes underscore the importance of data accuracy, patient-centered care and addressing social determinants of health. Agencies must adapt proactively, leveraging tools and training to meet the evolving demands and capitalize on opportunities within this dynamic regulatory landscape.
Discover more takeaways of the CY 2025 Home Health Final Rule and strategies for continued clinical and financial success in 2025. Click here to listen to the full webinar.
About the Author
Jeff Aaronson, VP of Advisory Consulting
Jeff Aaronson, Vice President of Advisory Consulting at McBee, assists post-acute providers toward achieving operational and financial excellence through maximization of technology, process redesign and analytics. Jeff has served as VP of Finance and other senior leadership roles within home health and hospice providers, in addition to years of experience working in healthcare IT. His significant financial management experience within the provider community gives him a wealth of knowledge and expertise focused on the operations of home health and hospice providers.
About the Author
Lisa Selman-Holman, JD, BSN, RN, HCS-D, COS-C, VP of Education and Quality
Lisa Selman-Holman, JD, BSN, RN, HCS-D, COS-C, is the VP of Education & Quality at McBee, bringing over 35 years of expertise in home health and hospice. As a registered nurse and home care attorney, she specializes in regulatory compliance. Lisa has held various roles, from field nurse to executive, managing accreditation surveys, acquisitions, and regulatory crises. In 2004, she founded Selman-Holman & Associates, offering consulting, coding and OASIS review services. Lisa is a renowned educator, known for turning challenges into achievements. Joining McBee in 2021, she leads education initiatives at the Post-Acute Academy, providing courses for home health and hospice staff and executives, including clinical, regulatory and onboarding requirements.
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