Key Takeaways from the CMS CY 2025 Home Health Final Rule

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The 2025 Home Health Final Rule is here! On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released its final rule for the 2025 Home Health Prospective Payment System (HH PPS). The new rule includes a range of updates affecting payment rates—including an overall estimated net increase in home health payments of 0.5% ($85 million), with the final home health payment update set at 2.7% ($460 million increase) and a permanent behavior adjustment of -1.975%. 

As part of Maxwell’s ongoing commitment to support home health agencies, our expert team continuously evaluates recent changes in wage index adjustments across the country. In recognition of the significant impact these adjustments may have on your agency’s operations and revenue, we’ve compiled some of the key takeaways you need to know about the CMS CY 2025 Home Health Final Rule. 
  

1. Payment Adjustments: Balancing Rate Increases and Behavior Assumptions 

CY 2025 Payment Increase: The final home health payment update percentage for CY 2025 is set at 2.7%, resulting in an estimated $460 million increase in payments. However, this increase is partially offset by two adjustments: 

• A 1.8% reduction due to permanent behavior adjustments, designed to address the impact of the Patient-Driven Groupings Model (PDGM) implemented in 2020.   

• An 0.4% decrease to update the fixed-dollar loss (FDL) ratio for outlier payments, resulting in a $65 million reduction. 

Permanent Behavior Adjustment: Since the launch of PDGM, CMS has analyzed claims data yearly to adjust for discrepancies in projected and actual spending. For CY 2025, a -1.975% adjustment will be applied (half of the calculated -3.95%) to account for ongoing overpayments. CMS aims to spread out these reductions over time to avoid excessive burden in a single year. 
 

 2. Patient-Driven Groupings Model (PDGM) and Updated LUPA Thresholds 

Recalibration of Case-Mix Weights: CMS has updated the PDGM’s case-mix weights and Low-Utilization Payment Adjustment (LUPA) thresholds, based on the most recent claims data from CY 2023. This recalibration ensures that payments more accurately reflect the patient demographics and care levels HHAs provide. 

New OT LUPA Add-On Factor: An occupational therapy (OT) LUPA add-on factor of 1.7238 has been introduced, replacing the temporary use of the physical therapy (PT) factor. Updated add-on factors for PT, speech-language pathology (SLP), and skilled nursing (SN) were also finalized. 
 

 3. Home Health Wage Index Update 

Reflecting Recent Census Data: CMS adopted the latest Core-Based Statistical Area (CBSA) delineations from the 2023 Office of Management and Budget update. The wage index now aligns with current population and labor market conditions, ensuring payments better match local economic realities. To cushion the financial impact, wage index decreases are capped at 5% annually. 
 

 4. Conditions of Participation (CoPs) and Patient Transparency 

Improving Access to Appropriate Care: Updates to the Conditions of Participation (CoPs) require HHAs to maintain consistent patient acceptance-to-service policies. These policies must address various criteria—including the anticipated needs of referred patients and staffing levels—and aim to help match patients with the most suitable provider. HHAs are expected to provide clear, publicly accessible information on their service offerings, promoting informed patient choice. It’s important to note that the final rule does not prevent HHAs from maintaining their existing acceptance-to-service policy. 
 

5. OASIS Data and Crosswalk from OASIS-E to OASIS-D 

Mapping Responses on Outcome and Assessment Information Set-E (OASIS-E): CMS introduced a crosswalk between OASIS-D and OASIS-E assessments to facilitate accurate payment calculations and support continuity of care. OASIS-E, effective as of January 2023, better aligns with CMS’s payment methodologies and includes items focused on social determinants of health (SDOH), essential for capturing data on factors impacting patient outcomes. 
 

 6. Home Health Quality Reporting Program (HH QRP) Updates 

New Social Determinants of Health (SDOH) Data Collection: Beginning in CY 2027, HHAs will collect new SDOH-related data elements, such as living situation, food access, utilities, and transportation availability. These additions aim to improve the quality of care by capturing socioeconomic factors that may impact patient health. 

All-Payer Data Collection: To enhance the accuracy of patient outcomes, CMS will require all-payer data collection at the start of care OASIS data collection rather than at discharge. 
 

 7. Expanding the Home Health Value-Based Purchasing (HHVBP) Model 

Bolstered HHVBP: Based on industry feedback, CMS is exploring new performance measures for the expanded HHVBP model, such as function-based activities and caregiver support. These measures reflect the importance of activities like dressing and bathing in improving patient independence and quality of life, particularly in home health settings. 
 

 8. Commitment to Health Equity 

Addressing Health Equity Gaps: The 2025 home health final rule highlights CMS’s focus on advancing health equity and applies this lens to both the expanded HHVBP model and broader CMS initiatives. These efforts are geared toward equitable access and care quality across diverse patient populations. 
 

 9. New Reporting Standards for Long-Term Care (LTC) Facilities 

Broadening Acute Respiratory Illness Data Reporting: Starting January 1, 2025, long-term care (LTC) facilities must electronically report data on acute respiratory illnesses like COVID-19, influenza, and respiratory syncytial virus (RSV). This new standard replaces the outgoing COVID-19 reporting standards for LTC facilities. Data elements will include facility census, resident vaccination status, and case counts to enhance infection control and proactively address health crises. 
 

Leading Home Health Agencies to Success 

As the post-acute landscape continues to shift, staying ahead of regulatory changes like the 2025 home health final rule remains vital for agencies looking to ensure compliance, navigate payment reductions, and deliver exceptional home care. 

Maxwell TEC is dedicated to helping you find innovative solutions to offset payment reductions. We believe that through automation, optimization, centralization, and enhanced productivity, home health agencies will not only just survive, but thrive in this evolving landscape. 

MTEC equips home health organizations with expert guidance, comprehensive assessments, and tech-enabled solutions like NOTIFYnana and nanaBEREAVMENT. Our strategic solutions and support tools help agencies meet evolving standards, improve patient care, and boost caregiver satisfaction. 

Stay tuned as we continue sharing more mitigation strategies to help your agency navigate the 2025 home health final rule payment reductions. Ready to elevate your home health agency’s success in the meantime? Let’s chat!

Resources

1. Centers for Medicare & Medicaid Services. "Calendar Year (CY) 2025 Home Health Prospective Payment System Final Rule Fact Sheet (CMS-1803-F)." Last modified November 1, 2024. Accessed November 1, 2024. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-home-health-prospective-payment-system-final-rule-fact-sheet-cms-1803-f. 

This blog was originally published as "Key Takeaways from the CMS CY 2025 Home Health Final Rule" by Jena Wallace on 11/5/2024, for Maxwell Healthcare Associates. The Maxwell TEC editorial team has since updated this article to ensure accuracy and relevance.