Medicare and Medicaid Programs; Calendar Year 2026 Home Health Prospective Payment System (HH PPS) Rate Update; Requirements for the HH Quality Reporting Program and the HH Value-Based Purchasing Expanded Model; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program Updates; DMEPOS Accreditation Requirements; Provider Enrollment; and Other Medicare and Medicaid Policies

As required under section 1895(b) of the Social Security Act (the Act), this final rule updates the CY 2026 Medicare payment rates for home health agencies (HHAs). In this final rule, we also finalize permanent and temporary adjustments to the CY 2026 home health base payment rate to account for the difference between assumed versus actual behavior changes on estimated aggregate expenditures for home health payments as a result of the change in the unit of payment to 30 days and the implementation of the Patient Driven Groupings Model (PDGM). In addition, this rule finalizes the recalibrated PDGM case-mix weights and updates the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups under sections 1895(b)(4) of the Act for 30-day periods of care in CY 2026. This rule finalizes an update to the CY 2026 fixed- dollar loss (FDL) ratio for outlier payments (so that outlier payments as a percentage of estimated total payments are projected not to exceed 2.5 percent, as required by section 1895(b)(5)(A) of the Act). Additionally, this rule finalizes changes to the face-to-face encounter policy at 42 CFR 424.22(a)(1)(v) to align with section 3708 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). 2. Home Health (HH) Quality Reporting Program (QRP)

In accordance with the statutory authority at section 1895(b)(3)(B)(v) of the Act, we are finalizing updated quality reporting policies. We are finalizing the proposal to remove the COVID- 19 Vaccine: Percent of Patients Who Are Up to Date measure and the item related to the measure and corresponding data element beginning with the CY 2026 HH QRP. CMS is also finalizing the proposal to remove four assessment items: one Living Situation item, two Food items, and one Utilities item beginning with the CY 2026 HH QRP. We are also finalizing the proposal to revise the policy to allow for providers to submit a request for reconsideration of an initial determination of noncompliance if they can demonstrate full compliance. In very limited circumstances, HHAs will be permitted to request an extension to file a reconsideration request if the HHA was affected by an extraordinary circumstance beyond the control of the HHA (that is, a natural or man- made disaster such as a cyber-attack, hurricane, tornado, or earthquake) during the 30-day reconsideration period. CMS is also finalizing a revised Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) Survey beginning with the April 2026 sample month. This rule also updates regulatory text to account for all-payer data submission of OASIS data. In a request for information (RFI) included in the CY 2026 HH PPS proposed rule, we sought information on a change to the final data submission deadline period from 4.5 months to 45 days. We also sought feedback on the digital quality measurement (dQM) transition for HHAs. We solicited feedback from the public on the current adoption of health information technology (IT) and standards including Fast Healthcare Interoperability Resources (FHIR), including related challenges or barriers HHAs are facing. Finally, we sought input on future HH QRP quality measure (QM) concepts of interoperability, cognitive function, nutrition, and patient well-being. A summary of the comments submitted in response to these RFIs is included in this final rule. 3. Expanded Home Health Value-Based Purchasing (HHVBP) Model

In accordance with the statutory authority at section 1115A of the Act, we are finalizing our proposals to do the following for the expanded HHVBP Model: (1) add a new measure removal factor for the expanded HHVBP Model applicable measure set and (2) make changes to the expanded HHVBP Model applicable measure set. Additionally, we included in the proposed rule a request for information (RFI) related to potential future performance measure concepts and we summarize comments received in response to this RFI in this final rule.

We proposed to add a new measure removal factor for the expanded HHVBP Model applicable measure set for measures that are not feasible to implement. We proposed to remove three HHCAHPS Survey-based measures, to align with proposed changes to the HHCAHPS survey. We proposed the addition of four new measures. These additions include the claims-based Medicare Spending Per Beneficiary Post-Acute Care (MSPB- PAC) measure, and three OASIS-based function measures: Improvement in Bathing, Improvement in Upper Body Dressing, and Improvement in Lower Body Dressing. Due to these proposed changes to the applicable measure set, we also proposed revising the weights of the individual HHVBP measures as well as the measure categories. As noted above, we are finalizing these proposals without modification. 4. Updates to the Home Health Agency CoPs To Align With the OASIS All- Payer Submission Requirements

We are finalizing the technical regulation text changes to the Home Health Conditions of Participation (CoP). These technical changes update terminology in the Home Health CoPs to further clarify that the requirement for reporting OASIS information applies to all HHA patients receiving skilled services. 5. Medicare and Medicaid Provider Enrollment

Consistent with section 1866(j) of the Act, we proposed and are finalizing several Medicare provider enrollment provisions to strengthen and clarify certain aspects of the provider enrollment process. These include but are not limited to: (1) modifying grounds for denying, revoking, or deactivating a provider's or supplier's Medicare enrollment; and (2) expanding the reasons for which CMS can apply a retroactive effective date for provider and supplier revocations. These changes are necessary to help ensure that payments are made only to qualified providers and suppliers, which we believe would assist in protecting the Trust Funds and Medicare beneficiaries.

We are also finalizing a technical correction to one of our Medicaid provider enrollment provisions in 42 CFR 455.416 to further clarify the scope of Sec. 455.416(c). 6. DMEPOS Supplier Accreditation Organizations

Consistent with provisions in section 1834(a)(20) of the Act, we proposed and are finalizing revisions and additions to a number of our regulations regarding DMEPOS supplier accreditation and, in particular, requirements that an organization must meet to become and remain a CMS- approved DMEPOS accrediting organization (AO). Our

finalized provisions include but are not limited to: (1) requiring DMEPOS suppliers to be surveyed and reaccredited every year (as opposed to the current 3-year cycle); (2) eliminating inconsistencies among AOs in how they oversee DMEPOS suppliers; and (3) strengthening our ability to take action against poorly performing DMEPOS AOs. We believe these changes will help ensure that DMEPOS AOs closely oversee DMEPOS suppliers for compliance with the DMEPOS quality standards. 7. DMEPOS Prior Authorization

In section V.C. of this final rule, we are finalizing regulations regarding granting and withdrawing exemptions from mandatory prior authorization requirements for certain DMEPOS suppliers. 8. DMEPOS Competitive Bidding Program

We are finalizing the proposed changes to regulations at subpart C of 42 CFR 414 we believe are necessary for the effective implementation of the DMEPOS Competitive Bidding Program (CBP) mandated by section 1847(a) of the Act. a. Determining Payment Amounts and the Number of Contracts Awarded for the DMEPOS CBP

We are finalizing the provisions for how single payment amounts (SPAs) are calculated and how CMS determines the number of contracts to award in each “competition,” which refers to the CBPs competitive bidding area (CBA) and product category combination. b. Adjustments to SPAs

We are finalizing the regulation to acknowledge the challenge and uncertainty a bidder may face when factoring inflation into its bid. We believe that adding an annual increase to the SPAs to account for inflation will be consistent with Medicare making annual covered item updates for other DMEPOS items and services. This will account for inflation in the cost of doing business for suppliers submitting bids for furnishing items under a multi-year contract. c. Bid Limits and Conditions for Awarding Contracts if Savings Are Not Expected

We are finalizing the regulation to revise the methodology used to establish bid limits and establish the conditions for determining when contracts cannot be awarded in accordance with section 1847 (b)(2)(A)(iii) of the Act because the total amounts to be paid to contract suppliers in a CBA are expected to be less than the total amounts that would otherwise be paid. These changes will better ensure DMEPOS CBP is responsive to rising costs over time while still ensuring alignment with the statutory requirement for achieving savings. d. Revising the Definition of “Item” Related to Medical Supplies

This final rule specifies that ostomy, tracheostomy, and urological supplies are medical equipment items mandated for inclusion under the DMEPOS CBP by section 1847(a)(2)(A) of the Act. e. Remote Item Delivery (RID) CBP

This final rule creates two new definitions under Sec. 414.402 for “Remote item delivery CBP” and “Remote item delivery item” for the purpose of establishing one or more RID CBPs wherein contract suppliers would be responsible for furnishing the items and services under the product category primarily on a mail order basis to all Medicare beneficiaries regardless of where they live in the CBA, but could also furnish the items on a non-mail order basis. Any competitively bid item furnished on a non-mail order basis would also need to be furnished by a contract supplier. For a given product category, we could implement one nationwide RID CBP that would include all areas (all States, territories, and the District of Columbia) or we could implement multiple RID CBPs covering different regions of the country. Items included in a nationwide or regional RID CBP will be those that are typically furnished to beneficiaries from remote supplier locations that are hundreds of miles on average from the beneficiary residence where the items are delivered. f. Payment for Continuous Glucose Monitors and Insulin Infusion Pumps

The final rule will make payment under the DMEPOS CBP for certain continuous glucose monitors and insulin infusion pumps and all necessary supplies and accessories on a bundled monthly rental basis. The technology of products used by beneficiaries to help manage diabetes continues to change rapidly, and without frequent and substantial servicing to ensure that the devices continue to function correctly, the beneficiary might not receive information they need to make correct diabetes treatment decisions or the dosage of insulin administered by the insulin pump could be incorrect, putting the beneficiary in imminent danger. This final rule will eliminate the need to wait 5 years to replace equipment, allowing beneficiaries to use the latest technologically updated items. Payment for continuous glucose monitors and insulin infusion pumps and all necessary supplies and accessories that are not furnished under the DMEPOS CBP would also be made on a bundled monthly rental basis in the same amounts established for continuous glucose monitors and insulin infusion pumps under the DMEPOS CBP. g. Revising the Submission of Financial Documents for the DMEPOS CBP

The final rule streamlines the requirements and evaluation of the DMEPOS CBP financial standards, while still ensuring that suppliers that are offered contracts are financially stable enough to participate in the Medicare DMEPOS CBP for the duration of the contract performance period. h. Revising the Covered Document Review Date Evaluation and Notification Process for the DMEPOS CBP

The final rule streamlines the process for evaluating and notifying a bidder who submitted a covered document by the covered document review date if a covered document(s) is missing. i. Bid Surety Bond Review Process

The final rule codifies the bid surety bond rider process that occurred during the DMEPOS CBP round in 2021 and to correct a regulatory citation error from previous rulemaking. j. Tribal Exemption From Participating in the DMEPOS CBP

The final rule adds a Tribal exception to the DMEPOS CBP regulations. k. Addition of a Termination Clause for the DMEPOS CBP Supplier Contracts

The final rule adds a termination clause to the DMEPOS CBP contracts that could be utilized during a public health emergency (PHE), when CMS determines that credible evidence exists of an access problem for beneficiaries, and when CMS believes the termination of an entire DMEPOS CBP contract, the termination of a competition on a DMEPOS CBP contract, or the termination of a defined area(s) within a CBA could improve the situation for the applicable competition(s) or defined areas (for example, ZIP codes) within a CBA. l. Technical Change to Sec. 414.408(h)(8)

The final rule makes a technical change to Sec. 414.408(h)(8) so that it correctly refers to paragraph (h)(8)(ii) instead of paragraph (h)(7)(ii).

In section II.B.1. of this final rule, we discuss comments related to the monitoring and data analysis on the PDGM utilization.

In section II.C.1. of this final rule, we finalized a -1.023 percent permanent adjustment and a -3.0 percent temporary adjustment to the base payment rate under the HH PPS.

In section II.D. of this final rule, we finalized the recalibrated CY 2026 PDGM case-mix weights and updates to the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups.

In section II.E. of this final rule, we update the home health wage index. We also update the CY 2026 national, standardized 30-day period payment rates and the CY 2026 national per-visit payment amounts by the home health payment update percentage. The final home health payment update percentage for CY 2026 is 2.4 percent. Additionally, this rule finalizes the CY 2026 fixed dollar loss (FDL) ratio to ensure that aggregate outlier payments are projected not to exceed 2.5 percent of the total aggregate payments, as required by section 1895(b)(5)(A) of the Act.

In section II.F. of this final rule, we finalized changes to the face-to-face encounter policy at 42 CFR 424.22(a)(1)(v). 2. Home Health Quality Reporting Program (HH QRP)

In section III. of this final rule, we are finalizing the proposal to remove the COVID-19 Vaccine: Percent of Patients Who Are Up to Date measure and the item related to the measure. We are also finalizing the proposal to remove four assessment items: one Living Situation item, two Food items, and one Utilities item. CMS is finalizing the proposal to implement a revised HHCAHPS Survey beginning with the April 2026 sample month. We are finalizing the proposal to revise the policy to allow providers to submit a request for reconsideration of an initial determination of non-compliance with the HH QRP data submission requirements. They can request this if they believe that they can demonstrate full compliance. We also are finalizing that, in very limited circumstances, the HHA could request an extension to file a reconsideration request if the HHA was affected by an extraordinary circumstance beyond the control of the HHA, (that is, a natural disaster or man-made disaster such as a cyber-attack, hurricane, tornado, or earthquake) during the 30-day period for requesting reconsideration of the initial determination.

We summarize input received on a series of RFIs. In the CY 2026 HH PPS proposed rule, we sought information on a change to the final data submission deadline period from 4.5 months to 45 days. We also sought feedback on the digital quality measurement (dQM) transition for HHAs. We solicited feedback from the public on current adoption of health IT and standards, including Fast Healthcare Interoperability Resources (FHIR), and what related challenges or barriers HHAs are facing. Finally, we sought input on future HH QRP quality measure (QM) concepts of interoperability, cognitive function, nutrition, and patient well- being. 3. Expanded Home Health Value Based Purchasing (HHVBP) Model

In section IV. of this final rule, we finalize a proposal to add a new measure removal factor for the expanded HHVBP Model applicable measure set. This ninth measure removal factor will allow CMS to propose the removal of a measure when it is no longer feasible to implement the measure specifications. We also finalize proposed changes to the expanded HHVBP Model applicable measure set and changes to measure weights. We are removing three HHCAHPS Survey-based measures to align with finalized changes to the HHCAHPS Survey. We also finalize the proposed addition of four new measures. These additions include the claims-based Medicare Spending Per Beneficiary Post-Acute Care (MSPB- PAC) measure, and three OASIS-based function measures: Improvement in Bathing, Improvement in Upper Body Dressing, and Improvement in Lower Body Dressing. Due to these changes to the applicable measure set, we also finalize proposed revisions to the weights of the individual HHVBP measures and the measure categories.

We also summarize public comments received in response to an RFI included in the proposed rule related to potential future measure concepts for the expanded HHVBP Model. 4. Updates to the Home Health Agency Conditions of Participation (CoPs) To Align With the OASIS All-Payer Submission Requirements

In section V. of this rule, we finalized technical regulation text changes to Sec. 484.45 and Sec. 484.55 of the Home Health Conditions of Participation (CoPs) to align with the OASIS all-payer submission requirements. These technical changes update terminology in the Home Health CoPs to further clarify that the requirement for reporting OASIS information applies to all HHA patients receiving skilled services. 5. Medicare and Medicaid Provider Enrollment

We finalized several Medicare provider enrollment provisions to strengthen and clarify certain aspects of the provider enrollment process. These include, but are not limited to, the following:

Modifying grounds for denying, revoking, or deactivating a provider's or supplier's Medicare enrollment.

Expanding the reasons for which CMS can apply a retroactive effective date for provider and supplier revocations.

Expanding the reasons for which CMS can apply a stay of enrollment.

Requiring providers and suppliers to report any adverse legal actions imposed against them, their owners, their managers, etc. within 30 days instead of the current 90 days.

We believe these revisions would help keep unqualified providers and suppliers out of the Medicare program, which, in turn would prevent improper Medicare payments to such parties. 6. DMEPOS Supplier Accreditation Organizations

DMEPOS suppliers are required to be accredited by a CMS-approved accrediting organization to enroll in and bill Medicare. The purpose of accreditation is to confirm, typically through an on-site survey of the supplier, that the supplier meets the DMEPOS quality standards. Regulations promulgating our accreditation requirements were enacted in 2006 but have not been updated since then. We are concerned there may be instances where: (1) AOs are accrediting DMEPOS suppliers that do not meet the quality standards; and (2) DMEPOS suppliers are falling out of compliance with the quality standards (sometimes for extended periods) after becoming accredited. To enhance our ability to ensure that AOs are performing DMEPOS accreditation functions effectively and thoroughly, including

verifying suppliers' compliance with the quality standards, we are finalizing proposals that add a number of provisions to our DMEPOS accreditation regulations. Among our finalized provisions are as follows:

Requiring DMEPOS suppliers to be surveyed and reaccredited every year (as opposed to the current 3-year cycle).

Reducing inconsistencies among AOs in how they oversee DMEPOS suppliers.

Requiring AOs to furnish more detailed information to CMS when applying or reapplying for approval to become or remain a DMEPOS AO.

Facilitating greater CMS oversight of the DMEPOS AOs.

We believe these and other changes to the DMEPOS accreditation process would help ensure that unqualified DMEPOS suppliers are not accredited and do not, in turn, receive Medicare payments. 7. DMEPOS Prior Authorization

In section V.C. of this final rule, we are finalizing regulations regarding granting and withdrawing exemptions from mandatory prior authorization requirements for certain DMEPOS suppliers. 8. DMEPOS Competitive Bidding a. Determining Payment Amounts and the Number of Contracts Awarded for the DMEPOS CBP

Currently SPAs for the lead item (defined under Sec. 414.402 as the item in the product category with the highest total allowed charges nationwide) are calculated using the maximum winning bid submitted by bidders whose composite bids for the product category that includes the lead item are equal to or below the pivotal bid for that product category. In the final rule, we are revising this calculation to use the 75th percentile of winning bids for the lead item by bidders whose composite bids for the product category that includes the lead item are equal to or below the pivotal bid for that product category. We are also finalizing our proposal to change the way the SPAs are calculated for the non-lead items in a product category in certain CBAs. Currently, the ratio multiplied by the SPA for the lead item to calculate the SPA for the non-lead item is based on the average of the 2015 fee schedule amounts for all areas (that is, all states, the District of Columbia, Puerto Rico, and the United States Virgin Islands) for the non-lead item divided by the average of the 2015 fee schedule amounts for all areas for the lead item. This formula uses average fee schedule amounts rather than fee schedule amounts for specific areas, which results in cases where the SPA for a non-lead item can be higher than the fee schedule amount that would otherwise be paid. To address this situation in CBAs other than remote item delivery CBAs, we are finalizing our proposal to calculate the ratio based on the 2015 fee schedule amounts for each specific area rather than the average of the 2015 fee schedule amounts for all areas. Additionally, the final rule would revise how CMS determines the number of DMEPOS CBP contracts to award to DMEPOS suppliers by using contract supplier utilization information from previous rounds of the DMEPOS CBP for product categories previously included under the CBP as well as information on current supplier utilization for new product categories. b. Adjustments to SPAs

We are finalizing our proposal to apply an annual update factor to SPAs, starting with year two of the DMEPOS CBP contracts. c. Bid Limits and Conditions for Awarding Contracts if Savings Are Not Expected

We are finalizing our proposal to amend 42 CFR 414.414(f) so contracts could be awarded in a CBA if the amounts to be paid are no greater than 110 percent of the amounts that would otherwise be paid for the items. This rule clarifies that the amounts that would otherwise be paid include payment amounts adjusted in accordance with Sec. 414.210(g). This rule also finalizes our proposal to modify 42 CFR 414.412(b) to establish bid limits both for items included in the CBP for the first time and for items that have previously been included in the CBP. For items included in the CBP for the first time, the bid limits would be the amounts otherwise paid for the items. For items that have previously been included in the CBP, the bid limits would be the most recent SPA for the items plus 10 percent, or if it has been more than a year since the SPA was last in effect, the inflation- adjusted SPA plus 10 percent. However, we are finalizing that in no event would the bid limit be allowed to exceed the unadjusted fee schedule amount. In addition, this rule finalizes a technical correction to add reference to subpart Q (“Payment for Lymphedema Compression Treatment Items”) to 42 CFR 414.414(f). d. Payment for Continuous Glucose Monitors and Insulin Infusion Pumps

We are finalizing our proposal to make payment under the DMEPOS CBP for certain continuous glucose monitors and insulin infusion pumps and all necessary supplies and accessories on a bundled monthly rental basis. We are finalizing our proposal that payment for continuous glucose monitors and insulin infusion pumps and all necessary supplies and accessories that are not furnished under the DMEPOS CBP would also be made on a bundled monthly rental basis with payments limited to the amounts established for continuous glucose monitors and insulin infusion pumps under the DMEPOS CBP. e. Revising the Definition of “Item” As Related to Medical Supplies

We are finalizing our proposal to revise the definition of “item” at Sec. 414.402 to clarify that section 1847(a)(2) of the Act includes ostomy, tracheostomy, and urological supplies as “items” subject to the DMEPOS CBP. We are finalizing our proposal that “medical supplies” under this section is a category of items separate from durable medical equipment that includes ostomy, tracheostomy, and urological supplies. f. Remote Item Delivery (RID) CBP

We are finalizing our proposal to create two new definitions under Sec. 414.402 for the purpose of establishing a RID CBP(s) wherein contract suppliers would be required to furnish the items primarily on a mail order basis under the product category to all Medicare beneficiaries regardless of where they live in the CBA. While we expect that the majority of items would be furnished on a mail order basis, a RID competition would not exclude items in the product category that are furnished on a non-mail order basis. Items included in a RID CBP would be those that are typically furnished to beneficiaries from remote supplier locations that are hundreds of miles on average from the beneficiary residence where the items are delivered. g. Revising the Submission of Financial Document Requirements for the DMEPOS CBP

We are finalizing our proposal to no longer require the submission of a tax return extract, income statement, balance sheet, or statement of cash flows for the purpose of implementing the financial standards mandated by section 1847(b)(2)(A)(ii) of the Act. This final rule will reduce the burden on suppliers submitting bids under the DMEPOS

CBP. However, we are finalizing our proposal to continue requiring suppliers to submit a credit report with a numerical credit score and/ or rating from one of the four approved credit reporting agencies during the bid window, and by the CDRD if the supplier wants to be eligible for the process for reviewing covered documents. Additionally, we are finalizing our proposal to continue using a five-tier scoring system in the evaluation of the credit report with a numerical credit score and/or rating, which will be utilized to establish a financial score that will indicate if a supplier is financially stable enough to participate in the Medicare DMEPOS CBP for the duration of the contract performance period. We are also finalizing our proposal to no longer use a supplier's financial score to assist in determining the capacity to assign to each supplier to meet projected beneficiary demand. Furthermore, we are finalizing our proposal to have suppliers attest to the fact that they meet the small supplier threshold in the DMEPOS Bidding System (DBidS), or any successor system, if applicable. h. Revising the CDRD Evaluation and Notification Process for the DMEPOS CBP

Since the inception of the DMEPOS CBP, when a bidder has submitted at least one covered document by the CDRD, CMS has notified the bidder within 90 days after the CDRD if they were missing a covered document by the close of the bid window or if a covered document was missing by the CDRD. We are finalizing our proposal that when a bidder has submitted at least one covered document by the CDRD, CMS will notify the bidder within 90 days after the CDRD if they have any missing covered document(s) by the close of the bid window. The supplier will have 10 days after such notification to provide the missing covered document(s). i. Bid Surety Bond Review Process

CMS applied a bid surety bond rider process during bid evaluation for the DMEPOS CBP round in 2021, and we are finalizing our proposal to codify this process in regulation for all future rounds. Additionally, we are finalizing our proposal to correct a technical error in 42 CFR 414.412(g) that happened as a result of a paragraph redesignation in 83 FR 57072. j. Tribal Exemption From Participating in the DMEPOS CBP

We are finalizing our proposal to add an exception to the DMEPOS CBP that will allow Medicare payment to Indian Health Service (IHS) and tribally operated facilities and suppliers as noncontract suppliers to furnish competitively bid items and services to American Indian/Alaska Native (AI/AN) Medicare beneficiaries who reside in a CBA during a round of the DMEPOS CBP. k. Addition of a Termination Clause for the DMEPOS CBP Supplier Contracts

We are finalizing the proposed changes in Sec. 414.422 to have the option to unilaterally terminate or modify each applicable DMEPOS CBP supplier contract to allow any Medicare enrolled DMEPOS supplier to furnish the applicable items and services to Medicare beneficiaries if CMS determines that due to a PHE, contract suppliers are unable to furnish certain items and services to beneficiaries in certain areas impacted by a PHE (PHE-impacted area) as required under their respective DMEPOS CBP supplier contracts.

CMS is finalizing the rule in Sec. 414.422 to have the option to remove items and services furnished in a PHE-impacted areas from the DMEPOS CBP when all of the following qualifying criteria are met: (1) the Secretary declares a PHE; (2) CMS determines that verifiable evidence exists of a DMEPOS access problem for beneficiaries for a certain competition or defined area(s) within the competition's CBA; (3) CMS determines that awarding additional DMEPOS CBP supplier contracts, per Sec. 414.414(i), will not address the access concerns; and (4) CMS determines terminating or modifying each impacted DMEPOS CBP supplier contract to exclude certain competition(s) or defined area(s) within the competition's CBA from the DMEPOS CBP would alleviate access concerns.

After termination and/or modification of all applicable DMEPOS CBP supplier contracts, CMS is finalizing the proposed changes in Sec. 414.422 to revert back to the general fee-for-service program requirements set forth in 42 CFR part 414 Subpart D for the applicable competition(s) or defined area(s) within a CBA. l. Technical Change to Sec. 414.408(h)(8)

We are finalizing our proposal to make a technical change to Sec. 414.408(h)(8) so that it correctly refers to paragraph (h)(8)(ii) instead of paragraph (h)(7)(ii). m. Adding Definitions of Adjusted Fee Schedule Amount, Competition, and Unadjusted Fee Schedule Amount to Sec. 414.402

This final rule adds definitions of “Adjusted fee schedule amount,” “Competition,” and “Unadjusted fee schedule amount” to Sec. 414.402 for the purpose of simplifying the regulation text for subpart F.

Section 1895(b)(1) of the Act requires the Secretary to establish a Home Health Prospective Payment System (HH PPS) for all costs of home health services paid under Medicare. Section 1895(b)(2)(A) of the Act requires that, in defining a prospective payment amount, the Secretary shall consider an appropriate unit of service and the number, type, and duration of visits provided within that unit, potential changes in the mix of services provided within that unit and their cost, and a general system design that provides for continued access to quality services. In accordance with the statute, as amended by the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), we issued a final rule which appeared in the July 3, 2000, Federal Register (65 FR 41128) to implement the HH PPS legislation.

Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v) to the Act, requiring home health agencies (HHAs) to submit data for purposes of measuring health care quality, and linking the quality data submission to the annual applicable home health payment update percentage increase. This data submission requirement is applicable for CY 2007 and each subsequent year. Pursuant to section 1895(b)(3)(B)(v)(I) of the Act, if an HHA does not submit quality data, the home health market basket percentage increase is reduced by 2 percentage points. In the November 9, 2006, Federal Register (71 FR 65935), we issued a final rule to implement the pay-for-reporting requirement of the DRA, which was codified at Sec. 484.225(h) and (i) in accordance with the statute. The pay-for-reporting requirement was implemented on January 1, 2007.

Section 51001(a)(1)(B) of the Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123) amended section 1895(b) of the Act to require a change to the home health unit of payment to 30-day periods beginning January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the Secretary to calculate a standard prospective payment amount (or amounts) for 30-day units of service furnished that end during the 12- month period beginning January 1, 2020, in a budget neutral manner, such that estimated aggregate expenditures under the HH PPS during CY 2020 are equal to the estimated aggregate expenditures that otherwise would have been made under the HH PPS during CY 2020 in the absence of the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of the Act requires that the calculation of the standard prospective payment amount (or amounts) for CY 2020 be made before the application of the annual update to the standard prospective payment amount as required by section 1895(b)(3)(B) of the Act.

Additionally, section 1895(b)(3)(A)(iv) of the Act requires that in calculating the standard prospective payment amount (or amounts), the Secretary must make assumptions about behavior changes that could occur as a result of the implementation of the 30-day unit of service under section 1895(b)(2)(B) of the Act and case-mix adjustment factors established under section 1895(b)(4)(B) of the Act. Section 1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide a description of the behavior assumptions made in notice and comment rulemaking. CMS finalized these behavior assumptions in the CY 2019 HH PPS final rule with comment period (83 FR 56461).

Section 51001(a)(2)(B) of the BBA of 2018 also added a new subparagraph (D) to section 1895(b)(3) of the Act. Section 1895(b)(3)(D)(i) of the Act requires the Secretary annually to determine the impact of differences between assumed behavior changes, as described in section 1895(b)(3)(A)(iv) of the Act, and actual behavior changes on estimated aggregate expenditures under the HH PPS with respect to years beginning with 2020 and ending with 2026. Section 1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a manner determined appropriate, through notice and comment rulemaking, to provide for one or more permanent increases or decreases to the standard prospective payment amount (or amounts) for applicable years, on a prospective basis, to offset for such increases or decreases in estimated aggregate expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. Additionally, section 1895(b)(3)(D)(iii) of the Act requires the Secretary, at a time and in a manner determined appropriate, through notice and comment rulemaking, to provide for one or more temporary increases or decreases to the payment amount for a unit of home health services for applicable years, on a prospective basis, to offset for such increases or decreases in estimated aggregate expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. Such a temporary increase or decrease shall apply only with respect to the year for which such temporary increase or decrease is made, and the Secretary shall not take into account such a temporary increase or decrease in computing the payment amount for a unit of home health services for a subsequent year. Finally, section 51001(a)(3) of the BBA of 2018 amends section 1895(b)(4)(B) of the Act by adding a new clause (ii) to require the Secretary to eliminate the use of therapy thresholds in the case-mix system for CY 2020 and subsequent years.

Division FF, section 4136 of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328) amended section 1834(s)(3)(A) of the Act to require that, beginning with 2024, the separate payment for furnishing negative pressure wound therapy (NPWT) be for just the device and not for nursing and therapy services. Payments for nursing and therapy services are to be included as part of payments under the HH PPS. The separate payment for 2024 was required to be equal to the supply price used to determine the relative value for the service under the Medicare Physician Fee Schedule (as of January 1, 2022) for the applicable disposable device updated by the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). The separate payment for 2025 and each subsequent year is to be the payment amount for the previous year updated by the percentage increase in the CPI-U (United States city average) for the 12-month period ending in June of the previous year reduced by the productivity adjustment as described in section 1886(b)(3)(B)(xi)(II) of the Act for such year. The CAA, 2023 also added section 1834(s)(4) of the Act to require that beginning with 2024, as part of submitting claims for the separate payment, the Secretary shall accept, and process claims submitted using the type of bill that is most commonly used by HHAs to bill services under a home health plan of care. 2. Current System for Payment of Home Health Services

For home health periods of care beginning on or after January 1, 2020, Medicare makes payment under the HH PPS on the basis of a national, standardized 30-day period payment rate that is adjusted for case-mix and area wage differences in accordance with section 51001(a)(1)(B) of the BBA of 2018. The national, standardized 30-day period payment rate includes

payment for the six home health disciplines (skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services). Payment for non-routine supplies (NRS) is also part of the national, standardized 30-day period rate. Durable medical equipment (DME) provided as a home health service, as defined in section 1861(m)(5) of the Act, is paid the fee schedule amount or is paid through the competitive bidding program and such payment is not included in the national, standardized 30-day period payment amount. Additionally, the 30-day period payment rate does not include payment for certain injectable osteoporosis drugs and disposable negative pressure wound therapy (dNPWT) devices, but such drugs and devices must be billed by the HHA while a patient is under a home health plan of care, as the law requires separate consolidated billing of certain osteoporosis drugs and dNPWT devices.

To better align payment with patient care needs and to better ensure that clinically complex and ill beneficiaries have adequate access to home health care, in the CY 2019 HH PPS final rule with comment period (83 FR 56406), we finalized case-mix methodology refinements, including the removal of therapy thresholds, through the Patient-Driven Groupings Model (PDGM) for home health periods of care beginning on or after January 1, 2020. The PDGM did not change eligibility or coverage criteria for Medicare home health services, and as long as the individual meets the criteria for home health services as described at 42 CFR 409.42, the individual can receive Medicare home health services, including therapy services. For more information about the role of therapy services under the PDGM, we refer readers to the Medicare Learning Network (MLN) Matters article SE20005 available at https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005. To adjust for case-mix for 30-day periods of care beginning on and after January 1, 2020, the HH PPS uses a 432-category case-mix classification system to assign patients to a home health resource group (HHRG) using patient characteristics and other clinical information from Medicare claims and the Outcome and Assessment Information Set (OASIS) instrument. These 432 HHRGs represent the different payment groups based on five main case-mix categories under the PDGM, as shown in figure 1. Each HHRG has an associated case-mix weight that is used in calculating the payment for a 30-day period of care. For periods of care with visits less than the low-utilization payment adjustment (LUPA) threshold for the HHRG, Medicare pays national per-visit rates based on the discipline(s) providing the services. Medicare also adjusts the national standardized 30-day period payment rate for certain intervening events that are subject to a partial payment adjustment. For certain cases that exceed a specific cost threshold, an outlier adjustment may also be available.

Under this case-mix methodology, case-mix weights are generated for each of the different PDGM payment groups by regressing resource use for each of the five categories (admission source, timing, clinical grouping, functional impairment level, and comorbidity adjustment) using a fixed effects model. A detailed description of each of the case-mix variables under the PDGM have been described previously, and we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through 70305) for further information.

[GRAPHIC] [TIFF OMITTED] TR02DE25.002

1. Behavior Adjustments Under the HH PPS a. Background

As discussed in section II.A.1. of this final rule, starting in CY 2020, the Secretary was required by section 1895(b)(2)(B) of the Act to change the

unit of payment under the HH PPS from a 60-day episode of care to a 30- day period of care. CMS was also required to make assumptions about behavior changes that could occur as a result of the implementation of the 30-day unit of payment and the case-mix adjustment factors that eliminated the use of therapy thresholds. In the CY 2019 HH PPS final rule with comment period (83 FR 56455), we finalized three behavior change assumptions which were also described in the CY 2022 and 2023 HH PPS rules (86 FR 35890, 87 FR 37614, and 87 FR 66795 through 66796). In the CY 2020 HH PPS final rule with comment period (84 FR 60519), we included these behavior change assumptions in the calculation of the 30-day budget neutral payment amount for CY 2020, finalizing a negative 4.36 percent behavior change assumption adjustment (“assumed behaviors”). We did not propose any changes for CYs 2021 and 2022 related to the behavior change assumptions finalized in the CY 2019 HH PPS final rule with comment period, or to the negative 4.36 percent behavior change assumption adjustment, finalized in the CY 2020 HH PPS final rule with comment period.

In the CY 2023 HH PPS final rule (87 FR 66796), we stated that we had concluded, based on our annual monitoring at that time, that the three expected behavior changes did in fact occur as a result of the implementation of the PDGM and that other behaviors, such as changes in the provision of therapy and changes in functional impairment levels, had also occurred. We reminded readers that in the CY 2020 HH PPS final rule with comment period (84 FR 60513), we interpreted actual behavior changes to encompass behavior changes that were previously outlined as assumed by CMS, as well as any other behavior changes even if they were not identified at the time we established the 30-day payment rate for CY 2020. In the CY 2023 HH PPS final rule (87 FR 66796), we reviewed evidence indicating that the number of therapy visits declined in CYs 2020 and 2021. That evidence also indicated a slight decline in therapy visits beginning in CY 2019 after we finalized our policy removing therapy thresholds prior to implementing the PDGM. In section II.B.1. of the CY 2025 HH PPS proposed rule (89 FR 55318), our analysis showed that the actual 30-day periods remained similar to the simulated 30-day periods. CMS is required, by law, to account for actual behavior changes related to the implementation of the PDGM and change to a 30- day unit of payment. Additionally, the statute instructs us to ensure that estimated aggregate expenditures under the PDGM are equal to the estimated aggregate expenditures that otherwise would have been made under the prior system.

Although our analysis examines particular actual behavior changes, some of which were part of our original assumed behavior assumptions (for example, in the volume of visits for LUPAs, therapy visits, etc.), the finalized methodology captures the entirety of all behavior changes in order to calculate estimated aggregate expenditures.

Section 4142(a) of the CAA, 2023 required CMS to present, to the extent practicable, a description of the actual behavior changes occurring under the HH PPS from CYs 2020 through 2026. The provision also required CMS to provide datasets underlying the simulated 60-day episodes and discuss and provide time for stakeholders to provide input on and ask questions about the payment rate development for CY 2023. CMS accordingly posted online both the supplemental limited data set (LDS) and descriptive files and the description of actual behavior changes that affected CY 2023 payment rate development. Additionally, on March 29, 2023, CMS conducted a webinar entitled “Medicare Home Health Prospective Payment System (HH PPS) Calendar Year (CY) 2023 Behavior Change Recap, 60-Day Episode Construction Overview, and Payment Rate Development.” The webinar was open to the public and discussed the actual behavior changes that we determined had occurred after we implemented the PDGM; our approach used to construct simulated 60-day episodes using 30-day periods; payment rate development for CY 2023; and information on the supplemental data files containing information on the simulated 60-day episodes and actual 30-day periods used in calculating the permanent adjustment to the payment rate. Materials from the webinar, including the presentation and the CY 2023 descriptive statistics from the supplemental LDS files containing information on the number of simulated 60-day episodes and actual 30- day periods in CY 2021 that were used to construct the permanent adjustment to the payment rate, as well as information such as the number of episodes and periods by case-mix group, case-mix weights, and simulated payments, can be found on the Home Health Patient-Driven Groupings Model web page at https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model. b. Method to Annually Determine the Impact of Differences Between Assumed Behavior Changes and Actual Behavior Changes on Estimated Aggregate Expenditures

In the CY 2023 HH PPS final rule (87 FR 66804), we finalized the methodology to evaluate the impact of the differences between assumed and actual behavior changes on estimated aggregate expenditures. In the CY 2024 HH PPS final rule (88 FR 77687 through 77688), we provided an overview of the methodology with more details for each step of the calculation.

Under the prior 153-group system (and the first three years for assessments associated with the PDGM completed prior to CY 2023), HHAs submitted the Outcome and Assessment Information Set (OASIS) instrument version D. However, effective January 1, 2023, HHAs were required to submit an updated version of the OASIS instrument, OASIS-E. This would mean for purposes of calculating the behavior adjustments, we would use the CY 2023 OASIS-E assessments and CY 2023 claims in CY 2025 rulemaking. Therefore, in the CY 2025 HH PPS final rule (89 FR 88364), we finalized two additional methodological assumptions related to mapping and imputation of OASIS-D responses from OASIS-E. We refer readers to the CY 2023, CY 2024, and CY 2025 HH PPS final rules for further information about the methodology. c. Calculating Permanent and Temporary Payment Adjustments

To adjust the base payment rate based on increases or decreases in estimated aggregate expenditures that result from differences between assumed behavior changes and actual behavior changes related to the implementation of the PDGM and the change to a 30-day unit of payment for 2020 through 2026, we calculate one or more permanent prospective adjustments by calculating the percent change between the actual 30-day base payment rate and the recalculated (“repriced”) 30-day base payment rate. We then convert the percent change into an adjustment factor and apply it in the annual rate update process.

To account for increases or decreases in estimated aggregate expenditures that result from differences between assumed behavior changes and actual behavior changes from 2020 through 2026, we calculate one or more temporary prospective adjustments by calculating the dollar amount difference

between the estimated aggregate expenditures from all 30-day periods using the recalculated 30-day base payment rate, and the aggregate expenditures for all 30-day periods using the actual 30-day base payment rate for each of those years once data is available (87 FR 66804). In other words, when determining the dollar amount of aggregate expenditures in prior years that we must offset in future years, we use the full dataset of actual 30-day periods using both the actual and recalculated 30-day base payment rates to ensure that the utilization and distribution of claims are the same. In accordance with section 1895(b)(3)(D)(iii) of the Act, each temporary adjustment applies prospectively but, as its name suggests, only with respect to the year for which such temporary increase or decrease is made. Therefore, after we determine the dollar amount we plan to reconcile in a given year, we calculate a temporary adjustment factor to be applied to the base payment rate for that year. The temporary adjustment factor is based on an estimated number of 30-day periods in the rate setting year using historical data trends, and as applicable, controls for any permanent adjustment factor, case-mix weight recalibration neutrality factor, wage index budget neutrality factor, and the home health payment update. The temporary adjustment factor is applied last since the adjustment applies only to the respective year. That is, the temporary adjustment is not permanently fixed into future base payment rates. We refer readers to the CY 2024 HH PPS final rule (88 FR 77689 through 77694) for analysis of CYs 2020 through 2022 claims and the CY 2025 HH PPS final rule (89 FR 88366 through 88369) for analysis of CY 2023 claims. Additionally, at the end of this section we provide a summary table for the permanent adjustment and temporary dollar amounts calculated for each year. d. CY 2024 Final Claims Results

We continue the practice of using the most recent complete home health claims data available at the time of rulemaking. This CY 2026 final rule thus uses the most current CY 2024 data for determining any permanent and temporary adjustments to the CY 2026 payment rate using the methodology finalized in the CY 2023 HH PPS final rule (87 FR 66804). This section of this final rule updates the calculations in the CY 2026 HH PPS proposed rule (90 FR 29129) as we have updated these calculations between the proposed and final rules in previous years. However, while we consider the claims data and the permanent and temporary adjustments results complete for CY 2026, any adjustments to payment rates for future payment years may be subject to additional considerations such as permanent adjustments taken in previous years.

The claims data used in rulemaking is released twice each year in the HH PPS LDS file, one for the proposed and one for the final. Accordingly, the HH PPS LDS file released with this final rule includes two files: the actual CY 2024 30-day periods and the CY 2024 simulated 60-day episodes.

We remind readers that a data use agreement (DUA) is required to purchase the CY 2026 final HH PPS LDS file using the CMS-R-0235A form under OMB control number 0938-0734. Access will be granted for both the 30-day periods and the simulated 60-day episodes under one DUA. Visit the HH PPS LDS web page for more information.\1\ In addition, the final CY 2026 Home Health Descriptive Statistics from the LDS Files spreadsheet is available on the HH PPS Regulations and Notices web page,\2\ does not require a DUA, and is available at no cost to interested parties. The spreadsheet contains information on the number of simulated 60-day episodes and actual 30-day periods in CY 2024. The spreadsheet also provides information such as the number of episodes and periods by case-mix group, case-mix weights, and simulated payments.

\1\ https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds.

\2\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.

As noted, section 1895(b)(3)(D)(i) of the Act requires us to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026. For this final rule, we update our calculations presented in the CY 2026 HH PPS proposed rule (90 FR 29129) that we had proposed using to determine the CY 2026 permanent and temporary adjustments using the most up to date claims data at the time of this final rule. This is similar to what we have done in previous final rules to update the proposed rule calculations. However, we do not finalize these calculated adjustments, as we explain later in this section and in the final decision section. We begin by applying the methodology finalized in the CY 2023 HH PPS final rule and described most recently in the CY 2024 HH PPS final rule (88 FR 77687 through 77688), as well as applying the two new assumptions related to the OASIS-E mapping in the CY 2025 HH PPS final rule (89 FR 88360 through 88365). We simulated 60-day episodes using actual CY 2024 30-day periods to determine what the permanent and temporary payment adjustments should be to offset for such increases or decreases in estimated aggregate expenditures as a result of the impact of differences between assumed behavior changes and actual behavior changes.

Using the final CY 2024 dataset, as this is the most complete claims data for this final rule, we began with 8,275,089 30-day periods of care and dropped 495,480 30-day periods of care that had a claim occurrence code 50 date after October 31, 2024. We also excluded 842,772 30-day periods of care that had a claim occurrence code 50 date before January 1, 2025, to ensure the 30-day period will not be part of a simulated 60-day episode that began in CY 2024. Applying the additional exclusions and assumptions as described in the finalized methodology (87 FR 66804), an additional 4,892 30-day periods were excluded.

Additionally, we excluded 211,506 simulated 60-day episodes, which consist of 393,108 30-day periods of care where no OASIS information was available in the Chronic Conditions Warehouse (CCW) Virtual Research Data Center (VRDC), a recent start of care/resumption of care (SOC/ROC) OASIS was not available, a wage index was not available, or the episode could not be grouped to a Health Insurance Prospective Payment System (HIPPS) code due to a missing primary diagnosis or other reason. Our simulated 60-day episodes of care produced a distribution of two 30-day periods of care (70.7 percent) and single 30-day periods of care (29.3 percent) that was similar to what we found when we simulated two 30-day periods of care for implementation of the PDGM. After all exclusions and assumptions were applied, the final dataset for this final rule included 6,538,837 actual 30-day periods of care and 3,849,780 simulated 60-day episodes of care for CY 2024.

Using the final dataset for CY 2024 (6,538,837 actual 30-day periods which made up the 3,849,780 simulated 60-day episodes) and the previously finalized methodology, we determined the estimated aggregate expenditures under the pre-PDGM HH PPS were lower than the actual estimated aggregate expenditures under the PDGM HH PPS.

As shown in table 2, aggregate expenditures under the PDGM were higher than if the 153-group payment system were still in place in CY 2024 and therefore, we determined the CY 2024 30-day base payment rate should have been $1,914.73 based on the difference between the assumed behavior changes and the actual behavior changes.

We then take the recalculated CY 2023 base payment of $1,875.46 (as published in the CY 2025 HH PPS final rule (89 FR 88366)) and applied the CY 2024 case-mix weights recalibration neutrality factor (1.0124), the CY 2024 wage index budget neutrality factor (1.0012), the CY 2024 labor-related share budget neutrality factor (0.9998), and the CY 2024 home health payment update factor (1.030). We determined the CY 2024 base payment rate for assumed behavior would have been $1,957.63.

To convert this base payment rate to a payment adjustment, we calculated the percent change between the two payment rates ($1,914.73 and $1,957.63)--which is equal to -2.191%. We also calculated the difference in aggregate expenditures in dollars for all CY 2024 PDGM 30-day claims using the those payment rates: the CY 2024 PDGM payment rate that is budget neutral to the aggregate expenditures generated from the CY 2024 simulated 60-day episodes ($1,914.73) and the CY 2024 PDGM payment rate that incorporates the permanent adjustment calculations through CY 2023 data. This difference is shown as the retrospective dollar amount that will be recouped with one or more temporary adjustments in future years. Our results for the CY 2024 annual (single year) permanent and temporary adjustment calculations using CY 2024 final claims data and the methodology in our proposed rule are shown in table 2. We reiterate that, as we explain further in later sections, that we are not finalizing the permanent or temporary payment calculated. Instead, the calculations that follow are being presented to be consistent with how we have updated these adjustments between the proposed and final rules in previous rulemaking. [GRAPHIC] [TIFF OMITTED] TR02DE25.003

As shown in table 2, a permanent prospective adjustment of -2.192 percent to the CY 2026 30-day payment rate (assuming all adjustments from prior years were applied) for CY 2024 would be required to adjust for such increases in estimated aggregate expenditures in future years. We remind readers, the permanent prospective adjustment of -2.192 percent is for illustrative purposes only and the annual (single year) permanent adjustment cannot be added to previous annual adjustments. Our final estimate of the CY 2024 base payment rate ($2,038.13) resulted in excess expenditures of approximately $870 million in CY 2024.

We now have 5 years of claims data (CYs 2020 through 2024) under the PDGM, and we have applied three permanent adjustments to the 30-day payment rate (CYs 2023 through 2025) that together partially account for the behavior changes we observed in the data, which we summarize in table 3. We reiterate that, as we explain further, we are not finalizing the permanent or temporary payment for CY 2024 reflected as follows. And we remind readers these annual adjustments cannot be added or multiplied together to determine the total permanent adjustment needed for CY 2026 because each individual year requires an assumption that all prior adjustments were taken.

[GRAPHIC] [TIFF OMITTED] TR02DE25.004

In the preceding section we updated the analysis in the proposed rule using CY 2024 final claims data to determine the difference in expenditures between the 30-day periods and the simulated 60-day episodes. We now update the analysis in the proposed rule using CY 2024 final claims data converting that difference into permanent and temporary payment adjustment. We reiterate that, as we explain further, we are not finalizing the permanent or temporary payment calculated in this section.

Again, that analysis included simulations that assumed the full - 3.95 percent payment adjustment (the calculated CY 2025 permanent adjustment) was already taken. We note that CMS implemented a payment adjustment of -1.975 percent for CY 2025, rather than the -3.95 percent we calculated (89 FR 88373), so the calculations set forth later in this section would be the remaining adjustments not applied in previous years (that is, CYs 2020 through 2023 claims data), as well as the adjustment needed to account for CY 2024 claims. In calculating the full permanent adjustment needed to the CY 2026 30-day payment rate, we compare estimated aggregate expenditures under the PDGM and the prior system. Unlike the annual adjustments described in table 3, we do not assume the full adjustment from prior years had been taken.

As discussed in section II.C.1.d. of this final rule, using the final dataset for CY 2024 (6,538,837 actual 30-day periods which made up the 3,849,780 simulated 60-day episodes) we determined the CY 2024 30-day base payment rate would have been $1,914.73 if calculated based on actual behavior compared to assumed behavior. We then compared the $1,914.73 CY 30-day base payment rate based on actual behavior to the CY 2024 30-day base payment rate of $2,038.13 we paid based on assumed behaviors. The percent change, as summarized in table 4, between the actual CY 2024 base payment rate of $2,038.13 (based on assumed behaviors) and the CY 2024 recalculated base payment rate of $1,914.73 (based on actual behaviors) is the total permanent adjustment reflecting CYs 2020 through 2024 claims. [GRAPHIC] [TIFF OMITTED] TR02DE25.005

As shown in table 4 a permanent prospective adjustment of -6.055 percent to the CY 2024 30-day payment rate is required to offset for such increases in estimated aggregate

expenditures in future years. To illustrate this calculation: [GRAPHIC] [TIFF OMITTED] TR02DE25.006

As we stated in the CY 2025 HH PPS final rule (89 FR 88373), applying a -1.975 percent (half of the final calculated -3.95 percent) permanent adjustment to the CY 2025 30-day payment rate did not adjust the rate fully to account for differences in behavior changes on estimated aggregate expenditures in CYs 2020, 2021, 2022, and 2023. Using CY 2024 claims data, as shown in table 4, a permanent prospective adjustment of -6.055 percent to the CY 2024 30-day payment rate is required to offset for such increases in estimated aggregate expenditures for CYs 2020 through 2024. We remind readers adjustment factors are multiplied in this payment system and individual numbers (that is, percentages) cannot be added or subtracted together to determine the final adjustment. Therefore, we cannot determine the CY 2026 final permanent adjustment, which will include estimated aggregate expenditures in CY 2024, by simply subtracting the -1.975 percent applied in CY 2025 from the total permanent adjustment of -6.055 percent as shown in table 4.

Instead, we account for the permanent adjustment applied in CY 2025 of -1.975 percent when we calculate the CY 2026 permanent adjustment by solving the following equation (1 - 0.01975) x (1 - x) = (1 - 0.06055). To illustrate this calculation we used the following approach. [GRAPHIC] [TIFF OMITTED] TR02DE25.007

x = 0.95838 x = 0.04162 (that is, 4.162 percent)

As shown previously, this methodology would suggest a -4.162 percent permanent adjustment for CY 2026. Accounting for the previous permanent adjustments applied to the 30-day payment rate in CYs 2023, 2024, and 2025, we can simulate the permanent adjustment calculation with the simulated annual permanent adjustment percentage shown previously for CY 2026:

Annual Permanent Adjustments Calculated: \3\

\3\ The annual permanent adjustments are for illustrative purposes only and the annual (single year) permanent adjustments cannot be combined to calculate the total permanent adjustment proposed and finalized in rulemaking.

CY 2020 Claims = -6.52% (87 FR 66805)

CY 2021 Claims = -1.42% (87 FR 66806)

CY 2022 Claims = -1.767% (88 FR 77692)

CY 2023 Claims = -1.004% (89 FR 88366)

CY 2024 Claims = -2.192% (Table 3) Permanent Adjustments Applied:

CY 2023 Rate = -3.925% (88 FR 66808)

CY 2024 Rate = -2.890% (88 FR 77697)

CY 2025 Rate = -1.975% (89 FR 88373) Illustrative Equation:

(1-0.0652)(1-0.0142)(1-0.01767)(1-0.01004)(1-0.02192) = (1- 0.03925)(1-0.0289)(1-0.01975)(1-x)

Solving, x = 4.162%.

In table 5, we provide the base payment rate for what CMS actually paid, the recalculated base payment rate for what CMS should have paid, the total permanent adjustments calculated from the base payment rates (accounts for any adjustments taken prior), and the permanent adjustment applied.

[GRAPHIC] [TIFF OMITTED] TR02DE25.008

In the CY 2023, 2024, and 2025 HH PPS final rules (87 FR 66790, 88 FR 77696, 89 FR 88373), we acknowledged that the full permanent adjustment in a single year may be burdensome for some providers. As shown in table 5, we finalized only half of the permanent adjustment percentages in CYs 2023 through 2025 final rules. We explained in the CY 2023, 2024, and 2025 HH PPS final rules (87 FR 66808, 88 FR 77697, 89 FR 88373) that when we apply a reduced permanent adjustment, we may need to continue to implement a reduction in future years to satisfy the statutory requirements. However, we recognize that only applying half of the calculated permanent adjustments in previous years has contributed to the significant growth of the temporary adjustment. In the CY 2026 HH PPS proposed rule (90 FR 29133), we proposed to apply the full permanent adjustment we (then) calculated of -4.059 percent, noting that we would update this percentage using more complete claims data in the final rule, to satisfy the statutory requirements at section 1895(b)(3)(D) of the Act to offset any increases or decreases on the impact of differences between assumed behavior and actual behavior changes on estimated aggregate expenditures, reduce the need for any future large permanent adjustments, and help slow the accrual of the temporary payment adjustment amount. Using more complete claims data, and as calculated previously, the permanent adjustment to the CY 2026 30-day payment rate would be a reduction of 4.162 percent.

As described previously in this final rule, to account for such increases or decreases in estimated aggregate expenditures as a result of the impact of differences between assumed behavior changes and actual behavior changes in any given year from 2020 to 2026, we calculate one or more temporary prospective adjustments by calculating the dollar amount difference between the estimated aggregate expenditures from all 30-day periods using the recalculated 30-day base payment rate, and the aggregate expenditures for all 30-day periods using the actual 30-day base payment rate for that year. In other words, when determining the temporary retrospective dollar amount, we used the full dataset of actual 30-day periods using both the actual and recalculated 30-day base payment rates to ensure that the utilization and distribution of claims are the same. We refer readers to the CY 2024 HH PPS final rule (88 FR 77689 through 77694) for analysis of CYs 2020 through 2022 claims, the CY 2025 HH PPS final rule (89 FR 88366 through 88369) for analysis of CY 2023 claims, and section II.C.1.d. of this final rule for the analysis of CY 2024 claims. Table 6 provides a summary of the temporary adjustment dollar amount for CYs 2020 through 2026 as shown in the CY 2026 proposed rule (90 FR 29132).

[GRAPHIC] [TIFF OMITTED] TR02DE25.009

Our analysis continues to show estimated aggregate expenditures are higher under the PDGM than if those same claims were paid under the prior 153-group system, though the data also show that the permanent adjustments we implemented in CY 2023 and CY 2024 successfully brought estimated aggregate expenditures closer to the statutorily required budget neutrality. In the CY 2022 HH PPS proposed rule (86 FR 65884), the CY 2023 HH PPS proposed rule (87 FR 37608), the CY 2024 HH PPS proposed rule (88 FR 43664), the CY 2025 HH PPS proposed rule (89 FR 55320), and CY 2026 HH PPS proposed rule (90 FR 29119), our analysis has shown that the annual national standardized 30-day period payment rate has exceeded the average estimated 30-day period cost. In addition, MedPAC has continued to find that FFS Medicare payments for home health care are substantially in excess of costs.\4\

\4\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch7_MedPAC_Report_To_Congress_SEC.pdf.

Given these facts, we exercised our authority under section 1895(b)(3)(D)(iii) of the Act to propose applying “one or more” temporary adjustments to begin recoupment of the retrospective overpayments for CYs 2020 through 2024. Even though we have not yet calculated the temporary dollar amounts for CYs 2025 through 2026, we have done so for CYs 2020 through 2024, and the cumulative amount is substantial. Beginning to adjust the base payment rate now to account for the calculated temporary dollar amount to date may help reduce the need for a larger reduction in future years. We estimated that collecting the full temporary dollar amount of $5,331,234,432 in a single year (as shown in table 6) would require an approximate 34 percent reduction to the CY 2026 base payment rate. Additionally, we anticipate that we will need to make additional adjustments for CYs 2025 and 2026, once data for those years are available.

We have stated in past rules that implementing both the permanent and temporary adjustments in the same year may be burdensome to HHAs; however, in the CY 2026 HH PPS proposed rule (90 FR 29133), we proposed to implement a -5.0 percent temporary adjustment (rather than the estimated 34 percent) along with the permanent adjustment to reduce larger temporary adjustments in future years. Beginning to apply only a portion of the temporary adjustment in CY 2026 balances the underlying statutory goal of budget neutrality against any hardship to HHAs.

We proposed implementing a 5.0 percent reduction in CY 2026, that is equivalent to a 0.9500 temporary adjustment factor, to the CY 2026 national, standardized payment rate. Using historical trends, we estimated 7,723,632 number of 30-day periods will occur in CY 2026. Using this estimated utilization, a 5.0 percent reduction to the CY 2026 30-day payment rate would collect approximately $786 million of the total temporary adjustment dollar amount, equating to about 14.7 percent of the total $5.3 billion shown in table 6. In doing so, however, we will need to account for the remaining temporary adjustment dollar amount for CYs 2020 through 2024, plus any possible adjustments for CY 2025 and 2026, in future years. It is important to note that the estimated $786 million dollar amount anticipated to be collected by

the implementation of the temporary adjustment factor is based on an estimate of the number of 30-day periods that will occur in CY 2026. It may not reflect the actual dollar amount to be collected if the actual number of 30-day periods and other utilization trends in CY 2026 differ from what was estimated. In other words, CMS will calculate the actual amount collected from the temporary adjustment in CY 2026 and credit it to the overall cumulative temporary dollar amount.

In accordance with section 1895(b)(3)(D)(iii) of the Act, we proposed applying the temporary adjustment on a prospective basis and only with respect to the year for which such a temporary increase or decrease is made. This means we will not include the -5.0 percent temporary adjustment applied for CY 2026 when calculating the CY 2027 base payment rates. However, to continue recoupment of the retrospective overpayments we may propose additional temporary adjustments in future rulemaking, whether -5.0 percent or a different amount. We will continue to analyze the data each year through CY 2026 claims as required by law, and in a time and manner deemed appropriate we would propose one or more additional temporary adjustments to account for retrospective overpayments. We refer readers to section II.E.3.b. of this final rule for the CY 2026 base payment rates with and without the temporary adjustment.

We solicited comments on the proposals to apply the permanent adjustment of -4.059 percent (-4.162 percent using more complete claims data) and the -5.0 percent temporary adjustment to the CY 2026 home health base payment rate. One commenter, the Medicare Payment Advisory Commission (MedPAC), supported the proposed permanent and temporary payment adjustments for CY 2026. MedPAC stated that the reduction to the base payment rate is generally consistent with their most recent recommendation calling for a seven percent reduction. They also stated that the home health base payment rate currently exceeds the estimated cost of a typical 30-day payment period by 33 percent. We received numerous comments opposing the permanent and temporary adjustment proposals as summarized as follows. (1) Excluding Data From HHAs With Anomalous Behavior

Comment: Several commenters expressed concerns that the data used in the calculation is being influenced by potential fraudulent behavior and anomalous utilization from some home health agencies, as evidenced by potential cost report fraud and outlier billing patterns, specifically in Los Angeles (LA) County, and should not be included in the methodology used to set a national base payment rate. Many commenters also stated that the adjustments should target agencies committing billing fraud, rather than making “blanket adjustments” to the home health payment rate based on HHAs who reduced therapy visits in order to increase payments.

Additionally, commenters stated that cost reports are largely non- representative of actual costs to provide care. They stated that the underreporting of costs can be due to the design and/or misunderstanding of the intent of the cost reports themselves; however, the commenter acknowledged that it is also a consequence of more providers not giving the cost reports the attention that they deserve. Commenters also cited lack of auditing by CMS to ensure cost reports are completely and accurately filled out.

A commenter stated that the current strategy creates a feedback loop whereby reduced reimbursements result in HHAs being less capable of providing the same number of therapy visits, triggering CMS to further reduce reimbursements because fewer visits are provided. Similarly, a commenter suggested CMS review the home health agency admission criteria to ensure that agencies are not exclusively admitting patients that may perform favorably on OASIS outcomes assessments and/or have a lower probability of hospitalization as a consideration for targeted payment adjustments.

Response: Both cost reports and claims are used as part of the rate setting for home health. We remind commenters that each HHA Medicare cost report is required to be certified by the Officer or Director of the home health agency as being true, correct, and complete, with potential penalties should any information in the cost report be a misrepresentation or falsification of information. Specifically, 42 CFR 413.24(f)(4)(iv)(B) states that misrepresentation or falsification of any information contained in this cost report may be punishable by criminal, civil and administrative action, fine and/or imprisonment under federal law. Furthermore, if services identified in this report were provided or procured through the payment directly or indirectly of a kickback or were otherwise illegal, criminal, civil and administrative action, fines and/or imprisonment may result. CMS must rely on the accuracy and completeness of cost report data when analyzing home health costs. Using HHA Medicare cost report data as one piece of the methodology to establish the case-mix relative weight aligns with the use of this data in determining the base payment amount under the HH PPS.

As discussed in the CY 2019 final rule (83 FR 56451), we use a trimming methodology described in detail in the “Analyses in Support of Rebasing & Updating Medicare Home Health Payment Rates” Report available at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps/downloads/analyses-in-support-of-rebasing-and-updating-the-medicare-home-health-payment-rates-technical-report.pdf. This methodology trims out values that fall in the top or bottom 1 percent of the distribution across all HHAs (that is, possible “questionable” data). Normalizing data by trimming out missing or extreme values is a widely accepted methodology both within CMS and amongst the health research community. In eliminating missing or questionable data with extreme values from the data we obtain a more robust measure of average costs per visit that is reliable for the purposes of establishing base payment amounts and case-mix weights under the HH PPS.

Furthermore, not all anomalous billing patterns indicate fraudulent practice, and we would need further evidence to determine which providers with anomalous billing patterns can be connected to fraudulent practices. Excluding data some commenters view as “anomalous” from the calculation of the national 30-day base payment rate, would thus require CMS to develop a new policy, including thresholds for determining deviations excluded from the analytical sample.

As always, we encourage providers to fill out the Medicare cost reports as accurately as possible. We note that there are efforts to monitor cost reports if there are concerns over the reported information. CMS audits home health cost reports through the Medicare Administrative Contractors (MACs) and the Center for Program Integrity (CPI). The cost report certification and associated penalties generally encourages HHAs to accurately represent the incurred costs of providing home health care. Any additional thresholds used for the exclusion criteria based on data anomalies would need to be discussed during notice and comment rulemaking. We have not proposed such considerations previously and we decline to do so now because we must balance commenter concerns about

reducing the number of claims through too many exclusions, which could also impact the results, with commenter concerns about possible fraudulent behavior which may be limited to a small subset of providers.

We do consider anomalous patterns to determine whether we should review cost reports and claims and might initiate investigation for evidence of fraud, waste, and abuse. CPI determines which providers may warrant program integrity actions. We generally have not excluded providers accused of fraud, waste, and abuse from samples before completing the adjudicatory process, and decline to do so for LA county claims. In addition, excluding all LA County claims might be overinclusive: anomalies have not shown up in the data from all home health providers in LA county, and even for those with anomalous data, investigation might vindicate their claims.

In previous rules, commenters have suggested targeted payment adjustments to certain providers, even under the previous 153-group payment system. We addressed these suggestions in the CY 2016 HH PPS and CY 2019 HH PPS final rules (80 FR 68421 and 83 FR 56455, respectively). In those rules we stated that this strategy is not viable, given the widespread nature of coding changes and improvements, small sample sizes of agencies with significant nominal case-mix across different classes of agencies, and difficulty in precisely distinguishing the agencies that engage in abusive coding and other behaviors from all others. Additionally, we reiterate that we are required to make temporary and permanent payment adjustments to the national, standardized 30-day period payment rate based on the impact of differences between assumed versus actual behavior change, in accordance with sections 1895(b)(3)(D)(ii) and (iii) to offset for such increases or decreases in estimated aggregate expenditures. These adjustments are not intended to account for coding abuses by specific HHAs, but rather overall behavior changes CMS observes across the system.

Cost report fraud and abusive billing behavior are concerns that need to be addressed by the appropriate channels with the authority to apply enforcement action, such as the hotline for reporting fraud at the following website: https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity/reporting-fraud. (2) Provider Margins and Access

Comment: Commenters expressed concerns that CMS does not consider all-payer margins when considering application of the behavior payment adjustments. Commenters suggested that CMS should consider all-payer margins as these are much lower than Medicare margins and therefore CMS should not apply a downward adjustment to the payment rate because this would result in all-payer margins going even lower and will cause HHAs to go out of business. Some commenters referenced analysis from the CMS Office of the Actuary (OACT) \5\ regarding providers with negative total facility margins. Commenters stated that OACT estimated that over one-third of HHAs have negative total profit margins with simulations suggesting that measure approaches nearly 45 percent by 2027 and nearly 60 percent by 2040. One commenter stated that this likely means agencies will place a heavier emphasis on keeping higher margins and reduce services to patients generating smaller payments, while another commenter stated directly that their agency will be forced to reduce their geographic service region, particularly the rural areas, in order to avoid financial losses. Some commenters also stated the adjustments would inhibit providers from investing in needed technology such as remote patient monitoring, electronic health records, and artificial intelligence that could ultimately save Medicare money. Commenters stated again that CMS needs to consider all-payer margins for home health rather than simply Medicare FFS margins. We also received several comments stating that further payment rate reductions will affect other payers that use Medicare as a benchmark to set payment (for example, Medicare Advantage (MA) plans).

\5\ https://www.cms.gov/files/document/simulations-affordable-care-act-medicare-payment-update-provisions-part-provider-financial-margins.pdf-0.

Response: We have considered OACT's report, which projected the impact of certain updates the Affordable Care Act made to Medicare payment rates on Part A provider financial margins.\6\ We note that HHAs that are hospital-based have shown negative margins for numerous consecutive years, which MedPAC has suggested can be traced to how hospital-based HHAs allocate overhead costs from its parent hospital instead of the actual costs of providing home health care for which the home health payment system is meant to account.\7\ Our analysis from the CY 2024 HH PPS final rule, shown in Table B6 (88 FR 77695), indicates that even prior to the PDGM, approximately 20 to 23 percent of freestanding HHAs had margins below zero percent, indicating that this phenomenon pre-dated the PDGM, and is not the result of the behavior adjustments related to the initial behavior assumptions applied in CY 2020 (88 FR 77695). In addition, the OACT report indicated that the percentage of HHAs with negative total facility margins was similar in 2011 and 2023.

\6\ Ibid.

\7\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch7_MedPAC_Report_To_Congress_SEC.pdf.

With respect to the comment that CMS must look at the HHA's overall financial condition (that is, overall margins) or consider MA rates when setting FFS payment rates, we have never endorsed the view that Medicare funds allocated for FFS should be used to subsidize reimbursement rates from other payers, a policy that would be inconsistent with our obligation to be responsible stewards of the Medicare Trust Funds and would ultimately increase costs to Medicare beneficiaries, taxpayers, or both.

Comment: Many commenters noted a decrease in the number of HHAs, with some claiming that CMS data suggests that over 1,000 HHAs have closed between 2019 and 2024, and that home health users decreased by 20 percent. A commenter stated that hundreds of counties have become “home health deserts”, meaning areas with a lack of HHAs, and specifically with declines in the number of HHAs of 40 percent or more. Several commenters also presented post- inpatient hospitalization discharge analysis showing declines in home health usage. Commenters stated that this would then increase overall Medicare spending, as beneficiaries would be forced to receive care in more expensive facilities such as hospitals and skilled nursing facilities. One commenter stated that the proposed rule fails to address previous evidence from providers, hospitals, and patients showing declining access to the benefit. Another commenter noted that HHAs would not be able to maintain the current level of access to care, particularly in an environment that far outweighs increases in payment and surges in administrative and staffing costs, which have more than doubled in recent years. Another commenter recommended CMS conduct a comprehensive impact analysis to determine how access has been affected before finalizing the proposed behavior adjustments. Commenters state that the behavior adjustments should not be applied to mitigate further closures of HHAs thereby creating access issues for beneficiaries.

Response: The CMS market saturation data set suggests that the change in the

number of Medicare-certified HHAs is relatively small: the data reflects a 2.5 percent decrease from 2020-2025.\8\ MedPAC suggests that much of the decline in the volume of home health use has been driven by a reduction in the number of beneficiaries in FFS Medicare, as a growing share of beneficiaries enroll in MA.\9\ When controlling for FFS enrollment, the number of 30-day periods in 2023 decreased by 1.8 percent. At the same time, the share of FFS beneficiaries using home health has also declined, falling 2.3 percent in 2023.\10\

\8\ https://data.cms.gov/summary-statistics-on-use-and-payments/program-integrity-market-saturation-by-type-of-service/market-saturation-utilization-core-based-statistical-areas.

\9\ https://www.medpac.gov/wp-content/uploads/2025/06/Jun25_ExecutiveSummary_MedPAC_Report_To_Congress_SEC.pdf.

\10\ Ibid.

Using the CMS saturation data \11\ within 2024, we do see some evidence of a reduction in the number of HHAs in certain geographic areas. The geographic areas that experienced decreases in providers serving the CBSA relative to 2023 are also likely to have a relatively low number of providers, such as Salisbury, Maryland and Hood River, Oregon. There are also areas that saw a decrease in providers, with an accompanying increase in number of home health users and increase in total payment change, such as Thomasville, Georgia and Clewiston, Florida. The dataset provides an incomplete view of how HHAs entering or exiting the market may affect home health use and total payments in the area. The differences in changes in total payments in the area and the resulting geographic market dynamics will likely vary based on the hospitals operating in the area, number of competing HHAs operating in the area, number of Medicare FFS beneficiaries, penetration of MA enrollment, number of post-acute facilities, dual-eligible beneficiaries, Medicaid policy for the state, as well as many other factors. While we agree that there are data that support some areas with reductions in HHAs, we note that this may not be solely attributable to the payment adjustments as there are other factors, as described previously, that could contribute to the ebb and flow of HHAs entering and exiting the market.

\11\ https://data.cms.gov/summary-statistics-on-use-and-payments/program-integrity-market-saturation-by-type-of-service/market-saturation-utilization-core-based-statistical-areas.

Commenters presented an analysis similar to the post-discharge analysis that we discussed in the CY 2025 HH PPS final rule (89 FR 88372). We found that 76 percent of acute inpatient hospital referrals have home health claims within 7 days of discharge compared to 62.6 percent of referrals from short-stay acute inpatient stays presented by the commenters.

We also presented the percentage of Medicare FFS home health claims within seven days of discharge by the preceding claim type in Figure 8 of the CY 2025 HH PPS final rule (89 FR 88372). In our analysis we found an average of 80 percent, 79 percent, and 75 percent using home after discharge to home health for 2018 (pre-PDGM), 2020 (PDGM), and 2023 (PDGM) respectively for Medicare FFS beneficiaries (89 FR 88372). In addition, MedPAC noted that data reported by HHAs to CMS indicate that 96.1 percent of home health services were initiated in a timely manner in 2023, a rate that was stable relative to 2022. As such, we do not believe that access has been compromised greatly since the implementation of the behavior adjustments, nor do we see statistical evidence presented by commenters, rather, anecdotal evidence. (3) Methodological Concerns

Comment: Commenters suggested technical flaws in the methodology to determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures. These commenters also recommended changes to the methodology for the calculation of the permanent and temporary adjustments. Specifically, some commenters stated that CMS should account for decreases in home health payments from CYs 2020 through 2024, shrinking FFS enrollment, and payment offsets occurring through lower MA benchmarks.

Response: Commenters have suggested that there are technical flaws in the methodology in previous rulemaking (87 FR 66797). Specifically, previous commenters suggest that the methodology does not compare behaviors assumed by CMS in establishing the CY 2020 rate to actual behaviors observed on aggregate expenditures. We have responded to these concerns in past rulemaking stating that CMS is not required to correct or quantify each original assumption regarding HHA behavior change, but rather, ensure that the payment rate is accurately accounting for all behaviors related to the implementation of the PDGM and the 30-day unit of payment that actually occurred in a given year. We remind commenters that the changes in the aggregate expenditures under the PDGM between different years are not part of the repricing process and therefore not a variable in the methodology used to calculate the permanent and temporary adjustments. CMS continues to reiterate that the methodology is technically accurate in that it captures actual changes in behavior that have been explained in previous rulemaking, as well as this final rule. As required by law, our methodology compares aggregate expenditures between the actual 30- day periods and simulated 60-day episodes paid under the prior payment system within a single claims' year to determine what the payment rate should be to ensure that payments under the two systems would be equal.

We recognize the overall decline of home health utilization and payments over time, decreasing Medicare FFS enrollment, and the growing share of enrollment in MA. In their most recent report, MedPAC states that when controlling for FFS enrollment, the number of 30-day periods in 2023 decreased by 1.8 percent from 2022.\12\ However, we remind commenters that the statutory requirements for the permanent and temporary adjustments do not state that we need to account for changes in MA benchmarks. When setting home health payment rates, we look only at Medicare FFS home health payments, not MA payment rates, and have a legal obligation to reimburse costs for expenditures made under Medicare FFS based on 42 CFR part 413.5. In addition, it is unclear how we would separate out total home health expenditures from MA as individual provider payments differ amongst varying MA plans. Furthermore, home health payments from MA plans are not available in encounter claims and provider payments from different MA plans are considered proprietary information, which CMS cannot access.

\12\ MedPAC--March 2025 Report to Congress Chapter 7.

Comment: Commenters suggested that CMS not apply the exclusions finalized in the CY 2023 final rule (87 FR 66804) for pricing simulated 60-day episodes, stating that excluded episodes have different characteristics than those included and introduce systemic bias undermining the accuracy of CMS's calculations. Commenters expressed concern over the increasing percentage of 30-day periods excluded from the sample. Commenters recommended that we include data that is currently excluded in our process for creating simulated 60-day episodes.

Response: We previously explained that the exclusion criteria in the finalized methodology dropped 30-day periods of care that had a claim occurrence code 50 after October 31,

2024, and before January 1, 2024, to ensure the 30-day period will not be part of a simulated 60-day period that began in 2023 and to ensure a simulated 60-day episode (simulated from two 30-day periods) does not overlap years (90 FR 29129). Additional exclusions include 60-day periods where no OASIS information was available, a recent SOC/ROC OASIS was not available, a wage index was not available, or the episode cannot be grouped to a Health Insurance Prospective Payment System (HIPPS) code due to a missing primary diagnosis or other reason. All the exclusion criteria are applied because the criteria are needed to appropriately price the simulated 60-day episodes for within the year the claims would have been paid. It is not relevant whether the 30-day periods that are excluded have different case-mix characteristics or higher visits if the 30-day periods are not able to be repriced accordingly as a simulated 60-day period. As stated in previous rulemaking (87 FR 66804), without these exclusions, we would not be confident we were appropriately grouping 30-day periods into simulated 60-day episodes. The excluded 30-day periods would need to show large differences compared to the episodes that were not excluded in order to significantly change the estimated aggregate expenditures from the 60- day episodes to produce significant revisions to our calculations. Additionally, the permanent adjustment is based on the percentage change between the payment rates (which utilizes the same claims), and the temporary adjustment is based on the aggregate expenditures of all claims (that is, no exclusions) using the two payment rates (that is, the actual payment rate and the budget neutral payment rate with the permanent adjustment applied). Therefore, we do not believe that the small portion of excluded claims significantly biased our results.

Comment: A commenter noted roughly 40 percent of the diagnoses previously allowed under the prior payment system are no longer accepted as a primary diagnosis under the PDGM. This commenter stated that this change may impact coding behavior and could potentially lead to the simulated 60-day episodes being inaccurately assigned.

Response: We refer readers to the CY 2023 HH PPS final rule (87 FR 66803) for a detailed response to this comment. In that rule, we stated that, while we acknowledge 41 percent (29,948) of all the diagnosis codes are not assigned a clinical group under the PDGM, we disagree that those unassigned codes would have created any significant difference in assigning the clinical level in the 153-group case-mix system. For example, out of all the diagnosis codes available in the final grouper for the 153-group case mix system, only 22 percent (15,936) of the diagnosis codes could potentially contribute to the clinical score. Of those codes which could have contributed to the clinical score, only 6.99 percent (1,114) of the diagnosis codes are not accepted as a principal diagnosis under the PDGM.

Comment: Several commenters suggested that when simulating 60-day episodes we should update the calculation of payment under the prior system by including an update for recalibration of case-mix group weights and fixed dollar loss (FDL) for outlier payments. Commenters raised concerns about recalibration not controlling for the impact of COVID-19. Commenters claim that this introduces challenges in determining whether changes were due to PDGM or pandemic-related disruptions. These commenters stated that during the COVID-19 pandemic, hospitals discharged differently and there were more staffing shortages and telehealth substitution for visits, which was not representative of long-term care delivery. Commenters specifically noted that CMS did not apply any COVID-specific exclusions, implement control periods, spillover analysis, or validation checks in the methodology. Commenters referred to these issues as a methodological gap that undermines the validity of CMS's behavior adjustment calculations.

Response: If we were to implement an updated FDL instead of using the finalized CY 2020 final rule FDL to determine outlier payments under the simulated episodes, it is unclear whether it would be an accurate representation to retrospectively assign the necessary FDL to hit a 2.5 percent target for the years after CY 2020. In addition, updating the FDL for the 153-group payment system would require an iterative process to adjust the PDGM FDL used in repricing to also hit the 2.5 percent target of total PDGM expenditures. We note that the 2.5 percent is only a target amount that is set prospectively and is never reconciled and adjusted for.

If we were to implement recalibration of case-mix weights (including early vs. late visits or admission source) when determining aggregate payments under the 60-day payment system, the aggregate expenditures would not change because we would implement the recalibration of case-mix weights in a budget neutral manner. In other words, although the case-mix weights themselves may increase or decrease from year-to-year, we correspondingly offset any estimated increases or decreases in total payments under the HH PPS, as a result of the case-mix recalibration, by applying a budget neutrality factor to the national, standardized payment rate. Recalibrating the pre-PDGM case-mix weights to reflect changes due to COVID-19 would not increase the aggregate payments estimated for simulated 60-day periods paid under pre-PDGM. Since we are comparing a single year of data priced under the PDGM and 153-group case-mix system, COVID-19 wouldn't bias the PDGM payments differently than the 153-group or vice-versa. In the CY 2022 HH PPS final rule (86 FR 62249), we discussed the influence of the COVID-19 PHE on home health utilization and finalized a proposal to recalibrate the PDGM case-mix weights, functional impairment levels, and comorbidity subgroups while maintaining the LUPA thresholds for CY 2022. We stated that, because there are several factors that contribute to how the case-mix weight is set for a particular case-mix group (such as the number of visits, length of visits, types of disciplines providing visits, and non-routine supplies) and the case-mix weight is derived by comparing the average resource use for the case-mix group relative to the average resource use across all groups, we believed the COVID-19 PHE would have impacted utilization within all case-mix groups similarly. Therefore, the impact of any reduction in resource use caused by the COVID-19 PHE on the calculation of the case-mix weight would be minimal since the impact would be accounted for both in the numerator and denominator of the formula used to calculate the case-mix weight.

Comment: Many commenters recommended that CMS apply the Patient Driven Payment Model (PDPM) parity adjustment methodology used in the CY 2023 Skilled Nursing Facility (SNF) PPS final rule (87 FR 47502) to the PDGM data.

Response: As we stated in the CY 2023 HH PPS final rule (87 FR 66802), the SNF PPS and HH PPS are different; SNFs are paid a per-diem payment with different case-mix variables, and HHAs are paid under a bundled payment system. In addition, unlike the requirements of the SNF PPS parity adjustment, CMS is required, by law, to account for behavior changes related to the implementation of the PDGM, which CMS did by comparing actual PDGM claims to what the same utilization (for example, visits, OASIS responses, etc.) would look like under a 60-day unit of payment.

Comment: Commenters stated that relying on a simulation of payments under the pre-PDGM payment system establishes a budget neutrality target that places an artificial limit on current PDGM payments.

Response: We finalized the methodology for estimating payments under the PDGM and simulated 60-day periods in the pre-PDGM system in the CY 2023 final rule (87 FR 66804). While it is unclear why the commenter states repricing establishes a budget neutrality target that places an artificial limit on current PDGM payments, we would like to remind commenters that repricing compares expenditures paid under the PDGM and pre-PDGM systems to determine if we are paying more under the PDGM than we otherwise would have absent the new payment system (that is, the 153-group system). Then if it is determined that we are paying more under the PDGM then we determine what the recalculated PDGM budget neutral payment rate for the claims year would be. Regardless of the magnitude and frequency of individual behavior change (for example, changes in LUPAs, therapy, etc.), the occurrence of any behavior change is captured by the methodology to determine the impact on aggregate expenditures. The methodology does not cap or limit the increase of expenditures in a given year as it uses the actual utilization for that year to reprice claims. Meaning, if utilization goes up from one year to another, expenditures in turn increase as well, so we disagree with commenters that state we are limiting PDGM payments as the expenditures are directly tied to the services that providers are, or are not, providing. (4) Suggested Change in Timeframe for Behavior Change Adjustments

Comment: Several commenters suggested that the behavior change observed after CY 2021 is no longer related to the implementation of the PDGM and change in the unit of payment and that we stop the adjustments after this timeframe. Commenters pointed out factors such as differences in visit thresholds for assigning case-mix adjusted claims as LUPAs between simulated 60-day episodes and actual 30-day periods, bias in timing assignment for episodes, potential bias in clinical group assignments for acuity, mapping limitations for assumptions cross-walking OASIS-E to OASIS-D responses for missing OASIS items, and overall mismatch of patterns between 2019 60-day episodes and simulated 60-day episodes, such as therapy thresholds. Commenters reminded CMS that the law requires that any permanent or temporary payment adjustment be related to only the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures that could occur as a result of the implementation of the new case-mix system and change in the unit of payment. Commenters mentioned additional changes that influenced behavior change beyond the implementation of the PDGM: application of the permanent adjustments reducing payments to a point where providers had to make business decisions to ensure adequate provision of services, recalibration and LUPA updates, introduction of the OASIS-E in CY 2023, expansion of the HHVBP Model, and increased MA penetration, among other things. Commenters stated that CMS should not consider behavior change that could be unrelated to the implementation of the PDGM when calculating the permanent and temporary adjustments, as this would be counter to what the law requires. Commenters stated that the exclusion of data from CY 2022 and beyond would result in the need for a 1 percent increase to the 30-day payment rate in CY 2026 and necessitate recalculating the temporary adjustment amounts for CYs 2020 and 2021 to offset the amount already collected in CY 2025 because the base rate for 2025 was set too low. Similarly, other commenters requested CMS pause the permanent adjustment this year until stable, post-pandemic data can be evaluated. This commenter suggested this data collection would begin in 2023.

Response: For the reasons described later in section, we agree with commenters in part and will not finalize the proposed -4.059% permanent payment adjustment based on the analysis in the proposed rule that concluded a -4.059% permanent adjustment was necessary to account for behavior changes from CY 2024 (based on the updated calculations described previously in this final rule, the final calculation results in a -4.162% reduction). We will instead finalize a -1.023 percent permanent adjustment (see calculation in the final decision), which is based only on changes in estimated aggregate expenditures that we previously calculated for CYs 2020 through 2022 and finalized through notice and comment in rulemaking for CY 2023 and 2024 (FR 87 66886 and FR 88 77869).

In the CY 2026 proposed rule (90 FR 29119 through 29126), we discussed various trends identified in monitoring changes related to the PDGM using analysis of CY 2024 claims. We agree with commenters to the extent that this data might suggest that there were large changes at the start of the PDGM. These changes, that may indicate that HHAs were adapting to the implementation of a new case-mix system, have decreased in magnitude (90 FR 29121 through 29125) to the extent we believe that the implementation of the PDGM is the reason for these changes through CY 2022; however, as discussed by commenters, CMS implemented policy changes in CYs 2023 through 2025 that could have prompted behavior change not directly attributable to the PDGM.

CMS policy changes implemented in CYs 2023 through 2025 might make it difficult to precisely distinguish the behavior changes related to the extenuating factors such as those mentioned by commenters and those behavior changes related to the implementation of the PDGM, based on analysis included in the proposed rule. These policy changes include recalibration of case-mix weights and LUPA visit thresholds finalized in the CY 2023, 2024, and 2025 final rules; reassignment of certain ICD-10-CM codes related to the PDGM clinical groups and comorbidity groups in the CY 2023 final rule; finalizing permanent adjustments in the CY 2023, 2024, and 2025 final rules; and the introduction of OASIS- E in 2023 and finalized mapping of OASIS-E to OASIS-D in the CY 2025 final rule for calculating functional points for functional impairment levels during repricing; and the expanded HHVBP Model.

Because it is difficult to definitively isolate the behaviors directly related to the PDGM implementation after CY 2022, we are only finalizing a permanent adjustment based on data from CYs 2020 through 2022. As required by law, we will continue to analyze data through CY 2026 claims to determine if any additional permanent adjustments are needed to account for the impact of assumed versus actual behavior change related to the implementation of the PDGM and the change to a 30-day unit of payment on estimated aggregate expenditures. Further, when analyzing the overall home health trends, such as the distribution of 30-day periods of care by the twelve PDGM clinical groups, distribution of 30-day periods of care by admission source and timing, distribution of 30-day periods of care by functional impairment level, distribution of 30-day periods with therapy and non-therapy visits, and average therapy visits per 30-day period by clinical group (Tables 6, 8, 9, 10, and Figure 3 in 90 FR 29121 through 29125), we see indicators that suggest provider

behavior changed more significantly in the years immediately following the implementation of the PDGM, but has decreased in magnitude overall starting in CY 2023.

We disagree with commenters to the extent they suggest that we should not rely on data from CY 2022 but should only use CYs 2020-2021 claims for calculating the behavior adjustments. As noted previously and as shown in the CY 2026 HH PPS proposed rule (90 FR 29119 through 29126), our analysis supports that the observed behavior changes in CYs 2020 through 2022 are attributable to the implementation of the PDGM and the 30-day unit of payment. Therefore, since the observed behavior change directly attributable to the implementation of the PDGM transpired in CYs 2020 through 2022, and not CYs 2020 and 2021 as the commenters suggest, we disagree with commenters that a 1 percent increase in the 30-day payment rate in CY 2026 is warranted. We are also recalculating the temporary adjustments for CYs 2023 and 2024 (see Table 7). For those reasons, instead of the -4.059% adjustment we proposed, we will finalize the -1.023% remaining adjustment for CY 2026 (see calculation in the final decision later in this section).

Comment: A commenter requested CMS adopt a phased approach to implementing the temporary adjustment, moderating the annual impact to providers, and requested CMS propose a timeframe for collecting the temporary adjustment amount in order to allow providers to business plan.

Response: We recognize the rationale for this commenter's request and stated in the proposed rule that implementing both the permanent and temporary adjustments in the same year may be burdensome to HHAs, hence why we proposed only to implement a smaller temporary adjustment (rather than the estimated 34 percent) along with the permanent adjustment, which should lessen any hardship to HHAs, as well as reduce larger temporary adjustments in future years. We did not propose that the -5.0 percent temporary adjustment would be applied each year after CY 2026, rather that we would continue to analyze the data each year through CY 2026 claims as required by law, and in a time and manner deemed appropriate we would propose one or more temporary adjustments to account for retrospective overpayments. We will take into consideration the suggestion to develop a timeframe for these adjustments in order to create a more stable business planning environment.

Comment: Commenters recommended that CMS also not make temporary adjustments based on data from CY 2022 and beyond. Commenters describe how the data is not appropriate for determining behavior change due to PDGM versus other unrelated factors as summarized in the preceding comment.

Response: We thank commenters for the recommendation and have considered how to recalculate the temporary adjustments based on the various reasons raised by the commenters. We agree that there have been multiple other factors that likely have affected changes in provider behavior, separate and distinct from the implementation of the PDGM and the change to a 30-day unit of payment in CY 2020. As discussed in this final rule, we believe that the majority of change in response to the PDGM and the change to a 30-day unit of payment occurred in CYs 2020 through -2022. As such, we have recalculated the temporary adjustment amount using the inalized methodology for CYs 2020 through 2022 (see Table 7).

Final Decision: As discussed in the comment/responses on the permanent and temporary behavior adjustments, there are several factors that make it difficult to determine changes resulting from the implementation of PDGM and non-PDGM-related behaviors, such as the recalibration of case-mix weights and LUPA visit thresholds and changes in the distribution of 30-day periods by PDGM clinical groups, therapy visits, admission source and timing, and functional impairment level beginning in CY 2023. Additionally, we have observed a decrease in the magnitude of these changes in our monitoring beginning in CY 2023. As such, we are only finalizing the remaining permanent adjustment needed to account for behavior change attributable to the implementation of the PDGM calculated using only the claims experience for CYs 2020 through 2022. Permanent Adjustment

Based on consideration of the public comments and reevaluation of PDGM trends, we are finalizing for CY 2026 the following:

We exercise the authority expressly delegated under the statute to apply permanent adjustments “at a time and in a manner appropriate” to apply the remaining permanent adjustment of -1.023 percent (see the following calculations) to account for behavior change related to the implementation of the PDGM in CYs 2020 through 2022.

We exercise the same authority not to apply any permanent adjustment based on CY 2023 or 2024 data. In future rulemaking, we will provide additional analysis on 2023 and 2024 data to support that behavior changes in these years are attributable to factors beyond the implementation of the PDGM and a 30-day unit of payment. However, we will continue to annually analyze the data through CY 2026 claims, as required by law, to determine if any additional permanent adjustments would need to be made based on the impact of assumed versus actual behavior change on estimated aggregate expenditures resulting from the implementation of the PDGM and the 30-day unit of payment.

The CY 2026 permanent adjustment is calculated using the permanent adjustments already applied to the CYs 2023, 2024, and 2025 finalized payment rates and to determine the payment rate reduction needed for CYs 2020 through 2022. These steps are summarized in the following:

When calculating the payment rate reduction for CYs 2020 through 2022, we multiply the annual permanent adjustment factors calculated for each of those years (accounting for -6.52 percent or 0.9348 finalized for CY 2020 claims, -1.42 percent or 0.9858 finalized for CY 2021 claims, and -1.767 percent or 0.9823 finalized for CY 2022 claims) which is approximately a cumulative payment rate reduction of -9.480 percent or 0.9052 needed to account for behavior change and the difference in aggregate expenditures for CYs 2020 through 2022.

Total Permanent Adjustment needed for CYs 2020 through 2022 = 0.9348 x 0.9858 x 0.9823 = 0.9052

We determine what payment rate reduction is needed through a permanent payment adjustment, by dividing the payment rate reduction needed for CYs 2020 through 2022 by the cumulative payment rate reduction already applied from the permanent adjustments implemented in prior final rules. When calculating the cumulative payment reduction applied, we account for the -3.925 percent or 0.96075 applied in CY 2023 final rule, -2.890 percent or 0.97110 applied in CY 2024 final rule, and -1.975 percent or 0.98025 applied in CY 2025 final rule, to calculate the cumulative permanent payment adjustment applied to be 0.91456. When we divide 0.9052 (payment rate reduction needed for CY 2020 through 2022) by 0.91456 (payment rate reduction applied in CYs 2023 through 2025 final rules), we determine that -1.023 percent or 0.9898 needs to be applied as a permanent adjustment to the CY 2026 30- day payment rate and to reach the payment rate reduction needed for CYs 2020 through 2022.

Total Permanent Adjustment applied in CYs 2023 through 2025 = 0.96075 x 0.97110 x 0.98025 = 0.91456 Total Permanent Adjustment [to be applied] for CY 2026 = 0.9052/0.91456 = 0.98977 1-0.98977 = 1.023 percent

We determine that a permanent adjustment of -1.023 percent applied to CY 2026 30-day payment rate is needed to account for behavior change for CYs 2020 through 2022 based on the repricing methodology finalized in the CY 2023 final rule. Therefore, we are finalizing a -1.023 percent permanent adjustment to the CY 2026 30-day payment rate.

We note that the law requires us to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures through CY 2026 claims. That is, we will continue to apply the finalized methodology through CY 2026 claims. However, while the law requires us to continue to evaluate the need for any additional permanent adjustments in future rulemaking, we reiterate that any additional permanent adjustment(s) would be related to actual behavior change resulting only from the implementation of the PDGM and the change in the unit of payment as required by law.

Though we are calculating and only finalizing the remaining permanent adjustment for CYs 2020-2022 in this final rule, we may still see an accrual in the temporary adjustment dollar amount. In other words, while the permanent adjustment accounts for the prospective payment amount needed to prevent future overpayments, the temporary adjustment will account for the prior overpayment and difference between expenditures for actual and recalculated budget neutral payment rates. Temporary Adjustment

Finalizing applying a permanent adjustment of -1.023 percent to CY 2026 for CYs 2020 through 2022 means we need to reconcile the difference between the finalized budget neutral rate and the new budget neutral rate for CY 2023 to calculate the new temporary adjustment dollar amounts. In the CY 2025 final rule, we compared the difference in the actual CY 2023 payment rate of $2,010.69 and the PDGM budget neutral rate of $1,875.46. Since we are finalizing a permanent adjustment of -1.023 percent to account for behavior change in CYs 2020 through 2022 claims, this means, the recalculated budget neutral rate for CY 2023 should be $1,894.43. We determined what the budget neutral rate for CY 2023 should be by adjusting what the actual CY 2023 finalized payment rate was and accounting for the permanent adjustment already applied to the CY 2023 payment rate and the remainder needed to apply to CY 2023 for the payment rate reduction needed for CYs 2020 through 2022.

$2,010.69 x (1-(1-0.9052/0.96075) = $1,894.43

For the recalculated budget neutral CY 2024 payment rate, we update the CY 2023 recalculated budget neutral payment rate by applying the CY 2024 case-mix weights recalibration neutrality factor (1.0124), the CY 2024 wage index budget neutrality factor (1.0012), the CY 2024 labor- related share budget neutrality factor (0.9998), and the CY 2024 home health payment update factor (1.030). We determined the recalculated budget neutral CY 2024 base payment rate would have been $1,977.43.

$1,894.43 x (1.0124) x (1.0012) x (0.9998) x (1.030) = $1,977.43

Using the recalculated budget neutral payment rates for CY 2023 and 2024, we determine the new temporary adjustments for those two years by comparing what the difference in aggregate expenditures would have been for those two years when comparing expenditures with the actual payments and estimated expenditures with payments under the recalculated budget neutral payment rate. We present the new temporary adjustments for CY 2023 and 2024 in Table 7. BILLING CODE 4120-01-P

[GRAPHIC] [TIFF OMITTED] TR02DE25.010

BILLING CODE 4120-01-C

In this final rule, we exercise our authority under section 1895(b)(3)(D)(iii) of the Act to apply “one or more” temporary adjustments to begin recoupment of the retrospective overpayments for CYs 2020 through 2024. However, we have considered commenters' concerns about the magnitude of a -5.0 percent temporary adjustment in tandem with any finalized permanent adjustment. As such, we are finalizing implementing a 3.0 percent reduction in CY 2026, that is equivalent to a 0.9700 temporary adjustment factor, to the CY 2026 national, 30-day payment rate. By implementing a -3.0 percent temporary adjustment, we can begin recoupment of retrospective overpayments. We determined that the total temporary adjustment dollar amount is approximately $4.7 billion through CY 2024 and that implementing a -3.0 percent temporary adjustment may allow us to recoup $471 million of this total dollar amount. We estimate we will be able to recoup $471 million if CY 2026 claims have approximately 7.7 million case-mix adjusted 30-day periods. Any additional temporary adjustments needed to recoup the total temporary adjustment will be discussed in future rulemaking. Also, in response to comments, we will consider a schedule for the temporary adjustment in future rulemaking as well.

We will continue with our monitoring of the trends in home health utilization, including the number of visits, diagnosis reporting, and other data that we present in our monitoring section to analyze behavior changes that are and are not related to the implementation of the PDGM and the 30-day unit of payment. We will present this analysis in future rulemaking along with our calculations of the impact of the difference between assumed versus actual behavior change on estimated aggregate expenditures to ensure that any potential future adjustments would be the result of the implementation of the PDGM and the 30-day unit of payment.

D. CY 2026 Home Health Low Utilization Payment Adjustment (LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub-Groups, and Case-Mix Weights