2025-21767: 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

E. Removal of Four Standardized Patient Assessment Data

Elements Beginning With the CY 2026 HH QRP

F. Amending the Data Non-Compliance Reconsideration Request

Policy and Process Beginning With the CY 2026 HH QRP G. Updates to Requirements for OASIS All-Payer Data Submission H. HHCAHPS Survey Updates I. HH QRP Quality Measure Concepts Under Consideration for Future Years--Request for Information

J. Potential Revision of the Final Data Submission Deadline

Period From 4.5 Months to 45 Days--Request for Information (RFI)

M. Policies Regarding Public Display of Measure Data for the HH

QRP IV. The Expanded Home Health Value-Based Purchasing (HHVBP) Model A. Background B. Finalized Changes to HHVBP Measure Removal Factors C. Finalized Changes to the Expanded HHVBP Model's Applicable Measure Set

B. Updates to the Home Health Agency CoPs To Align With the

OASIS All-Payer Submission Requirements (Sec. Sec. 484.45(a) and 484.55(d)(1)(i))

D. Bid Limits and Conditions for Awarding Contracts if Savings

Are Not Expected E. Revising the Definition of Item Related to Medical Supplies F. Remote Item Delivery (RID) CBP G. Payment for Continuous Glucose Monitors and Insulin Infusion Pumps

I. Revising the CDRD Evaluation and Notification Process for the

DMEPOS CBP J. Bid Surety Bond Review Process K. Tribal Exemption From Participating in the DMEPOS CBP L. Addition of a Termination Clause for the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) Supplier Contracts

A. Statutory Requirement for Solicitation of Comments

[[Page 55343]] B. Information Collection Requirements (ICRs) IX. Regulatory Impact Analysis A. Statement of Need B. Overall Impact C. Detailed Economic Analysis D. Regulatory Review Cost Estimation E. Alternatives Considered F. Accounting Statements and Tables G. Regulatory Flexibility Act (RFA) H. Unfunded Mandates Reform Act (UMRA) I. Federalism J. Unleashing Prosperity Through Deregulation K. Conclusion X. Response to Comments

1. Home Health Prospective Payment System (HH PPS)

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 [[Page 55344]] 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.

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). [[Page 55345]] m. Adding Definitions of Adjusted Fee Schedule, Amount Competition, and Unadjusted Fee Schedule Amount to Sec. 414.402. The 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.

1. Home Health Prospective Payment System (HH PPS)

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 [[Page 55346]] 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 [[Page 55347]] 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.

C. Summary of the Regulatory Impact Analysis

BILLING CODE 4120-01-P [[Page 55348]] [GRAPHIC] [TIFF OMITTED] TR02DE25.000 [[Page 55349]] [GRAPHIC] [TIFF OMITTED] TR02DE25.001 [[Page 55350]] BILLING CODE 4120-01-C

1. Statutory Background

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 [[Page 55351]] 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. [[Page 55352]] [GRAPHIC] [TIFF OMITTED] TR02DE25.002

1. Routine PDGM Monitoring

The CY 2026 HH PPS proposed rule (90 FR 29108) included analysis of Medicare home health benefit utilization, including overall total 30- day periods of care and average periods of care per HHA user; distribution of the type of visits in a 30-day period of care; the percentage of periods that receive the LUPA; estimated costs; the percentage of 30-day periods of care by clinical group, comorbidity adjustment, admission source, timing, and functional impairment level; and the proportion of 30-day periods of care with and without any therapy visits, nursing visits, and/or aide/social worker visits. We also included monitoring of home health visits using telecommunications technology and remote patient monitoring. Comment: Commenters discussed the home health utilization trends presented in the monitoring concurrently with comments regarding access to the benefit and the majority of commenters stated the opinion, as they have in prior years, that a decline in utilization is not necessarily related to a reduced need for home health services. Response: We will continue to monitor and analyze home health utilization trends, potential access issues, and other vulnerabilities within the home health payment system. We address and provide more detailed responses regarding certain utilization trends, access concerns, and reported potential vulnerabilities within the home health payment system in the comment summaries in subsequent sections of this rule.

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 [[Page 55353]] 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 [[Page 55354]] 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. --------------------------------------------------------------------------- e. Applying the Methodology to CY 2024 Data To Determine the CY 2026 Permanent and Temporary Adjustments 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. [[Page 55355]] 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. [[Page 55356]] [GRAPHIC] [TIFF OMITTED] TR02DE25.004 f. CY 2026 Permanent Adjustment and Temporary Adjustment Calculations 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 [[Page 55357]] 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. [[Page 55358]] [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). [[Page 55359]] [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 [[Page 55360]] 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 [[Page 55361]] 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 [[Page 55362]] 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, [[Page 55363]] 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. [[Page 55364]] 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 [[Page 55365]] 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. [[Page 55366]] 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 [[Page 55367]] [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

1. Final CY 2026 PDGM LUPA Thresholds

Under the HH PPS, LUPAs are paid when a certain visit threshold for a payment group during a 30-day period of care is not met. In the CY 2019 HH PPS final rule with comment period (83 FR 56492), we finalized a policy setting the LUPA thresholds at the 10th percentile of visits or two visits, whichever is higher, for each PDGM payment group. This means the LUPA threshold for each 30-day period of care varies depending on the PDGM payment group to which it is assigned. If the LUPA threshold for the payment group is met under the PDGM, the 30-day period of care will be paid the full 30-day period case-mix adjusted payment amount (subject to any partial payment adjustment or outlier adjustments). If a 30-day period of care does not meet the PDGM LUPA visit threshold, then payment will be made using the per-visit payment amounts as described in [[Page 55368]] section II.E.4.c. of this final rule. For example, if the LUPA visit threshold is four, and a 30-day period of care has four or more visits, it is paid the full 30-day period payment amount; if the period of care has three or fewer visits, payment is made using the per-visit payment amounts. In the CY 2019 HH PPS final rule with comment period (83 FR 56492), we finalized our policy that the LUPA thresholds for each PDGM payment group will be reevaluated every year based on the most current utilization data available at the time of rulemaking. However, as CY 2020 was the first year of the new case-mix adjustment methodology, we stated in the CY 2021 HH PPS final rule (85 FR 70305 and 70306) that we will maintain the LUPA thresholds that were finalized and shown in table 17 of the CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY 2021 payment purposes. We stated at that time, we did not have sufficient CY 2020 data to reevaluate the LUPA thresholds for CY 2021. In the CY 2022 HH PPS final rule with comment period (86 FR 62249), we finalized the 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 believe 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 PHE on the calculation of the case-mix weight will be minimized since the impact will be accounted for both in the numerator and denominator of the formula used to calculate the case-mix weight. However, in contrast, the LUPA thresholds are based on the number of overall visits in a particular case-mix group (the threshold is the 10th percentile of visits or 2 visits, whichever is greater) instead of a relative value (like what is used to generate the case-mix weight) that will control for the impacts of the COVID-19 PHE. We noted that visit patterns and some of the decrease in overall visits in CY 2020 may not be representative of visit patterns in CY 2022. Therefore, to mitigate any potential future and significant short-term variability in the LUPA thresholds due to the COVID-19 PHE, we finalized the proposal to maintain the LUPA thresholds finalized and displayed in table 17 in the CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY 2022 payment purposes. For CY 2024, we proposed to update the LUPA thresholds using CY 2022 Medicare home health claims (as of March 17, 2023) linked to OASIS assessment data. We believed that CY 2022 data would have been more indicative of visit patterns in CY 2024 rather than continuing to use the LUPA thresholds derived from the CY 2018 data pre-PDGM. Therefore, we finalized a policy to update the LUPA thresholds for CY 2024 using data from CY 2022. For CY 2025, we proposed to update the LUPA thresholds using CY 2023 home health claims utilization data (as of March 19, 2024), in accordance with our policy to annually recalibrate the case-mix weights and update the LUPA thresholds, functional impairment levels and comorbidity subgroups. Therefore, we finalized the functional points and functional impairment level updates for CY 2025 as proposed, using updated CY 2023 claims data (as of July 11, 2024). For CY 2026, we proposed to update the LUPA thresholds using CY 2024 home health claims utilization data (using more complete CY 2024 claims data as of July 11, 2025), in accordance with our policy to annually recalibrate the case-mix weights and update the LUPA thresholds, functional impairment levels, and comorbidity subgroups. After reviewing the CY 2024 home health claims utilization data, we determined that LUPA visit patterns in 2024 were similar to visits in 2023 and a total of 18 case-mix groups have a decline in their LUPA threshold of a single visit. The proposed LUPA thresholds for the CY 2026 PDGM payment groups with the corresponding Health Insurance Prospective Payment System (HIPPS) codes and the case-mix weights can be found in the CY 2026 HH PPS proposed rule (90 FR 29145). We solicited public comment on the proposed updates to the LUPA thresholds for CY 2026. The following is a summary of the comments we received and our responses: Comment: The majority of the commenters expressed support for the proposed updates to the LUPA thresholds and recognized that these updates are necessary to help align payments more closely with evolving care delivery and improve payment accuracy. However, multiple commenters expressed concern that ongoing upward adjustments to some of the LUPA thresholds seem to be arbitrary and not fully supported by clinical evidence. As such, these commenters recommended that the LUPA thresholds remain static or clinically justified, and that there be an established monitoring system that is able to identify providers with abnormally low LUPA rates in an effort to ensure care delivery reflects medical appropriateness rather than potential payment manipulation. Response: We thank the commenters for their feedback and their support for the annual update of the LUPA thresholds. Our policy is that the LUPA thresholds for each PDGM payment group will be reevaluated every year based on the most current utilization data available at the time of rulemaking. While the visit patterns and utilization data do not constitute clinical evidence, we note that the LUPA thresholds are annually updated to correspond with the visit patterns associated with each home health resource group, which we do monitor and include in the rule. More specifically, the visit patterns/ utilization data serve as the most accurate method to update the LUPA thresholds, as the LUPA rates correspond to provider behavior that correlates with the visit patterns/utilization data as opposed to clinical standards. We could consider a separate monitoring system for those providers who have abnormally low LUPA rates in future rulemaking. However, this could potentially require collaboration on potential program integrity efforts. We also note that low LUPA rates do not necessarily mean that a provider is acting inappropriately. We believe updating the LUPA thresholds is the most accurate way to reflect the provision of home health visits based on the most current utilization data available at the time of rulemaking. Final Decision: We are finalizing the proposal to update the LUPA thresholds for CY 2026 using CY 2024 claims data (as of July 11, 2025). The final LUPA thresholds for the CY 2026 PDGM payment groups with the corresponding Health Insurance Prospective Payment System (HIPPS) codes and the case-mix weights are listed in table 8 and are also available on the HHA Center web page, located at https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.

2. Final CY 2026 Functional Impairment Levels

Under the PDGM, the functional impairment level is determined by responses to certain OASIS items associated with activities of daily living [[Page 55369]] and risk of hospitalization; that is, responses to OASIS items M1800- M1860 and M1033. A home health period of care receives points based on each of the responses associated with these functional OASIS items, which are then converted into a table of points corresponding to increased resource use. The sum of all these points results in a functional impairment score which is used to group home health periods into a functional level with similar resource use. That is, the higher the points, the more the response is associated with increased resource use, or increased impairment. The three functional impairment levels of low, medium, and high were designed so that approximately one-third of home health periods from each clinical group falls within each level. This means home health periods in the low impairment level have responses for the functional OASIS items that are associated with the lowest resource use, on average. Home health periods in the high impairment level have responses for the functional OASIS items that are associated with the highest resource use on average. For CY 2026, we proposed to use CY 2024 claims data to update the functional points and functional impairment levels by clinical group. The CY 2018 HH PPS proposed rule (82 FR 35320) and the technical report from December 2016, posted on the Home Health PPS Archive web page, located at https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive, provides a more detailed explanation as to the construction of the functional impairment levels using the OASIS items. We proposed to use the same methodology previously finalized to update the functional impairment levels for CY 2026. The final updated OASIS functional points table and the table of functional impairment levels by clinical group for CY 2026 are listed in tables 8 and 9, respectively. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR02DE25.011 [[Page 55370]] [GRAPHIC] [TIFF OMITTED] TR02DE25.012 BILLING CODE 4120-01-C We solicited public comment on the proposed updates to the functional points and the thresholds for functional impairment levels by clinical group. The following is a summary of the comments we received and our responses: Comment: Several commenters opposed the proposed updates to the CY 2026 functional impairment points and levels. These commenters described the proposed changes to functional impairment scoring as arbitrary, nontransparent, and reflecting changes that are not aligned with actual patient characteristics. Several of these commenters cited that high acuity patients (providing examples such as beneficiaries with multiple sclerosis) will require constant supervision and are misclassified into low functional levels, which ultimately results in underpayment. Some commenters objected to the division of patients into evenly distributed impairment categories and stated that this approach does not reflect the increasing acuity of all functional levels. Some commenters also questioned whether CMS uses discharge assessments instead of the Start of Care (SOC) OASIS items, which they state leads to potentially misrepresenting resource needs. Some commenters also emphasized that they believe the point value changes in OASIS scoring devalues clinically [[Page 55371]] significant indicators including indicators such as ambulation or therapy needs, leading to a risk in undermining access to medically necessary services. As such, these commenters suggested that CMS provide greater transparency in methodology, reevaluate impairment thresholds, and incorporate social determinants of health into the scoring process to more accurately capture the complexities of home health patients. Response: We appreciate the commenters' feedback and recommendations. We note that we proposed and finalized the methodology which utilizes those OASIS items specifically related to functional status, as well as the use of the start of care OASIS for calculating the functional impairment level in the CY 2019 HH PPS final rule (83 FR 56454). At this time, we do not use OASIS items associated with social determinants of health but could consider this in future rulemaking. We use the follow-up OASIS near the time of recertification for the third and fourth 30-day periods of care. This helps to ensure that the functional impairment level is determined to correspond with expected resource use. We do not use the discharge OASIS given the beneficiary would no longer be receiving home health services. Still, we maintain that annual recalibration is vital to ensuring the most accurate and current assessment of the relationship between resource use and functional points, functional impairment levels, comorbidities, utilization thresholds, and case-mix weights. We contend that the use of the most up-to-date data in revising functional impairment levels is integral to ensure that all variables used in the case-mix adjustment process align with the actual costs of delivering home health services. Also, we note that the functional impairment levels are structured so that approximately one-third of periods within each clinical group are assigned to low, medium, and high categories, as this ensures that the case-mix system appropriately reflects differences in functional impairment. This classification of functional impairment has been a fundamental component of the HH PPS since its implementation and remains essential under the PDGM. Previously, the HH PPS grouped home health episodes using functional scores based on functional OASIS items with similar average resource use within the same functional level, with approximately a third of episodes classified as low functional score, a third of episodes classified as medium functional score, and a third of episodes classified as high functional score. Likewise, the PDGM groups home health periods of care using functional impairment scores based on functional OASIS items with similar resource use and have three levels of functional impairment severity: low, medium, and high. However, the PDGM differs from the previous HH PPS functional variable, in that the three functional impairment level thresholds in the PDGM vary between the clinical groups. As such, the PDGM functional impairment structure accounts for patient characteristics within each clinical group that are associated with increased resource use due to functional impairment. This ensures that payment is more accurately aligned with patient characteristics, including beneficiaries who have greater need with activities of daily living (ADLs) and who are more functionally impaired. Updating the functional impairment levels based on the most current OASIS and claims data ensures that the payment system captures changes in functional impairment and the associated increases in resource use. Regardless of whether patients entering home health are more impaired due to shifts in the broader health care system or any other influence, the functional levels capture the relationship between functional status as indicated on the OASIS with resource use captured on claims. While we acknowledge commenters' concerns, we emphasize that the proposed recalibration is designed to strengthen the alignment between payment and patient characteristics, not to diminish access to medically necessary services. As such, updating the functional levels would specifically capture any changes in functional impairment and any changes in resource use associated with ADLs. Final Decision: We are finalizing the functional points and functional impairment level updates for CY 2026 as proposed, using updated CY 2024 claims data (as of July 11, 2025).

3. Final CY 2026 Comorbidity Subgroups

Thirty-day periods of care receive a comorbidity adjustment category based on the presence of certain secondary diagnoses reported on home health claims. These diagnoses are based on a home-health specific list of clinically and statistically significant secondary diagnosis subgroups with similar resource use, meaning the diagnoses have at least as high as the median resource use and are reported in more than 0.1 percent of 30-day periods of care. Home health 30-day periods of care can receive a comorbidity adjustment under the following circumstances: High comorbidity adjustment: There are two or more secondary diagnoses on the home health-specific comorbidity subgroup interaction list that are associated with higher resource use when both are reported together compared to when they are reported separately. That is, the two diagnoses may interact with one another, resulting in higher resource use. Low comorbidity adjustment: There is a reported secondary diagnosis on the home health-specific comorbidity subgroup list that is associated with higher resource use. No comorbidity adjustment: A 30-day period of care receives no comorbidity adjustment if no secondary diagnoses exist or do not meet the criteria for a low or high comorbidity adjustment. In the CY 2019 HH PPS final rule with comment period (83 FR 56406), we stated that we will continue to examine the relationship of reported comorbidities on resource utilization and make the appropriate payment refinements to help ensure that payment is in alignment with the actual costs of providing care. For CY 2026, we proposed to use the same methodology used to establish the comorbidity subgroups to update the comorbidity subgroups using CY 2024 home health data with linked OASIS data. For CY 2026, we proposed to update the comorbidity subgroups to include 20 low comorbidity adjustment subgroups and 100 high comorbidity adjustment interaction subgroups. The proposed CY 2026 low comorbidity adjustment subgroups and the high comorbidity adjustment interaction subgroups including those diagnoses within each of these comorbidity adjustments was included in the CY 2026 HH PPS proposed rule (90 FR 29136). We solicited comments on the proposed updates to the low comorbidity adjustment subgroups and the high comorbidity adjustment interactions for CY 2026. Using more updated claims data (as of July 11, 2025), for CY 2026 there are 20 low comorbidity subgroups, and 98 high comorbidity subgroups as shown in tables 10 and 11. BILLING CODE 4120-01-P [[Page 55372]] [GRAPHIC] [TIFF OMITTED] TR02DE25.013 [[Page 55373]] [GRAPHIC] [TIFF OMITTED] TR02DE25.014 [[Page 55374]] [GRAPHIC] [TIFF OMITTED] TR02DE25.015 [[Page 55375]] [GRAPHIC] [TIFF OMITTED] TR02DE25.016 [[Page 55376]] [GRAPHIC] [TIFF OMITTED] TR02DE25.017 [[Page 55377]] [GRAPHIC] [TIFF OMITTED] TR02DE25.018 [[Page 55378]] [GRAPHIC] [TIFF OMITTED] TR02DE25.019 BILLING CODE 4120-01-C The following is a summary of the comments we received and our responses: Comment: Commenters broadly expressed support for CMS's proposal to implement the proposed low and high comorbidity adjustments using CY 2024 claims data. Commenters stated these adjustments would result in more accurate payments, reflecting the resources required to effectively manage patients with these conditions. Additionally, commenters indicated that the proposed changes to the comorbidity subgroups should reflect the actual costs of providing care. Response: We thank commenters for their support. Comment: A commenter expressed concern for the elimination of certain diabetic subgroups and the removal of Endocrine 2 from the low comorbidity list, citing that these actions may result in adverse consequences for [[Page 55379]] beneficiaries that require intensive diabetes management. Another commenter recommended that CMS expand subgroup coding logic to include additional conditions such as rheumatic mitral and aortic valve disease, diabetes with mononeuropathy, and cystitis. Several commenters also raised concerns about inconsistencies with the high comorbidity pairings specifically as it relates to instances in which certain behavioral and circulatory conditions are paired with only one skin subgroup, Skin 3 or Skin 4, despite comparable clinical risks. As such, these commenters recommended CMS expand pairings to better capture patient complexity and increase the alignment for current comorbidity adjustments so that there is arguably a more adequate reflection to the costs of patients with multiple chronic conditions in an effort to reduce systematic underpayment and potential access barriers. One commenter suggested refining the case-mix adjustment methodology, particularly as it related to the admission source variable and suggested that shifts from inpatient to outpatient and ambulatory surgical center settings alter the distribution of clinical complexity in ways not fully reflected in historical data. Response: We appreciate commenters' review of the proposed comorbidity subgroup refinements. As outlined in the CY 2020 final rule with comment period (84 FR 60510) and further detailed in the technical report Overview of the Home Health Groupings Model,\13\ the home health specific comorbidity list is a result of principles of patient assessment by providers, as well as the evaluation of body systems and their associated diseases, conditions, and injuries, as this framework was specifically used to develop the clinically relevant categories that resultingly identify relationships that are tied to increased resource usage. We also acknowledge commenters' concerns regarding the elimination of certain diabetic subgroups and the removal of Endocrine 2 from the low comorbidity list. However, we remind commenters that only the subgroups of diagnoses representing more than 0.1 percent of periods of care, and demonstrating at least the median resource use, will qualify for a low comorbidity adjustment. That said, the specific subgroups, including rheumatic mitral and aortic valve disease, diabetes with mononeuropathy, and cystitis, that do not meet these statistical and utilization thresholds ultimately do not qualify for inclusion in the payment adjustment, even if clinically complex. As a result, this ensures that payment adjustments are based on demonstrated cost patterns rather than clinical potential alone. In instances where the data does not demonstrate the requisite frequency or resource use associated with the condition, such diagnoses are not included in the adjustment. For example, in response to concerns about behavioral and circulatory conditions being paired with only one skin subgroup, Skin 3 or Skin 4, despite comparable clinical risks, we again want to remind commenters that subgroup combinations are determined by observed utilization and statistical significance. If specific conditions do not meet the required thresholds in relation to particular ulcer types, they are not included in those pairings. Finally, we acknowledge the one commenter suggestion to refine the case-mix adjustment methodology, particularly regarding the admission source variable. We will continue to monitor these trends and assess whether refinements to the admission source variable are warranted in future rulemaking to ensure that the case-mix adjustment methodology remains accurate and responsive to evolving patterns of care. --------------------------------------------------------------------------- \13\ https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health-pps/home-health-pps-archive. --------------------------------------------------------------------------- Final Decision: We are finalizing the updated comorbidity adjustment subgroups and the high comorbidity adjustment interactions using CY 2024 home health data. For CY 2026, the final updated comorbidity adjustment subgroups include 20 low comorbidity adjustment subgroups as identified in table 10 and 98 high comorbidity adjustment interaction subgroups as identified in table 11. The final CY 2026 low comorbidity adjustment subgroups and the high comorbidity adjustment interaction subgroups including those diagnoses within each of these comorbidity adjustments will also be posted on the HHA Center web page at https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.

4. Final CY 2026 PDGM Case-Mix Weights

As finalized in the CY 2019 HH PPS final rule with comment period (83 FR 56502), the PDGM places patients into meaningful payment categories based on patient and other characteristics, such as timing, admission source, clinical grouping using the reported principal diagnosis, functional impairment level, and comorbid conditions. The PDGM case-mix methodology results in 432 unique case-mix groups called home health resource groups (HHRGs). We also finalized a policy in the CY 2019 HH PPS final rule with comment period (83 FR 56515) to annually recalibrate the PDGM case-mix weights using a fixed effects model with the most recent and complete utilization data available at the time of annual rulemaking. Annual recalibration of the PDGM case-mix weights ensures that the case-mix weights reflect, as accurately as possible, current home health resource use and changes in utilization patterns. To generate the proposed recalibrated CY 2026 case-mix weights, we used CY 2024 home health claims data with linked OASIS data (as of March 13, 2025). We included the proposed case-mix weights in table 25 of the proposed rule (90 FR 29145). In this final rule, we update these case- mix weights with claims data as of July 11, 2025, as shown in table 13. These data are the most current and complete data available at the time of this rulemaking. The claims data provide visit-level data and data on whether non- routine supplies (NRS) were provided during the period and the total charges of NRS. We determine the case-mix weight for each of the 432 different PDGM payment groups by regressing resource use on a series of indicator variables for each of the categories using a fixed effects model as described in the following steps: Step 1: Estimate a regression model to assign a functional impairment level to each 30-day period. The regression model estimates the relationship between a 30-day period's resource use and the functional status and risk of hospitalization items included in the PDGM, which are obtained from certain OASIS items. We refer readers to table 25 of the proposed rule for further information on the OASIS items used for the functional impairment level under the PDGM. We measure resource use with the cost-per-minute + NRS approach that uses information from 2022 home health cost reports. We use 2022 home health cost report data because it is the most complete cost report data available at the time of rulemaking. Other variables in the regression model include the 30-day period's admission source, clinical group, and 30-day period timing. We also include home health agency level fixed effects in the regression model. After estimating the regression model using 30-day periods, we divide the coefficients that correspond to the functional status and risk of hospitalization items by 10 and round to the nearest whole number. Those [[Page 55380]] rounded numbers are used to compute a functional score for each 30-day period by summing together the rounded numbers for the functional status and risk of hospitalization items that are applicable to each 30-day period. Next, each 30-day period is assigned to a functional impairment level (low, medium, or high) depending on the 30-day period's total functional score. Each clinical group has a separate set of functional thresholds used to assign 30-day periods into a low, medium, or high functional impairment level. We set those thresholds so that we assign roughly a third of 30-day periods within each clinical group to each functional impairment level (low, medium, or high). Step 2: A second regression model estimates the relationship between a 30-day period's resource use and indicator variables for the presence of any of the comorbidities and comorbidity interactions that were originally examined for inclusion in the PDGM. Like the first regression model, this model also includes home health agency level fixed effects and includes control variables for each 30-day period's admission source, clinical group, timing, and functional impairment level. After we estimate the model, we assign comorbidities to the low comorbidity adjustment if any comorbidities have a coefficient that is statistically significant (p-value of 0.05 or less) and which have a coefficient that is larger than the 50th percentile of positive and statistically significant comorbidity coefficients. If two comorbidities in the model and their interaction term have coefficients that sum together to exceed $150 and the interaction term is statistically significant (p-value of 0.05 or less), we assign the two comorbidities together to the high comorbidity adjustment. Step 3: After Step 2, each 30-day period is assigned to a clinical group, admission source category, episode timing category, functional impairment level, and comorbidity adjustment category. For each combination of those variables (which represent the 432 different payment groups that comprise the PDGM), we then calculate the 10th percentile of visits across all 30-day periods within a particular payment group. If a 30-day period's number of visits is less than the 10th percentile for their payment group, the 30-day period is classified as a Low Utilization Payment Adjustment (LUPA). If a payment group has a 10th percentile of visits that is less than two, we set the LUPA threshold for that payment group to be equal to two. That means if a 30-day period has one visit, it is classified as a LUPA and if it has two or more visits, it is not classified as a LUPA. Step 4: Take all non-LUPA 30-day periods and regress resource use on the 30-day period's clinical group, admission source category, episode timing category, functional impairment level, and comorbidity adjustment category. The regression includes fixed effects at the level of the home health agency. After we estimate the model, the model coefficients are used to predict each 30-day period's resource use. To create the case-mix weight for each 30-day period, the predicted resource use is divided by the overall resource use of the 30-day periods used to estimate the regression. The case-mix weight is then used to adjust the base payment rate to determine each 30-day period's payment. Table BBB shows the coefficients of the payment regression used to generate the weights, and the coefficients divided by average resource use. BILLING CODE 4120-01-P [[Page 55381]] [GRAPHIC] [TIFF OMITTED] TR02DE25.020 [[Page 55382]] [GRAPHIC] [TIFF OMITTED] TR02DE25.021 [[Page 55383]] The final updated case-mix weights for CY 2026 are listed in table 13 and will also be posted on the HHA Center web page \14\ upon display of this final rule. BILLING CODE 4120-01-P --------------------------------------------------------------------------- \14\ https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center. [GRAPHIC] [TIFF OMITTED] TR02DE25.022 [[Page 55384]] [GRAPHIC] [TIFF OMITTED] TR02DE25.023 [[Page 55385]] [GRAPHIC] [TIFF OMITTED] TR02DE25.024 [[Page 55386]] [GRAPHIC] [TIFF OMITTED] TR02DE25.025 [[Page 55387]] [GRAPHIC] [TIFF OMITTED] TR02DE25.026 [[Page 55388]] [GRAPHIC] [TIFF OMITTED] TR02DE25.027 [[Page 55389]] [GRAPHIC] [TIFF OMITTED] TR02DE25.028 [[Page 55390]] [GRAPHIC] [TIFF OMITTED] TR02DE25.029 [[Page 55391]] [GRAPHIC] [TIFF OMITTED] TR02DE25.030 [[Page 55392]] [GRAPHIC] [TIFF OMITTED] TR02DE25.031 [[Page 55393]] [GRAPHIC] [TIFF OMITTED] TR02DE25.032 [[Page 55394]] [GRAPHIC] [TIFF OMITTED] TR02DE25.033 [[Page 55395]] [GRAPHIC] [TIFF OMITTED] TR02DE25.034 [[Page 55396]] [GRAPHIC] [TIFF OMITTED] TR02DE25.035 [[Page 55397]] [GRAPHIC] [TIFF OMITTED] TR02DE25.036 [[Page 55398]] [GRAPHIC] [TIFF OMITTED] TR02DE25.037 BILLING CODE 4120-01-C Changes to the PDGM case-mix weights are implemented in a budget neutral manner by multiplying the CY 2026 national standardized 30-day period payment rate by a case-mix budget neutrality factor. Typically, the case-mix weight budget neutrality factor is also calculated using the most recent, complete home health claims data available. For CY 2026, we will continue the practice of using the most recent complete home health claims [[Page 55399]] data at the time of rulemaking, which is CY 2024 data. The case-mix budget neutrality factor is calculated as the ratio of 30-day base payment rates such that total payments when the CY 2026 PDGM case-mix weights (developed using CY 2024 home health claims data) are applied to CY 2024 utilization (claims) data are equal to total payments when CY 2025 PDGM case-mix weights (developed using CY 2023 home health claims data) are applied to CY 2024 utilization data. This produced a proposed case-mix budget neutrality factor for CY 2026 of 1.0051. We invited public comments on the CY 2026 proposed case-mix weights and proposed case-mix weight budget neutrality factor. The following is a summary of the comments we received and our responses: Comment: Several commenters expressed support for the proposed case-mix weights using the most current data available for recalibration. Response: We thank the commenters for their support. Comment: Several commenters expressed concern over the proposed recalibration of the PDGM case-mix weights, stating that they believe this proposal relies on potentially fraudulent claims data (including the data particularly from Los Angeles County, COVID-19 pandemic-era anomalies and outdated assumptions) which may potentially reward outlier behavior while penalizing providers that are compliant. A few commenters suggested that weights should be frozen at CY 2020 levels until potentially problematic claims (claims that have billing patterns based on excessive recertification rates and abnormal use of high reimbursement codes) are excluded. Several commenters also mentioned that they believe CMS's methodology blends behavior assumptions with recalibration, which ultimately results in ``double counting'' and misclassification of provider behavior. Some commenters stated that this methodology results in the current weights undervaluing high acuity cases, including patients with heart failure, COPD, diabetes, and complex postsurgical recovery, as well as the therapy related groupings. Commenters further suggested that undervaluation has already reduced access to therapy services, particularly for patients that require intensive speech language, swallowing, or mobility interventions. Commenters also posited that annual recalibration creates volatility, complicates financial and operational planning, and thus, requested that CMS increase transparency by publishing multiyear comparative tables, impact simulations, and clearer explanations of OASIS mapping assumptions. Some commenters cited that rising patient acuity, operational expenses, and workforce shortages present justifications for higher payment levels and thus stated that recalibration should not be constrained by budget neutrality. Commenters further stated that budget neutrality reallocates points in ways that diminish the weight of important clinical factors (such as ambulation, which potentially leads to adverse outcomes like increased falls and hospitalizations). Other commenters noted that the combined effect of recalibration and other adjustments contributes to substantial year-to-year payment variances, which they state may disproportionately disadvantage HHAs that are mainly serving medically complex or rural populations. Response: CMS appreciates commenters' feedback regarding the proposed recalibration of the PDGM case-mix weights. While we understand concerns about data integrity, behavior assumptions, and the impact on high acuity patients, ultimately, we continue to believe that annual recalibration is essential to ensure that weights reflect current utilization patterns and patient characteristics. Recalibration only considers patient characteristics and associated resource use to ensure that the case-mix weights accurately reflect the types of patients HHAs are servicing. The behavior adjustments only ensure that Medicare is not paying any more under the PDGM than it would have under the prior 153-group system. If CMS were to prolong recalibration beyond an annual schedule, this would not accurately reflect year-to-year changes in resource use associated with patient characteristics. That said, for CY 2026, the use of CY 2024 claims represents the most complete and current data available. Also, as it relates to commenters' concerns regarding fraudulent/anomalous claims, we would like to note that the recalibration methodology finalized in the CY 2019 HH PPS rule (83 FR 56502) is applied nationally and is based on the aggregate relationship between patient characteristics and observed resource use. Therefore, any stated ``undervaluation'' would be the result of what is being reported by HHAs. To add, program integrity issues are addressed through separate oversight channels and do not alter the statutory requirement for recalibrations to be implemented in a budget-neutral manner, as required by section 1895(b)(3)(A)(i) of the Act. Finally, we acknowledge that annual recalibration may contribute to year-to-year variability, but the overarching intent is to align payments as closely as possible with actual resource use as reported by HHAs. While we understand commenters' concerns about HHAs serving mainly medically complex or rural populations potentially being disproportionately disadvantaged, the case-mix weights are universally applied to the national, standardized 30-day payment rate. Nevertheless, CMS will continue to evaluate ways to improve transparency while monitoring broader system trends such as rising acuity, workforce shortages, and operational costs. Final Decision: We are finalizing the recalibrated case-mix weights for CY 2026, updated with claims data as of July 11, 2025. We did not receive any comments on the proposed case-mix weight budget neutrality factor. Therefore, we are finalizing the proposal to implement the changes to the PDGM case-mix weights in a budget neutral manner by applying a case-mix budget neutrality factor to the CY 2026 national, standardized 30-day period payment rate. Using the most updated data at the time of rulemaking, the final case-mix budget neutrality factor for CY 2026 will be 1.0052.

1. Final CY 2026 Home Health Market Basket Update for HHAs

Section 1895(b)(3)(B) of the Act requires that the standard prospective payment amounts for home health be increased by a factor equal to the applicable home health market basket update for those HHAs that submit quality data as required by the Secretary. In the CY 2024 HH PPS final rule (88 FR 77726), we finalized a rebasing of the home health market basket to reflect 2021 cost report data. We also finalized a policy for CY 2024 and subsequent years that the labor- related share will be 74.9 percent, and the non-labor-related share will be 25.1 percent. A detailed description of how we rebased the home health market basket and labor-related share is available in the CY 2024 HH PPS final rule (88 FR 77726 through 77742). In the CY 2015 HH PPS final rule (79 FR 38384), we finalized our methodology for calculating and applying the productivity adjustment. As we explained in that rule, section 1895(b)(3)(B)(vi) of the Act, requires that, in CY 2015 (and in subsequent calendar years, except CY 2018 (under section 411(c) of the Medicare Access and CHIP Reauthorization Act of 2015 [[Page 55400]] (MACRA) (Pub. L. 114-10, enacted April 16, 2015)), the market basket percentage under the HH PPS as described in section 1895(b)(3)(B) of the Act be annually adjusted by changes in economy-wide productivity. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as equal to the 10-year moving average of change in annual economy-wide private nonfarm business multifactor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period). The Bureau of Labor Statistics (BLS) publishes the official measures of productivity for the United States economy. We note that previously, the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private nonfarm business multifactor productivity. Beginning with the November 18, 2021, release of productivity data, BLS replaced the term ``multifactor productivity'' with ``total factor productivity'' (TFP). BLS noted that this is a change in terminology only and will not affect the data or methodology. As a result of the BLS name change, the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as ``private nonfarm business total factor productivity''. We refer readers to https://www.bls.gov for the BLS historical published TFP data. A complete description of IHS Global Inc.'s (IGI) TFP projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. The proposed home health market basket update for CY 2026 was based on the estimated home health market basket percentage increase, specified at section 1895(b)(3)(B)(iii) of the Act, of 3.2 percent (based on IHS Global Inc.'s first quarter 2025 forecast with historical data through fourth quarter 2024). The estimated CY 2026 proposed home health market basket percentage increase of 3.2 percent was then reduced by a productivity adjustment, in accordance with section 1895(b)(3)(B)(vi) of the Act. Based on IGI's first quarter 2025 forecast, the proposed productivity adjustment was estimated to be 0.8 percentage point for CY 2026. Therefore, the proposed CY 2026 home health market basket update was 2.4 percent (3.2 percent market basket percentage increase, reduced by a 0.8 percentage point productivity adjustment). Furthermore, we proposed that if more recent data became available (for example, a more recent estimate of the market basket percentage increase and/or productivity adjustment), we would use such data, if appropriate, to determine the final CY 2026 market basket percentage increase and productivity adjustment in the final rule. Section 1895(b)(3)(B)(v) of the Act requires that the home health percentage update be decreased by 2 percentage points for those HHAs that do not submit quality data as required by the Secretary. For HHAs that do not submit the required quality data for CY 2026, the proposed home health payment update percentage was 0.4 percent (2.4 percent minus 2 percentage points). We invited public comments on the proposed CY 2026 home health market basket percentage increase and productivity adjustment. The following is a summary of the comments received and our responses: Comment: Multiple commenters stated that they support CMS' proposal and application of the CY 2026 market basket update but expressed concerns that the proposed market basket update of 3.2 percent for CY 2026 would fail to adequately address the inflationary pressures and cost increases experienced by HHAs. Commenters cited organization-specific experience and data demonstrating that the proposed update does not align with the increased cost of skilled care experienced by the home health industry, particularly for labor costs amid continued recruitment challenges, and stated that they believe it to be inconsistent with price trends evidenced in Bureau of Labor Statistics (BLS) data. They emphasized that it is critically important for the annual payment update to accurately reflect price growth in the cost of care to ensure that beneficiaries needing home health services have access to care and to support the viability of this important Medicare benefit over time. Multiple commenters noted that they expect actual inflation costs to far exceed the proposed market basket update, creating a widening gap between Medicare payments and the actual cost of providing home health services. Several commenters urged CMS to reassess the market basket construction, forecasting methodology, whether the reliance on the Employment Cost Index is capturing shifts to contract labor and other changes to the home health workforce, and to consider methodological refinements and greater transparency. Response: We appreciate the comments regarding the proposed CY 2026 HH PPS market basket update and recognize the concerns raised about inflationary pressures affecting HHAs. Section 1895(b)(3)(B) of the Act requires that the standard prospective payment amounts be increased by a factor equal to the applicable home health market basket update for those HHAs that submit quality data as required by the Secretary. The home health market basket is a fixed-weight, Laspeyres-type price index, which measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix of goods and services (such as shifts in the occupational mix of the workforce) purchased over time relative to the base period are appropriately not measured. The home health market basket was last rebased to reflect a 2021 base year effective for CY 2024 (88 FR 77726). We continue to believe that the home health market basket cost weights accurately reflect the cost structure of HHAs, allowing for an accurate estimate of the price pressures that HHAs will face in CY 2026. Since the home health market basket update is required to be set prospectively, it relies on a mix of historical data for part of the period for which the update is calculated and forecasted data for the remainder. As a result, the market basket percentage increase reflects expectations of trends, which may periodically differ from actual experience due to unforeseen events and short-term volatility. The forecasted data are provided by IHS Global Inc. (IGI), a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the components of the market baskets. In the CY 2026 HH PPS proposed rule, we proposed that if more recent data become available, we would use such data, if appropriate, to derive the final CY 2026 home health market basket update for the final rule. In this final rule, we have incorporated the most recent historical data and forecasts provided by IGI to capture the expected price and wage pressures facing HHAs in CY 2026. The CY 2026 market basket update in this final rule reflects historical data through the second quarter of 2025 and forecasted data for the third quarter of 2025 through the fourth quarter of 2026. Accordingly, the final CY 2026 market basket update reflects an updated and revised outlook on the U.S. economy. Based on IGI's third quarter 2025 forecast with historical data through second quarter 2025 of the 2021-based home health market basket percentage [[Page 55401]] increase for CY 2026 is 3.2 percent, reflecting forecasted compensation price growth of 3.3 percent. We will continue to evaluate opportunities to enhance transparency around the market basket and to assess whether refinements to inputs or methods are warranted. Any changes deemed necessary would be proposed through notice and comment rulemaking. Comment: Several commenters noted that in every year from 2021 through 2024, actual inflation has outpaced the CMS market basket adjustment for the home health industry. Commenters emphasized that CYs 2021 and 2022 alone represented a shortfall of over 5 percentage points and, unless corrected, the forecast error compounds underpayments with each successive year which could result in significant cumulative underpayment by the year 2030. Multiple commenters referenced the precedent for CMS to implement forecast error corrections, noting that in the FY 2024 Skilled Nursing Facility Prospective Payment System final rule CMS finalized a 3.6 percentage points market basket forecast error adjustment for SNFs. They stated that the cumulative shortfall in the SNF updates, preceding the implementation of the market basket forecast error adjustment, was less than the shortfall experienced by home health providers over the CY 2021-2022 period and noted that CMS subsequently finalized additional forecast error adjustments for SNFs in FY 2025 and FY 2026. Several commenters recommended that CMS exercise its authority to implement a one-time market basket forecast error adjustment to payments in CY 2026 to account for previous forecast errors in home health market basket updates. They stated that this additional funding would enable home health providers to recruit and retain staff and be competitive in their local labor markets, while supporting improved access to care. Response: A forecast error for a market basket update is equal to the actual market basket percentage increase for a given year less the forecasted market basket percentage increase. Due to the uncertainty regarding future price trends, forecast errors can be both positive and negative, as has occurred since the implementation of the HH PPS. We acknowledge that over most of the history of the HH PPS, forecast errors have been smaller in magnitude, with the largest error prior to 2021 being an over forecast of 1.2 percentage points in 2009. As noted by commenters, more recently the home health market basket has been under forecast, with the largest forecast errors occurring in 2021 and 2022. The cumulative forecast error since HH PPS inception (fiscal year 2002 to CY 2024, excluding CY 2018 and CY 2020 when the market basket update was statutorily mandated) is -0.1 percent. The recent forecast errors were largely a function of uncertainty in the overall economy and the health sector specifically due to the nature of the COVID-19 PHE and the unforeseen rapidly accelerating inflationary environment. In contrast to the SNF PPS, there is currently no mechanism to adjust for a market basket forecast error in the home health prospective payment system. Any changes in this respect would require careful consideration of the statutory and regulatory frameworks specific to the HH PPS, and any changes deemed necessary would be proposed through notice and comment rulemaking. Comment: Numerous commenters opposed the proposed 0.8 percentage point productivity adjustment for CY 2026, arguing that this adjustment fails to account for home health-specific productivity factors. Commenters noted that the proposed 2026 productivity adjustment of 0.8 percentage point is among the highest historically applied without adequate justification or transparency and suggested that the 10-year moving average used to determine the productivity adjustment may be influenced by unprecedented pandemic-related fluctuations. Several commenters expressed their belief that the productivity adjustment methodology is fundamentally flawed when applied to healthcare settings. One commenter cited that since 2014, the BLS' estimate of the annual percentage change in the private nonfarm business sector total factor productivity has ranged from -0.9 to 3.8, while CMS's computed productivity adjustment ranged from 0 to 0.8 percentage point. Commenters highlighted that CMS has applied the productivity adjustment exclusively to restrict increases in Medicare payments, and that in the one year where productivity in the non-farm business sector declined, CMS set the productivity adjustment to 0 rather than increasing payments. Multiple commenters emphasized that industry-specific challenges prevent hospitals and HHAs from achieving productivity improvements consistent with the private nonfarm business sector. They stated that the private nonfarm sector encompasses a broad range of industries, some with stable and predictable production processes and outputs, while healthcare providers operate in complex environments characterized by unpredictable patient volumes, rising input costs, varying patient acuity levels, and regulatory requirements. Therefore, they posited that the use of the Total Factor Productivity (TFP) adjustment holds healthcare providers to an unreasonable standard by requiring that they mimic productivity gains obtained in industries that operate very differently. Numerous commenters noted their belief that the cumulative effect of these reductions year over year, combined with the asymmetric treatment of declines in economy-wide productivity, leads to an increasing gap between payments and the cost of providing services, leaving healthcare providers increasingly underfunded and ultimately restricting the amount of care they can provide. Commenters suggested CMS reconsider the use or magnitude of the productivity adjustment or otherwise take these criticisms into account when considering decisions that affect payment where flexibility is afforded. Response: Section 1895(b)(3)(B)(vi) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the HH PPS market basket increase factor. As required by statute, the CY 2026 productivity adjustment is derived based on the 10-year moving average growth in economy-wide private nonfarm business TFP for the period ending in CY 2026. We recognize the concerns of commenters regarding the appropriateness of the productivity adjustment; however, we are required under section 1895(b)(3)(B)(vi) of the Act to apply the specific productivity adjustment described here. We have always made available on the CMS website the general method for calculating the productivity adjustment. This includes providing a link to the most recent BLS historical TFP data, which allows interested parties to obtain historical TFP annual index levels for 1987 through 2024. We also provided the IGI projection model (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/medicareprogramratesstats/downloads/tfp_methodology.pdf), which is used to derive annual TFP growth rates for 2025 and 2026. The annual index level derived from this method is then interpolated to quarterly levels, and the CY 2026 productivity adjustment is equal to the percent change in the 40-quarter moving average projected level for the period ending December 31, [[Page 55402]] 2026, relative to the 40-quarter moving average projected level for the period ending December 31, 2025. We believe our methodology for the productivity adjustment is consistent with section 1886(b)(3)(B)(xi)(II) of the Act which states that the productivity adjustment is equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period). At the time of this final rule, the CY 2026 productivity adjustment reflects BLS historical TFP data through 2024 (released on March 21, 2025) and IGI's forecasted TFP growth for 2025 and 2026. The average annual growth rate of historical TFP published by BLS for 2017 through 2024 is currently 0.9 percent and IGI is projecting average TFP growth of about 0.3 percent for 2025 and 2026 based on IGI's third-quarter 2025 forecast. Combining the historical and projected TFP data over the entire 10-year time period results in a compound annual growth rate of TFP of 0.8 percent for 2026. The productivity adjustment (based on the 10-year period ending with CY 2026) for the CY 2026 final rule is the same as the CY 2026 proposed rule. The 0.8percent productivity adjustment in the CY 2026 final rule is larger than the productivity adjustment in prior final rules for CY 2023 and CY 2024 mainly due to the incorporation of updated BLS historical data. In response to commenters' concerns about the productivity adjustment only being applied if it reduces the payment update, we note that the productivity adjustment was established under the Affordable Care Act with a specific policy intent to encourage efficiency improvements in healthcare delivery by linking Medicare payment updates to economy-wide productivity gains. The statutory language in section 1886(b)(3)(B)(xi)(II) of the Act requires that the Secretary reduce (not increase) the market basket percentage increase by changes in economy-wide productivity, therefore, only positive productivity adjustments are applied. Final Decision: Consistent with section 1895(b)(3)(B)(vi) of the Act, and as outlined previously in section IV.B.1. of this final rule, we are finalizing the home health payment update methodology. The market basket percentage increase for CY 2026 for the HH PPS is based on IGI's third quarter 2025 forecast of the home health market basket percentage increase, which is estimated to be 3.2 percent. As outlined earlier in this section, we are applying a 0.8 percentage point productivity adjustment to the CY 2026 home health market basket percentage increase. Therefore, the final CY 2026 home health market basket update is equal to 2.4 percent.

2. Final CY 2026 Home Health Wage Index

a. Background Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the Secretary to provide appropriate adjustments to the proportion of the payment amount under the HH PPS that account for area wage differences, using adjustment factors that reflect the relative level of wages and wage-related costs applicable to the furnishing of home health services. Since the inception of the HH PPS, we have used inpatient hospital wage data in developing a wage index to be applied to home health payments. We proposed to continue this practice for CY 2026, as it is our belief that, in the absence of home health-specific wage data that accounts for area differences, using inpatient hospital wage data, including any changes made by the Office of Management and Budget (OMB) to Metropolitan Statistical Area (MSA) definitions, is appropriate and reasonable for the HH PPS. In general, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which superseded the August 15, 2017, OMB Bulletin No. 17-01. On September 14, 2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10, 2018, OMB Bulletin No. 18-03. These bulletins established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. A copy of OMB Bulletin No. 18-04 may be obtained at https://www.bls.gov/bls/omb-bulletin-18-04-revised-delineations-of-metropolitan-statistical-areas.pdf. In the CY 2021 HH PPS final rule (85 FR 70298), we finalized our proposal to adopt the revised OMB delineations with a 5 percent cap on wage index decreases in CY 2021. On July 21, 2023, OMB issued Bulletin No. 23-01, which updates and supersedes OMB Bulletin No. 20-01, issued on March 6, 2020. OMB Bulletin No. 23-01 establishes revised delineations for the MSAs, Micropolitan Statistical Areas, Combined Statistical Areas, and Metropolitan Divisions, collectively referred to as Core Based Statistical Areas (CBSAs). According to OMB, the delineations reflect the 2020 Standards for Delineating Core Based Statistical Areas (CBSAs) (the ``2020 Standards''), which appeared in the Federal Register (86 FR 37770 through 37778) on July 16, 2021, and application of those standards to Census Bureau population and journey-to-work data (for example, 2020 Decennial Census, American Community Survey, and Census Population Estimates Program data). A copy of OMB Bulletin No. 23-01 is available online at https://www.bls.gov/bls/omb-bulletin-23-01-revised-delineations-of-metropolitan-statistical-areas.pdf. In the CY 2025 HH PPS final rule (89 FR 88354), we finalized our proposal to adopt the revised OMB delineations from OMB Bulletin 23-01 with a 5 percent cap on wage index decreases at the CBSA level as well as at the county level. In that final rule we stated that we believe it is important for the HH PPS wage index to use the latest OMB delineations available in order to maintain a more accurate and up-to- date payment system that reflects the reality of population shifts and labor market conditions. We also stated that we believe using the most current OMB delineations will increase the integrity of the HH PPS wage index by creating a more accurate representation of geographic variation in wage levels. b. Five Percent Cap on Wage Index Decreases In the CY 2023 HH PPS final rule (87 FR 66851 through 66853), we finalized a policy that the CY HH PPS wage index will include a permanent 5 percent cap on wage index decreases for CY 2023 and each subsequent year. Specifically, we finalized, for CY 2023 and subsequent years, the application of a permanent 5 percent cap on any decrease to a geographic area's wage index from its wage index in the prior year, regardless of the circumstances causing the decline. That is, we finalized a policy requiring that a geographic area's wage index for CY 2023 will not be less than 95 percent of its final wage index for CY 2022, regardless of whether the geographic area is part of an updated CBSA, and that for subsequent years, a geographic area's wage index will not be less than 95 percent of its wage index calculated in the prior CY. Previously this methodology was applied to all counties that make up a [[Page 55403]] CBSA or statewide rural area. However, in the CY 2025 HH PPS final rule (89 FR 88418 through 88421), because of the adoption of the revised OMB delineations from OMB Bulletin 23-01, we finalized a policy applying this methodology to individual counties. Specifically, we finalized a policy applying the 5 percent cap to counties that moved from a CBSA or statewide rural area with a higher wage index value into a new CBSA or rural area with a lower wage index value, so that the county's CY 2025 wage index would not be less than 95 percent of the county's CY 2024 wage index value under the old delineation despite moving into a new delineation with a lower wage index. Due to the way that we proposed calculating the 5 percent cap for counties that experienced an OMB designation change, some CBSAs and statewide rural areas could have had more than one wage index value. Specifically, some counties that changed OMB designations had a wage index value that was different than the wage index value assigned to the other constituent counties that made up that CBSA or statewide rural area that they moved into after the application of the 5 percent cap. However, for home health claims processing, each CBSA or statewide rural area can have only one wage index value assigned to that CBSA or statewide rural area. Therefore, we finalized a policy, beginning in CY 2025, that counties that have a different wage index value than the CBSA or rural area into which they are designated after the application of the 5 percent cap will use a wage index transition code. These special codes are five digits in length and begin with ``50'' and the remaining digits are unique for that code. The 50XXX wage index transition codes are used only in specific counties; counties located in CBSAs and rural areas that do not correspond to a different transition wage index value will still use the CBSA number. We also finalized a policy applying the 5 percent cap to these specific counties that correspond to a different wage index value due to a delineation change until the county's new wage index is more than 95 percent of the wage index from the previous calendar year. In order to capture the correct wage index value, an HHA will continue to use the assigned 50XXX transition code on home health claims for services in these counties until the county's wage index value calculated for that calendar year using the new OMB delineations is not less than 95 percent of the county's capped wage index from the previous calendar year. For CY 2026, the 5 percent cap on wage index decreases will continue to be calculated at the county level as well as the CBSA and statewide rural area level. While some counties that required a transition code for CY 2025 will continue to use the same transition code for CY 2026, other counties that required a transition code in CY 2025 will no longer require a transition code in CY 2026. In the counties that will no longer require a transition code beginning in CY 2026 wage index, the CY 2026 wage index of the CBSA or rural area that the county was redesignated into has a wage index value higher than 95 percent of the county's CY 2025 wage index. Therefore, these counties will use the CBSA or rural county code of the area they were redesignated into based on OMB Bulletin No. 23-01. The complete list of counties and corresponding transition codes can be found as a separate tab in the calendar year's wage index file located on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health-pps/home-health-pps-wage-index. c. Final CY 2026 HH PPS Wage Index The appropriate wage index value is applied to the labor portion of the HH PPS rates based on the site of service for the beneficiary (defined in section 1861(m) of the Act as the beneficiary's place of residence). For CY 2026, we proposed to base the HH PPS wage index on the FY 2026 hospital pre-floor, pre-reclassified wage index for hospital cost reporting periods beginning on or after October 1, 2021, and before October 1, 2022 (FY 2022 cost report data). The final CY 2026 HH PPS wage index will not take into account any geographic reclassification of hospitals, including those in accordance with sections 1886(d)(8)(B) or 1886(d)(10) of the Act but will include the 5 percent cap on wage index decreases as discussed previously. There exist some geographic areas where there are no hospitals, and thus, no hospital wage data on which to base the calculation of the HH PPS wage index. To address those geographic areas in which there are no inpatient hospitals, and thus, no hospital wage data on which to base the calculation of the CY 2026 HH PPS wage index, we proposed to continue to use the same methodology discussed in the CY 2007 HH PPS final rule (71 FR 65884) to address those geographic areas in which there are no inpatient hospitals. For urban areas without inpatient hospitals, we use the average wage index of all urban areas within the State as a reasonable proxy for the wage index for that CBSA. For CY 2026, the only urban area without inpatient hospital wage data is Hinesville, GA (CBSA 25980). Using the average wage index of all urban areas in Georgia as a proxy, we proposed the CY 2026 wage index value for Hinesville, GA would be 0.8800. With updated wage data, the final CY 2026 HH PPS wage index value for Hinesville, GA will be 0.8779. For rural areas that do not have inpatient hospitals, we use the average wage index from all contiguous Core Based Statistical Areas (CBSAs) as a reasonable proxy. The term ``contiguous'' means sharing a border (72 FR 49859). In the CY 2025 HH PPS final rule (89 FR 88422), we finalized a policy that rural North Dakota will become a rural area without a hospital from which hospital wage data can be derived. Therefore, in order to calculate the wage index for rural area 99935, North Dakota, we finalized using as a proxy, the average pre-floor, pre-reclassified hospital wage data from the contiguous CBSAs: CBSA 13900--Bismark, ND, CBSA 22020--Fargo, ND-MN, CBSA 24220--Grand Forks, ND-MN, and CBSA 33500, Minot, ND. Using this methodology, we proposed that the CY 2026 HH PPS wage index for rural North Dakota would be 0.8346. With updated wage data, the CY 2026 HH PPS final wage index value for rural North Dakota will be 0.8329. Previously, the only rural area without a hospital from which hospital wage data could be derived was rural Puerto Rico. However, for rural Puerto Rico, we did not apply this methodology due to the distinct economic circumstances that exist there (for example, due to the proximity of almost all of Puerto Rico's various urban and non- urban areas to one another, this methodology would produce a wage index for rural Puerto Rico that is higher than that in half of its urban areas). Instead, we used the most recent wage index previously available for that area, which was 0.4047. Beginning in CY 2025, due to the adoption of the revised OMB delineations, there is now a hospital in rural Puerto Rico from which hospital wage data can be derived. Therefore, we finalized a policy that the wage index for rural Puerto Rico will now be based on the hospital wage data for the area instead of the previously available wage index of 0.4047. The CY 2025 final unadjusted wage index value for rural Puerto Rico was 0.2510. However, because 0.2510 is more than a 5 percent decline in the area's CY [[Page 55404]] 2024 wage index, the 5 percent cap was applied and the final CY 2025 5 percent cap adjusted wage index for rural Puerto Rico was set equal to 95 percent of the CY 2024 wage index, which resulted in a final wage index value of 0.3845. The unadjusted CY 2026 proposed wage index for rural Puerto Rico was 0.2452. However, because 0.2452 is more than a 5 percent decline in the CY 2025 wage index, we proposed that the CY 2026 5 percent cap adjusted wage index for rural Puerto Rico be set equal to 95 percent of the CY 2025 wage index, which resulted in a proposed wage index value of 0.3653. The unadjusted CY 2026 final wage index for rural Puerto Rico is 0.2443. However, because 0.2443 is more than a 5 percent decline in the CY 2025 wage index, we are finalizing the CY 2026 5 percent cap adjusted wage index for rural Puerto Rico, set equal to 95 percent of the CY 2025 wage index, which will result in a final wage index value of 0.3653. Additionally, due to the adoption of the revised OMB delineations in the CY 2025 HH PPS final rule, Delaware, which was previously an all-urban state, now has one rural area with a hospital from which hospital wage data can be derived. As such, we proposed that the CY 2026 wage index for rural Delaware would be 1.0133. With updated wage data, the CY 2026 HH PPS final wage index value for rural Delaware will be 1.0095. Finally, the Northern Mariana Islands and American Samoa are rural areas with no hospital data from which a wage index can be calculated. Consistent with our established methodology, we compute an appropriate wage index for rural areas with no hospital using the average wage index values from contiguous CBSAs, to represent a reasonable proxy. Therefore, we proposed that HHAs that provide services in the Northern Mariana Islands and American Samoa will use CBSA 99965 (Guam) and receive the wage index assigned to CBSA 99965 (Guam) of 0.9611. While we appreciate that the islands of the Pacific Rim are not actually contiguous, we believe that same principle applies here, and that Guam is a reasonable proxy for American Samoa and the Northern Mariana Islands. We believe that CBSA 99965 (Guam) represents a reasonable proxy because the islands are located within the Pacific Rim and share a common status as United States Territories. We solicited comments on the proposed CY 2026 HH PPS wage index. The following is a summary of the comments we received and our responses: Comment: Several commenters were opposed to the proposed wage index updates, particularly in rural areas. These commenters expressed concern that wage index changes in rural areas would worsen rural access to care issues. A commenter stated that the current method of adjusting labor costs using the hospital wage index does not accurately account for increased travel costs and lost productivity in serving rural areas. This commenter recommended a population density adjustment, stating that travel costs are increased because of the time and mileage involved for home health personnel to travel from patient to patient to provide services in areas with lower population densities, while, in densely populated areas, these costs are significantly reduced because of the relative proximity of beneficiaries to the home health agency. Response: We appreciate commenters' concerns regarding the wage index values assigned to rural areas. As discussed in the CY 2022 HH PPS final rule (86 FR 62285), we do not believe that a population density adjustment is appropriate at this time. Rural HHAs continually cite the added cost of traveling from one patient to the next. However, urban HHAs cite the added costs associated with needed security measures and traffic congestion. The home health wage index values in rural areas are not necessarily lower than the home health wage index values in urban areas. The home health wage index reflects the wages that inpatient hospitals pay in their local geographic areas. We continue to believe that in the absence of home health specific data, the pre-floor, pre-reclassified hospital wage index is appropriate for the geographic adjustment of home health claims. Comment: Several commenters expressed concern that home health providers are unable to benefit from IPPS hospital wage index policies such as reclassification and the rural floor. A commenter recommended that all providers should be guaranteed that their wage index value does not drop below the rural wage index value applicable in the state of operation. A few commenters requested that CMS modify its wage index policy to incorporate hospital reclassifications to ensure fair geographic payment adjustments. Another commenter stated that the significant variance in the wage index values assigned to IPPS hospitals and HHAs and hospices makes it much more difficult for home health and hospice providers to recruit nurses and other professional and para-professional staff when hospitals can offer those same individuals a much higher salary and benefit package due to this large variance in the wage index values. Other commenters recommended that CMS institute a floor policy in the HH PPS. Several commenters located in Puerto Rico recommended that CMS implement a National Wage Index Floor of 0.6000. These commenters believe that a national wage index floor would stabilize Medicare home health payments and also improve parity within the national Medicare HH PPS. A few commenters also recommended a 0.8000 floor in the HH PPS wage index similar to the hospice floor. Response: We thank the commenters for their recommendations. We continue to believe that the regulations and statutes that govern the HH PPS differ from the hospital and hospice regulations and statutes, such that there would be differences between how these payment systems apply wage index policies including geographic reclassification, or the rural floor. Section 4410(a) of the Balanced Budget Act of 1997 provides that the area wage index applicable to any hospital that is located in an urban area of a state may not be less than the area wage index applicable to hospitals located in rural areas in that State. This rural floor provision is specific to hospitals. The reclassification provision at section 1886(d)(10)(C)(i) of the Act states that the Medicare Geographic Classification Review Board shall consider the application of any subsection (d) hospital requesting the Secretary change the hospital's geographic classification for purposes of payment under the IPPS. This reclassification provision is only applicable to hospitals as defined in section 1886(d) of the Act. In addition, we do not believe that using hospital reclassification data would be appropriate as these data are specific to the requesting hospitals. Additionally, the application of the hospice floor is specific to hospices and does not apply to HHAs. The hospice floor was developed through a negotiated rulemaking advisory committee, under the process established by the Negotiated Rulemaking Act of 1990 (Pub. L. 101-648). Committee members included representatives of national hospice associations; rural, urban, large, and small hospices; multi-site hospices; consumer groups; and a government representative. The Committee reached consensus on a methodology that resulted in the hospice wage index. We continue to believe the use of the pre-floor and pre-reclassified hospital wage [[Page 55405]] index results in the most appropriate adjustment to the labor portion of the home health payment rates. Comment: Several commenters expressed concern with the wage index values assigned to their specific geographic areas. A commenter recommended that the wage index value for rural Hawaii match or exceed the wage index value assigned to rural California. A few commenters expressed concern with the wage index value assigned to rural Puerto Rico after the adoption of the delineations from OMB Bulletin No. 23- 01. Response: We appreciate the concerns expressed by commenters regarding wage index values in specific geographic areas, including rural Hawaii and rural Puerto Rico. While we understand these concerns, we believe that the permanent 5 percent cap policy provides an adequate safeguard against any significant payment reductions in CY 2026 while improving the accuracy of the payment adjustment for differences in area wage levels. Comment: Several commenters recommended far-reaching revisions and reforms to the HH PPS wage index methodology. A commenter stated that the pre-floor, pre-reclassified hospital wage index is inadequate for adjusting home health costs and recommended that CMS develop and implement a wage index model that is consistent across all provider types so that all providers have a level playing field from which to compete for personnel. Another commenter recommended that CMS develop a home health wage index and retire the use of the hospital wage index to determine the home health wage index. This commenter stated that until a new home health wage index can be implemented, they support CMS' proposal to continue using OMB's most recent statistical area delineations for the hospital wage index. A commenter stated that the current wage index fails to capture real costs in high-price markets such as New York City, creating structural underpayments that destabilize safety-net providers. This commenter believes that as with PDGM itself, COVID-19 pandemic-era data should be excluded from wage index calculations and that without meaningful reform to the wage index methodology, providers in many regions will continue to face structural disadvantages that further limit their ability to deliver care. Another commenter recommended changes to the wage index methodology including using state-specific data such as BLS wage surveys, accounting for housing and transportation costs, and exploring payment adjustments for high-cost areas. Response: We thank the commenters for their recommendations. While we did not propose any changes to the wage index methodology in the proposed rule, we may consider these recommendations in future rulemaking. Comment: A few commenters expressed support for the finalized 5 percent cap policy. However, other commenters recommended updates to the finalized 5 percent cap policy. A commenter recommended lowering the threshold of the cap to 2 percent. This commenter believes that lowering the cap to 2 percent would protect HHAs who operate with negative or razor-thin operating margins and are still experiencing multiple negative consequences due to the COVID-19 pandemic. Response: We appreciate commenters' recommendations for changes to the 5 percent cap policy. However, in the CY 2026 HH PPS proposed rule, we did not propose to make changes to this policy. Therefore, these comments are outside the scope of the proposed rule. Any changes to the finalized 5 percent cap policy would need to go through notice and comment rulemaking. However, we continue to believe that a 5 percent cap would most effectively mitigate any significant decreases in a geographic area's wage index for a calendar year, while still balancing the importance of ensuring that area wage index values accurately reflect relative differences in area wage levels. Furthermore, we believe that the 5 percent cap on wage index decreases provides a degree of predictability in payment changes for providers and allows providers time to adjust to any significant decreases they may face year to year. Final Decision: After consideration of public comments, we are finalizing our proposal to base the HH PPS wage index on the FY 2026 hospital pre-floor, pre-reclassified wage index for hospital cost reporting periods beginning on or after October 1, 2021, and before October 1, 2022 (FY 2022 cost report data). The final CY 2026 HH PPS wage index will include the 5 percent cap on wage index decreases. Additionally, using our established methodology for rural areas with no hospitals, we are finalizing including in the CY 2026 HH PPS wage index the wage indexes for the Northern Mariana Islands and American Samoa. Consistent with our established methodology, we compute an appropriate wage index for rural areas with no hospital using the average wage index values from contiguous CBSAs to represent a reasonable proxy. We believe that CBSA 99965 (Guam) represents a reasonable proxy because the islands are located within the Pacific Rim and share a common status of US territories. Therefore, HHAs that provide services in the Northern Mariana Islands and American Samoa should use CBSA 99965 (Guam) and should receive the wage index assigned to CBSA 99965 (Guam) of 0.9611. The final HH PPS wage index file applicable for CY 2026 (January 1, 2026, through December 31, 2026) is available on the CMS website at https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.

3. Final CY 2026 Home Health Payment Update

a. Background The HH PPS has been in effect since October 1, 2000. As set forth in the July 3, 2000, final rule (65 FR 41128), the base unit of payment under the HH PPS was a national, standardized 60-day episode payment rate. As finalized in the CY 2019 HH PPS final rule with comment period (83 FR 56406), and as described in the CY 2020 HH PPS final rule with comment period (84 FR 60478), the unit of home health payment changed from a 60-day episode to a 30-day period effective for those 30-day periods beginning on or after January 1, 2020. As set forth in Sec. 484.220, we adjust the national, standardized prospective payment rates by a case-mix relative weight and a wage index value based on the site of service for the beneficiary. To provide appropriate adjustments to the proportion of the payment amount under the HH PPS to account for area wage differences, we apply the appropriate wage index value to the labor portion of the HH PPS rates. In the CY 2024 HH PPS final rule (88 FR 77676), we finalized the rebasing of the home health market basket to reflect 2021 Medicare cost report data. We also finalized a policy that, for CY 2024 and subsequent years, the labor-related share will be 74.9 percent, and the non-labor-related share will be 25.1 percent. The following are the steps we take to compute the case-mix and wage- adjusted 30-day period payment amount for CY 2026: Multiply the national, standardized 30-day period rate by the patient's applicable case-mix weight. Divide the case-mix adjusted amount into a labor (74.9 percent) and a non-labor portion (25.1 percent). Multiply the labor portion by the applicable wage index based on the site of service of the beneficiary. [[Page 55406]] Add the wage-adjusted portion to the non-labor portion, yielding the case-mix and wage adjusted 30-day period payment amount, subject to any additional applicable adjustments. We provide annual updates of the HH PPS rate in accordance with section 1895(b)(3)(B) of the Act. Section 484.225 sets forth the specific annual percentage update methodology. In accordance with section 1895(b)(3)(B)(v) of the Act and Sec. 484.225(i), for an HHA that does not submit home health quality data, as specified by the Secretary, the unadjusted national prospective 30-day period rate is equal to the rate for the previous calendar year increased by the applicable home health payment market basket, minus two percentage points. Any reduction of the percentage change will apply only to the calendar year involved and will not be considered in computing the prospective payment amount for a subsequent calendar year. The final claim that the HHA submits for payment determines the total payment amount for the period and whether we make an applicable adjustment to the 30-day case-mix and wage-adjusted payment amount. The end date of the 30-day period, as reported on the claim, determines which calendar year rates Medicare will use to pay the claim. We may adjust a 30-day case-mix and wage-adjusted payment based on the information submitted on the claim to reflect the following: A LUPA is provided on a per-visit basis as set forth in Sec. Sec. 484.205(d)(1) and 484.230. A partial payment adjustment as set forth in Sec. Sec. 484.205(d)(2) and 484.235. An outlier payment as set forth in Sec. Sec. 484.205(d)(3) and 484.240. b. Final CY 2026 National, Standardized 30-Day Period Payment Amount Section 1895(b)(3)(A)(i) of the Act requires that the standard prospective payment rate and other applicable amounts be standardized in a manner that eliminates the effects of variations in relative case- mix and area wage adjustments among different HHAs in a budget-neutral manner. To determine the CY 2026 national, standardized 30-day period payment rate, we will continue our practice of using the most recent, complete utilization data at the time of rulemaking; that is, we are using CY 2024 claims data for CY 2026 payment rate updates. We apply a permanent adjustment factor, a case-mix weights recalibration budget neutrality factor, a wage index budget neutrality factor, the home health payment update percentage, and a temporary adjustment factor to update the CY 2026 payment rate. As discussed in section II.C.1. of this final rule, we are finalizing the implementation of a permanent adjustment of -1.023 percent to ensure that estimated aggregate expenditures under the PDGM are equal to the estimated aggregate expenditures that otherwise would have been under the 153-group payment system as required by law. The final permanent adjustment factor is 0.98977. As discussed previously, to ensure the changes to the PDGM case-mix weights are implemented in a budget neutral manner, we apply a case-mix weight budget neutrality factor to the CY 2026 national, standardized 30-day period payment rate. The final case-mix weight budget neutrality factor for CY 2026 is 1.0052. Additionally, we apply a wage index budget neutrality factor to ensure that wage index updates and revisions are implemented in a budget neutral manner. To calculate the wage index budget neutrality factor, we first determine the payment rate needed for non-LUPA 30-day periods using the CY 2026 wage index (with the 5 percent cap) so those total payments are equivalent to the total payments for non-LUPA 30-day periods using the CY 2025 wage index (with the 5 percent cap) and the CY 2025 national standardized 30-day period payment rate adjusted by the case-mix weights recalibration neutrality factor. Then, by dividing the payment rate for non-LUPA 30-day periods using the CY 2026 wage index with the 5 percent cap on wage index decreases) by the payment rate for non-LUPA 30-day periods using the CY 2025 wage index (with the 5 percent cap on wage index decreases), we obtain a wage index budget neutrality factor of 1.0025. We then apply the wage index budget neutrality factor of 1.0025 to the 30-day period payment rate. Next, we update the 30-day period payment rate by the final CY 2026 home health payment update percentage of 2.4 percent. As discussed in section II.C.1. of this final rule, we also finalizing the implementation of a temporary -3.0 percent reduction to the CY 2026 base payment rate. The final temporary adjustment factor is 0.97000. Per section 1895(b)(3)(D)(iii) of the Act a temporary adjustment is to be applied for the applicable year and not included when computing a payment rate for a subsequent year. In other words, the temporary adjustment factor for CY 2026 should not be included in the starting payment rate for CY 2027. Therefore, we have calculated the CY 2026 national, standardized 30-day period payment with and without the temporary adjustment factor. The CY 2026 national standardized 30-day period payment rate without a temporary adjustment is only for illustrative purposes. The actual CY 2026 national standardized 30-day period payment rate includes the final temporary adjustment and is calculated in table 14. Next, we update the 30-day period payment rate by the final CY 2026 home health payment update percentage of 2.4 percent. The CY 2026 national standardized 30-day period payment rate is calculated in table 14. [[Page 55407]] [GRAPHIC] [TIFF OMITTED] TR02DE25.038 The CY 2026 national standardized 30-day period payment rate for an HHA that does not submit the required quality data will be updated by 0.4 percent (the final CY 2026 home health payment update percentage of 2.4 percent minus 2 percentage points) and is shown in table 15. [GRAPHIC] [TIFF OMITTED] TR02DE25.039 c. Final CY 2026 National Per-Visit Rates for 30-Day Periods of Care The national per-visit rates are used to pay LUPAs and are also used to compute imputed costs in outlier calculations. The per-visit rates are paid by type of visit or home health discipline. The six home health disciplines are as follows: Home health aide (HH aide). Medical Social Services (MSS). Occupational therapy (OT). Physical therapy (PT). Skilled nursing (SN). Speech-language pathology (SLP). To calculate the final CY 2026 national per-visit rates, we started with the CY 2025 national per-visit rates. Then we applied a wage index budget neutrality factor to ensure budget neutrality for LUPA per-visit payments. We calculated the wage index budget neutrality factor by simulating total payments for LUPA 30-day periods of care using the CY 2026 wage index with the 5 percent cap on wage index decreases and comparing it to simulated total payments for LUPA 30-day periods of care using the CY 2025 wage index with the 5 percent cap. By dividing the total payments for LUPA 30-day periods of care using the CY 2026 wage index by the total payments for LUPA 30-day periods of care using the CY 2025 wage index, we obtained a wage index budget neutrality factor of 1.0005. As a reminder, the wage index budget neutrality factors for the national, standardized 30-day period amount and the national LUPA per-visit rates are not equal because they are calculated differently. The wage index budget neutrality factor for the LUPA per- visit payments is calculated by simulating total payments for LUPA 30- day periods while the 30-day period budget neutrality factor is calculated by simulating payments for non-LUPA 30-day periods. The LUPA per-visit rates are not calculated using case-mix weights. [[Page 55408]] Therefore, no case-mix weight budget neutrality factor is needed to ensure budget neutrality for LUPA payments. Additionally, we are not applying the permanent adjustment or the temporary adjustment to the per-visit payment rates but only to the case-mix adjusted 30-day payment rate. Lastly, the per-visit rates for each discipline are updated by the final CY 2026 home health payment update percentage of 2.4 percent. The national per-visit rates are adjusted by the wage index based on the site of service of the beneficiary. The per-visit payments for LUPAs are separate from the LUPA add-on payment amount, which is paid for periods that occur as the only period or initial period in a sequence of adjacent periods. The final CY 2026 national per-visit rates for HHAs that submit the required quality data are updated by the final CY 2026 home health payment update percentage of 2.4 percent and are shown in table 16. [GRAPHIC] [TIFF OMITTED] TR02DE25.040 The CY 2026 per-visit payment rates for HHAs that do not submit the required quality data will be updated by 0.4 percent, which is the final CY 2026 home health payment update percentage of 2.4 percent minus 2 percentage points and are shown in table 17. [GRAPHIC] [TIFF OMITTED] TR02DE25.041 We solicited comments on the proposed CY 2026 30-day home health payments rates and per-visit payment rates, but did not receive comments on this proposal. Final Decision: We are finalizing the updates to the CY 2026 national, standardized 30-day period payment rates and the CY 2026 national per-visit payment amounts as proposed, using the final CY 2026 market basket update. d. LUPA Add-On Factors Prior to the implementation of the 30-day unit of payment, LUPA episodes were eligible for a LUPA add-on payment if the episode of care was the first or only episode in a sequence of adjacent episodes. As described in the CY 2008 HH PPS final rule, the average visit lengths in these initial LUPAs are 16 to 18 percent higher than the average visit lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes that occur as the only episode or as an initial episode in a sequence of adjacent episodes are adjusted by applying an additional amount to the LUPA payment before adjusting for area wage differences. In the CY 2014 HH PPS final rule (78 FR 72305), we changed the methodology for calculating the LUPA add-on amount, whereby we finalized the approach of multiplying the per-visit payment amount for the first skilled nursing (SN), physical therapy (PT), or speech language pathology (SLP) visit in LUPA episodes that occur as the only episode or an initial episode in a sequence of adjacent episodes by 1 + the proportional increase in minutes for an initial visit over non- initial visits. Specifically, we updated the analysis using 100 percent of LUPA episodes and a 20 percent sample of non-LUPA first episodes from CY 2012 claims data. At that time, we finalized add-on factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. In the CY 2019 HH PPS final rule with comment period (83 FR [[Page 55409]] 56440), in addition to finalizing a 30-day unit of payment, we finalized our policy of continuing to multiply the per-visit payment amount for the first SN, PT, or SLP visit in LUPA periods that occur as the only period of care or the initial 30-day period of care in a sequence of adjacent 30-day periods of care by the appropriate add-on factor (using the already established LUPA add-on factors of 1.8451 for SN, 1.6700 for PT, and 1.6266 for SLP) to determine the LUPA add-on payment amount for 30-day periods of care under the PDGM. In the CY 2025 HH PPS final rule (89 FR 88426 through 88427), in an effort to enhance the accuracy and relevance of LUPA add-on factors to reflect current healthcare practices and costs, we finalized updates to the LUPA add-on factors for PT, SN, and SLP, which had not been revised since the CY 2014 HH PPS final rule (using CY 2012 claims data). We finalized the proposal to use the same methodology to establish the LUPA add-on amount for CY 2014, using updated claims data. Specifically, we updated the LUPA add-on factors by using 100 percent of LUPA periods and a 100 percent sample of non-LUPA first periods from CY 2023 claims data (as of September 11, 2024). Our analysis found that the average excess of minutes for the first visit in LUPA periods that were the only period or an initial LUPA in a sequence of adjacent periods are 29.91 minutes for the first visit if SN, 28.08 minutes for the first visit if PT, and 31.57 minutes for the first visit if SLP. The average minutes for all non-first visits in non-LUPA episodes are 41.54 minutes for SN, 45.11 minutes for PT, and 47.15 minutes for SLP. To determine the LUPA add-on factors for each discipline, we calculated the ratio of the average excess minutes for the first visits in LUPA claims to the average minutes for all non- first visits in non-LUPA claims. We then added one to these ratios to obtain the final add on factors. Therefore, beginning in CY 2025 the final LUPA add on factors for SN, PT, and SLP are 1.7200 for SN; 1.6225 for PT; and 1.6696 for SLP. Additionally, as outlined in the CY 2025 HH PPS proposed rule (89 FR 55378), in order to implement Division CC, section 115, of the Consolidation Appropriations Act (CAA), 2021, CMS finalized changes to the regulations at Sec. [thinsp]484.55(a)(2) and (b)(3) that allowed occupational therapists to conduct initial and comprehensive assessments for all Medicare beneficiaries under the home health benefit when the plan of care does not initially include skilled nursing care, but included OT, as well as either PT or SLP (86 FR 62351). This change necessitated the establishment of a LUPA add-on factor for calculating the LUPA add-on payment amount for the first skilled OT visit in LUPA periods that occur as the only period of care or the initial 30-day period of care in a sequence of adjacent 30-day periods of care. However, at the time of the implementation, we stated in the CY 2022 HH PPS final rule (86 FR 62289), there was not sufficient data regarding the average excess minutes for the first visit in LUPA periods when the initial and comprehensive assessments are conducted by occupational therapists. Therefore, we finalized a policy using the PT LUPA add-on factor as a proxy. We also stated in the CY 2022 final rule that we will use the PT LUPA add-on factor as a proxy until we have CY 2022 data to establish a more accurate OT add-on factor for the LUPA add-on payment amounts (86 FR 62289). Ultimately, we refrained from using CY 2022 data (and instead utilized the PT LUPA add-on factor as a proxy for the OT LUPA add-on factor), as we marked the first year that occupational therapists were permitted to conduct the initial assessment. We wanted to extend our analysis to ensure we had sufficient data to reflect OT time spent conducting initial assessments to establish a discrete OT LUPA add-on factor (86 FR 62240). In the CY 2025 HH PPS final rule (89 FR 88427), we finalized a proposal to discontinue use of the PT LUPA add-on factor as a proxy and established a definitive LUPA add-on factor for occupational therapy. We used the same methodology used to establish the LUPA add-on amount for CY 2014, as described previously for the SN, PT, and SLP add-on factors. Specifically, we updated the analysis using 100 percent of LUPA periods and a 100 percent sample of non-LUPA first periods from CY 2023 claims data. Using updated analysis (as of September 11, 2024), we found that the average excess of minutes for the first OT visit in LUPA periods that were the only period or an initial LUPA in a sequence of adjacent periods is 33.28 minutes for the first visit. The average number of minutes for all non-first visits in non-LUPA periods is 45.98 minutes for OT. To determine the LUPA add-on factor for OT to account for the excess minutes during the first visit in a LUPA period, we finalized calculating the ratio of the average excess minutes for the first visits in LUPA claims to the average minutes for all non-first visits in non-LUPA claims. We then added one to this ratio to obtain the final add on factor of 1.7238 for OT. Therefore, the OT LUPA factor of 1.7238 is used when occupational therapy is the first skilled visit in a LUPA period that occurs as the only period or an initial period in a sequence of adjacent periods. [GRAPHIC] [TIFF OMITTED] TR02DE25.042

4. Payments for High-Cost Outliers Under the HH PPS

a. Background Section 1895(b)(5) of the Act allows for the provision of an addition or adjustment to the home health payment amount otherwise made in the case of outliers because of unusual variations in the type or amount of medically necessary care. Under the HH PPS and the previous unit of payment (that is, 60-day episodes), outlier payments were made for 60-day episodes whose estimated costs exceed a threshold amount for each HHRG. The episode's estimated cost was established as the sum of the national wage-adjusted per-visit payment amounts delivered during the episode. The outlier threshold for each case-mix group or PEP adjustment [[Page 55410]] is defined as the 60-day episode payment or PEP adjustment for that group plus a fixed-dollar loss (FDL) amount. For the purposes of the HH PPS, the FDL amount is calculated by multiplying the home health FDL ratio by a case's wage-adjusted national, standardized 60-day episode payment rate, which yields an FDL dollar amount for the case. The outlier threshold amount is the sum of the wage and case-mix adjusted PPS episode amount and wage-adjusted FDL amount. The outlier payment is defined as a proportion of the wage-adjusted estimated cost that surpasses the wage-adjusted threshold. The proportion of additional costs over the outlier threshold amount paid as outlier payments is referred to as the loss-sharing ratio. As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 70399), section 3131(b)(1) of the Affordable Care Act amended section 1895(b)(3)(C) of the Act to require that the Secretary reduce the HH PPS payment rates such that aggregate HH PPS payments were reduced by 5 percent. In addition, section 3131(b)(2) of the Affordable Care Act amended section 1895(b)(5) of the Act by redesignating the existing language as section 1895(b)(5)(A) of the Act and revised the language to state that the total amount of the additional payments or payment adjustments for outlier episodes could not exceed 2.5 percent of the estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of the Affordable Care Act also added section 1895(b)(5)(B) of the Act, which capped outlier payments as a percent of total payments for each HHA for each year at 10 percent. As such, beginning in CY 2011, we reduced payment rates by 5 percent and targeted up to 2.5 percent of total estimated HH PPS payments to be paid as outliers. To do so, we first returned the 2.5 percent held for the target CY 2010 outlier pool to the national, standardized 60-day episode rates, the national per visit rates, the LUPA add-on payment amount, and the NRS conversion factor for CY 2010. We then reduced the rates by 5 percent as required by section 1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the Affordable Care Act. For CY 2011 and subsequent calendar years we targeted up to 2.5 percent of estimated total payments to be paid as outlier payments, and apply a 10-percent agency-level outlier cap. In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through 43742 and 81 FR 76702), we described our concerns regarding patterns observed in home health outlier episodes. Specifically, we noted the methodology for calculating home health outlier payments may have created a financial incentive for providers to increase the number of visits during an episode of care in order to surpass the outlier threshold and simultaneously created a disincentive for providers to treat medically complex beneficiaries who require fewer but longer visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR 76702), we finalized changes to the methodology used to calculate outlier payments, using a cost-per-unit approach rather than a cost- per-visit approach. This change in methodology allows for more accurate payment for outlier episodes, accounting for both the number of visits during an episode of care and the length of the visits provided. Using this approach, we now convert the national per-visit rates into per 15- minute unit rates. These per 15-minute unit rates are used to calculate the estimated cost of an episode to determine whether the claim would receive an outlier payment and the amount of payment for an episode of care. In conjunction with our finalized policy to change to a cost-per- unit approach to estimate episode costs and determine whether an outlier episode should receive outlier payments, in the CY 2017 HH PPS final rule we also finalized the implementation of a cap on the amount of time per day that would be counted toward the estimation of an episode's costs for outlier calculation purposes (81 FR 76725). Specifically, we limit the amount of time per day (summed across the six disciplines of care) to 8 hours (32 units) per day when estimating the cost of an episode for outlier calculation purposes. In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we did not plan to re-estimate the average minutes per visit by discipline every year. Additionally, the per unit rates used to estimate an episode's cost were updated by the home health update percentage each year, meaning we would start with the national per visit amounts for the same calendar year when calculating the cost-per-unit used to determine the cost of an episode of care (81 FR 76727). We would continue to monitor the visit length by discipline as more recent data becomes available and may propose updating the rates as needed in the future. In the CY 2019 HH PPS final rule with comment period (83 FR 56521), we finalized a policy to maintain the current methodology for payment of high-cost outliers upon implementation of PDGM beginning in CY 2020 and calculated payment for high-cost outliers based upon 30-day period of care. Upon implementation of the PDGM and 30-day unit of payment, we finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020. In the CY 2025 HH PPS final rule (89 FR 88354), using CY 2023 claims data (as of July 11, 2024) we finalized the FDL ratio of 0.35 for CY 2025. b. Final FDL Ratio for CY 2026 For a given level of outlier payments, there is a trade-off between the values selected for the FDL ratio and the loss-sharing ratio. A high FDL ratio reduces the number of periods that can receive outlier payments but makes it possible to select a higher loss-sharing ratio, and therefore, increase outlier payments for qualifying outlier periods. Alternatively, a lower FDL ratio means that more periods can qualify for outlier payments, but outlier payments per period must be lower. The FDL ratio and the loss-sharing ratio are selected so that the estimated total outlier payments do not exceed the 2.5 percent aggregate level (as required by section 1895(b)(5)(A) of the Act). Historically, we have used a value of 0.80 for the loss-sharing ratio, which we believe preserves incentives for agencies to attempt to provide care efficiently for outlier cases. With a loss-sharing ratio of 0.80, Medicare pays 80 percent of the additional estimated costs that exceed the outlier threshold amount. Using CY 2024 claims data (as of March 13, 2025) and given the statutory requirement that total outlier payments do not exceed 2.5 percent of the total payments estimated to be made under the HH PPS, we proposed an FDL ratio of 0.46 for CY 2026. CMS stated that we would update the FDL, if needed, in the final rule once we have more complete CY 2024 claims data. We solicited comments on the proposed CY 2026 FDL. The following is a summary of the comments we received and our responses: Comment: Several commenters opposed the proposed update to the CY 2026 FDL. A commenter recommended maintaining the current FDL for CY 2026. Other commenters expressed concern that CMS is raising the FDL based on potentially fraudulent data, specifically in what they describe as high fraud areas such as LA County. These commenters recommended excluding suspect claims so that legitimate HHAs are not penalized based on flawed data. Another commenter suggested that raising the FDL will make it harder to qualify for outlier payments and could harm agencies caring for high acuity patients. Response: We remind commenters that the FDL is set such that outlier [[Page 55411]] payments do not exceed 2.5 percent of total home health payments. A high FDL ratio reduces the number of episodes that can receive outlier payments but makes it possible to select a higher loss-sharing ratio, and therefore, increase outlier payments for qualifying outlier episodes. Alternatively, a lower FDL ratio means that more episodes can qualify for outlier payments, but outlier payments per episode must then be lower. We appreciate the commenters' concerns regarding potential fraudulent billing and its potential impact on the proposed FDL. However, as discussed previously, outlier billing patterns are not always indicative of fraudulent practice. CMS currently includes the most recent and complete claims data when updating the FDL. If CMS excluded the claims the commenter views as outliers from the calculation of the FDL, CMS would need to make thresholds for determining what qualifies as an outlier to be excluded from the analytical sample. In addition, dropping providers with anomalous billing patterns can cause the sample to be much smaller relative to the most recent and complete claims for that given year. It is important to note that providers that have anomalous billing patterns will need further evidence to state definitively whether their activities cannot be connected to fraudulent practices. Depending on the circumstance, anomalous patterns can prompt further review and initiate investigation for evidence of fraud, waste, and abuse. We appreciate commenters sharing insight into how we can address concerns about potential fraud in the home health market. Cost report fraud and abusive billing behavior are concerns that need to be addressed through the appropriate channels with the authority to pursue 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. Furthermore, we are statutorily required to ensure that total outlier payments do not exceed the 2.5 percent aggregate level (as required by section 1895(b)(5)(A) of the Act). In the CY 2019 HH PPS final rule with comment period (83 FR 56521), we finalized a policy to maintain the current methodology for payment of high-cost outliers upon implementation of the PDGM beginning in CY 2020 and calculated payment for high-cost outliers based upon 30-day periods of care. We have used the most recent claims data to calculate the FDL ratio since that time. In the CY 2026 HH PPS proposed rule, we stated that we would use the most recent claims data available which is CY 2024 claims data. Using CY 2024 claims data, we found that the FDL ratio would need to be increased from the final CY 2025 FDL of 0.35 to 0.37. Final Decision: With updated CY 2024 claims data (as of July 11, 2025) and given the statutory requirement that total outlier payments not exceed 2.5 percent of the total payments estimated to be made under the HH PPS, we are finalizing an FDL ratio of 0.37 for CY 2026.

F. Change to Face-to-Face Encounter Regulations

As a condition for payment, section 6407(a) of the Affordable Care Act (Pub. L. 111-148, March 23, 2010) requires that prior to certifying a patient's eligibility for the home health benefit, the physician must document that the physician himself or herself or a non-physician practitioner (NPP) has had a face-to-face encounter with the patient. In the Home Health Prospective Payment System Rate Update for Calendar Year 2011; Changes in Certification Requirements for Home Health Agencies and Hospices final rule (75 FR 70427) (hereinafter referred to as the CY 2011 HH PPS final rule), we established that the certifying physician must document the face-to-face encounter regardless of whether the physician himself or herself or one of the permitted NPPs performed the face-to-face encounter. Sections 6407(a)(1)(B) and 6407(a)(2)(B) of the Affordable Care Act further describe NPPs who may perform this face-to-face patient encounter. In the Medicare Program, Home Health Prospective Payment System Rate Update for Calendar Year 2012 final rule (hereinafter referred to as the CY 2012 HH PPS final rule), we stated that the Medicare home health benefit relies on the patient's physician to determine eligibility for home health services (76 FR 68596), noting that this type of physician involvement is critical from both a quality of care and program integrity perspective. Prior to enactment of section 6407(a) of the Affordable Care Act regarding the home health face-to- face encounter provision, the patient's physician often relied on information provided by an HHA when making decisions about patient care. In the CY 2012 HH PPS final rule (76 FR 68597), we stated that, in addition to the certifying physician and allowed NPPs, the physician who cared for the patient in an acute or post-acute care facility, and who had privileges in such facility, could also perform the face-to- face encounter and inform the certifying physician, who would document the encounter as part of the certification of eligibility, and that encounter supported the patient's homebound status and need for skilled services. During the CY 2012 HH PPS rulemaking comment period, stakeholders requested that CMS allow any physician to complete the face-to-face encounter, rather than limiting it to the certifying physician or allowed NPP; however, CMS referred commenters to the CY 2011 HH PPS final rule where we stated we did not believe that we had the statutory authority to allow for this additional flexibility (76 FR 68596). The Affordable Care Act established the requirement for a physician face-to-face encounter prior to certifying a patient's eligibility for home health services, along with other program integrity provisions, to address concerns surrounding ineligible patients receiving home health services and concerns that physicians who had no firsthand knowledge of the patient's clinical condition were certifying the patient's eligibility for home health. In the CY 2011 HH PPS final rule, we described research that showed fewer re- hospitalizations when the home health patient had a recent encounter with the physician responsible for the home health care plan. As such, 42 CFR 424.22(a)(1)(v)(A) requires that a face-to-face encounter be performed by the certifying physician; the certifying allowed practitioner (nurse practitioner, clinical nurse specialist, physician assistant); or a certified nurse midwife. Additionally, 42 CFR 424.22(a)(1)(v)(C) requires that a face-to-face encounter be performed by the certifying physician or allowed practitioner unless the encounter is performed by a certified nurse midwife or a physician, physician assistant, nurse practitioner, or clinical nurse specialist with privileges who cared for the patient in an acute or post-acute care facility from which the patient was directly admitted to home health and who is different from the certifying practitioner. Section 3708 of the Coronavirus Aid, Relief, and Economic Security Act, 2020 (CARES Act) (Pub. L. 116-136, March 27, 2020) amended sections 1814(a) and 1835(a) of the Act to allow nurse practitioners (NPs), clinical nurse specialists (CNSs), and physician assistants (PAs) (as those terms are defined in section 1861(aa) of the Act), to order and certify patients for eligibility under the Medicare home health benefit and establish a plan of care. Since its implementation in the March 31, 2020 COVID-19 interim final rule with comment period (85 FR 27550), CMS has received requests from [[Page 55412]] stakeholders to change the current face-to-face encounter policy to allow any practitioner to perform the face-to-face encounter and not limit this regulation to the certifying practitioner, a permitted NPP, or a physician or allowed practitioner with privileges who cared for the patient in an acute or post-acute care facility from which the patient was directly admitted to home health, as set out at Sec. 424.22(a)(1)(v)(C). Commenters have stated that the CARES Act language allows this additional flexibility. Additionally, commenters have stated, and CMS agrees, that the current regulation text at Sec. 424.22(a)(1)(v)(A)(1) through (4) can be read to allow NPs, CNSs, and PAs to perform the face-to-face encounter regardless of whether they certify the patient for home health services, but limits the provision of the face-to-face encounter to the certifying physician or a physician, with privileges, who cared for the patient in an acute or post-acute care facility from which the patient was directly admitted to home health. Therefore, stakeholders have requested that any physician, in addition to NPs, CNSs, and PAs, be allowed to perform the face-to-face encounter regardless of whether they are the certifying practitioner or whether they cared for the patient in the acute or post-acute facility from which the patient was directly admitted to home health and who is different from the certifying practitioner. Some commenters have referenced situations in which a patient sees a physician in the same practice as the patient's primary care physician (PCP), but where the patient's PCP was unavailable to see the patient on a particular date. As stated in the CY 2026 proposed rule, we agree that it would be reasonable for the patient's PCP to certify eligibility under the Medicare home health benefit and establish the plan of care even though a different physician or allowed practitioner in the same practice conducted the face-to-face encounter. However, we note that it would not be appropriate for a practitioner who specializes in optometry to certify a patient for home health services that are needed due to orthopedic reasons. These are only a couple of examples of circumstances that could occur, and we do not enumerate in this rulemaking all situations in which the certifying provider may be different than the provider who conducted the face-to-face encounter. Regarding our original concern in limiting the face-to-face encounter to the certifying provider (or the provider who cared for the patient in the inpatient facility), we still believe physician or allowed practitioner involvement is critical from both a quality of care and program integrity perspective. However, we note that additional program integrity protections exist currently in the certification policies. To be eligible for Medicare home health services, in accordance with Sec. 424.22(a)(1)(iv) a patient must be under the care of a physician or an allowed practitioner. Additionally, in accordance with Sec. 424.22(a)(1)(v), the face-to-face encounter documentation must be related to the primary reason the patient requires home health services, occur in the required time frame by an allowed provider type, and the certifying practitioner must include a signature and the date of the encounter as part of the certification. Furthermore, our subregulatory guidance in the Medicare General Information, Eligibility and Entitlement Manual (Pub. 100-01, chapter 4, section 30.1) provides that physicians and allowed practitioners should complete the certification when the plan of care is established, or as soon as possible thereafter, and that it is not acceptable to wait until the end of the required time frame to complete the requirements. As such, the certification also cannot be completed after a patient is discharged from home health services. Additionally, our subregulatory guidance in the Medicare General Information, Eligibility and Entitlement Manual (Pub. 100-01, chapter 4, section 30.1), the Medicare Benefit Policy Manual (Pub. 100-02, chapter 7, section 30.5), and the Medicare Program Integrity Manual (Pub. 100-08, chapter 6, section 6.2.1 and 6.2.3) also supports our program integrity and quality goals. Specifically, the subregulatory guidance provides additional details on requirements that include the following: specific signature and date requirements; a requirement for an actual clinical note from the certifying practitioners for the face- to-face encounter visit; specific information that must be present in face-to-face encounter documentation; a requirement that a new face-to- face encounter is required if the patient's condition has changed; a requirement that home health eligibility must be supported by other medical entries in the certifying provider's medical record for the patient and this documentation must be available for medical reviews as needed; and a requirement that documentation of the face-to-face encounter can only be from physicians or allowed NPPs who do not have a financial relationship with the HHA. We also stated in the CY 2026 proposed rule that we believe the regulations at 42 CFR 424.22(a)(1), in conjunction with the Medicare home health eligibility requirements at 42 CFR 424.22(c), finalized in the CY 2019 final rule (83 FR 56627), provide sufficient preservation of our original intent of ensuring that the home health benefit relies on the patient's physician (or subsequently, the allowed practitioner) to determine eligibility for home health services, and that the physician or NPP performing the face-to-face encounter should be a practitioner who is most knowledgeable and has firsthand information of the patient's current clinical condition when certifying the patient's eligibility for home health services and establishing a patient's plan of care. As such, we proposed to revise Sec. 424.22(a)(1)(v)(A) to state that the face-to-face encounter must be performed by one of the following: a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant as defined at 42 CFR 484.2; or a certified nurse-midwife as defined in section 1861(gg) of the Act as authorized by State law. We also proposed to remove Sec. 424.22(a)(1)(v)(C), which limits the face-to-face encounter to the certifying physician or allowed practitioner unless the encounter is performed by either of the following: A certified nurse midwife as described in paragraph (a)(1)(v)(A)(4) of this section. A physician, physician assistant, nurse practitioner, or clinical nurse specialist with privileges who cared for the patient in the acute or post-acute facility from which the patient was directly admitted to home health and who is different from the certifying practitioner. We stated that this additional flexibility should decrease ambiguity regarding which providers are able to complete the face-to- face encounter and potentially improve access to home health services by increasing the number of providers allowed to perform the face-to- face encounter. We noted that these revisions would also address concerns that the current regulations do not align with the CARES Act language. We solicited comments on these proposed revisions to 42 CFR 424.22(a)(1)(v) and the proposed removal of Sec. 424.22(a)(1)(v)(C). Comment: All commenters expressed strong support for the proposed changes that would expand who can conduct face-to-face encounters. Some commenters specifically expressed appreciation that CMS proposed these changes after they were suggested by [[Page 55413]] stakeholders in past comments and letters to CMS. Commenters consistently praised CMS for aligning regulations with the CARES Act provisions and simplifying the process, which addresses timely care initiation while maintaining program integrity. Additionally, commenters stated that the proposed changes would improve access to care and administrative efficiency due to operational flexibility, streamlined processes, and reduce administrative complexity. They also stated that the proposed changes would improve workforce optimization allowing for team-based care and resource utilization, especially in complex care settings, rural areas, HHAs with staffing challenges, and when managing referrals from various settings. Response: We thank commenters for their support. Comment: A few commenters requested that CMS provide additional clarification and guidance related to implementation details, documentation requirements, and acceptable formats to ensure consistent application across contractors, specifically as they relate to facility and community referrals, MACs, and auditors. Another commenter requested clarification regarding the requirement that face-to-face encounters need to be related to the primary reason for home health services, mentioning that this requirement has been interpreted by HHAs to mean that the primary diagnosis needs to be in perfect alignment with the face-to-face encounter. Additionally, a few commenters asked clarifying questions related to the proposed face-to-face encounter changes as follows: Will HHAs be required to delay sending the certification statement until the completed face-to-face encounter documentation is received, or can a handoff be documented in other ways? If documentation of collaboration is required, will it suffice for the HHA to record the process, or must a formal order be signed by both the certifying provider and the face-to-face encounter provider? If a specialist performs the face-to-face encounter, will HHAs be required to demonstrate how that specialist is involved in the patient's plan of care? And will CMS mandate that Medicare Advantage (MA) plans align their requirements with CMS policy, or should HHAs prepare for distinct processes across MA plans? A few commenters requested guidance on whether CMS intends to issue parameters to guide how HHAs and practitioners demonstrate that the face-to-face encounter is conducted by the most knowledgeable practitioner, especially in situations where care is shared among providers. These commenters also requested that CMS maintain flexibility for HHAs and practitioners to determine, based on clinical judgment and care team structure, which practitioner is best positioned to perform the face-to-face encounter while still meeting eligibility and certification requirements. One commenter also recommended that educational materials related to regulatory changes be made available in Spanish to avoid errors in the interpretation of documentation requirements. Response: We thank the commenters for their recommendations. We will take all these suggestions into consideration when updating subregulatory guidance with additional clarifying information and examples if needed. Additionally, we have issued instructions in the past to the contractors who perform medical reviews to ensure compliance with this regulation, and we will continue to educate MACs and auditors to further support consistent application of existing regulations and this added flexibility. We would like to remind readers that these changes only add flexibility to the face-to-face encounter and do not otherwise change the intent, documentation requirements, or acceptable formats of the face-to-face encounter. We refer readers back to our subregulatory guidance in the Medicare General Information, Eligibility and Entitlement Manual (Pub. 100-01, chapter 4, section 30.1), the Medicare Benefit Policy Manual (Pub. 100-02, chapter 7, section 30.5), and the Medicare Program Integrity Manual (Pub. 100-08, chapter 6, sections 6.2.1 and 6.2.3) for additional details on our program integrity, quality goals, and requirements for the face-to-face encounters. We also remind commenters that diagnosis codes are not required to be on the face-to-face documentation and do not exactly have to match the primary diagnosis for which the patient is receiving home health services. Rather, the face-to-face documentation has to sufficiently demonstrate that the encounter was related to the primary reason that home health services were needed (42 CFR 424.22(a)(1)(v)). With respect to the specific questions on timing of the face-to-face encounter and certification statement, the HHA's method of recording collaboration between providers including specialists, and how HHAs and practitioners can demonstrate the most knowledgeable practitioner, we remind readers again that these changes allow for additional flexibility with respect to the practitioners who can complete the face-to-face encounter; the intent and guidelines of the face-to-face encounter and other payment policies are otherwise unchanged. Additionally, a condition of participation for HHAs includes care coordination, such as assuring communication with all physicians or allowed practitioners involved in the plan of care and integrating orders from all physicians or allowed practitioners involved in the patient's plan of care to assure the coordination of all services and interventions. We agree with the commenter that HHAs should use clinical judgment to determine what practitioner is the most appropriate to perform the face-to-face encounter, and we intend to maintain this flexibility for HHAs; however, the documentation needs to support that the physician completing the face-to-face encounter has firsthand information of the patent's primary reason for needing home health services and also is the most appropriate (that is, the most knowledgeable) provider to complete the face-to-face encounter. Lastly, regarding Medicare Advantage plan requirements, this is outside the scope of our proposed policy, as this policy only applies to Medicare FFS home health payment requirements. Comment: A commenter requested that the face-to-face encounter requirement be eliminated, noting their belief that it creates an administrative burden due to diverting limited resources from patient care to paperwork navigation and creating unnecessary obstacles for patients and providers, causes access to care concerns due to delays and disruptions to care, and is ineffective in achieving the original intent of the requirement, which was to reduce fraud, waste, and abuse. This commenter suggested that CMS focus its program integrity efforts on targeting ``bad providers'' instead of implementing broad requirements that burden ``good providers'' and prioritize outcomes over administrative processes. Response: We appreciate the commenter's feedback; however, the face-to-face encounter requirement is set forth in section 1814(a)(2)(C) of the Act, and, because this is a statutory requirement, we must require this encounter as a condition for payment and have no regulatory discretion to eliminate it. As such, we refer readers back to the CY 2011 HH PPS final rule, where we cited research that supports that recent physician involvement results in significantly better patient outcomes and decreased hospitalizations compared to patients who did not receive a face-to-face physician visit during their episode of [[Page 55414]] care (Wolff et al., 2009, p. 11511). Additionally, the CY 2011 HH PPS final rule addressed concerns about feasibility by providing increased flexibility to the time frames in which face-to-face encounters are completed in order to address access to care risks, especially those faced in rural areas, and accounted for administrative burden. Care coordination, including assuring communication with all physicians or allowed practitioners involved in the plan of care, is a condition of participation and the responsibility of the HHA. Additionally, we note that these changes provide additional flexibility by allowing more providers to conduct the face-to-face encounter. Comment: A few commenters requested that telehealth face-to-face encounters be permitted to reduce burden on beneficiaries and improve access to care. One commenter requested that Puerto Rico be given this flexibility to utilize telehealth face-to-face encounters due to the recurring natural disasters that they face. Response: We thank commenters for their suggestions. Telehealth face-to-face encounters can be performed at an approved originating site as specified in the Medicare Benefit Policy Manual (Pub. 100-02, chapter 7, section 30.5.1.1). Final Decision: We are finalizing the changes to the face-to-face encounter regulations as proposed.

A. Background and Statutory Authority

The HH QRP is authorized by section 1895(b)(3)(B)(v) of the Act. Section 1895(b)(3)(B)(v)(II) of the Act requires that, for 2007 and subsequent years, each home health agency (HHA) submit to the Secretary in a form and manner, and at a time, specified by the Secretary, such data that the Secretary determines are appropriate for the measurement of health care quality. To the extent that an HHA does not submit data in accordance with this clause, the Secretary shall reduce the home health market basket percentage increase applicable to the HHA for such year by 2 percentage points pursuant to section 1895(b)(3)(B)(v)(I) of the Act. As provided at section 1895(b)(3)(B)(vi) of the Act, depending on the market basket percentage increase applicable for a particular year, as further reduced by the productivity adjustment (except in 2018 and 2020) described in section 1886(b)(3)(B)(xi)(II) of the Act, the reduction of that increase by 2 percentage points for failure to comply with the requirements of the HH QRP may result in the home health market basket percentage increase being less than 0.0 percent for a year, and may result in payment rates under the HH PPS for a year being less than payment rates for the preceding year. Section 1890A of the Act requires that the Secretary establish and follow a pre-rulemaking process, in coordination with the consensus-based entity (CBE) with a contract under section 1890 of the Act, to solicit input from certain groups regarding the selection of quality and efficiency measures for the HH QRP. The HH QRP regulations can be found at 42 CFR 484.245 and 484.250.

B. Summary of the Provisions

In accordance with the statutory authority at section 1895(b)(3)(B)(v) of the Act, we proposed the following policies in the proposed rule: We proposed 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. CMS proposed the removal of four assessment items: one Living Situation item, two Food items, and one Utilities item. We also proposed to revise the policy to allow providers that fail to provide complete, timely data to CMS to submit a request for reconsideration if they can demonstrate full compliance. We noted in the proposed rule that in very limited circumstances, we would permit the HHA 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 disaster such as a hurricane, tornado, or earthquake) during the 30-day reconsideration period. We also proposed to implement a revised HHCAHPS Survey beginning with the April 2026 sample month. The proposed rule also included a proposal to update regulatory text to account for all-payer data submission of OASIS data. As part of the request for information (RFI) contained in the proposed rule, we sought feedback on a potential change to the final data submission deadline from 4.5 months to 45 days after the close of the period. 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 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. For a detailed discussion of the considerations we historically use for measure selection for the HH QRP quality, resource use, and other measures, we refer readers to the CY 2016 HH PPS final rule (80 FR 68695 through 68696). In the CY 2019 HH PPS final rule with comment period (83 FR 56548 through 56550), we finalized the factors we consider for removing previously adopted HH QRP measures.

C. Quality Measures Currently Adopted for the CY 2026 HH QRP

The HH QRP currently includes 19 measures for the CY 2026 program year, as described in table C-19. BILLING CODE 4120-01-P [[Page 55415]] [GRAPHIC] [TIFF OMITTED] TR02DE25.043 [[Page 55416]] BILLING CODE 4120-01-C

D. Removal of the ``COVID-19 Vaccine: Percent of Patients/Residents Who

Are Up to Date'' (Patient/Resident COVID-19 Vaccine Measure) Beginning With the CY 2026 HH QRP In the CY 2026 HH PPS proposed rule, we proposed to remove the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date'' measure (``Patient/Resident COVID-19 Vaccine'' measure) beginning with the CY 2026 HH QRP under removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program (Sec. 484.245(b)(3)(viii)). We noted that the estimated burden of collecting this information annually across all 11,904 active HHAs is 47,168 hours at a cost of $4,326,249 and referred readers to section VII of the proposed rule for more details on the estimated burden reduction related to the proposal. When we adopted the Patient/Resident COVID-19 Vaccine measure, COVID-19 continued to be a major challenge for HHAs, with older adults at a significantly higher risk of mortality, severe disease, and death following infection (88 FR 77762). We refer readers to the CY 2024 HH PPS final rule, where we adopted Patient/Resident COVID-19 Vaccine measure into the HH QRP for further background on the adoption of this measure (88 FR 77762 through 77764). Since that time, HHAs have expressed concerns about data collection challenges and increased provider burden in collecting patient immunization data.\15\ Providers were required to integrate the required Patient/Resident COVID-19 Vaccine OASIS item into their assessment instrument and ensure accurate assessment for all their patients. While preventing the spread of COVID-19 remains a public health goal, the number of COVID-19 cases and deaths \16\ is declining, and as noted in the proposed rule, we believe the continued costs and burden to providers of reporting this measure outweigh the benefit of continued information collection on COVID-19 vaccination coverage among patients in HHAs. For the COVID-19 items collected at transfer of care, death at home, and discharge, we estimate a decrease in clinician cost of $4,326,249 or $363 ($4,326,249/11,904) for each of the 11,904 active HHAs. We refer readers to section VII.A.3. of the proposed rule for more details on this estimated burden reduction. --------------------------------------------------------------------------- \15\ Standing Technical Expert Panel for the Development, Evaluation, and Maintenance of Post-Acute Care (PAC) and Hospice Quality Reporting Program (QRP) Measurement Sets Summary Report December 15, 2023. https://www.cms.gov/files/document/december-2023-pac-and-hospice-cross-setting-tep-summary-report.pdf-1. \16\ Provisional COVID-19 Deaths, by Week, in The United States, Reported to CDC. Accessed on March 18, 2025, via https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00. --------------------------------------------------------------------------- We proposed that, effective with assessments completed on or after the date of publication of this CY 2026 HH PPS final rule, the data from the ``Patient/Resident COVID-19 Vaccination is Up to Date'' OASIS item (O0350) would no longer be used in the calculation of the Patient/ Resident COVID-19 Vaccine measure, and the measure itself would be withdrawn pursuant to measure removal factor eight (set out at 42 CFR 484.245(b)(3)(viii)). We proposed to remove the Patient/Resident COVID- 19 Vaccination is Up to Date item (O0350) from the OASIS effective April 1, 2026, since it is not technically feasible to remove the item earlier. However, under our proposal, until this item can be removed from the OASIS, HHAs would be permitted to submit any valid response (0--No, 1--Yes, or dash) on a Transfer, Death at home, or Discharge OASIS assessment, without any future quality measure implications. Note that the item must be completed with one of these three valid responses (must not be left blank) in order for the submitted assessment not to be rejected by the iQIES under existing submission specification edits. We invited public comments on our proposal to remove the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure from the HH QRP beginning with the CY 2026 HH QRP. The following is a summary of the comments received and our responses: Comment: A majority of commenters supported CMS's proposal to remove the Patient/Resident COVID-19 Vaccine measure from the HH QRP, with most citing the collection burden associated with the measure as support for its removal. Many commenters highlighted that there are many other sources that provide national COVID-19 vaccination rates. Some cited the end of the public health emergency and the reduced need to track COVID-19 vaccination rates through a standalone process. Some commenters also recommended that, given the expected timeframe for removal of this measure, CMS should clearly explain how providers could reduce their burden associated with the proposal to make the Patient/ Resident COVID-19 Vaccination is Up to Date OASIS item (O0350) voluntary. Response: We thank commenters for their support. We agree that the burden associated with this measure, including the resources spent by HHA staff in trying to ascertain patients' vaccination status, outweighs the benefit of its continued inclusion in the program, particularly given the end of the COVID-19 PHE,\17\ the decrease in COVID-19 cases, as well as the availability of treatments for COVID-19. We will ensure that HHAs understand that submission of the Patient/ Resident COVID-19 Vaccination OASIS item (O0350) is voluntary with the final posting of this final rule through a range of CMS communication methods. This will allow for providers to immediately reduce efforts in collecting the O0350 item by providing any valid response until the item is removed with the implementation of OASIS E2 on April 1, 2026. --------------------------------------------------------------------------- \17\ https://archive.cdc.gov/www_cdc_gov/coronavirus/2019-ncov/your-health/end-of-phe.html. --------------------------------------------------------------------------- Comment: A few commenters opposed the proposed removal of the Patient/Resident COVID-19 Vaccine measure from the HH QRP. These commenters cited the continued recommendation by the Centers for Disease Control and Prevention (CDC) and the Advisory Committee on Immunization Practices (ACIP) in 2025 for adults and especially adults 65 or older to receive the COVID-19 vaccine due to higher rates of hospitalization and deaths amongst this population associated with COVID-19. Another commenter noted that this measure offers valuable information to clinicians entering a patient's home and helps providers to better understand a patient's risk of contracting or transmitting COVID-19. Response: We appreciate the commenters' concerns for providers and patients in home health. We note that since the end of the COVID-19 PHE, there has been an increase in the availability of treatments, including antiviral medications used to treat mild to moderate COVID-19 in vulnerable populations.\18\ The CDC has also recently updated its adult and child immunization schedules to apply individual-based decision-making to COVID-19 vaccination.\19\ As we stated in the proposed rule, because the number of COVID-19 cases and deaths[thinsp]is declining and the availability of treatments has increased, we believe the threat to vulnerable populations, [[Page 55417]] such as HH patients, is also reduced. There has also been a reduction in risk to HH providers treating patients in homes. On these bases, we believe the continued costs and burden to providers of reporting this measure outweigh the benefit of continued information collection on COVID-19 vaccination coverage among patients in HHAs. --------------------------------------------------------------------------- \18\ COVID-19 Treatment Options, https://www.cdc.gov/covid/treatment/index.html. \19\ https://www.cdc.gov/media/releases/2025/cdc-immunization- schedule-adopts-individual-based- decision.html#:~:text=Unlike%20the%20COVID%2D19%20primary,physicians% 2C%20nurses%2C%20and%20pharmacists. --------------------------------------------------------------------------- Final Decision: After consideration of the public comments, we are finalizing our proposal to remove the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure from the HH QRP beginning with the CY 2026 HH QRP. Beginning with patients discharged on or after April 1, 2026, HHAs would not be required to collect and submit the Patient/Resident COVID-19 Vaccine measure data to CMS. Until that time and with the posting of this final rule, HHAs may submit any valid response (0--No, 1--Yes or dash) on a Transfer, Death at home, or Discharge OASIS assessment, without any future quality measure implications.

E. Removal of Four Standardized Patient Assessment Data Elements

Beginning With the CY 2026 HH QRP In the CY 2025 HH PPS final rule (88 FR 88433 through 88439), we finalized the adoption of four items as standardized patient assessment data elements under the social determinants of health (SDOH) category: one item for Living Situation (R0310); two items for Food (R0320A and R0320B); and one item for Utilities (R0330). As finalized in the CY 2025 HH PPS final rule, HHAs would be required to report these data elements using the OASIS beginning with patients discharged in the CY 2027 HH QRP and each program year after (89 FR 88433 through 88439). In the proposed rule, we proposed to remove the four standardized patient assessment data elements under the SDOH category, as we acknowledged the burden associated with these items. We noted that we continuously look for ways to balance the need for data collection regarding quality care and the burden of data collection on health care providers. CMS has a goal to facilitate improved health care delivery by requiring different systems and software applications to communicate and exchange data. Therefore, we noted we will work towards the workflow for these specific data elements being part of a low burden interoperable electronic system. The focus will turn towards how these data and associated recommendations exchanged can improve care coordination, efficiency, reduction in errors and patient experience. As health IT advances and interoperability of data becomes more standardized, the burden to collect and share clinical data on these and other relevant patient information will become less burdensome, allowing for better outcomes for HH patients and their families. The objectives of the HH QRP continue to be the improvement of care, quality and health outcomes for all patients through transparency and quality measurement, while not imposing undue burden on essential health providers. HHAs and providers across the ndustry play a vital role in improving the health of all patients, including those who may be experiencing unstable housing, food insecurity or challenges paying utilities. At the same time, we recognized the burden that the collection of the additional data will impose on already overextended staff. We also acknowledged the additional cost and resources HHAs will bear for training HH staff and altering their workflows if they are required to collect and submit these items. The objectives of the HH QRP continue to be the improvement of care, quality and health outcomes for all patients through transparency and quality measurement. The estimated savings from not collecting this information annually across all 11,904 HHAs is 158,835 hours, with total savings of $13,484,033 (or $1,133 per HHA). We referred readers to section VII.A.3. of the proposed rule for more details on this estimated burden reduction. We proposed that HHAs would no longer be required to collect and submit Living Situation (R0310), Food (R0320A and R0320B), and Utilities (R0330) beginning with patients discharged on or after April 1, 2026. We noted that these items would not be required to meet HH QRP requirements beginning with the CY 2026 HH QRP. We invited public comments on our proposal to remove four standardized patient assessment data elements collected under the SDOH category from the HH QRP beginning with the CY 2026 HH QRP. The following is a summary of the comments received and our responses: Comment: A slight majority of commenters expressed their support for the proposal to remove the four standardized patient assessment data elements focused on collecting information related to SDOH. These commenters often acknowledged the importance of better understanding of SDOH in addressing healthcare challenges and noted that there may be less burdensome methods for obtaining SDOH data. Response: We thank commenters for their support of our proposal to remove these four SDOH items from the standardized patient assessment data elements collected and submitted using the OASIS. We continue to monitor the HH QRP data collection requirements to look for ways to reduce the administrative burden, where appropriate, while maintaining a high standard of quality care. We agree that removing these items at this time will alleviate some of the burden on HH providers associated with HH QRP data collection and submission requirements. We intend to align the HH QRP more closely with our overarching goal for improved health care delivery through health IT advances and low-burden interoperable electronic systems. As we stated in the CY 2026 HH PPS proposed rule (90 FR 2908), we plan to refocus efforts on how data elements can improve care coordination, efficiency, reduction in errors, and patient experience. Comment: Many commenters opposed CMS' proposal to remove the four SDOH items from the HH QRP. Many commenters who opposed the SDOH items' proposed removal shared that collecting these data allows HHAs to identify barriers to care access and adherence to care plans. Some commenters further stated that they are already collecting SDOH data on their patients to support efforts of nurses, social workers, and care managers. A commenter stated that these items are particularly useful in rural HHAs to address deficits in rural patients' living situations. A few commenters stated these SDOH items were particularly important in caring for patients with complex or chronic conditions and geriatric patients. These commenters noted that integration of SDOH into care planning can result in cost savings by reducing readmissions and emergency department visits while improving patients' post-care outcomes. Response: We appreciate the commenters' concerns and feedback regarding the importance of collecting these SDOH items from HH patients and acknowledge the value that commenters ascribe to the collection of this information for discharge planning and care coordination. We recognize commenters' experiences using SDOH data to improve outcomes and facilitate high quality care through improved coordination between HH providers. We also acknowledge feedback from commenters that healthcare outcomes may be different for those patients experiencing unstable housing, food insecurity, or challenges paying utilities. [[Page 55418]] However, in reviewing the data collection and reporting requirements for the CY 2027 HH QRP, we determined that these SDOH items should be removed from the OASIS prior to the start of data collection and submission. We have re-evaluated the value of adding these SDOH items to the OASIS for the purposes of the HH QRP against their need at this time. We considered that HHA have not yet begun to report these data, we do not currently have a specific use for these items in the HH QRP, these SDOH items are not clinical items related to direct patient care, and we have refocused efforts on modernization of health care and health care systems which may support less burdensome ways of collecting SDOH data in the future. We continuously review and reassess the balance of data collection and HH provider burden for the HH QRP, and at this time, determined these SDOH items should be removed prior to implementation. The objectives of the HH QRP continue to be the improvement of care, quality, and health outcomes for all patients through transparency and quality measurement, while balancing burden for HHAs and their staff. As outlined in our RFI in the CY 2026 HH PPS proposed rule (90 FR 29108), we are refocusing our efforts to advance the digital quality measurement transition to include ways for data elements, such as those related to SDOH, to be collected as part of a low-burden interoperable electronic system. Given these administrative goals and efforts to reduce burden for HHAs, we do not believe that the collection of SDOH items via the OASIS assessment outweighs the cost and burden of collecting them at this time. Comment: Some commenters noted that SDOH screening has already been integrated into many HHAs care coordination workflows and that removing the SDOH items without a plan would disrupt current care processes. Response: The purpose of the HH QRP data is to meet CMS quality reporting requirements. Even though we will no longer require HHAs to collect and submit these four items to CMS using the OASIS, HHAs can still collect and use SDOH information and share it with local agencies, in compliance with applicable laws governing confidentiality and privacy of patient information, if they believe this would be beneficial. We understand implementation efforts to collect and submit any data elements for the purposes of meeting HH QRP requirements are inherently burdensome for HHAs and their staff, particularly adopting and implementing new data elements since they involve adjustments to health IT systems and electronic health record (EHRs), workflows, and staff training. We are always reviewing and reassessing this balance of data collection and HH provider burden for the HH QRP. For the four SDOH items, we reconsidered the value of their collection and submission to us for the purposes of the HH QRP against their need at this time. We specifically considered that these items are not clinical in nature. While they reflect certain aspects of a resident's health that may inform clinical decisions, they are not factors within the scope of care that an HHA and its staff provide. Comment: A few commenters who opposed our proposal to remove the four SDOH items noted that these items are critical for risk adjustment and evaluating HHA performance across demographic groups. Response: We wish to clarify that these four SDOH items are not currently being used for risk adjustment for any HH QRP measures, and we do not currently utilize them for evaluating HH performance across demographic groups. Furthermore, there are no current plans for utilizing the four SDOH items in risk adjustment models or to report HH performance stratified by these elements, either publicly or in confidential feedback reports. While we finalized the adoption of the four SDOH items in the CY 2025 HH PPS final rule (88 FR 88433 through 88439), these items were not yet available on the OASIS. Because data collection has not begun and we do not have an active use for these items, we have re-evaluated the value of adding them to the OASIS at this time. Final Decision: After consideration of the public comments, we are finalizing our proposal to remove four standardized patient assessment data elements (one item for Living Situation (R0310); two items for Food (R0320A and R0320B); and one item for Utilities (R0330)) collected under the SDOH category from the HH QRP beginning with the CY 2026 HH QRP without modification.

F. Amending the Data Non-Compliance Reconsideration Request Policy and

Process Beginning With the CY 2026 HH QRP

1. Background

The HH QRP reconsiderations and appeals process was finalized in the CY 2013 HH PPS final rule (77 FR 67096). At the conclusion of the required quality data reporting and submission period, we review the data received from each HHA during that reporting period to determine if the HHA met the HH QRP reporting requirements. HHAs that are found to be non-compliant with the HH QRP reporting requirements for the applicable calendar year will receive a 2-percent point reduction to its market basket percentage update for that calendar year. In the CY 2018 HH PPS final rule (82 FR 52738 through 51740), CMS finalized a process for HHAs to request and for us to grant exceptions and extensions for the reporting requirements of the HH QRP for one or more quarters beginning with the CY 2019 HH QRP when there are certain extraordinary circumstances outside the control of the HHA. When an exception or extension is granted, we finalized that we would not reduce the HHA's PPS payment for failure to comply with the requirements of the HH QRP. In that rule, we finalized a policy that, in very limited circumstances, CMS could grant a request by an HHA to extend the proposed deadline for their reconsideration requests (82 FR 52738 through 51740). We stated that, to extend the deadline, HHAs would have to request an extension and demonstrate that ``extenuating circumstances'' existed which prevented the filing of the reconsideration request by the proposed 30-day deadline (82 FR 52738 through 51740). In the CY 2018 HH PPS final rule (82 FR 51752), we codified the reconsideration policy and process for HHAs at Sec. [thinsp]484.250. As codified, our regulation at Sec. [thinsp]484.250 addressed how we send our written notification of non-compliance to an HHA, the process for an HHA to request reconsideration, what information an HHA must include with its reconsideration request (for example, documentation that demonstrates the HHA's compliance HH QRP requirements), and how we would notify the HHA of our final decision regarding its reconsideration request. In 2019, we moved the regulatory text to Sec. [thinsp]484.245 and updated and clarified the regulatory text in the CY 2020 HH PPS final rule (84 FR 60645). As we noted in the proposed rule, we became aware that there were inconsistencies in our preamble and regulation text regarding HHA requests for reconsideration. On this basis, in the proposed rule, we sought to address those inconsistencies. [[Page 55419]]

2. HH QRP Reconsideration Policy: Amending and Codifying Requirements

Related to Requests for Extension To File Reconsideration Request Beginning With the CY 2027 HH QRP As noted previously, in the CY 2018 HH PPS final rule (82 FR 51738 through 51740), we provided that, in very limited circumstances, we may grant a request by an HHA to extend the deadline to submit its reconsideration request, so long as the HHA requested the extension and demonstrated that extenuating circumstances existed that prevented it from filing a reconsideration request by the 30-day deadline (82 FR 51738 through 51740). However, we did not codify this policy-- permitting HHAs to request an extension to file their reconsideration request--in our regulation text at Sec. 484.245(d). In implementing this finalized policy, we have noted an area where further clarity would be beneficial to HHAs. Specifically, we have noted that HHAs may benefit from clearly demarcated deadlines. Although we believe an HHA would have an interest in asking for an extension to file a reconsideration request prior to the deadline, our policy currently does not specify a deadline for an HHA to submit its request for such an extension (82 FR 51738 through 51740). in order to support such a request, the HHA must demonstrate that extenuating circumstances existed that prevented filing the reconsideration request by the 30-day deadline (82 FR 51738 through 51740). However, we have not specified a deadline from when the extenuating circumstances occurred. We believe HHAs may benefit from further specificity by setting a deadline for submitting a request to extend the deadline to file a reconsideration request. On this basis, we proposed to amend our reconsideration policy as codified at Sec. 484.245(d) to permit a HHA to request, and CMS to grant, an extension to file a request for reconsideration of a non- compliance determination if, during the period to request a reconsideration as set forth in Sec. 484.245(d), the HHA was affected by an extraordinary circumstance beyond the control of the HHA (for example, a natural or man-made disaster such as a cyber-attack, hurricane, tornado, or earthquake). We proposed that the HHA submit its request for an extension to file a reconsideration request to CMS via email no later than 30 calendar days from the date of the written notification of non-compliance. We proposed that the HHA's extension request, submitted to CMS, must contain all of the following information: (1) the CCN for the HHA; (2) the business name of the HHA; (3) the business address of the HHA; (4) certain contact information for the HHA's chief executive officer or designated personnel; (5) a statement of the reason for the request for the extension; and (6) evidence of the impact of the extraordinary circumstances, including, for example, photographs, newspaper articles, and other media. We proposed to codify this process at Sec. 484.245(d)(5). We further proposed that we would notify the HHA in writing of our final decision regarding its request for an extension to file a reconsideration of the non-compliance request via an email from CMS. We proposed to notify the HHA via email because this would allow for more expedient correspondence with the HHA, given the 30-day reconsideration timeframe. We proposed to codify this process at Sec. 484.245(d)(6). We noted that we considered proposing similar modifications across all post-acute care setting quality reporting programs to more closely align the reconsideration processes. We invited comments on these proposals to amend the HH QRP reconsideration policy to permit HHAs to request an extension to file a reconsideration request beginning with the CY 2027 HH QRP and to codify this proposed policy and process at Sec. 412.634(d)(5) and (d)(6). The following is a summary of the comments received and our responses: Comments: All commenters supported the proposal to amend the current reconsideration policy to permit HHAs to request an extension to file a reconsideration request, citing the increasing number of natural and man-made emergencies that could require HHAs to submit such a request. Response: CMS thanks commenters for their support of the proposed updates to the current reconsideration policy that would permit HHAs to request an extension to file a reconsideration request. Final Decision: After consideration of the public comments received, we are finalizing these proposals to amend the HH QRP Reconsideration policy to permit HHAs to request an extension to file a reconsideration request beginning with the CY 2027 HH QRP and to codify this proposed policy at Sec. 484.245(d)(5) and (d)(6).

3. Codifying the Bases on Which CMS Can Grant a Reconsideration Request

As discussed previously, in the CY 2013 HH PPS final rule, we stated that, after we reviewed an HHA request for reconsideration, we may reverse our initial finding of non-compliance if: (1) the HHA provides proof of compliance with all requirements during the reporting period; or (2) the HHA provides adequate proof of a valid or justifiable excuse for non-compliance if the HHA was not able to comply with requirements during the reporting period (77 FR 67096). We also stated that we will uphold an initial finding of non-compliance if the HHA cannot show any justification for non-compliance (77 FR 67096). As previously discussed, we codified our reconsideration policy at Sec. 484.245(d) in the CY 2013 HH PPS final rule (77 FR 67096). Our regulation at Sec. 484.245(d)(3) requires that an HHA's request for reconsideration includes accompanying documentation that demonstrates the HHA's compliance with the HH QRP requirements. Then, we will notify the HHA in writing regarding our final decision on its reconsideration request (Sec. 412.634(d)(4)). We noted in the proposed rule that we believe it would be beneficial for HHAs if we codify our specific bases for granting a reconsideration request in our regulation at Sec. 484.245(d). These have not been previously outlined in regulatory text and CMS has outlined these details for clarity for any HHA seeking an extension in the reconsideration process. On these bases, we proposed to modify our reconsideration policy to provide that we will grant a timely request for reconsideration and reverse an initial finding of non-compliance, only if CMS determines that the HHA was in full compliance with the HH QRP requirements for the applicable program year. We would consider full compliance with the HH QRP requirements to include CMS granting an exception or extension to HH QRP reporting requirements under our extraordinary circumstance exception and extension (ECE) policy at Sec. 484.245(c). However, to demonstrate full compliance with our ECE policy, the HHA would need to comply with our ECE policy's requirements, including the specific scope of the exception or extension as granted by CMS. We proposed to amend Sec. 484.245(d)(4) to codify this modified policy. We noted that we considered proposing similar modifications across all post-acute care setting quality reporting programs to more closely align the reconsideration processes. We invited comments on these proposals to amend the bases by which we grant a reconsideration request [[Page 55420]] under the HH QRP reconsideration policy and to codify this proposed policy at Sec. 484.245(d)(5). The following is a summary of the comments received and our responses: Comment: All commenters supported CMS's proposal to clarify the current data non-compliance reconsideration policy. Some commenters noted that this update was needed, with HHAs facing a range of disasters more frequently. Many commenters also expressed that the consistency of the policy across care settings was also welcomed. One commenter requested that CMS further provide technical assistance and practical examples of acceptable supporting documentation, especially for smaller agencies that may lack compliance resources. Another commenter sought to determine CMS's plans to update guidance to surveyors in light of this policy update. Response: CMS thanks commenters for their support of the updates to the data non-compliance reconsideration request policy and process. CMS will seek to ensure the requirements of acceptable supporting documentation as part of the reconsideration process are available to stakeholders. CMS will also ensure all stakeholders engaged in the reconsiderations process have clear guidance on how this update affects current processes that evaluate HHA compliance. Final Decision: After consideration of the public comments received, we are finalizing our proposals to amend the bases by which we grant a reconsideration request under the HH QRP reconsideration policy and to codify this proposed policy at Sec. 484.245(d)(5).

1. Statutory Authority and Background

Section 1891(d) of the Act, cross-referencing section 1891(c)(2)(C)(i)(I) of the Act (section 4021(b) of Pub. L. 100-203 (December 22, 1987)) requires the Secretary to develop a comprehensive assessment for Medicare-participating HHAs. In 1993, CMS (then known as HCFA) developed an assessment instrument that identified each patient's need for home care and the patient's medical, nursing, rehabilitative, social and discharge planning needs. As part of this assessment, Medicare-certified HHAs were required to use a standard core assessment data set, the Outcome and Assessment Information Set (OASIS). As part of the home health assessment, the statute requires a survey of the quality of care and services furnished by the agency as measured by indicators of medical, nursing, and rehabilitative care provided by the HHA. OASIS is the designated assessment instrument for use by an HHA in complying with the requirement and HHAs must submit the data collected by the OASIS assessment to CMS as an HHA condition of participation (42 CFR part 484.45). Section 704 of the Medicare Prescription Drug Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, December 12, 2003) ``suspended'' the legal authority of the Secretary to require HHAs to report non-Medicare and non-Medicaid patient data to CMS until at least 2 months after the Secretary published final regulations on CMS's collection and use of OASIS data following the submission of a report to Congress on the study required under section 704(c) of the MMA. Subsequently, CMS conducted the study from 2004 to 2005 and submitted a report \20\ to Congress in 2006 titled ``The OASIS Study: The Costs and Benefits Associated with the Collection of Outcome and Assessment Information Set (OASIS) Data on Private Pay Home Health Patients-- Report to Congress.'' While the 2006 report recommended that the suspension continue, the passage of the Improving Medicare Post-Act Care Transformation (IMPACT) Act (Pub. L. 113-115) in 2014 required CMS to create a uniform quality measurement system that allows CMS to compare outcomes across post-acute care (PAC) providers. --------------------------------------------------------------------------- \20\ https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf. --------------------------------------------------------------------------- The final rule titled, ``Medicare Program; Calendar Year (CY) 2023 Home Health Prospective Payment System Rate Update; Home Health Quality Reporting Program Requirements; Home Health Value-Based Purchasing Expanded Model Requirements; and Home Infusion Therapy Services Requirements'' \21\ finalized the requirement for HHAs to report OASIS data on all patients, regardless of payer, for the applicable 12-month performance period (example July 1, 2025-June 30, 2026) (87 FR 66862). With the CY 2025 HH PPS final rule, CMS established that start of care (SOC) is the first assessment that can be submitted for a non-Medicare/ non-Medicaid patient, either on or after January 1, 2025, for the phase-in (voluntary) period or on or after July 1, 2025, for the mandatory period. CMS would use the M0090 ``Date Assessment Completed'' date of the SOC assessment to identify non-Medicare/non-Medicaid patient assessments in the phase-in and mandatory periods (89 FR 88439 through 88441). This ended the suspension of the OASIS data collection on non-Medicare and non-Medicaid HHA patients. As discussed in the final rule, the most accurate representation of the quality of care furnished by HHAs is best captured by calculating the assessment-based measures rates using OASIS data submitted on all HHA patients receiving skilled care, regardless of payer. --------------------------------------------------------------------------- \21\ https://www.federalregister.gov/documents/2022/11/04/2022-23722/medicare-program-calendar-year-cy-2023-home-health-prospective-payment-system-rate-update-home. ---------------------------------------------------------------------------

2. Updates to the Home Health Agency CoPs To Align With the OASIS All-

Payer Submission Requirements (Sec. Sec. 484.45(a) and 484.55(d)(1)(i)) Section 484.45(a) of the HHA CoPs currently requires an HHA to encode and electronically transmit each completed OASIS assessment to the CMS system, regarding each beneficiary, with respect to which information is required to be transmitted (as determined by the Secretary), within 30 days of completing the assessment of the beneficiary. To align with the transition to OASIS all-payer submission requirements as outlined in the CY 2023 Home Health PPS final rule, we proposed at Sec. 484.45(a) to remove the term ``beneficiary'' and replace it with the term ``patient.'' Patients must receive, and an HHA must provide, a comprehensive assessment no later than 5 calendar days after the start of care. The comprehensive assessment not only examines patients' current health, psychosocial, functional, and cognitive status, but also must incorporate the most current version of the OASIS data items. This includes clinical record items, patient history, supportive assistance, etc. Currently, the comprehensive assessment, including administration of OASIS, must be updated and revised as frequently as the patient's condition warrants, but not less frequently than the last five days of every 60 days beginning with the start-date of care. Language at Sec. 484.55(d)(1)(i) references a ``beneficiary elected transfer'' in reference to one scenario in which an OASIS assessment would be updated. To support the transition to OASIS all-payer submission requirements, we also proposed to remove the term ``beneficiary'' at Sec. 484.55(d)(1)(i). We noted that these technical changes to update terminology would further clarify that the requirement for reporting OASIS information applies to all HHA patients receiving skilled services and align the language in the CoPs with the requirements finalized in the CY 2023 [[Page 55421]] and CY 2025 Home Health PPS final rules. We noted that this policy would not change current patient exemptions for OASIS, which are as follows: patients under the age of 18; patients receiving maternity services; and patients receiving only personal care, housekeeping, or chore services.

H. HHCAHPS Survey Updates

a. Survey and Measure Changes Based on feedback from patients and interested parties, CMS launched an effort to update and shorten the Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) survey. CMS conducted a mode experiment with 100 HHAs in 2022. The experiment tested a web-mail mode and a revised survey instrument. The revised survey is shorter than the current survey and includes new questions on topics suggested by interested parties. Specifically, the changes proposed to the survey and the quality measures derived from testing included the following: Addition of three new questions to assess new topics of importance to patients: ++ Whether the care provided helped the patient take care of their health. ++ Whether the patient's family/friends were given sufficient information and instructions. ++ Whether the patient felt the staff cared about them ``as a person.'' Removal of questions or topics of less importance to patients (that is, six questions about medications were reduced to two questions). The following 4 questions were removed: ++ Whether someone asked to see all the prescription and over-the- counter medicines the patient was taking. ++ Whether the patient is taking any new prescription medicines or whether the patient's medicines have changed. ++ Whether home health providers talked to the patient about the purpose for taking new or changed prescription medicines. ++ Whether home health providers talked to the patient about when to take the medicines. Removal of questions not currently used in public reporting composites (that is, three questions on which type of staff served the patient--nurse, physical or occupational therapist, and home care aide). Removal of one question which did not perform well in testing to stand alone or fit into one of the revised composite measures: Whether the patient got information about what care and services they would get when they first started getting home health care. Minor text changes to selected existing questions to help clarify the question or response options, based on feedback from patients. The revised HHCAHPS Survey, including the revised Care of Patients and Communications between Providers and Patients measures, and the three stand-alone measures that remain from the current Specific Care Issues measure were reviewed as part of the 2025 Measures Under Consideration list (MUC2024-054, -055, -061, -062, & -063) through the Pre-Rulemaking Measure Review (PRMR) Post-Acute Care/Long-Term Care (PAC/LTC) Committee. The PRMR PAC/LTC Committee recommended four out of the five measures without any conditions and one of the measures with conditions, such as stratifying the survey data for analysis and including greater detail about the types of medications. For more information, please see https://p4qm.org/sites/default/files/2025-02/PRMR-2024-2025-MUC-Recommendations-Report-Final.pdf. Since the publication of the proposed rule, the HHCAHPS Survey and measures went through consensus-based entity re-evaluation as described here: https://p4qm.org/EM. As of August 7, 2025, the updated HHCAHPS measures were endorsed with a condition that a robust logic model illustrating the actions accountable entities can take to improve patient experience is included in the next measure evaluation in 2030. Due to the very favorable recommendations from the PRMR, we proposed to move forward with the five measures. CMS proposed to implement the revised HHCAHPS Survey beginning with the April 2026 sample month. Table C-20 provides a comparison of the current and proposed HHCAHPS Survey measures. Proposed to move forward with the five measures. CMS proposed to implement the revised HHCAHPS Survey beginning with the April 2026 sample month. Table C-20 provides a comparison of the current and revised or new HHCAHPS Survey measures. BILLING CODE 4120-01-P [[Page 55422]] [GRAPHIC] [TIFF OMITTED] TR02DE25.044 [[Page 55423]] [GRAPHIC] [TIFF OMITTED] TR02DE25.045 [[Page 55424]] [GRAPHIC] [TIFF OMITTED] TR02DE25.046 BILLING CODE 4120-01-C b. Impact on Public Reporting and Star Ratings HHCAHPS Survey measure scores are calculated across four rolling quarters and are published quarterly for all HHAs over the reporting period. The Summary Star Rating is currently based on the Overall Rating of Care and the three composite measures that are equally weighted. We proposed calculating the Summary Rating based on the Overall Rating of Care, the two modified composite measures (Care of Patients and Communications between Providers and Patients), and the three new stand-alone measures related to talking about home safety, reviewing prescribed and over-the-counter medicines, and talking about medicine side effects. In the calculation of the Summary Star Rating, we proposed that the Overall Rating of Care and two modified composite measures would each have a weight of 1 and each of the three new stand- alone measures would have a weight of one-third. The Summary Star Ratings will continue to be calculated using four rolling quarters and will be publicly reported for all HHAs with 40 or more completed surveys over the reporting period. Star Ratings are updated every quarter. To determine what impact the changes to the survey measures will have on public reporting, CMS considered the nature of the measure change. As Talk About Home Safety, Review Medicines, and Talk About Medicine Side Effects are new measures for the HHCAHPS Survey, since they will be reported individually, we will have to wait to introduce public reporting until we have four quarters of data. Although the revised Care of Patients measure is conceptually similar to the current Care of Patients measure, we believe the change (adding two new questions and dropping one question) is substantive and the revised measure should be treated as new for purposes of public reporting and Star Ratings. Similarly, the revised Communications Between Providers and Patients measure is also conceptually similar to the current Communications Between Providers and Patients measure; however, the change (dropping two questions and adding one new question) is substantive and the revised measure should be treated as new for purposes of public reporting and Star Ratings. As such, we proposed waiting to publicly report the new versions of Care of Patients and Communications Between Providers and Patients until we have four quarters of data. We anticipate that the first Care Compare refresh in which publicly reported measures scores will be updated to include the new measures will be October 2027, with scores calculated using data from Q2 2026 through Q1 2027. In the interim period, measure scores will be made available to HHAs confidentially via their Provider Preview reports on the HHCAHPS Survey website after two full quarters of data are submitted. We believe the change to the Overall Rating measure (minor wording change from ``provider'' to ``staff'') is non- [[Page 55425]] substantive (i.e., does not meaningfully change the measure) and along with the unchanged Willingness to Recommend the Agency measure, both measures can continue to be publicly reported in the transition period between the current and new surveys. During the transition period, scores and Star Ratings for the Overall Rating and Willingness to Recommend measures will be calculated by combining scores from quarters using the current and new survey and continue to be reported. c. Survey Administration Changes No survey administration changes were proposed with the new survey. d. Case-Mix and Mode Adjustments Prior to public reporting, HHAs' HHCAHPS Survey scores are adjusted for the effects of case mix. Case mix refers to characteristics of the patient that are not under control of the HHA that may affect reports of home health experiences. Case-mix adjustment is performed within each quarter of data after data cleaning. The current case-mix adjustment model includes the following variables: patient age, patient education, self-reported overall health, self-reported mental health, diagnosis of schizophrenia or dementia, whether the patient lives alone, whether the patient or a proxy answered the survey, and language in which the survey was completed. The model used and adjustments are updated quarterly and are available on the HHCAHPS website at this link: https://homehealthcahps.org/General-Information/Archived-Publicly-Reported-Data. Based on testing the revised survey in a 2022 Mode Experiment, CMS reviewed the variables included in the case-mix adjustment models currently in use for the HHCAHPS Survey to determine if any changes needed to be introduced along with the revised survey. We found that while no case-mix variables need to be added, and the diagnosis adjustments were no longer significant. As such, CMS proposed to drop the adjustment for diagnoses of schizophrenia or dementia with the revised survey. Using data from the 2022 Mode Experiment, CMS also tested for whether there were impacts in how someone responds to the survey based on the mode of survey administration. Mode effects were observed with the 2022 Mode Experiment, so CMS proposed to add a mode adjustment in addition to the case-mix adjustment, with the revised survey. Case-mix adjustment will be performed within each quarter of data after data cleaning and before mode adjustment. When we make mode adjustments, it is necessary to choose one mode as a reference mode. One can then interpret all adjusted responses from all modes as if they had been surveyed in the reference mode. CMS will use mail-only as the reference mode for the HHCAHPS Survey, because it is the most used mode for HHCAHPS. The choice of mail mode as the reference mode does not indicate that mail mode is preferable to other approved modes in any way. In the 2022 HHCAHPS Survey mode experiment, telephone-only respondents were more negative in their evaluations of care relative to mail-only respondents across the HHCAHPS measures. The mode adjustments are generally small--most are around 2 percentage points. Please see the HHCAHPS Revised Survey Mode Adjustments on https://homehealthcahps.org for the mode adjustments if these measures are finalized through rulemaking. We invited public comment on the HHCAHPS Survey proposals. The following is a summary of the comments received and our responses: Comment: Most commenters expressed support for revising the HHCAHPS Survey to make it shorter and simpler. Some commenters noted that these changes represent a meaningful step toward making the instrument more patient-centered and less burdensome. Some commenters expressed strong support for adding the three new HHCAHPS Survey items noting that ensuring family caregivers are better equipped to meet the needs of the individuals they care for is critical for home health care and the new items strengthen the survey's relevance to patients. Response: We thank the commenters for their support. Comment: A few commenters asked for a crosswalk and dry run period so agencies are not penalized during the transition to the new survey in April 2026, as well as information for vendors to prepare to administer the updated survey for their client agencies. Response: The revised HHCAHPS Survey instrument and crosswalks between the original and proposed publicly reported measures are available on the HHCAHPS website at https://homehealthcahps.org/Survey-and-Protocols/Survey-Materials. CMS conducted a focused HHCAHPS Survey Vendor Update Training in late August 2025 to help the approved survey vendors prepare for the transition. There will also be an opportunity for survey vendors to submit test files to ensure they are properly formatted. Additionally, the updated XML data file layouts and XML file schemas used for data submission are available on the HHCAHPS website at https://homehealthcahps.org/Data-Submission/Data-Submission-Resources. Comment: A few commenters voiced concerns about the proposed measure changes to the HHCAHPS Survey, specifically eliminating three composite measures: Care of Patients, Communication between Providers and Patients, and Specific Care Issues. A commenter supported the removal of the four medication questions that are currently included in the Specific Care Issues measure. Response: The Specific Care Issues measure is being retired because four of the seven items that made up this measure have been removed from the updated HHCAHPS Survey with the remaining three survey items being reported as individual measures. As we were shortening the survey, we removed four of the six current HHCAHPS Survey questions related to medications patients are taking that were previously included in the Specific Care Issues measure. The Care of Patients and the Communications Between Providers and Patients measures are not being retired. However, CMS will not be able to report them publicly until there are at least 12 months of data that reflect the survey updates. Comment: A commenter suggested freezing the HHCAHPS Star Ratings on the website during the transition period to the new measures and caveating the changes on the Care Compare website. Response: We will take into consideration feedback on how the HHCAHPS data are reported during the transition period. Comment: A commenter asked whether the following question was tested: In the last 2 months of care, did home health staff from this agency provide your family or friends with information or instructions about your care as much as you wanted? Another commenter noted that they found the phrase ``as much as you wanted,'' when referring to the amount of information sharing a patient desired from home health staff, to be a challenging for assessing quality. This commenter also noted that the phrasing ``helped you take care of your health,'' could be interpreted by respondents in a variety of ways. This same commenter also recommended that the following question focus on the plan of care: In the last two months of care, how often did you feel that home health staff from the agency care about you as a person? Response: All three questions were developed based on important aspects of home health care identified during a literature review and focus groups with [[Page 55426]] home health patients. Questions were cognitively tested with home health patients and their family members through both one-on-one interviews with an experienced interviewer and as part of the 2022 mode experiment. Patients felt that home health agencies should give pamphlets and information to the family members and friends that help with the person's care, such as spouses and children, which led to the development of the question ``In the last two months of care, did home health staff from this agency provide your family or friends with information or instructions about your care as much as you wanted''. When asked what the phrase ``helped you take care of your health'' meant in the question ``In the last 2 months of care, how often have the services you received from this agency helped you take care of your health'' patients explained that that they were thinking about the ways the care they received helped them to walk better, helped their wounds to heal, and helped with their diets and overall health. Patients understood the question ``In the last two months of care, how often did you feel that home health staff from the agency cared about you as a person'' to mean whether staff took the time to get to know them on a personal level or form a personal connection with them, for example, treating them like people and not ``like a number''. Results from several rounds of interviews consistently showed that questions were well understood and supported by patients and their families. Comment: Several commenters requested CMS to add the web mode of survey administration, stating that the HHCAHPS Survey should be offered in an electronic format delivered by email or text. Response: A web-based mode was tested during the 2022 mode experiment with very few respondents opting to complete via web. Obtaining email addresses for sample members was challenging and not routinely available. CMS will continue to evaluate the possibility of a web-based mode for this population in the future. Comment: A few commenters did not support the removal of the case- mix adjustment for patients with diagnoses of schizophrenia or dementia as they believed communication challenges with individuals with these diagnoses would not be accounted for without the adjustment. Response: In the most recent mode experiment, despite robust statistical testing, the potential schizophrenia and dementia adjusters were no longer statistically significant and did not show an impact on responses. Since these patients are most likely to have proxy respondents, this helps with the validity of these patients' responses. Comment: A couple of commenters were concerned about the increased cost to agencies for retraining staff and revising their systems for the new survey. Response: The updated HHCAHPS Survey instrument should not require any changes to existing data that HHAs provide their HHCAHPS Survey vendors. The approved survey vendors will need to update their systems and materials. Comment: A commenter suggested fielding both the revised and original survey items concurrently during a transition period. Response: Many agencies having very small sample sizes and given the expense of running two instruments simultaneously, CMS has elected to phase out the current survey and phase in the new survey rather than run two separate surveys concurrently. Comment: A commenter suggested that CMS eliminate the ``Overall Rating'' and ``Willingness to Recommend'' stating that the responses to these questions do not always align with the responses to other more specific questions in the survey. Another commenter asked that these questions be at the beginning of the survey. Response: CMS administers these two standard questions across all of its CAHPS surveys to provide a cross-provider metric. These questions also capture a combined assessment of a patient's entire home health experience, integrating all aspects of their interactions with the home health agency and staff. To keep CAHPS surveys fairly short, we are unable to ask questions that encompass all aspects of care. We agree that the home health-specific survey measures and individual items are critical and CMS will, therefore, continue to report these as well. Overall rating questions are generally at the end of all CAHPS surveys so a respondent can provide an overall assessment of their experiences after thinking about more specific aspects of their care. Comment: A commenter recommended that CMS ensure that the Spanish HHCAHPS Survey is not simply a literal translation, but one that is culturally and linguistically validated; raised challenges in Puerto Rico related to internet connectivity, mail access, and responsiveness to phone calls; and suggested that survey vendors conducting telephone outreach in Puerto Rico be required to use a Puerto Rico area code (787) when placing calls. Response: The Spanish translation was developed by a reliable translation service provider and thoroughly reviewed by native Spanish speakers. The translation service was asked to retain phrasing from the current HHCAHPS Survey instrument as much as possible since that translation was reviewed and cognitively tested specifically with patients in Puerto Rico to ensure that they could understand the questions. We appreciate the challenges of conducting both mail and telephone surveys in Puerto Rico and encourage agencies there to work closely with their HHCAHPS Survey vendors to implement mixed-mode surveys (i.e., mail survey with telephone follow-up of non- respondents), which give patients a choice of how to respond. We have provided vendors with your suggestion to use a Puerto Rico area code when making outbound calls. Agencies in Puerto Rico should work with their vendors to implement this and any other measures (within HHCAHPS protocols) to help maximize response rates. Final Decision: After consideration of the public comments we received, we are finalizing our proposal to update the HHCAHPS measures beginning with the April 2026 sample month.

I. HH QRP Quality Measure Concepts Under Consideration for Future

Years--Request for Information (RFI) In the CY 2026 HH PPS proposed rule (), we sought input on the importance, relevance, appropriateness, and applicability of each of the quality measure concepts under consideration listed in Table C-21 for future years of the HH QRP. In the CY 2024 HH PPS proposed rule (88 FR 43738 through 43740), we included an RFI on a set of principles for selecting and prioritizing HH QRP measures, identifying measurement gaps, and suitable measures for filling these gaps. We refer readers to the CY 2024 HH PPS final rule (88 FR 77773 through 77774) for a summary of the public comments received in response to the RFI. We sought input on four concepts for future measures for the HH QRP in the CY 2026 HH PPS proposed rule.

1. Interoperability

We sought input on the quality measure concept of interoperability, focusing on information technology (IT) systems' readiness and capabilities in the HH setting. Title XXX of the Public Health Service Act defines ``interoperability'' in part, and with respect to health IT, as health IT that enables the secure exchange of electronic health information with, and [[Page 55427]] use of electronic health information from, other health IT without requiring special efforts by the user.\22\ The definition further states that interoperability of health IT allows for complete, including by providers and patients, access, exchange, and use of electronically accessible health information for authorized uses under applicable State or Federal law.\23\ We requested input and comment on approaches to assessing interoperability in the HH setting, for instance, measures that address or evaluate the level of readiness for interoperable data exchange, or measures that evaluate the ability of data systems to securely share information across the spectrum of care. --------------------------------------------------------------------------- \22\ 21st Century Cures Act, 42 U.S.C. 300jj(9) (2016). \23\ 21st Century Cures Act, 42 U.S.C. 300jj(9) (2016). ---------------------------------------------------------------------------

2. Cognitive Function

Illnesses associated with limitations in cognitive function, which may include stroke, traumatic brain injuries, dementia, and Alzheimer's disease, affect an individual's ability to think, reason, remember, problem-solve, and make decisions. The IMPACT Act identifies cognitive function as a key quality measure domain, and an area for inclusion as a standardized assessment data element. Two sources of information on cognitive function currently collected in HHAs are the Brief Interview for Mental Status (BIMS) and Confusion Assessment Method (CAM(copyright)).\24\ Both the BIMS and CAM have been incorporated into the OASIS. Scored by providers via direct observation, the BIMS is used to determine orientation and the ability to register and recall new information. The CAM assesses the presence of inattention, disorganized thinking, and level of consciousness. --------------------------------------------------------------------------- \24\ Centers for Medicare & Medicaid Services. Long-Term Care Hospital Continuity Assessment Record and Evaluation (CARE) Data Set Version 5.0. Effective October 1, 2022. https://www.cms.gov/files/document/ltch-care-data-set-version-50-planned-discharge-final.pdf. --------------------------------------------------------------------------- The BIMS and CAM include items representing different aspects of cognitive function, from which quality measures may be constructed. Although these instruments have been subjected to feasibility, reliability, and validity testing, additional development and testing would be required prior to transforming the concepts reflected in the BIMS and CAM (example temporal orientation, recall) into fully specified measures for implementation in the HH QRP. This RFI requested input on cognitive functioning measures that may be available for immediate use, or that may be adapted or developed for use in the HH QRP, using the BIMS or the CAM. In addition to comment on specific measures and instruments, CMS sought input on the feasibility of measuring improvement in cognitive functioning during a HH stay, which typically averages 56 days; \25\ the cognitive skills (example executive functions) that are more likely to improve during an HHA stay; conditions for which measures of maintenance--rather than improvement in cognitive functioning--are more practical; and the types of intervention that have been demonstrated to assist in improving or maintaining cognitive functioning. --------------------------------------------------------------------------- \25\ Based on home health episodes ending in CY2021 (the most recent year for which complete data are available). ---------------------------------------------------------------------------

3. Well-Being

We sought input on a quality measure concept of well-being. Well- being is a comprehensive approach to disease prevention and health promotion, as it integrates mental, social, and physical health while emphasizing preventative care to proactively address potential health issues.\26\ This comprehensive approach emphasizes person-centered care by promoting well-being of patients and their family members. We sought comments on tools and measures that assess for overall health, happiness, and satisfaction in life that could include aspects of emotional well-being, social connections, purpose, fulfillment, and self-care. --------------------------------------------------------------------------- \26\ Well-Being Concepts. CDC Archives. WHPL_Canon_WB_Well- Being_Concepts___HRQOL___CDC_2017.pdf. ---------------------------------------------------------------------------

4. Nutrition

Finally, we sought input on a quality measure concept of nutrition. Assessment for nutritional status may include various strategies, guidelines, and practices designed to promote healthy eating habits and ensure individuals receive the necessary nutrients for maintaining health, growth, and overall well-being. This also includes aspects of health that support or mediate nutritional status, such as physical activity and sleep. In this context, preventable care plays a vital role by proactively addressing factors that may lead to poor nutritional status or related health issues. These efforts not only support optimal nutrition but also work to prevent conditions that could otherwise hinder an individual's health and nutritional needs. We sought feedback on tools and frameworks that promote healthy eating habits, exercise, nutrition, or physical activity for optimal health, well-being, and best care for all. [GRAPHIC] [TIFF OMITTED] TR02DE25.047

1. Interoperability

Most commenters on the interoperability measure concept stressed the value and importance of advancing interoperability in healthcare in general and in home health specifically. Many commenters shared that national standards will be critical for any interoperability measure concept. Most commenters also shared that federal funding was needed to ensure that home health could have the same advances in health record systems seen in hospital and physician practices. Numerous commenters cited the HITECH Act (Pub. L. 111-5), that subsidized the adoption and [[Page 55428]] implementation of certified electronic health record (EHR) systems for hospitals and physician practices but that was not available to home health, behavioral health, and other post-acute care settings. They note, without this funding, HHAs have not had access to the same level of financial or technical support to build and maintain an interoperable infrastructure. Many commenters specifically noted that HH was behind in the development of health IT deployment and this would be a barrier to any measure. Those who support the development of an interoperability measure concept outlined criteria that must be considered. Some shared that any measure must evaluate both technical readiness or capability and the processes or practices of data exchange. Others shared that a measure should address interoperability between health care providers, between providers and patients, and between providers and payers. One commenter noted that the exchange of information needs to account for clinical as well as social determinants of health information. A number of commenters highlighted the work of The Post-Acute Care Interoperability (PACIO) project \27\ that supports development of FHIR (Fast Healthcare Interoperability Resources) technical implementation guides and suggested any interoperability work builds on these ongoing efforts. One commenter shared that this measure concept should include caregiver information in electronic health records. Another advocated for building out a measure process based on the Trusted Exchange Framework Common Agreement (TEFCA) initiative. --------------------------------------------------------------------------- \27\ For more information on the Post-Acute Care InterOperability (PACIO) project, see: https://pacioproject.org/. --------------------------------------------------------------------------- Several commenters who stressed the importance of interoperability also noted that they didn't support an interoperability measure concept for HH due to what they described as significant financial and operational barriers to advancing standardized interoperability in HH. They argue that home health agencies currently are largely not at the appropriate level of technology adoption for interoperable data exchange or measures that evaluate the ability of data systems to securely share information across providers and with patients.

2. Cognitive Function

Commenters shared that addressing cognitive function in home health care is a critical clinical area. Many commenters shared that the OASIS tool already has several tools that evaluate aspects of cognitive function. The PHQ 2-9(copyright), Brief Interview for Mental Status (BIMS(copyright)), and Confusion Assessment Method (CAM(copyright)) were often referenced, and commenters shared that those tools would not be sufficient to address the range of issues that encompass cognitive function. One commenter highlighted that the current tools are not effective in assessing mild cognitive impairment that can affect activities of daily living or instrumental activities of daily living. Several commenters particularly note that these tools were intended to assess some areas of cognition but not intended for performance measures. Some commenters shared that the trajectory of patients with cognitive function challenges can vary and make the use of any one tool alone insufficient to address the range of cognitive function challenges. Some patients with progressive neurological conditions will have steady decline and not likely to expect cognitive improvement. Patients with chronic conditions may complicate assessment of cognitive function and a patient's expected care path would also be progressive decline. These issues are made more challenging due to the short average length of stay that numerous commenters suggest is too short to have a meaningful impact on cognitive function. With these considerations, many commenters stressed that CMS should not target a cognitive function measure focused on improvement but rather focus on maintenance or limiting cognitive decline. Some commenters, after considering the complexity of cognitive function, argued against developing a single measure to address this domain or to not develop this measure domain with the present challenges. One commenter shared that there would need to be additional resources for home health agencies to build expertise in addressing cognitive function needs to justify introducing a new measure related to this measure domain.

3. Well-Being

Numerous commenters provided input on the well-being measure concepts. Many commenters shared that addressing well-being could be important for home health patients. Commenters often also shared that any measure concept addressing well-being should account for what HHAs can reasonably affect with respect to well-being during a home health stay. Most commenters also shared that any measure of well-being should be an evidence-driven, validated tool. A commenter highlighted the importance of including caregiver input on assessing patient well-being, where appropriate. Some commenters had suggestions about what kinds of tools may best address the well-being measure concept. A few commenters suggested CMS consider focusing on a patient reported outcome measure structure. Other commenters suggested specific components of the OASIS that could already be valuable as part of a wellbeing measure such as the BIMS, CAM, and PHQ 2-9 and not duplicate the value of these tools when considering a well-being concept. Many commenters also suggested that given the timeframe of a home health stay, the focus for CMS should be on a process rather than outcome measure since the HHA would have limited ability to affect the broad concept of well-being. Others cautioned that HHAs could not address an issue as broad as well-being in the timeframe of a patient's HH care and that this measure concept should not be considered for the HH QRP.

4. Nutrition

Many commenters described the importance of nutrition in patient care and in home health specifically. Commenters share that clinicians can support patients' health by understanding their nutritional status. Commenters who supported developing a nutrition measure concept often stressed the need for using tools that were validated and reliable. Commenters suggested a range of nutrition tools such as the standardized Mini Nutritional Assessment (MNA) or Malnutrition Screening Tool (MST) that could provide reliable data. Another commenter suggested the DETERMINE nutrition risk scale as a screening tool. Another tool suggested was the hand grip strength (HGS) through purposeful activities and further referencing research that shows in older adults, a significant association between malnutrition and HGS. Yet another commenter noted that weight was collected and start of care and resumption of care and that CMS should use data already available in consideration of a new measure concept. The most commonly cited tool from commenters was the Malnutrition Care Score (MCS), an electronic clinical quality measure (eCQM) adopted into the Inpatient Quality Reporting (IQR) program for acute care hospitals. Commenters stated they favored the MCS because it assesses a different aspects of care that are essential to addressing malnutrition in any care setting. One commenter noted that the [[Page 55429]] MCS addresses the malnutrition care workflow that are necessary to identify and manage malnutrition risk in a timely and effective manner. Commenters described the four steps of: (1) Screen for malnutrition risk; (2) Conduct nutrition assessment; (3) Document malnutrition diagnosis; and (4) Document nutrition care plan strong, clear, clinical processes underpinning the measure. A number of commenters highlighted that this tool has been successfully utilized in quality reporting and therefore is key for CMS consideration for the HH QRP. Commenters who supported a nutrition measure for HH often stressed that a measure concept related to nutrition should be a process measure because of the complex range of issues that encapsulate nutrition issues. One commenter suggested that any measure concept should also align with broader efforts to improve access to nutrition supports, such as the Supplemental Nutrition Assistance Program (SNAP) and nutrition programs authorized under the Older Americans Act. Some commenters who differed in support for the development of a nutrition measure concept were unified in arguing that CMS needed to support HH by increasing funding to address nutritional challenges. Currently, HHAs incorporate dietician or nutritionist services with no expectation of reimbursement. The commenter suggested that CMS should reimburse for dietician services and empower HHAs to more comprehensively address nutritional issues in their patients. Several commenters did not support current development of a nutrition measure concept because of a number of factors. They cited the lack of reimbursement for services that would support nutrition interventions. They also noted that the complex issues around nutrition care would not fall within the scope of HHAs to address in the limited time frame of home health care. They often cited the current margins in HH care that are being taxed in providing the essential services of the home health benefit. Response: We thank all the commenters for responding to this RFI. While we are not responding to specific comments in response to the RFI in this final rule, we will take this feedback into consideration for our future measure development efforts for the HH QRP.

J. Potential Revision of the Final Data Submission Deadline Period From

4.5 Months to 45 Days--Request for Information (RFI) Section 1895(b)(3)(B)(v)(I) of the Act states that for 2007 and each subsequent year, the home health market basket percentage increase applicable under such clause for such year shall be reduced by 2 percentage points if a home health agency does not submit quality data to the Secretary in accordance with subclause (II) for such a year. Section 1899B(f)(1) of the Act also requires the Secretary to provide confidential feedback reports to PAC providers on the performance of such PAC providers for quality, resource use, and other measures required under sections 1899B(c)(1) and (d)(1) of the Act beginning 1 year after the applicable specified application date. Further, section 1899B(g) of the Act requires the Secretary to establish procedures for making available to the public information regarding the performance of individual PAC providers for quality, resource use, and other measures required under sections 1899B(c)(1) and (d)(1) of the Act beginning not later than 2 years after the applicable specified application date. The procedures must ensure, including through a process consistent with the process applied under section 1886(b)(3)(B)(viii)(VII) of the Act for similar purposes, that each PAC provider has the opportunity to review and submit corrections to the data and information that are to be made public for the PAC provider prior to such data being made public. Although assessment data submission, quarterly performance reports, and public reporting are required by statute, timing of data submission under the HH QRP is not specified. Thus, in the CY 2017 HHS PPS final rule (81 FR 76784) we finalized our proposal, to comply with the requirements of section 1899B(g) of the Act, that HHAs would have approximately 4.5 months after the reporting quarter to correct any errors of their assessment-based data to calculate the measures. During the time of data submission for a given quarterly reporting period and up until the quarterly submission deadline, HHAs could review and perform corrections to errors in the assessment data used to calculate the measures. In the process of implementing the public reporting programs, CMS has become concerned that the time between when data are collected and when the measures are reported from those data may be too long to get the desired results in a public reporting program. Public reporting programs are designed to provide patients and their families with the most current information so they can make quality-informed decisions about where to receive their care. Currently, the largest contributing factor to the 9- month lag between end of the data collection and when measures are publicly reported is the current 4.5-month timeframe for data submission. If the timeframe for data submission was reduced from 4.5 months to 45 days, the lag time between collection and reporting could be reduced by up to 3 months. This would result in more timely public reporting that would be more valuable for patients and families as they make decisions about where they can receive the best care. An important consideration in reducing the data submission timeframe is the potential burden it may place on providers, which could lead to lower quality data. CMS conducted analysis to evaluate the potential impact of reducing the timeframe by determining how many charts are being submitted by 60 days currently. Using 2022 data, CMS found that only 1.3 percent of all OASIS assessments were submitted after the 60-day timeframe. Of those submissions, approximately seventy percent (or 0.9 percent of the total) were submitted between 60 days and 4.5 months and hence have potential to be impacted. Because assessments are tied to payment, providers are likely to submit assessments close to the date of service and to close out medical records once the patient is discharged from service. Therefore, we noted in the proposed rule that we believe by reducing this deadline from 135 days to 45 days, we could reduce the time between data collection and public reporting resulting in the improvement in timeliness with limited change in burden to providers. We requested feedback on this potential future reduction of the HH QRP data submission deadline from 4.5 months to 45 days. Specifically, we requested comment on the following: How this potential change could improve the timeliness and actionability of HH QRP quality measures. How this potential change could improve public display of quality information. How this potential change could impact HHA workflows or require updates to Systems. Comment: Most commenters supported a reduction in the final data submission deadline from 4.5 months, with additional recommendations related to implementation. They agreed with the CMS assessment that timely [[Page 55430]] public reporting is essential for informed consumer decision-making and enhances transparency and accountability. Some commenters stressed that with any reduction in timeframe, CMS should adopt a phased approach over several fiscal years to allow for providers and other stakeholders to adjust to the transition. Many commenters suggested that CMS should pilot the reduction in submission deadlines before moving to national implementation of the policy update, stating that this would allow CMS to evaluate the impacts and determine appropriate technical guidance, stakeholder engagement, and operational flexibility needed to successfully implement this change. Other commenters cautioned that a transition from 4.5 months to 45 days would cause harm to a range of HHAs due to additional administrative burden. They noted that this would especially be the case for small HHAs, stand-alone HHAs that operate with limited resources, HHAs that manage coding and review in-house, HHAs experience high field staff turnover, or HHAs that lack robust EMR or analytics systems. They noted this could introduce errors and comprise the quality of OASIS data submitted. One commenter expressed concerns due to the rate cuts that are currently under consideration for HHAs. Commenters who expressed concerns with the potential reduction in the submission deadline had suggestions for how to make the transition manageable for HHAs. Many suggested that the submission deadline should be 60 days to be consistent with the data CMS cited in the original RFI, which showed that only 1.3% of data was submitted after 60 days. Other commenters noted that 60 days would be a reasonable target since the 60-day time frame would align with the current HHA episode of care, and with some HHA's expectations around HH QRP conditions of participation guidelines. A few commenters suggested 90 days to account for the current administrative burdens HHAs are managing. A few commenters cited the financial pressure currently faced by HHAs and opposed the reduction in the submission deadline over concerns that HHAs would not be able to meet the new workflow and operational challenges in the current resource environment. Along with feedback on this RFI, numerous commenters provided feedback related to OASIS submissions. Many commenters suggested that CMS should move to a four-year cycle in updating the OASIS. One commenter requested that the timeframe for updating claims-based measures be reduced to also provide more timely information related to these measures which have grown in importance. One commenter also requested that CMS align any reconsideration updates to account for the reduction in submission deadlines. Response: We thank all the commenters for responding to this RFI. While we are not responding to specific comments in response to the RFI in this final rule, we will take this feedback into consideration for our future measure development efforts for the HH QRP.

K. Advancing Digital Quality Measurement in the HH QRP--Request for

Information As part of our effort to advance the digital quality measurement (dQM) transition, issued an RFI in the CY 2026HH PPS proposed rule to gather broad public input on the dQM transition in HHAs.

1. Background

As we noted in the proposed rule, we are committed to improving healthcare quality through measurement, transparency, and public reporting of quality data, and to enhancing healthcare data exchange by promoting the adoption of interoperable health IT that enables information exchange using Fast Healthcare Interoperability Resources[supreg] (FHIR[supreg]) standards. Proposing to require the use of such technology within the HH QRP in the future could potentially enable greater care coordination and information sharing, which is essential for delivering high-quality, efficient care and better outcomes at a lower cost. In the CYs 2022 and 2023 HH PPS proposed rules,\28\ we outlined several HHS initiatives aimed at promoting the adoption of interoperable health IT and facilitating nationwide health information exchange. Further, to inform our digital strategy, in the CY 2022 HH PPS proposed rule (86 FR 35980) we shared and sought feedback on the following: --------------------------------------------------------------------------- \28\ ``Advancing Health Information Exchange'' in the CY 2022 HH PPS proposed rule (86 FR 35979) and CY 2023 HH PPS proposed rule (87 FR 37602). --------------------------------------------------------------------------- Our intent to explore the use of FHIR[supreg]-based standards to exchange clinical information through application programming interfaces (APIs). Enabling quality data submission to CMS through our internet Quality Improvement and Evaluation System (QIES). To work with healthcare standards organizations to ensure their standards support our assessment tools. We considered opportunities to advance FHIR[supreg]-based reporting of patient assessment data for the submission of the OASIS. Our objective was to explore how HHAs typically integrate technologies with varying complexity into existing systems and how this affects HH workflows. In this RFI, we sought to identify the challenges and/or opportunities that may arise during this integration, and determine the support needed to complete and submit quality data in ways that protect and enhance care delivery. We also sought input on future measures under consideration including applicability of interoperability as a future measure concept in post-acute care settings. We refer readers to section III.H.1. of this proposed rule for more information. Any updates specific to the HH QRP program requirements related to quality measurement and reporting provisions would be addressed through separate and future notice-and-comment rulemaking, as necessary.

2. Solicitation of Comment

We sought feedback on the current state of health IT use, including electronic health records (EHRs), in HHAs: To what extent does your HHA use health IT systems to maintain and exchange patient records? If your agency has transitioned to using electronic records, in part or in whole, what types of health IT does your HHA use to maintain patient records? Are these health IT systems certified under the Office of the National Coordinator for Health Information Technology (ONC) Health IT Certification Program? If your agency uses health IT products or systems that are not certified under the ONC Health IT Certification Program, please specify. Does your agency use EHRs or other health IT products or systems that are not certified under the ONC Health IT Certification Program? If no, what is the reason for not doing so? Do these other systems exchange data using standards and implementation specifications adopted by HHS? Does your agency maintain any patient records outside of these electronic systems? If so, are the data organized in a structured format, using codes and recognized standards, that can be exchanged with other systems and providers? Does your HHA submit patient assessment data to CMS through your current health IT system? If a third-party intermediary is used to report data, what type of intermediary service is used? How does your agency currently [[Page 55431]] exchange health information with other healthcare providers or systems, specifically between HHAs and other provider types? What about health information exchange with other entities, such as public health agencies? What challenges do you face with electronic exchange of health information? Are there any challenges with your current electronic devices (for example, tablets, smartphones, computers) that hinder your ability to achieve interoperability, such as collecting, storing, sharing, or submitting data? Please describe any specific issues you encounter. Does limited internet or lack of internet connectivity impact your ability to exchange data with other healthcare providers, including community-based care services, or your ability to submit patient assessment data to CMS? Please specify. What steps does your HHA take with respect to the implementation of health IT systems to ensure compliance with security and patient privacy requirements such as HIPAA? Does your HHA refer to the Safety Assurance Factors for EHR Resilience (SAFER) Guides (see newly revised versions published in January 2025 at https://www.healthit.gov/topic/safety/safer-guides) to self-assess EHR safety practices? What challenges or barriers does your agency encounter when submitting quality measure data to CMS as part of the HH QRP? What opportunities or factors could improve your agency's successful data submission to CMS? What types of technical support, guidance, workforce trainings, and/or other resources would be most beneficial for the implementation of FHIR[supreg]-based technology in your agency for the submission of the OASIS to CMS? What strategies can CMS, HHS, or other Federal partners take to ensure that technical assistance is both comprehensive and user-friendly? How could Quality Improvement Organizations (QIOs) or other entities enhance this support? Is your agency using technology that utilizes APIs based on the FHIR[supreg] standard to enable electronic data sharing? If so, with whom are you sharing data using the FHIR[supreg] standard and for what purpose(s)? For example, have you used FHIR[supreg] APIs to share data with public health agencies? Does your agency use any Substitutable Medical Applications and Reusable Technologies (SMART) on FHIR[supreg] applications? If so, are the SMART on FHIR[supreg] \29\ applications integrated with your EHR or other health IT? --------------------------------------------------------------------------- \29\ https://smarthealthit.org/. --------------------------------------------------------------------------- How do you anticipate the adoption of technology using FHIR[supreg]-based APIs to facilitate the reporting of patient assessment data could impact provider workflows? What impact, if any, do you anticipate it will have on quality of care? Does your facility have any experience using technology that shares electronic health information using one or more versions of the United States Core Data for Interoperability (USCDI) standard? \30\ --------------------------------------------------------------------------- \30\ For more information about USCDI see https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi. --------------------------------------------------------------------------- Would your HHA and/or vendors be interested in participating in testing to explore options for transmission of assessments, for example testing the transmission of a FHIR[supreg]- based assessment to CMS? The Trusted Exchange Framework and Common AgreementTM (TEFCATM) framework supports nationwide health information exchange by connecting health information networks (HINs) across the country.\31\ Additionally, TEFCATM facilitates FHIR exchange by requiring Qualified HINs (QHINs) to perform patient discovery for those querying for data and providing data holders with FHIR endpoints to enable point-to-point exchange via FHIR APIs. How could the TEFCATM support CMS quality programs' adoption of FHIR[supreg]-based assessment submissions consistent with the FHIR[supreg] Roadmap (available here: https://rce.sequoiaproject.org/three-year-fhir-roadmap-for-tefca/)? How might patient assessment data hold secondary uses for treatment or other TEFCATM exchange purposes? --------------------------------------------------------------------------- \31\ For more information about TEFCATM, see https://www.healthit.gov/topic/interoperability/policy/trusted-exchange-framework-and-common-agreement-tefca. --------------------------------------------------------------------------- What other information should we consider that could facilitate successful adoption and integration of FHIR[supreg]-based technologies and standardized data for patient assessment instruments like the OASIS? We invited any feedback, suggestions, best practices, or success stories related to the implementation of these technologies and noted that we would use the input to inform our future dQM transition efforts. Comment: Many commenters expressed support for a transition to dQMs in the HH QRP, citing that using FHIR as a standard can alleviate administrative burden and improve data quality if implemented effectively. Many of these commenters supported the transition but had recommendations for CMS on successful implementation for HHAs, including a phased implementation or ``glide path'' approach, reporting flexibility, and adequate time to update systems after CMS finalizes a change to HH QRP requirements. Many commenters recommended funding or incentive opportunities to obtain resources and technology for improved exchange of health information. Numerous commenters also noted that implementation and updating EHRs is resource intensive, and that HHAs, along with other PAC providers, were not included in Meaningful Use funding through the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009. Several commenters expressed concerns about the differences in dQM and IT readiness across HHAs. They highlighted data that over time, the adoption of EHR technology has increased in the post-acute care; however, the interoperability of that technology remains limited. A commenter gave examples of HHAs still receiving records via fax and noted that many HHAs lack connectivity to EHRs. Commenters suggested that technical assistance would be needed for HHAs that were the least advanced in health IT capabilities, and to also provide opportunities for those farther along to meet today's certified EHR technology (CEHRT) standards. Some commenters went further to note that they could not support any implementation around dQMs without federal commitment of additional funding for these goals. Commenters addressed other related issues related to a dQM's implementation. Some commented on the need to manually submit OASIS and other PAC assessment data. They recommend that CMS develop and implement standardized Application Programming Interfaces (APIs) that would allow for direct data exchange between certified EHRs and CMS systems (directly). Another commenter noted that CMS has regulations that limit use of technology in populating OASIS items from a patient's medical chart. With the ability of artificial intelligence and other technologies, they noted that HHAs could now incorporate some patient data more efficiently without removing clinician review of the data. They argued this could significantly reduce the time required to complete the OASIS. Several commenters also provided detailed responses to the RFI's questions about their agency's current state of health IT use, challenges and/or opportunities that may arise during [[Page 55432]] integration of technologies with varying complexity into existing HH systems, how it affects workflow, and what support may be needed to complete and submit quality data in ways that protect and enhance care delivery. Response: We thank commenters for their feedback. While we will not be responding to specific comments submitted in response to this RFI in this final rule, we intend to use this information to inform future dQM transition work and potential future rulemaking to further our efforts toward a patient-centric digital health ecosystem.

L. Form, Manner, and Timing of Data Submission Under the HH QRP

We did not propose any new policies regarding Form, Manner, and Timing of Data Submission Under the HH QRP in the proposed rule.

1. Ending the Public Display of Patient/Resident COVID-19 Measure

In the CY 2024 HH PPS final rule (88 FR 77762 through 77764), we finalized our proposal to begin publicly displaying data for the Patient/Resident COVID-19 measure beginning with the January 2026 Care Compare refresh. In section III.C.2 of the CY 2026 HH PPS proposed rule, we proposed to remove the Patient/Resident COVID-19 Measure beginning with the CY 2026 HH QRP. However, we noted that effective with assessments completed on or after the date of publication of the CY 2026 HH final rule, the data from O0350 Patient's COVID-19 Vaccination is Up to Date may be submitted using any of the three valid responses (0--No, 1--Yes, or dash) on a Transfer, Death at home, or Discharge OASIS assessment, without any future quality measure implications. We proposed that the Patient/Resident COVID-19 measure rates would be publicly reported for the last time with the January 2026 Care Compare refresh on Medicare.gov, based on data from Q1 of 2025. We invited public comments on our proposal to end the public display of Patient/Resident COVID-19 Measure data after the January 2026 Care Compare refresh on Medicare.gov. Comment: Some commenters supported the proposal to end of the public display of the Patient/Resident COVID-19 Measure data after the January 2026 Care Compare refresh on Medicare.gov. Response: We appreciate commenters' support. Final Decision: We will cease publicly reporting data for this measure after the January 2026 Care Compare refresh, as proposed.

A. Background

As authorized by section 1115A of the Act and finalized in the CY 2016 HH PPS final rule (80 FR 68624), the Center for Medicare and Medicaid Innovation (Innovation Center) implemented the Home Health Value-Based Purchasing (HHVBP) Model (``original Model'') in nine states on January 1, 2016. The design of the original Model leveraged the successes and lessons learned from other CMS value-based purchasing programs and demonstrations to shift from volume-based payments to a model designed to promote the delivery of higher quality care to Medicare beneficiaries. The specific goals of the original Model were to-- Provide higher incentives for better quality care with greater efficiency; Study new potential quality and efficiency measures for appropriateness in the home health setting; and Enhance the current public reporting process. The original Model resulted in an average 4.6 percent improvement in HHAs' total performance scores (TPS) and an average annual savings of $141 million to Medicare without evidence of adverse risks.\32\ The evaluation of the original Model also found reductions in unplanned acute care hospitalizations and skilled nursing facility (SNF) stays, resulting in reductions in inpatient and SNF spending. The U.S. Secretary of Health and Human Services (the Secretary) determined that expansion of the original Model will further reduce Medicare spending and improve the quality of care. In October 2020, the CMS Chief Actuary certified that expansion of the HHVBP Model will produce Medicare savings if expanded to all states.\33\ --------------------------------------------------------------------------- \32\ https://innovation.cms/gov/data-and-reports/2020/hhvbp-thirdann-rpt. \33\ https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf. --------------------------------------------------------------------------- On January 8, 2021, CMS announced the certification of the HHVBP Model for expansion nationwide, as well as the intent to expand the Model through notice and comment rulemaking.\34\ In the CY 2022 HH PPS final rule (86 FR 62292 through 62336), we finalized the decision to expand the HHVBP Model to all Medicare certified HHAs in the 50 States, territories, and District of Columbia beginning January 1, 2022. CY 2022 was a pre-implementation year. The first payment year is CY 2025 based on the first performance year which was CY 2023. Our codified policies for the expanded HHVBP Model can be found in our regulations at 42 CFR part 484, subpart F, Sec. Sec. 484.300 through 484.375. --------------------------------------------------------------------------- \34\ https://www.cms.gov/newsroom/press-releases/cms-takes-action-improved-health-care-seniors-announces-intent-expand-home-value-based. --------------------------------------------------------------------------- In the CY 2024 HH PPS final rule (88 FR 77676), we finalized proposals to codify in the Code of Federal Regulations (CFR) the measure removal factors finalized in the CY 2022 HH PPS final rule; to replace the two Total Normalized Composite Measures (for Self-Care and Mobility) with the Discharge Function Score measure effective January 1, 2025; to replace the OASIS-based Discharge to Community (DTC) measure with the claims-based Discharge to Community-Post Acute Care (PAC) Measure for Home Health Agencies, effective January 1, 2025; to replace the claims-based Acute Care Hospitalization During the First 60 Days of Home Health Use and the Emergency Department Use without Hospitalization During the First 60 Days of Home Health measures with the claims-based Potentially Preventable Hospitalization measure effective January 1, 2025; to change the weights of individual measures due to the change in the total number of measures; and to update the Model baseline year to CY 2023 for all applicable measures in the finalized measure set beginning with performance year CY 2025.

B. Changes to HHVBP Measure Removal Factors

In the CY 2023 HH PPS final rule (88 FR 77776), CMS finalized the codification of specific factors that CMS considers for measure removal. Currently, there are eight measure removal factors that CMS considers when determining whether to remove measures from the expanded HHVBP Model's applicable measure set. In the CY 2026 HH PPS proposed rule (90 FR 29184), we proposed adding and codifying an additional measure removal factor at Sec. 484.358, Factor 9: It is not feasible to implement the measure specifications. We noted that this new measure removal factor would enable CMS to address situations in which it is no longer feasible to continue implementing a quality measure, such as when a data collection instrument is revised in a way that no longer collects the information required for the quality measure specifications. We invited public comments on this proposal. The following is a summary of the comments we received and our responses: [[Page 55433]] Comment: Commenters supported this proposed addition to the measure removal factors. Response: CMS appreciates the positive comments regarding the proposed measure removal factor. Final Decision: CMS is finalizing as proposed the proposal to add and codify at Sec. 484.358 Measure Factor 9: It is not feasible to implement the measure specifications.

C. Changes to the Expanded HHVBP Model's Applicable Measure Set

We proposed removing three measures from the current applicable measure set and adding four measures starting in CY 2026. The proposed removal of the three measures was necessary due to revisions to the Home Health Consumer Assessment of Healthcare Providers and System[supreg] (HHCAHPS) Survey that were proposed beginning with the April 2026 sample. These proposed survey revisions prevent the three HHCAHPS Survey-based measures from being calculated as currently specified for the expanded HHVBP model.

1. Removal of Three HHCAHPS Survey-Based Measures From the Expanded

HHVBP Model Applicable Measure Set The HHCAHPS Survey, a nationally standardized and publicly reported survey, is designed to measure the experiences of people receiving home health care from Medicare-certified HHAs. It is conducted for HHAs by approved HHCAHPS Survey vendors. Currently, the expanded HHVBP Model includes five HHCAHPS Survey-based measures: Care of Patients Communications between Providers and Patients Specific Care Issues Overall Rating of Home Health Care Willingness to Recommend the Agency The Care of Patients, Communications between Providers and Patients, and Specific Care Issues measures are based on multiple items from the HHCAHPS Survey while Overall Rating of Home Health Care and Willingness to Recommend the Agency are single-item measures. Elsewhere in the proposed rule, CMS proposed changes to the HHCAHPS Survey. These proposed changes would affect the survey questions used to calculate three measures that are used in the expanded HHVBP Model. CMS plans to make changes to the questions used for two of the multi- item measures (Care of Patients and Communication between Providers and Patients). In addition, the Specific Care Issues measure will no longer exist as four of the seven items used for that measure will be removed from the survey. These changes are described in section III.H. of the final rule, and will become effective beginning with the April 2026 sample month. Given these proposed changes, we proposed to remove the following HHCAHPS Survey based measures from the HHVBP applicable measure set starting with CY 2026: Care of Patients Communications between Providers and Patients Specific Care Issues We proposed to remove these three HHCAHPS Survey-based measures using the proposed and finalized Removal Factor 9: It is not feasible to implement the measure specifications. This measure removal factor is described in more detail previously in section IV.B. of this final rule. The removal of these measures is necessary because the proposed changes to the HHCAHPS Survey instrument have been finalized, as the current measure specifications cannot be calculated using the finalized survey revisions. Because the proposed changes to the HHCAHPS Survey instrument are finalized, several of the survey questions used to calculate the Care of Patients and Communication Between Providers and Patients measures will be changed and will no longer match the measure specifications. Also, four of the seven survey items used to calculate the Specific Care Issues measure will be removed because the survey changes have been finalized, making it impossible to calculate the measure as currently specified. While CMS could revise the HHCAHPS measures to use the proposed HHCAHPS Survey instrument changes, a full year of data with the revised HHCAHPS measures will not be available until CY 2027. Data from multiple quarters will be needed to establish benchmarks and achievement thresholds for the revised HHCAHPS Survey-based measures. Removing these three measures as part of this rulemaking cycle will give CMS the time needed to collect the required data and potentially develop updated benchmarks and achievement thresholds for revised or new measures. If CMS decides to propose the addition of the new versions of the Care of Patients and Communications between Providers and Patients measures and individual item measures to replace the Specific Care Issues measure, CMS will do so through future rulemaking. We invited public comments on this proposal. The following is a summary of the comments we received and our responses: Comment: Several commenters provided feedback regarding the proposed removal of certain HHCAHPS Survey items. Most of the commenters supported the changes to the HHVBP applicable measure set. A commenter stated that they supported the removal of outdated composite measures, such as those removed in the revised HHCAHPS Survey. Another commenter supported changing the HHVBP applicable measure set based on HHCAHPS Survey changes but encouraged CMS to revise the HHCAHPS Survey- based measures rather than remove them entirely. Response: CMS appreciates the support for aligning the HHVBP Model applicable measure set with the revised HHCAHPS Survey change. At this time, CMS is not introducing replacement measures for those based on removed elements of the HHCAHPS Survey. However, we will take these public comments into consideration as we continue to refine the HHVBP Model applicable measure set. Comment: A few commenters opposed any measure set changes at this time. Response: CMS notes that these measures cannot be retained in the expanded HHVBP Model given the finalized changes to the HHCAHPS Survey. Comment: A commenter encouraged CMS to remove all HHCAHPS Survey- based measures from the calculation of HHA quality scores to focus on objective clinical measures. Response: CMS declines to remove all HHCAHPS Survey-based measures from the calculation of HHA quality scores and believes that self- reported patient experience data remains valuable for holistically measuring quality of care. As such, the measures still calculable from the revised HHCAHPS Survey, Overall Rating and Willingness to Recommend, will remain in the expanded HHVBP Model's applicable measure set. Final Decision: After consideration of the public comments received, CMS is finalizing the removal of three HHCAHPS Survey-based measures as proposed. [[Page 55434]]

2. Addition of Medicare Spending Per Beneficiary Post-Acute Care (MSPB-

PAC) to the Expanded HHVBP Model Applicable Measure Set We proposed adding the claims-based MSPB-PAC measure to the HHVBP applicable measure set starting in CY 2026. This cross-setting 2-year measure was required by the Improving Post-Acute Care Transformation Act of 2014 (IMPACT Act) and was added to the Home Health Quality Reporting Program on January 1, 2017. Public comments on the CY 2025 HH PPS proposed rule (89 FR 88354) in support of adding this measure to the expanded HHVBP Model suggested that the MSPB-PAC measure could help to identify the costs associated with the delivery of high-quality home health services, which could identify areas for improved efficiencies in resource usage. The MSPB-PAC measure is intended to incentivize providers to redesign care systems to provide coordinated, high-quality, and cost- efficient care. It holds HHAs accountable for Medicare payments for an episode of care that includes the period during which a patient is directly under HHA care, as well as a defined period after the end of HHA treatment, which may be reflective of and influenced by the services provided by the HHA. Evaluating Medicare payments during an episode creates a continuum of accountability between providers and has the potential to improve post-treatment care planning and coordination. In conjunction with the other performance measures used in the expanded HHVBP Model, explicit measurement of costs of care will allow recognition of HHAs that provide high quality care at a lower cost. We noted that we anticipate adding the MSPB-PAC measure would create incentives for greater care coordination to deliver high-quality care at a lower cost to Medicare and incentivize providers to find efficient ways to address patients' care needs. Incentivizing efficient resource utilization aligns with the pay-for-performance approach used in the expanded HHVBP Model. The MSPB-PAC measure would ensure that HHVBP payment adjustments consider not only patient outcomes but also HHA's ability to produce those outcomes at a lower cost. The MSPB-PAC measure is a claims-based measure that includes price- standardized payments for Part A and Part B services. It measures Medicare spending during an episode of care relative to the Medicare spending for other HHAs. The Medicare spending measure is payment- standardized and risk-adjusted. The MSPB-PAC measure captures Medicare spending for most Part A and B services during the episode of care, excluding services that are clinically unrelated to post-acute care treatment or services over which HHAs may have limited to no influence (for example, routine management of certain preexisting chronic conditions). The episode of care window consists of a treatment period and an associated services period (from the admission to the home health services up to 30 days after the end of the home health treatment period). The episode includes the period a patient is directly under HHA care, as well as a defined period after the end of the HHA's treatment which may be reflective of and influenced by the services rendered by the HHA.\35\ --------------------------------------------------------------------------- \35\ See https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assesment-Instruments/NursingHomeQualityInits/Downloads/2016_07_20_mspb_pac_Itch_irf_snf_measure_specs.pdf for more details on the specifications for the MSPB-PAC measure. --------------------------------------------------------------------------- We noted that we anticipate reporting preliminary benchmarks, achievement thresholds, and improvement thresholds for the MSPB-PAC measure in the October 2025 Interim Performance Reports (IPR). The MSPB-PAC measure would use 2 years of data covering CY 2022 and CY 2023 as baseline data. Because the MSPB-PAC measure is a 2-year measure, CY 2026 performance for the measure would be calculated based on 2 years of performance data (CY 2025/2026). The MSPB-PAC measure was designed as a 2-year measure to optimize reliability. In addition, each performance year would consist of 1 year of data that does not overlap with data from the prior performance year, which provides sufficient opportunity to capture quality improvement over time. Adding the MSPB-PAC and function measures described below would increase the number of HHAs that have sufficient data for at least five measures, the minimum required to have a payment adjustment for the expanded HHVBP Model. Increasing the number of HHAs that receive payment adjustments would allow the Model to better incentivize high- quality home health care across the country. We invited public comments on this proposal. The following is a summary of the comments we received and our responses: Comment: Several commenters supported the addition of the MSPB-PAC measure, encouraging CMS to adopt MSPB-PAC to align with administrative priorities and focus on spending efficiency. They acknowledged that adding MSPB-PAC to HHVBP supported CMS's shift towards more comprehensive accountability by combining cost metrics with functional and patient-reported outcomes. They agreed the MSPB-PAC measure would advance HHVBP's emphasis on cost-effectiveness, which is a key indicator of value in home health care. A commenter stated that agencies that can deliver necessary care in fewer episodes should be recognized and rewarded. They also expressed appreciation that MSPB-PAC includes price-standardized payments for Part A and Part B services, and is risk-adjusted to reflect patient complexity, thereby making it an appropriate tool for assessing efficiency. Response: CMS appreciates commenters' understanding of the value of the MSPB-PAC measure and the supportive feedback. Comment: A few commenters encouraged CMS to ensure the new measure was validated and properly risk-adjusted to avoid unfairly penalizing agencies serving complex, high-need patients. Response: CMS appreciates commenters' concerns. CMS is committed to ensuring fairness, accuracy, and feasibility for all quality measures used in the expanded HHVBP Model. CMS also reminds commenters that the MSPB-PAC measure is risk adjusted to account for variations in patient populations and resource utilization across PAC providers. Comment: Multiple commenters stated that MSPB-PAC is not a measure of care quality, only of expenditures. A commenter noted that the introduction of the Patient-Driven Groupings Model (PDGM) for Medicare payment aligned payment with payment complexity and removed incentives to increase the volume of therapy visits, making the MSPB-PAC measure unnecessary. Another commenter noted that, within the PDGM, payment is determined by defined patient characteristics: admission source, clinical grouping, functional impairment level, and comorbidity adjustment. This commenter expressed concern that patients referred from acute settings or presenting with higher-acuity conditions such as wounds, neurological rehabilitation needs, or musculoskeletal impairments generate higher episodic payments due to increased resource requirements. Response: Incentivizing care coordination and efficient resource allocation is consistent with the expanded HHVBP Model's goal of improving the quality and efficiency of Medicare home health care, leading to [[Page 55435]] better outcomes for beneficiaries and reduced costs for the Medicare program. CMS believes that the addition of MSPB-PAC will further the goal of improving the efficiency of home health care, creating incentives for coordination of care and incentivizing providers to find efficient ways to deliver high quality care. CMS acknowledges that higher-acuity patients often require more resource-intensive treatments. CMS notes that the MSPB-PAC measure is risk-adjusted to account for differences in patient acuity. In addition, clinically complex patients receive a higher payment rate under the PDGM, limiting the financial incentive to avoid these high acuity patients. Comment: Some commenters questioned whether HHAs that spend more than the national average of MSPB-PAC will receive a lower score on the measure. They also questioned whether HHAs that spend more than the average for their cohort will receive a lower score on the measure. Response: We appreciate the commenters' concerns. MSPB-PAC is a metric of cost-effectiveness and efficiency, and as such, lower spending results in a higher score on the measure. As with all expanded HHVBP Model measures, HHAs will receive TPS scores based on their measure performance relative to their cohort. Full measure specifications for MSPB-PAC are available at the following link: https://www.cms.gov/files/document/home-health-outcome-measures-table-oasis-e2025.pdf. Comment: Some commenters stated that the incentive to reduce costs of care which would result from adding the MSPB-PAC measure would not necessarily lead to higher quality care for patients and would run contrary to the goals CMS has for promoting patient-centered care. Some commenters particularly noted the potential for unintended consequences associated with the introduction of the MSPB-PAC measure, stating that adding the measure would create disincentives for HHAs to admit clinically complex patients, undermining access to care for high-need patients. Response: We appreciate these comments. As part of our ongoing monitoring of the expanded HHVBP Model, we will monitor for changes in patient characteristics that may suggest unintended consequences associated with adding the MSPB-PAC measure. We note that the MSPB-PAC measure is risk-adjusted to account for differences in patient acuity. In addition, clinically complex patients receive a higher payment rate under PDGM, limiting the potential for unintended consequences. Comment: A commenter stated that the MSPB-PAC and DTC-PAC measures measure very similar outcomes and that only one should be added to the expanded HHVBP Model. Response: We believe that the MSPB-PAC and DTC-PAC measures measure different dimensions of quality and efficiency. DTC-PAC is a measure of patient outcomes while MSPB-PAC is a measure of resource use and cost efficiency. The DTC-PAC measure uses inpatient hospital claims to identify episodes with an associated unplanned hospitalization and administrative data to identify patients who die within 31 days of discharge, both of which result in an episode being classified as not having a successful community discharge. The MSPB-PAC measure uses Medicare Part A and B claims to measure the average Medicare spending per patient during and after the home health stay. The goal of the DTC- PAC measure is to encourage the provision of comprehensive care that facilitates successful long-term recovery at home. The goal of the MSPB-PAC measure is to incentivize providers to improve care efficiency and coordinate services across the episode of care, ultimately reducing total Medicare spending. Analyses conducted as part of the endorsement process for the MSPB-PAC measure found a small but significant negative association between the MSPB-PAC measure scores and the DTC measure scores. These results show that MSPB-PAC and DTC-PAC measure separate dimensions of quality.\36\ --------------------------------------------------------------------------- \36\ National Quality Forum (NQF) (2021) Cost and Efficiency, Spring 2020 Cycle: CDP Report. Available from: https://digitalassets.jointcommission.org/api/public/content/926365c68be1441791340150005aacd6?v=39e48ce7. --------------------------------------------------------------------------- Comment: Several commenters opposed adding any additional measures to the HHVBP applicable measure set, noting that HHAs have made substantial investments in quality improvement strategies tied to the current Model's framework. Some commenters expressed concern about the burden of adding additional measures, given the proposed reductions to home health payments. Another commenter encouraged CMS to maintain a stable and predictable measure environment, requesting that CMS maintain the current measure set and weight distribution in the near term, while engaging stakeholders in a phased, transparent process for any future expanded HHVBP Model refinements. Response: We appreciate these comments but note that one of the goals of the expanded HHVBP Model is to study new potential quality and efficiency measures for appropriateness in the home health setting. Adding the MSPB-PAC measure to the HHVBP applicable measure set is consistent with this goal. We have and will continue to engage stakeholders in the measure development and implementation processes. Comment: Some commenters expressed concern that, as a claims-based measure, MSPB-PAC lacks real-time transparency, limiting HHAs' ability to implement timely performance improvements. Response: We recognize commenters' concerns regarding the timeliness of public reporting data. We remain committed to ensuring providers have access to the most timely data available to support quality improvement efforts. The MSPB-PAC measure is intended to provide actionable, transparent information to providers. By evaluating a given HHA's risk-adjusted Medicare spending in a defined timeframe as compared to that of the national median HHA, the MSPB-PAC measure recognizes HHAs that deliver high quality care at lower cost to Medicare, when used in conjunction with the other quality measures in the expanded HHVBP Model. The MSPB-PAC measure will have a six-month data lag, similar to the other claims-based measures already included in the HHVBP Model applicable measure set. Additionally, as discussed in the CY 2018 HH PPS final rule (82 FR 51676), improvements in performance in the MSPB-PAC measure over a one-year period will also be included in the two years of measure data, so providers' improvement efforts can still be reflected in their two-year measure scores.\37\ --------------------------------------------------------------------------- \37\ https://www.govinfo.gov/content/pkg/FR-2017-11-07/pdf/2017-23935.pdf. --------------------------------------------------------------------------- Comment: Some commenters expressed concern that MSPB-PAC reflects spending related to factors outside of HHAs' control, potentially including spending for care the patient receives after discharge that may not have been preventable. Response: We recognize commenters' concerns. We believe providers will not be unfairly punished for spending outside of their control. The MSPB-PAC measure excludes certain services and costs that are considered clinically unrelated or beyond the provider's control. This is done so that providers are held accountable only for the costs they can reasonably manage. The episode of care definition that the MSPB-PAC measure uses includes the period a patient is directly under a provider's care, as well as a defined [[Page 55436]] period after the end of that provider's treatment which may be reflective of and influenced by the services rendered by the provider. Final Decision: After consideration of the public comments received, we are finalizing the addition of MSPB-PAC measure to the expanded HHVBP Model's applicable measure set as proposed.

3. Addition of OASIS-Based Function Measures to the Expanded HHVBP

Model Applicable Measure Set We proposed adding three OASIS-based function measures to the HHVBP applicable measure set beginning with CY 2026: Improvement in Bathing (based on OASIS item M1830) Improvement in Upper Body Dressing (based on OASIS item M1810) Improvement in Lower Body Dressing (based on OASIS item M1820) These measures are intended to complement the Discharge (DC) Function Score measure added to the HHVBP applicable measure set starting with CY 2025 to provide a more holistic picture of patients' functional status. The DC Function Score measure uses a cross-setting function item set which does not include items related to bathing or dressing. These three measures have already been tested, validated, and implemented for other purposes within CMS models and programs. Improvement in Bathing is used in the Home Health Quality Reporting Program, the Home Health Quality of Patient Care Star Rating system and reported on Care Compare. All three of the OASIS items underlying these measures were also used in the Total Normalized Change (TNC) in Self- Care measure that were part of the CY 2023 and CY 2024 expanded HHVBP Model applicable measure set. Additionally, the underlying OASIS M1800 items are used in the Home Health Patient-Driven Groupings Model that is used for Medicare home health payments. Therefore, adding these measures to the expanded HHVBP Model would align with existing quality measurement and payment practices. Adding these measures would not create additional burden to HHAs, as the data for these measures is already collected on OASIS assessments. In the CY 2024 HH PPS final rule (88 FR 77676), CMS finalized the policy to add the DC Function Score measure to replace the previous OASIS-based TNC measures (TNC Self-Care and TNC Mobility). That change aligned the expanded HHVBP Model with PAC quality programs. The DC Function Score measure is an OASIS-based measure that is used in the HH QRP and the expanded HHVBP Model starting in CY 2025. This measure reports the percentage of patients who meet or exceed an expected discharge function score during the reporting period. The DC Function Score measure considers two dimensions of patient function--self-care and mobility activities--using 13 OASIS items.\38\ --------------------------------------------------------------------------- \38\ These OASIS items and activities include GG0130 Self-Care, GG0130A Eating, GG0130B Oral hygiene, GG0130C Toileting hygiene, GG0170 Mobility, GG0170A Roll left and right, GG0170C Lying to sitting on side of bed, GG0170D Sit to stand, GG0170E Bed-to-chair transfer, GG0170F Toilet transfer, GG0170I Walk 10 feet, GG0170J Walk 50 feet with two turns, GG0170R Wheel 50 feet with two turns. --------------------------------------------------------------------------- The Model's Technical Expert Panel (TEP) has raised concerns that the DC Function Score measure does not consider bathing or dressing abilities, as these items are not available across all PAC settings covered by this cross-setting measure. TEP members identified the ability to bathe and dress as being critically important for home health patients. Many patients who receive home health care are recovering from an injury or illness and may have difficulty performing the tasks of bathing and dressing, requiring help from another person or special equipment to accomplish these activities. Improving patients' ability to bathe themselves contributes to patient comfort and quality of life and is often a rehabilitative goal for home health patients. These metrics also promote safer discharges from home care. Improvement in both upper and lower body dressing are important indicators of usefulness and improvement for patients, as well as indicators of being able to stay home, care for themselves, and be independent. In 2024, TEP members supported CMS moving ahead as quickly as possible to add bathing and dressing function measures to the Model's applicable measure set to complement the DC Function measure. The TEP recommended using existing measures based on the OASIS M1800 items, which could be added sooner than future measures based on section GG items.\39\ --------------------------------------------------------------------------- \39\ The Section GG items were added to patient assessment tools for home health, skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals to support alignment of measurement of functional abilities and goals across post-acute care assessment instrument. --------------------------------------------------------------------------- The baseline data for these three measures will cover CY 2023, which was specified as the Model baseline year in the CY 2024 HH PPS final rule. This baseline data will be used to calculate benchmarks and achievement thresholds for the proposed OASIS-based function measures. We anticipate providing HHAs with the benchmarks, achievement thresholds, and improvement thresholds for the OASIS-based function measures in the October 2025 IPRs. Adding these three measures would increase the number of OASIS- based measures used in the Model, allowing for more robust measurement of HHA performance. The change will also allow more HHAs to have sufficient data for at least five measures, the minimum required to calculate a payment adjustment. We anticipate that HHAs that receive payment adjustments will have greater incentives to improve or maintain quality of care. The following is a summary of the comments we received and our responses: Comment: Most of the commenters supported CMS' proposed addition of the measures of bathing and dressing to complement the DC Function measure. However, many of the supportive commenters encouraged CMS to work toward replacing these measures with GG-based counterparts. Response: We appreciate commenters' support of these measures. CMS agrees with commenters about the desirability of section GG-based versions of these measures. Once section GG-based versions of these measures are available, we may consider proposing changing to the GG- based measures through future rulemaking. Comment: Some commenters opposed adding any measures based on the OASIS M1800 items, even in the short-term. These commenters stated that the functional areas addressed by these measures would be better served by developing new quality measures based on the OASIS GG items. One commenter expressed concern that using the M1800-based measures could delay development and implementation of the GG-based measures. Response: We agree with commenters about the desirability of Section GG-based versions of these measures but note that each of the M1800 item-based measures were used in the TNC in Self-Care measure that was used in the expanded HHVBP Model prior to 2025. The addition of the M1800-based measures will not delay development or implementation of the GG-based measures, as CMS will continue to work toward development of the GG-based measures, even while the M1800-based measures are publicly reported. Both the M1800 items and GG items will continue to be collected during this development period. Once section GG- [[Page 55437]] based versions of these measures are available, we may consider proposing changing to the GG-based measures through future rulemaking. Comment: A few commenters encouraged CMS to replace the DC Function measure with individual OASIS-based function measures. Response: We finalized the proposal to add the DC Function measure to the HHVBP applicable measure set in the CY 2024 HH PPS final rule (88 FR 77676). Public comments on this change were generally supportive. CMS will not remove the DC Function measure at this time. The DC Function measure contributes valuable insights about the quality of care provided to patients. For many patients, the overall goals of HHA care may include optimizing functional improvement, returning to a previous level of independence, maintaining functional abilities, or avoiding institutionalization Unlike the individual OASIS-based function measures, the DC Function measure does not solely reflect improvement of patients at discharge, as it estimates the percentage of patients who meet, as well as exceed, an expected discharge function score. The measure gives credit for patients who, based on their own demographic and clinical characteristics, are expected to maintain, as opposed to improve in, function. We will continue to monitor performance trends of the DC Function measure. Comment: Some commenters opposed adding any additional measures to the HHVBP applicable measure set. A few commenters cited concerns with the administrative burden of adding new measures, while another noted the investments that providers have made in quality improvement strategies based on the current measure set. Response: We appreciate commenters' concerns about changes to the HHVBP applicable measure set. We note that these measures were used in the TNC in Self-Care measure that was part of the HHVBP applicable measure set prior to 2025, when it was replaced by the DC Function measure. As a result, CMS believe that HHAs should be able to adjust to this change in the measure set without unreasonable burden. Comment: A commenter requested that CMS not obscure the role of the nurse in providing patient-centered care. Response: We appreciate the comment and remain committed to supporting the contributions made by all members of an interdisciplinary patient-centered care team. Comment: A few commenters expressed concerns about the fairness, accuracy, and feasibility of new measures. A commenter encouraged CMS to validate all proposed new measures before tying the measures to payment. Another encouraged CMS to ensure that functional measures are appropriately risk-adjusted to account for the complexity of patient populations. Another commenter encouraged CMS to adopt a perspective oriented around comprehensive care. Another commenter recommended CMS either delay the proposed changes or make at least some of the changes voluntary for the first performance year before payments are impacted. Response: We appreciate commenters' concerns about quality measure accuracy and fairness. We remain committed to ensuring that all HHVBP applicable measures account for providers' patient populations and notes that all three of the proposed function measures are risk- adjusted. Additional information about the specifications of these function measures is available at the following link: https://www.cms.gov/files/document/home-health-outcome-measures-table-oasis-e2025.pdf. While CMS recognizes commenters' concerns about the timing of adding these measures, we do not believe the addition of these measures needs to be delayed particularly given that the three measures are included in the TNC in Self-Care measure previously used in the expanded HHVBP Model. The function measures have been thoroughly vetted and two of the measures have been utilized in HH QRP for multiple years. These function measures would add valuable information about quality of care to the expanded HHVBP Model, which we believe will be beneficial to incorporate into the Model sooner rather than later. After implementation, we will monitor performance trends for these function measures to verify that the measures are meaningfully identifying HHAs' quality of care. Therefore, CMS has decided not to delay implementation of these measure changes. In addition, we do not believe making the new measures voluntary would be viable or beneficial to the expanded HHVBP Model or providers. The expanded HHVBP Model is designed to incentivize HHAs to provide high-quality home health care across the country. Given the intent of the expanded HHVBP Model to improve the quality of care furnished to Medicare beneficiaries and study what incentives are sufficiently significant to encourage HHAs to provide high quality, CMS believes that it is important that none of the measures used in the Model be voluntary. Permitting HHAs to voluntarily decide whether to use the newly finalized measures would result in some HHAs receiving performance scores that are based on less complete and less representative data, reducing the impact of the Model on quality. In addition, the addition of the three finalized OASIS-based function measures to the Model increases the number of HHAs that have sufficient data available to receive a payment adjustment, which also increases the impact of the Model on quality. Final Decision: After consideration of the public comments received, CMS is finalizing the addition of the three OASIS-based function measures to the HHVBP applicable measure set as proposed.

4. Updates to Individual Measure Weights and Category Weights

Along with the proposed revisions to the current HHVBP applicable measure set, we proposed revising the weights of the individual measures starting with the CY 2026 performance year as well as revising the measure category weights. Table D-22 has current and proposed individual measure weights and category weights. Changes to the measure weights are necessary given the proposed changes to the expanded HHVBP Model applicable measure set. Reflecting the reduction in the number of HHCAHPS Survey-based measures, the proposed weights include a lower total weight for the HHCAHPS Survey- based measures and a higher weight for the OASIS-based and claims-based measures. In addition, some of the weight for the current claims-based measures is shifted to the MSPB-PAC measure and some weight for the OASIS-based measures is shifted to the additional function measures. As with the current measure weights, higher weight is given to claims- based measures because they may have a greater impact on reducing Medicare expenditures. For example, HHAs with better performance scores on the claims-based PPH measure have lower rates of potentially preventable hospitalizations for their patients, reducing Medicare expenditures. Currently, the OASIS-based, claims-based, and HHCAHPS Survey-based measures contribute 35 percent, 35 percent, and 30 percent, respectively, to the Total Performance Score (TPS) for HHAs in the larger-volume cohort. We proposed adjusting the measure category weights for the larger-volume cohort such that the OASIS-based and claims-based measure categories each contribute 40 percent, and the HHCAHPS Survey-based measure [[Page 55438]] category contributes 20 percent to the TPS due to the reduction in the number of individual HHCAHPS Survey-based measures. For HHAs in the smaller-volume cohort, the OASIS-based and claims-based measures both contribute 50 percent to the TPS. We did not propose changing the measure category weights for the smaller-volume cohort as the HHCAHPS measures are not used for the smaller-volume cohort. As proposed, changes to the applicable measure set would increase the number of OASIS-based measures from three measures to six and increase the number of claims-based measures from two to three. The number of individual measures for the HHCAHPS Survey-based measures would decrease from five to two. Note that we have changed weights for measures and measure categories in the past due to changes to the applicable measure set (for example, replacing the two TNC measures with the DC Function Score measure). [GRAPHIC] [TIFF OMITTED] TR02DE25.048 Comment: A few commenters supported all of the proposed changes to HHVBP Model's measure weights. Another commenter only supported modifications caused by the proposed changes to HHCAHPS Survey-based measures, as they opposed the other proposed changes to the HHVBP applicable measure set. Response: We appreciate the comments supporting the proposed changes to HHVBP measure weights. We note that all proposed changes to measure weights are necessary given the changes to the expanded HHVBP Model's applicable measure set that are being finalized in this rule. Comment: Several commenters disagreed with CMS's proposed measure weight changes. A commenter expressed concern about the increased weight for the OASIS-based measures. A different commenter expressed concern about the increased weight each individual HHCAHPS Survey-based measure would receive under the proposed measure category weights. Another commenter requested that measure weight changes be introduced gradually. A different commenter expressed concerns about the differential impact the revised measure weights might have on providers in Puerto Rico. A few commenters opposed any measure set or measure weight changes at this time. Response: We appreciate the comments received on the proposed changes to the expanded HHVBP Model individual measure and category weights. We note that changes to measure weights are necessary given the changes to the expanded HHVBP Model applicable measure set that are being finalized as part of this rule. The increase in the number of total measures in the expanded model, the increase in the number of measures in the OASIS-based and claims-based categories, and the decrease in the number of measures in the HHCAHPS Survey-based category, necessitate adjusting the weight assigned to some or all of the measures in the HHVBP Model applicable measure set. As measures are removed and added to the expanded HHVBP Model, CMS works to balance measure weights across both measure categories and across individual measures. For example, the removal of three HHCAHPS Survey-based measures is required to align with the finalized changes to the HHCAHPS Survey, reducing the total number of HHCAHPS Survey- based measures in the HHVBP Model to two. As outlined in the proposed rule and below in section IV.C.5, CMS evaluated options which could preserve the HHCAHPS Survey-based measure category weight (30 percent) or preserve the individual HHCAHPS Survey-based measure weights (6 percent) but could not preserve both. CMS determined that these alternatives would be inconsistent [[Page 55439]] with previous decisions about applying differential weights to measures, and therefore these alternatives were not proposed. At this time, CMS has not identified any disproportionate impacts the revised measure weights would have on providers in Puerto Rico. We will continue to monitor trends in measure performance that may indicate unintended consequences from participating in the expanded HHVBP Model. Final Decision: After consideration of the public comments received, we are finalizing the changes to the expanded HHVBP Model's individual measure weights and category weights as proposed.

5. Alternatives Considered

We considered two alternative options for revising the HHVBP measure weights prior to choosing the previously discussed proposals. Table D-23 describes these alternative options for HHAs in the larger- volume cohort, including maintaining measure category weights consistent with current measure set weights and adjusting within- category measure weights (Option 1), reducing the HHCAHPS-based measure category weight to 20 percent (Option 2), and maintaining HHCAHPS-based measure weights consistent with current measure set weights, adjusting measure category weights accordingly (Option 3). We also considered these options for the smaller-volume cohort and came to the same conclusions. Therefore, we only provided a table with measure weighting alternatives for the larger-volume cohort. [GRAPHIC] [TIFF OMITTED] TR02DE25.049 We determined that these alternatives would be less consistent with previous decisions about applying differential weights to measures, and therefore these alternatives were not proposed. We invited comments on these alternatives considered. The following is a summary of the comments we received and our responses: Comment: A commenter recommended that CMS adopt Option 3, retaining the 6.00 percent individual measure weight for the remaining two HHCAHPS Survey-based measures. Response: We appreciate the commenter's suggestion. However, as stated previously, we determined that the alternative measure weight options would be less consistent with previous decisions about applying differential weights to measures. Final Decision: After consideration of the public comments received, we are finalizing the changes to the expanded HHVBP Model's individual measure weights and category weights as proposed.

D. HHVBP Quality Measure Concepts Under Consideration for Future

Years--Request for Information The expanded HHVBP Model provides an opportunity to examine a broad array of quality measures that address critical gaps in care. A comprehensive review of the Value-Based Purchasing (VBP) experience, conducted by the Office of the Assistant Secretary for Planning and Evaluation (ASPE), identified several objectives for HHVBP measures.\40\ The recommended objectives emphasize measuring patient outcomes and functional status; appropriateness of care; and incentives for providers to build infrastructure to facilitate measurement within the quality framework. The study identified the following seven objectives which served as guiding principles for the development of performance measures used in the original Model: --------------------------------------------------------------------------- \40\ U.S. Department of Health and Human Services. Office of the Assistant Secretary for Planning and Evaluation (ASPE) (2014). Measuring Success in Health Care Value-Based Purchasing Programs. Cheryl L. Damberg et al. on behalf of RAND Health. --------------------------------------------------------------------------- Use a broad measure set that captures the complexity of the HHA service provided. Incorporate the flexibility to include Improving Medicare Post-Acute [[Page 55440]] Care Transformation (IMPACT) Act of 2014 measures that are cross- cutting amongst post-acute care settings. Develop second-generation measures of patient outcomes, health and functional status, shared decision making, and patient activation. Include a balance of process, outcome, and patient experience measures. Advance the ability to measure cost and value. Add measures for appropriateness or overuse. Promote infrastructure investments. A central driver of the process used to select measures for the original Model was incorporating innovative thinking from the field while simultaneously drawing on evidence-based literature and documented best practices. Broadly, measures were selected based on their impact on care delivery and to support the goal of improving health outcomes, quality, safety, efficiency, and experience of care for patients. As we continue to leverage our value-based purchasing initiatives to improve the quality of care furnished across healthcare settings, we are interested in considering new performance measures for inclusion in the expanded HHVBP Model. We requested public comments on one specific performance measure as well as general comments on other potential future model concepts that may be considered for inclusion in the expanded HHVBP Model.

1. Falls With Major Injury Measure (OASIS-Based and Claims-Based)

Within the home health population, approximately one third of individuals over the age of 65 experience one or more falls each year.41 42 Since 2022, CMS has reported rates for the Falls with Major Injury (FMI) measure on Care Compare. This measure is based on OASIS data. --------------------------------------------------------------------------- \41\ Avin KG, Hanke TA, Kirk-Sanchez N, McDonough CM, Shubert TE, Hardage J, Hartley G; Academy of Geriatric Physical Therapy of the American Physical Therapy Association. Management of falls in community-dwelling older adults: clinical guidance statement from the Academy of Geriatric Physical Therapy of the American Physical Therapy Association. Phys Ther. 2015 Jun;95(6):815-34. doi: 10.2522/ ptj.20140415. Epub 2015 Jan 8. PMID: 25573760; PMCID: PMC4757637. \42\ Carande-Kulis V, Stevens JA, Florence CS, Beattie BL, Arias

V. Updates to the Home Health Agency Conditions of Participation (CoPs)

To Align With the OASIS All-Payer Submission Requirements

A. Statutory Authority and Background

Section 1891(d) of the Act, cross-referencing section 1891(c)(2)(C)(i)(I) of the Act (section 4022(a) of Pub. L. 100-203 (December 22, 1987)), required the Secretary to develop a comprehensive assessment for Medicare-participating HHAs. Section 1891(c)(2)(C)(i)(II) of the Act also requires a survey of the quality of care and services furnished by the agency as measured by indicators of medical, nursing, and rehabilitative care provided by the HHA. Subsequently, CMS developed an assessment instrument that identifies each patient's need for home care and the patient's medical, nursing, rehabilitative, social and discharge planning needs. Part of this assessment requires Medicare-certified HHAs to use a standard core assessment data set, the Outcome and Assessment Information Set (OASIS). Thus, OASIS became the designated assessment instrument for use by an HHA in complying with these reporting requirements. Section 704 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, December 8, 2003) suspended the legal authority of the Secretary to require HHAs to gather or report non-Medicare and non-Medicaid patient data to CMS until certain conditions \44\ were met. Subsequently, CMS conducted a study from 2004 to 2005 and submitted a report \45\ to Congress which recommended that the suspension of data collection on non-Medicare and non-Medicaid patients continue. In addition, the Improving Medicare Post-Acute Care Transformation Act (IMPACT Act) (Pub. L. 113-185, October 6, 2014) required CMS to create a uniform quality measurement system that allows CMS to compare outcomes across post-acute care (PAC) providers, which include HHAs. --------------------------------------------------------------------------- \44\ Section 704(b) of the MMA suspended legal authority to require HHAs to report on non-Medicare and non-Medicaid patient data until at least two months after the Secretary published final regulations on CMS's collection and use of OASIS data for non- Medicare/Medicaid patients following the submission of a report to Congress on the study described under section 704(c) of the MMA. \45\ The ``OASIS Study: The Costs and Benefits Associated with the Collection of Outcome and Assessment Information Set (OASIS) Data on Private Pay Home Patients--Report to Congress'' https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf. --------------------------------------------------------------------------- In response to the IMPACT Act, the final rule titled, ``Medicare Program; Calendar Year (CY) 2023 Home Health Prospective Payment System Rate Update; Home Health Quality Reporting Program Requirements; Home Health Value-Based Purchasing Expanded Model Requirements; and Home Infusion Therapy Services Requirements'' (87 FR 66790, November 4, 2022) finalized the requirement for HHAs to report OASIS data on all patients, regardless of payer, for the applicable 12-month performance period (for example, July 1, 2025-June 30, 2026) (87 FR 66862 through 66865). With the CY 2025 HH PPS final rule (89 FR 88354, November 7, 2024), CMS established that start of care (SOC) is the first assessment that can be submitted for a non-Medicare/non-Medicaid patient, either on or after January 1, 2025, for the phase-in (voluntary) period or on or after July 1, 2025, for the mandatory reporting period (89 FR 88439 through 88441). This ended the suspension of the OASIS data collection on non-Medicare and non-Medicaid HHA patients.

B. Updates to the Home Health Agency (CoPs) To Align With the OASIS

All-Payer Submission Requirements (Sec. Sec. 484.45(a) and 484.55(d)(1)(i)) Section 484.45(a) of the HHA CoPs currently requires an HHA to encode and electronically transmit each completed OASIS assessment to the CMS system, ``regarding each beneficiary'' with respect to which information is required to be transmitted (as determined by the Secretary), within 30 days of completing the ``assessment of the beneficiary.'' To [[Page 55442]] align with the transition to OASIS all-payer submission requirements we proposed at Sec. 484.45(a) to remove the term ``beneficiary'' and replace it with the term ``patient.'' Additionally, under section 484.55 of the HHA CoPs, all patients must receive, and an HHA must provide, a comprehensive assessment no later than 5 calendar days after the start of care. The comprehensive assessment must incorporate the most current version of the OASIS data items. This includes clinical record items, patient history, supportive assistance, etc. Section 484.55(d)(1)(i) specifies a ``beneficiary elected transfer'' in reference to one scenario in which an OASIS assessment must be updated. To support the transition to OASIS all- payer submission requirements, we also proposed to remove the term ``beneficiary'' at Sec. 484.55(d)(1)(i). Comment: A commenter requested additional clarification regarding the OASIS all-payer requirements. The commenter noted that the proposed policy shift would be a significant operations change for HHAs and the electronic medical record (EMR) systems they utilize. The commenter suggested CMS update the OASIS validation rules and engage EMR vendors in pilot testing. Response: While the commenter noted the operational change that may be required, HHAs have had substantial time to prepare for the transition to the OASIS all-payer requirement as this policy was initially finalized in 2022 in the CY 2023 HH PPS final rule (87 FR 66862). With implementation of OASIS all-payer data submission, there is no required change to HHA electronic medical record systems. CMS is not introducing any new required OASIS items with the implementation of the all-payer proposal that would require a change to OASIS submission processes. With all-payer submission, HHAs will now be required to submit OASIS for patients receiving skilled care regardless of payor source using the same processes currently in place for Medicare and Medicaid patients. Lastly, all HHAs will continue to have access to technical support relative to submission of OASIS data via the QIES Technical Support Office website https://qtso.cms.gov/ and iQIES team at CMS. After consideration of public comment, we are finalizing the technical changes to the CoPs as proposed. Thus, Sec. 484.45(a) will state that an HHA must encode and electronically transmit each completed OASIS assessment to the CMS system, ``regarding each patient'' with respect to which information is required to be transmitted (as determined by the Secretary), within 30 days of completing the ``assessment of the patient'' and Sec. 484.55(d)(1)(i) will state ``Elected transfer.'' These technical changes further clarify that the requirement for reporting OASIS information applies to all HHA patients receiving skilled services and align the language in the CoPs with the requirements finalized in the CY 2023 and CY 2025 HH PPS final rules. We emphasize that there is no change to existing policy regarding patient exemptions from OASIS, which are as follows: patients under the age of 18; patients receiving maternity services; and patients receiving only personal care, housekeeping, or chore services. Additionally, we remind readers that the OASIS submission requirements continue not to apply to patients receiving Part B outpatient therapy services provided by an HHA that elects to provide these outpatient services.\46\ Patients receiving Part B outpatient therapy services would not have an HHA plan of care nor would an OASIS assessment be completed on these patients. --------------------------------------------------------------------------- \46\ In accordance with 484.105(g) an HHA that furnishes outpatient physical therapy or speech-language pathology services must meet all of the applicable conditions of Part 484 and the additional health and safety requirements set forth in Sec. Sec. 485.711, 485.713, 485.715, 485.719, 485.723, and 485.727 to implement section 1861(p) of the Act. --------------------------------------------------------------------------- VI. Provider Enrollment and Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Accreditation Policies

1. Medicare Enrollment

a. Background Section 1866(j)(1)(A) of the Act requires the Secretary to establish a process for the enrollment of providers and suppliers into the Medicare program. The central purpose of the enrollment process is to help verify that providers and suppliers (hereafter collectively ``providers'' unless otherwise noted) seeking to bill Medicare for services and items furnished to Medicare beneficiaries meet all applicable Federal and State requirements to do so. The process assists in preventing unqualified and potentially fraudulent individuals and entities from entering and improperly billing Medicare. Since 2006, we have undertaken rulemaking efforts to outline our enrollment procedures. These regulations are generally codified in 42 CFR part 424, subpart P (currently Sec. Sec. 424.500 through 424.575 and hereafter occasionally referenced as subpart P). They address, among other things, requirements that providers must meet to obtain and maintain Medicare billing privileges. As outlined in Sec. 424.510, one requirement is that the provider must submit to its assigned Medicare Administrative Contractor (MAC) the appropriate enrollment form, typically the Form CMS-855 (for example, the Form CMS-855A (OMB control number 0938-0685)). The Form CMS-855 collects important information about the provider. This includes, but is not limited to, general identifying information (for instance, legal business name), licensure and/or certification data, and practice locations. The application is used for various provider enrollment transactions, such as: Initial enrollment--The provider is--(1) enrolling in Medicare for the first time; (2) enrolling in another Medicare contractor's jurisdiction; or (3) seeking to enroll in Medicare after having previously been enrolled: Change of ownership--The provider is reporting a change in its ownership; Revalidation--The provider is revalidating its Medicare enrollment information in accordance with Sec. 424.515. (DMEPOS) suppliers must revalidate their enrollment every 3 years; all other providers and suppliers must do so every 5 years.); Reactivation--The provider is seeking to reactivate its Medicare billing privileges after it was deactivated under Sec. 424.540. (Deactivation, an important program integrity safeguard, means that the provider's or supplier's billing privileges are stopped for one or more of the reasons outlined in Sec. 424.540(a)(1) through (8) (for example, non-compliance with enrollment requirements). However, they can be restored (or ``reactivated'') upon the submission of information required under Sec. 424.540). Change of information--The provider is reporting a change in its existing enrollment information in accordance with Sec. 424.516. After receiving the provider's initial enrollment application, CMS or the MAC reviews and confirms the information thereon and determines whether the provider meets all applicable Medicare requirements. We believe this screening process has greatly assisted CMS in executing its responsibility to prevent Medicare fraud, waste, and abuse by keeping unqualified providers out of the Medicare program. As previously mentioned, over the years we have issued various final rules pertaining to provider enrollment. [[Page 55443]] These rules were intended not only to clarify or strengthen certain components of the enrollment process but also to enable us to take further action against providers: (1) engaging (or potentially engaging) in fraudulent or abusive behavior; (2) presenting a risk of harm to Medicare beneficiaries or the Medicare Trust Funds; or (3) that are otherwise unqualified to furnish Medicare services or items. Consistent with this, and as we discuss in this section VI.A.1.c of this final rule, we proposed and are finalizing several changes to our Medicare provider enrollment regulations. (Section VI.A.2 of this final rule addresses our proposed and finalized change to one of our Medicaid provider enrollment provisions.) b. Legal Authorities There are two principal categories of legal authorities for our proposed and finalized Medicare provider enrollment provisions-- Section 1866(j) of the Act furnishes specific authority regarding the enrollment process for providers and suppliers; and Sections 1102 and 1871 of the Act provide general authority for the Secretary to prescribe regulations for the efficient administration of the Medicare program. c. Medicare Provider Enrollment Provisions This section of this final rule discusses our proposals, outlines the comments we received and responses thereto, and identifies our final provisions. A number of the comments addressed multiple proposals and topics simultaneously, particularly with respect to revocations and stays of enrollment. We will thus include all the comments and responses received on the subjects in sections VI.A.1.c.(1).(a). through (c). of this rule within section VI.A.1.c.(1).(d). of this final rule. (1) Revocation and Denial Reasons, Revisions to Other Revocation Policies, Retroactive Revocations, and Stays of Enrollment (a) Revocations and Denials Under Sec. 424.535(a), CMS may revoke a Medicare provider's enrollment for any of the reasons specified in that paragraph. These reasons include, for instance, the provider's: (i) failure to adhere to Medicare enrollment requirements; (ii) exclusion by the HHS Office of Inspector General (OIG); (iii) felony conviction within the previous 10 years; (iv) pattern of improper or abusive billing; and (v) termination by another Federal health care program. A revocation is designed to safeguard the Medicare program, the Trust Funds, and beneficiaries by removing (and preventing payment to) Medicare providers that have engaged in problematic or otherwise non-compliant behavior. When a provider is revoked, it is generally barred from reenrolling in Medicare for a period of 1 to 10 years. The length of this ``reenrollment bar'' is determined based upon the severity of the basis of the revocation. CMS also has numerous reasons in Sec. 424.530(a) for which it can deny a provider's enrollment application, some of which duplicate our revocation grounds in Sec. 424.535(a) (for instance, OIG exclusion, felony conviction, termination by another federal health care program). The general rationale for a denial is akin to that for a revocation: to protect the Medicare program and its beneficiaries from potentially fraudulent or abusive activity. We have previously finalized a number of regulations adding new revocation and denial reasons to subpart P to address particular program integrity vulnerabilities and types of provider conduct. We have also used rulemaking to refine other policies regarding revocations, such as the effective dates of certain revocations. Given our continuing obligation to establish effective payment safeguards, we proposed several additions and revisions to our revocation and denial policies in part 424 subpart P. (i) Authority To Prescribe Drugs (Sec. Sec. 424.535(a)(13)(ii) and 424.530(a)(11)(ii)) Sections 424.535(a)(13)(ii) and 424.530(a)(11)(ii) permit CMS to revoke or deny a physician's or eligible professional's enrollment if the licensing or administrative body for any state where the individual practices suspends or revokes the person's ability to prescribe drugs. We have received questions regarding the term ``prescribe drugs''-- specifically, whether the state's prohibition: (1) must be for all drugs for Sec. 424.535(a)(13)(ii) or Sec. 424.530(a)(11)(ii) to potentially apply; or (2) need only apply to one drug. Our position has long been the latter, and we accordingly proposed to revise Sec. Sec. 424.535(a)(13)(ii) and 424.530(a)(11)(ii) to change ``prescribe drugs'' to ``prescribe one or more drugs.'' Given the seriousness of any state suspension or revocation action regarding an individual's prescribing authority, we believe a prohibition involving even one drug is sufficient to warrant revocation or denial if we deem it necessary to protect beneficiaries and the Trust Funds. (ii) Pattern or Practice of Prescribing (Sec. 424.535(a)(14)) We currently may revoke a physician's or practitioner's enrollment under Sec. 424.535(a)(14) if the individual has a pattern or practice of prescribing Part B or D drugs that is abusive, threatens the health and safety of Medicare beneficiaries, or fails to meet Medicare requirements. This authority aims to protect Medicare beneficiaries and the Trust Funds against harmful and non-compliant prescribing practices. Drugs associated with services covered under Part A presently do not fall within the purview of Sec. 424.535(a)(14). This is of increasing concern to us. Although Part A does not cover many drugs that beneficiaries take at home or in outpatient facilities, it can cover drugs administered as part of an inpatient covered stay, such as at a hospital or a skilled nursing facility. We do not believe the important protections that Sec. 424.535(a)(14) affords must depend upon the setting in which the drugs were furnished. It is the abusive or non-compliant prescribing itself, rather than the beneficiary's location or inpatient or outpatient status, that is most critical for purposes of program integrity. Beneficiaries can be endangered by prescribing during inpatient stays no less than in other environments. We accordingly proposed to revise Sec. 424.535(a)(14) to change ``Part B or D drugs'' to ``Medicare-covered drugs'' to encompass Medicare Parts B, D, and now A. (iii) Abuse of Billing Privileges (Sec. 424.535(a)(8)(i)) Section 424.535(a)(8) permits revocation of enrollment if-- The provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service (Sec. 424.535(a)(8)(i)); or CMS determines that the provider has a pattern or practice of submitting claims that fail to meet Medicare requirements (Sec. 424.535(a)(8)(ii)). Paragraph (a)(8)(i) states that situations falling within its purview include but are limited to (and are enumerated as paragraphs (a)(8)(i)(A) through (C))-- The beneficiary is deceased; The directing physician or beneficiary is not in the state or country when services were furnished; or When the equipment necessary for testing is not present where the testing is stated to have occurred. We have recently seen cases where providers and suppliers have submitted [[Page 55444]] claims for payment involving services or items that the beneficiary states were never furnished. While the ``but are not limited to'' caveat in paragraph (a)(8)(i) means that paragraphs (a)(8)(i)(A) through (C) are not exclusive, we believe the seriousness of the attestation cases we have seen and the potential fraud, waste, and abuse that has resulted therefrom warrant a specific mention of this situation in paragraph (a)(8)(i). We accordingly proposed to include it in new paragraph (a)(8)(i)(D). (b) Retroactive Revocations Bases Section 424.535(g) addresses revocation effective dates. Paragraph (g)(1) states that except as described in paragraphs (g)(2) and (g)(3), a revocation becomes effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider; the revocation is thus prospective. Paragraphs (g)(2)(i) through (viii) list eight situations where the revocation effective date is retroactive, generally meaning that the revocation becomes effective back to the date on which the provider's non-adherence to Medicare requirements commenced. The purpose of paragraph (g)(2) is to prevent payment to a provider while it is out of compliance. Assume a provider's license is revoked by the state on September 1. CMS learns of this and sends a revocation notice to the provider on September 15. If we applied paragraph (g)(1)'s prospective ``30 days after mailing'' timeframe, the provider could bill and be paid for services furnished between September 1 and October 15 while unlicensed, resulting in potentially thousands of dollars in improper Medicare payments. Preventing improper payments is a cornerstone of provider enrollment, and we believe that retroactive revocation effective dates are crucial means of ensuring that taxpayer monies are paid only to legitimate, compliant providers. For this reason, we proposed several new grounds and effective dates for retroactive revocations. These will be designated as paragraphs (g)(2)(viii) through (xiv) (the requirement in current paragraph (g)(2)(viii) will be removed, as later explained) and are as follows: For revocations based on a lapse in the IDTF's comprehensive liability insurance under Sec. 410.33(g)(6), the date the insurance lapsed. For revocations based on the provider's or supplier's submission of false or misleading information on the enrollment application, the date the application's certification statement was signed. For revocations based on the provider's or supplier's failure to timely report a change of ownership or adverse legal action, or a change, addition, or deletion of a practice location, the day after the date by which the provider or supplier was required to report the change, addition, or deletion. For revocations based on the surrender of the provider's or supplier's Drug Enforcement Administration certificate of registration in response to a show cause order, the date the certificate was surrendered. For revocations based on the State's suspension or revocation of the physician's or practitioner's ability to prescribe one or more drugs, the date of the suspension or revocation. For revocations of any of the provider's or supplier's other enrollments under Sec. 424.535(i), the effective date of the revocation that triggered the revocation(s) of the other enrollment(s). For revocations based on a DMEPOS supplier's non- compliance with a condition or standard in Sec. 424.57(b) or (c), respectively, the date on which the non-compliance began. We proposed these particular grounds because, as we explained in the proposed rule, the revoked provider or supplier engaged in action or inaction resulting in non-compliance and/or otherwise concerning conduct. Regarding proposed paragraph (g)(2)(viii), lapsed IDTF liability insurance could have eliminated financial protection for beneficiaries negligently harmed by a test the IDTF performed. We believe such an insurance lapse and the risk it could have posed to patients warrants a retroactive revocation effective date. Moreover, because IDTF liability insurance is required per Sec. 410.33(g)(6), failure to maintain it means the IDTF is non-compliant with enrollment requirements; the supplier must therefore not receive payments for services furnished on or after the date the non-compliance commenced. Providing false or misleading data on the enrollment application, meanwhile, reflects in our view dishonest behavior that could have resulted in improper payments to the provider. To illustrate, assume an enrolled provider had failed to report one of its practice locations on its application, knowing that it was not a valid site. If the provider furnished services from that site, it could have received payments to which it was not entitled due to the location's non-compliance. We believe the severity of such conduct justifies a retroactive revocation. The same concerns about potential improper payments were behind proposed new paragraph (g)(2)(x). As an example, if a provider moves its practice location without notifying CMS and the new location does not meet the definition of ``operational'' in Sec. 424.502, Medicare might have been paying for services while the provider was non- compliant with enrollment requirements. Accordingly, we believe this warrants application of the revocation retroactively to the date the non-compliance began as described in proposed paragraph (g)(2)(x). As for new paragraphs (g)(2)(xi) and (xii), meeting all applicable federal and state requirements is necessary for enrollment. If an individual is prescribing or dispensing drugs while non-compliant, we believe the risk this presented to beneficiaries after the loss of DEA or state authority justifies a revocation back to the date said loss occurred. With respect to proposed paragraph (g)(2)(xiii), we believe it would be inconsistent to apply one effective date to the triggering revocation and a different, later one to others, for the same individual or provider organization is involved in all these enrollments. Proposed paragraph (g)(2)(xiv), in our view, is appropriate because the supplier's non-compliance may have resulted in payments (on or after the date of non-compliance) to which the supplier was not entitled. We previously noted our authority under Sec. 424.535(a)(8) to revoke a provider for the abusive billing situations described in paragraphs (a)(8)(i) and (ii). These situations are especially disconcerting with regard to the question of improper payments. If a provider is engaging in abusive billing, this, in our view, constitutes a direct threat to the integrity of the Medicare program. To allow a provider that was revoked for submitting claims for unfurnished services to continue billing Medicare for another 30 days would run entirely counter to our role as steward of the Trust Funds. Thus, we proposed to include the revocation bases in Sec. 424.535(a)(8) as grounds for retroactive applicability. Under new paragraph (a)(8)(iii), the revocation effective date in paragraph (a)(8)(i) would be the earliest date of service on the claim or claims that is or are triggering the revocation. To illustrate, if CMS revokes the provider for submitting claims for non-furnished services with the claims' service dates of June 1, June 5, and June 10, the revocation date would be the earliest of them, or June 1. Considering the serious program integrity risks associated with such claims, we do not believe the [[Page 55445]] effective date must be the last claimed service date, for the risk commenced with the first claim's submission. The revocation effective date under paragraph (a)(8)(ii), meanwhile, would be the last date of service on the claims in question. The reason for the different effective dates is that while (a)(8)(i) requires only one claim submission, (a)(8)(ii) requires a pattern or practice, which cannot be established via a single claim. The last claim establishes the pattern or practice, hence the need to use the date thereon as the effective date. To further accommodate new paragraph (a)(8)(iii), we proposed to add reference to it in the previously noted opening clause of Sec. 424.535(g)(1) as being excluded from application under paragraph (g)(1). We also proposed several other technical changes involving retroactive revocations. First, Sec. 405.800(b)(2) states that a revocation is effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier, the only exceptions being the revocations referenced in current Sec. 424.535(g)(2)(i) through (iv), which are retroactive. Given our significant changes to Sec. 424.535(g)(2) over the years, we proposed to replace the current language of Sec. 405.800(b)(2) with a statement that a revocation's effective date is as specified in Sec. 424.535 (which would include Sec. 424.535(a)(8)(iii) and (g)). Second, Sec. 424.57(e)(1) states that except as otherwise provided in Sec. 424.57, a DMEPOS supplier's revocation for violating Sec. 424.57(b) or (c) is effective 30 days after the entity is sent notice of the revocation, as specified in Sec. 405.874. Similar to our proposed revision to Sec. 405.800(b)(2), we proposed to modify Sec. 424.57(e)(1) to state that the revocation effective date would be as specified in Sec. 424.535. Third, current Sec. 424.535(g)(2)(viii) outlines effective dates for revocations under Sec. 424.535(a)(23). Paragraphs Sec. 424.535(g)(2)(viii)(A) through (C) identify three situations where a retroactive effective date applies. Section 424.535(g)(2)(viii)(D), meanwhile, states that for all standard violations not addressed in paragraphs (A) through (C), the prospective effective date in paragraph (g)(1) applies if the effective date in paragraph (g)(3) does not. We proposed two changes involving Sec. 424.535(g)(2)(viii). One is that-- given proposed new Sec. 424.535(g)(2)(viii) through (xiv)--we proposed to redesignate existing Sec. 424.535(g)(2)(viii) as new Sec. 424.535(g)(2)(xv). The other proposed change involved replacing the reference to ``paragraphs (A) and (C)'' in current Sec. 424.535(g)(2)(viii)(D) (proposed new Sec. 424.535(g)(2)(xv)(D)) with ``paragraph (g)(2)''. This is because we proposed to add certain standard violations to (g)(2) in paragraphs other than current (g)(2)(viii)(A), (B), and (C). (c) Revisions to Stay of Enrollment Authority (Sec. 424.541) Along with revocations and deactivations, CMS has a third vehicle with which to prevent Medicare fraud, waste, and abuse as well as improper payments: a ``stay of enrollment.'' Under Sec. 424.541(a)(1) and (2), we can impose a stay against a provider if the provider: Is non-compliant with at least one enrollment requirement in Title 42; and Can remedy the non-compliance by submitting, as applicable to the situation, a Form CMS-855, Form CMS-20134, or Form CMS-588 change of information or revalidation application. We established the stay of enrollment concept based largely on our concern that there were instances of provider non-compliance that did not necessarily warrant a measure as significant as a deactivation, much less a revocation. We believed that a more moderate CMS approach in addressing these cases would ease the burden on providers without hindering our obligation to protect the Trust Funds. To further explain the rationale behind stays of enrollment, we noted in the proposed rule several critical differences between stays and revocations and deactivations. Length of Action--We previously noted that a revoked provider is subject to a reenrollment bar typically lasting between 1 to 10 years. Deactivations last until the provider has reactivated its billing privileges under Sec. 424.540; if no reactivation occurs, the deactivation remains effective indefinitely. An enrollment stay, however, lasts a maximum of 60 calendar days, during which period the provider remains enrolled in Medicare, unlike with a revocation. Described otherwise, a stay of enrollment represents a comparatively brief ``pause'' in the provider's enrollment that permits the provider to quickly resume compliance without the greater burdens associated with deactivations and revocations. Payments--Section 424.541(a)(2)(ii)(A) states that claims submitted by the provider with dates of service within the stay period will be rejected. Yet under Sec. 424.541(a)(2)(ii)(B), these claims are eligible for payment (and may be resubmitted by the provider within applicable timeframes specified in Title 42) if-- ++ CMS or its contractor determines that the provider or supplier has resumed compliance with all Medicare enrollment requirements in Title 42; and ++ The stay ends on or before the 60th day of the stay period. This means that whereas revocations and deactivations prohibit payment for services or items furnished during the revocation or deactivation period with no possibility of retroactive payments, a stay of enrollment permits these payments if the requirements in Sec. 424.541(a)(2)(ii)(B) are met. Mechanism for Resuming Compliance--A revoked or deactivated provider cannot re-enroll in Medicare (after the reenrollment bar expires) or reactivate its billing privileges until the applicable provider enrollment application process is complete, which can take considerable time. Under Sec. 424.541(a)(5), a stay can end on the date on which CMS or its contractor determines that the provider has resumed compliance with all Medicare enrollment requirements in Title 42. For purposes of Sec. 424.541(a)(5) only, we have interpreted the term ``has resumed compliance'' as meaning the provider has submitted the required application referenced in Sec. 424.541(a)(1)(ii) (for example, Form CMS-855 change of information). This means that a stay could end within a few days, allowing the provider to rapidly resume billing. Considering the burden-reducing aspects of the stay concept, we proposed that its scope be expanded to cover other situations--one of which is where a provider submits a revalidation or change of information application that is rejected under Sec. 424.525(a)(1) or (2). Per these provisions, rejection is permissible if the provider does not furnish complete information on the application (or required supporting documentation under paragraph (a)(2)) within 30 calendar days of the date the Medicare contractor requested the missing or incomplete data or documentation. A deactivation often follows the rejection. Unlike cases where the provider did not submit the required revalidation or change of information at all, the provider in Sec. 424.525(a)(1) cases did submit the application, albeit incompletely. We believe it would be inconsistent to allow the more concerning action of application non-submission to be subject to a stay and have situations where the provider actually submitted the form to result in a deactivation. Therefore, we proposed to expand Sec. 424.541(a)(1)(i) to include instances where the provider's change of [[Page 55446]] information or revalidation application is rejected under Sec. 424.525(a)(1) or (2)). In addition, current Sec. 424.541(a)(3) states that a stay of enrollment lasts no longer than 60 days from the postmark date of the notification letter, which is the effective date of the stay. We proposed two changes to this section. One was to delete existing Sec. 424.541(a)(3) and, in new Sec. 424.541(a)(3)(i), state that the effective date of a stay is, as applicable: (1) the date on which the provider's or supplier's non-compliance began; or (2) the date on which the provider's or supplier's change of information or revalidation application was rejected under Sec. 424.525. Considering our concerns about payments to providers when they are non-compliant, we no longer believe commencing the stay period upon the notification letter's postmark date is appropriate. The other was to propose in new Sec. 424.541(a)(3)(ii) that CMS may establish a stay of enrollment for any period up to a maximum of 60 days. This is consistent with current CMS practice, but we sought to make clearer that the CMS-assigned stay period need not be 60 days but can be any timeframe up to that point. We previously noted the reference in Sec. 424.541(a)(2)(ii)(B) regarding claim submission eligibility, with Sec. 424.541(a)(2)(ii)(B)(2) referencing the end of the stay on or before the 60th day. We proposed to revise paragraph (a)(2)(ii)(B)(2) to replace the 60-day reference therein with the requirement that the stay must end on or before the expiration of the originally designated stay period. This would further clarify that the stay period can be less than 60 days. Meanwhile, Sec. 424.541(a)(5) states that a stay of enrollment ends on the date on which CMS or its contractor determines that the provider or supplier has resumed compliance with all Medicare enrollment requirements in Title 42 or the day after the 60-day stay period expires, whichever occurs first. Since, again, the stay period CMS has assigned may be less than 60 days, we proposed to change ``60- day period'' to ``CMS-assigned stay period''. (d) Comments Received We received the following comments on the provisions addressed in section VI.A.1.c.(1). of this final rule: Comment: A number of commenters expressed concern about our reference to beneficiary attestations in proposed new Sec. 424.535(a)(8)(i)(D), believing this provision to be overly punitive. They stated that because of the potential for unintentional and innocuous misunderstandings and errors (as well as delays in mailing products and incorrect postal tracking), providers should be able to: (1) furnish input, documentation, and explanations to CMS; and (2) take corrective action before any revocation occurs. Some commenters added that attestations could contain unsubstantiated information given that patients may not understand or recall the items or services they received. Accordingly, the attestation alone should not be a basis for revocation without CMS performing a thorough investigation of the matter and assessing the accuracy of the attestation, with several commenters. Another commenter believed that CMS would use the provision to revoke massive numbers of providers and suppliers, with one commenter stating that stronger contractor oversight of providers would be a sounder approach. Response: We appreciate these concerns but stress two things. First, this is not a new revocation ground; in fact, it has existed for many years. As indicated in the proposed rule and this final rule (and as correctly noted by a commenter), we currently have the authority to revoke a provider under Sec. 424.535(a)(8)(i) in the beneficiary attestation situations addressed in proposed Sec. 424.535(a)(8)(i)(D). We are merely adding a specific reference to situations in Sec. 424.535(a)(8)(i)(D) to reiterate our authority in this regard given the disconcerting increase in these scenarios. Second, and notwithstanding this authority, we do not revoke providers on this basis (or any other basis under Sec. 424.535(a)) as a matter of course. We only do so: (1) after a thorough investigation of the facts of the case; and (2) when it is truly warranted. Indeed, we fully recognize the impact of a revocation on a provider and do not take these measures lightly. Concerning the commenters' apparent suggestion of an informal appeals process whereby documentation and an explanation could be furnished to CMS before a revocation occurs, we most respectfully disagree. Considering that we only undertake these revocations after a very careful and detailed analysis and when clearly warranted, we believe we must proceed with the revocation promptly to ensure that the Trust Funds are protected against further improper billing. We have always maintained that establishing an informal pre-revocation appeals process could encourage providers to disregard compliance with Medicare requirements until they are notified of the non-adherence, upon which they will remedy the issue and remain enrolled but then perhaps resume their prior behavior. In other words, allowing providers to always take corrective action and resume compliance before revocation gives them no incentive to remain adherent in the first place, which leaves the Medicare program at risk of billions of dollars in payments to non- compliant providers. We reiterate that with all revocations regardless of the reason, the provider has an opportunity to be heard via the appeals process in 42 CFR part 498. Comment: Several commenters appeared to suggest that a stay of enrollment (rather than a revocation) be applied to situations involving proposed Sec. 424.535(a)(8)(i)(D). Response: Although we were somewhat uncertain as to the context of the commenters' specific recommendation, we respectfully do not believe a stay of enrollment would be an adequate substitution for a revocation in a Sec. 424.535(a)(8)(i)(D) scenario. Stays are short-term measures designed to be a less serious action than a deactivation or revocation. As noted, we only undertake a revocation under Sec. 424.535(a)(8)(i) in exceptional cases due to the provider's concerning activity. Considering the seriousness of such behavior and the consequent need to protect the Trust Funds and beneficiaries for an extended period, we believe a revocation, rather than a stay, is the most appropriate CMS action. Comment: Several commenters stated that Sec. 424.535(a)(8)(i)(D) appears to allow revocation based on a single beneficiary complaint or minor administrative error. Other commenters stated that Sec. 424.535(a)(8)(i)(D) scenarios should only result in revocation if there is a pattern of abuse, an intent to commit fraud, or a hindrance to patient care. Response: We appreciate these comments. Section 424.535(a)(8)(i) scenarios have never required a pattern of conduct (unlike, for instance, Sec. 424.535(a)(8)(ii)), fraudulent intent, or patient care impact. On the other hand, Sec. 424.535(a)(8)(i) has never been intended to punish providers for small transgressions. Only in rare and exceptional circumstances have we ever revoked a provider under Sec. 424.535(a)(8)(i), and this will be the case for Sec. 424.535(a)(8)(i)(D). We recognize commenters' concerns and wish to assure stakeholders that we have no intention whatsoever of revoking legitimate providers under Sec. 424.535(a)(8)(i)(D) on spurious and unfair bases. Comment: A commenter stated that a competitor's use of Sec. 424.535(a)(8)(i)(D) to generate false claims against the provider should itself mandate the competitor's revocation. [[Page 55447]] Response: We appreciate and will contemplate this suggestion as we continue our efforts to strengthen Medicare program integrity and the provider enrollment process. Comment: Regarding Sec. 424.535(a)(8)(i)(D), a commenter sought clarification regarding: (1) how CMS will distinguish between potential fraud and a mere misunderstanding or delivery delay; (2) whether there is a formal appeals process to challenge such a finding; and (3) whether provider can continue operations during an investigation or will instead face immediate suspension of billing privileges. Response: We thank the commenter for these comments and respond as follows. First, and as already stated, CMS will carefully investigate the facts in all potential Sec. 424.535(a)(8)(i)(D) situations. While we cannot address in detail the operational aspects of these investigations, we again assure providers that Sec. 424.535(a)(8)(i)(D) revocations will occur only when truly justified. Second, providers can appeal any Sec. 424.535(a)(8)(i) revocation under 42 CFR part 498. Third, if the commenter's use of ``immediate suspension of billing privileges'' refers to Medicare payment suspensions under 42 CFR 405.371, CMS cannot predict when the latter provision may or will be invoked. Nor can CMS advise the provider as to whether it can or should continue its full operations during a Sec. 424.535(a)(8)(i)(D) investigation; we believe this would be the provider's independent business decision. We can, though, state that if the provider is revoked after the investigation, it loses its Medicare billing privileges and the revocation will, per proposed Sec. 424.535(a)(8)(iii)(A), be retroactive to the earliest date of service on the claim or claims that is or are triggering the revocation. Comment: A commenter stated that instead of an immediate revocation under Sec. 424.535(a)(8)(i), CMS could, while conducting an investigation, perform a pre-payment audit of the supplier's claims to ensure that CMS guidelines are being followed; this would facilitate continuity of patient care. Response: We appreciate and may consider this suggestion as a possible action during our investigation. Comment: A commenter supported our proposal to change the term ``Part B or D drugs'' in Sec. 424.535(a)(14) to ``Medicare-covered drugs''. Response: We appreciate the commenter's support. Comment: A commenter supported our proposal to change the term ``prescribe drugs'' in Sec. Sec. 424.535(a)(13)(ii) and 424.530(a)(11)(ii) to ``one or more drugs.'' Response: We appreciate the commenter's support. Comment: A commenter opposed our proposed revision to Sec. 424.535(a)(13), stating that a provider on this basis could be revoked for isolated or unrelated state licensing issues without any educational opportunity or appeal. Response: We appreciate this comment. While we are respectfully uncertain as to the type and timing of the educational opportunity to which the commenter refers, we reiterate that: (1) we always carefully examine the facts of the case before undertaking revocation action; and (2) providers can appeal a Sec. 424.535(a)(13) revocation per 42 CFR part 498. Comment: A commenter stated that our expanded revocation reasons increase the likelihood of harsh penalties for minor or administrative errors. Response: We respectfully disagree. We believe our revisions to Sec. 424.535(a)(8)(i), (a)(13), and (a)(14) are relatively minor; for example, the addition of Sec. 424.535(a)(8)(i)(D) is, as discussed, simply a reminder of our existing authority. We do not anticipate a significant increase in Sec. 424.535(a)(8)(i), (a)(13), and (a)(14) revocations stemming from our proposals, and we will continue to exercise great care and prudence in determining whether a revocation is warranted. Comment: Several commenters supported our proposal to include certain application rejections within the scope of enrollment stays. Response: We appreciate the commenters' support. Comment: While favoring our proposed expansion of the stay of enrollment's applicability, several commenters requested that CMS to go further and require a stay in the situations described in Sec. 424.541 (and perhaps others) instead of giving the MACs discretion to impose a deactivation or revocation. A commenter stated that this would: (1) reduce burden on suppliers and better facilitate continued patient access to care; (2) reduce inconsistency among the MACs in these cases; (3) assist suppliers that are part of a group when their PTANs are deactivated upon the deactivation of the group's PTAN; and (4) allow payment for services performed. Other commenters recommended that CMS expand the reasons for which a stay can be imposed in lieu of many deactivation and revocation grounds (especially revocations with retroactive effective dates); the commenters stated that this would give suppliers time to correct the issue without the consequences of a revocation. Response: We appreciate these comments. MACs generally do not have the discretion to choose whether to impose a stay, deactivation, or revocation. These actions are only imposed via CMS's direction (for instance, through Chapter 10 of CMS Publication 100-08 or specific CMS instruction to the MAC regarding a particular provider). Regarding the further expansion of stay of enrollment grounds, we thank the commenters' for their recommendation and may consider it for future rulemaking. Comment: A commenter supported our stay of enrollment proposal but requested that CMS ensure the efficiency of the existing provider enrollment process regarding stays before adding additional grounds. Response: We appreciate the commenter's support and are confident that the MACs can operationally accommodate our new stay of enrollment basis. Comment: A commenter requested that CMS issue guidance to MACs requiring them to follow the stay of enrollment instructions in CMS Change Request (CR) 13449. Response: We appreciate this comment but believe it is outside the scope of this final rule. Comment: A commenter stated that some providers that have a stay imposed against them do not receive a notification letter and therefore are: (1) unable to meet the 15-day rebuttal timeframe; and (2) uncertain as to the status of their enrollment when a claim is denied. Response: Although we respectfully believe this comment is outside the scope of this final rule, we thank the commenter for bringing this to our attention as we continue to take steps to enhance the provider enrollment process. Comment: Several commenters opposed the proposal to change the stay's effective date from the postmark date to the date the provider's: (1) non-compliance began; or (2) revalidation or change of information submission was rejected. They stated that this change would reduce the time the supplier has to research, address, and correct the issue causing the stay. A commenter added that: (1) our change would likely result in a stay that is more than 60 days, which would invalidate the stay of enrollment; and (2) a stay freezes [[Page 55448]] payment, meaning there is no need to back-date the stay. Response: We appreciate the commenters' feedback and recognize the potential time reduction for remedial action by the provider. Yet we reiterate that using the postmark date permits the provider to receive payment for services furnished between the commencement of non- compliance (for example, the day after the date on which the revalidation application was due) and the postmark date. A core purpose of our provider enrollment proposals is to help halt payments to non- compliant providers, and we believe that having the postmark date as the stay effective date contradicts this. Also, this change would not result in a stay greater than 60 days because any 60-day long stay would begin on the non-compliance date. To illustrate, suppose a 60-day stay is imposed on a provider effective on the non-adherence date of April 1. The letter's postmark date is April 5. The stay would end on May 30, 60 days after the April 1 effective date. Regarding the final comment in the previous paragraph, we reemphasize most respectfully that the issue is not whether payment is frozen but whether the provider was entitled to payment in the first place; we believe the provider was not during the period between the date of non-compliance and the postmark date. Comment: A commenter stated that a stay should only be applied when there is clear evidence of intent. Response: We respectfully disagree. Even if a provider failed to timely submit a revalidation or change of information application for innocuous reasons, non-compliance still results and the provider is not entitled to payment absent the corrective measures permitted under Sec. 424.541. Comment: Several commenters requested that CMS define ``rejected'' in the context of CMS' proposed stay of enrollment expansion (for example, whether it references the MAC's rejection of a revalidation application). Response: The term ``rejected'' for purposes of 42 CFR part 424, subpart P (which includes Sec. 424.541) is defined in Sec. 424.502 and further described in Sec. 424.525. Comment: A commenter: (1) supported our change from ``60-day period'' to ``CMS assigned stay period''; and (2) questioned whether CMS' proposed clarification that a stay can be up to 60 days is intended to make Sec. 424.541 consistent with CMS CR 13449. Response: We appreciate the commenter's support and note that our change is unrelated to CR 13449. It simply incorporates our existing position into Sec. 424.541. Comment: Multiple commenters recommended that CMS fully implement the ``state of enrollment'' standard across all programs, including with respect to DMEPOS suppliers, to promote uniformity and fairness. Response: We believe the commenters are referring to ``stay of enrollment'' rather than ``state of enrollment.'' While we are respectfully unclear as to the ``programs'' to which the commenter is referring, stays of enrollment can apply to all Medicare provider and supplier types, including DMEPOS suppliers. Comment: Numerous commenters opposed the concept of retroactive revocations in general. Several commenter stated that CMS' existing and proposed grounds (as well as payment collection and any additions to the Medicaid termination database) should not be implemented in a particular case if an appeal is pending. A commenter stated that CMS' proposed reasons could result in unfair and unwarranted repayments to the Medicare program. Other commenters stated that retroactive revocations: (1) should only be invoked in cases of intentional or systemic provider fraud, waste, or abuse; and (2) could financially devastate providers. Response: We appreciate the concerns expressed. Retroactive revocations are designed to recoup payments to which the provider was not entitled due to its non-compliance. That is, and potentially excluding situations under Sec. 424.541, once the provider is non- adherent to Medicare enrollment requirements, it cannot receive payment for services furnished beginning on or after the point the non- compliance began. Our allowance of prospective revocation dates for the grounds in proposed Sec. 424.535(g)(viii) through (xiv) has resulted in hundreds of millions of dollars in payments to non-compliant providers; we accordingly believe we have an obligation to the American taxpayers to stop this. Indeed, we estimated in the proposed rule that our proposed grounds would annually save nearly $2.2 billion in taxpayer monies. Insofar as appeals, and most respectfully, we historically have not delayed implementing retroactive revocations or commencing collections while appeals are pending. As the appeals process takes some time, delayed implementation could result in many millions of dollars in continued payments to non-compliant providers as well as postponed repayment of monies to which Medicare and the taxpayers are entitled. Should the revocation be reversed on appeal, repayment of any collected monies can be facilitated. Concerning the final two comments, we respectfully reiterate that the core issue is payments to non-compliant providers regardless of whether fraud is involved; allowing prospective revocations in all-non fraud cases would, as it has, lead to additional billions of dollars to these providers. While we recognize the financial impact retroactive revocations can have on providers: (1) we again note that we only revoke providers when truly necessary; and (2) a provider's vigilant and constant compliance with Medicare enrollment requirements can help avoid revocations. Comment: A commenter: (1) expressed doubt that CMS could determine precisely when a supplier fell out of compliance with Sec. 424.57(b) or (c); and (2) requested that CMS establish clear standards for when a retroactive revocation would apply. Response: We thank the commenter for this feedback. As CMS always diligently and carefully reviews the facts and circumstances of all potential revocation cases before taking any action, we are confident we will be able to ascertain the point at which non-compliance commenced. As for the second comment, we are respectfully unclear as to the ``standards'' the commenter seeks. Our retroactive revocation grounds are detailed in Sec. 424.535(g)(2), and a number of our underlying revocation reasons in Sec. 424.535(a) contain factors that CMS considers in its revocation determinations. Comment: Several commenters opposed retroactive revocations for non-compliance with a condition or standard in Sec. 424.57(b) or (c). A commenter stated that: (1) it could be difficult for CMS to determine the date of non-compliance (for purposes of establishing the effective date); and (2) a stay of enrollment would be a more suitable action considering that stays are designed to address non-compliance. Response: While we appreciate the commenters' feedback, we reiterate our belief that CMS will be able to establish the proper effective date. As for the final comment, there are numerous levels of non-compliance, with some being significant enough to warrant revocation while others are not. Stays are intended to address the latter; they are generally limited to minor instances of non-compliance most typically involving failure to submit a revalidation or change of information application. In our view, violations of the DMEPOS conditions of payment and supplier standards are potentially more concerning than actions triggering a stay because they focus on supplier's [[Page 55449]] inherent ability to qualify as a DMEPOS supplier. If we applied a stay to all Sec. 424.57(b) or (c) violations, we believe suppliers would be less inclined to ensure constant adherence to the conditions and standards; they would know they could regain compliance at any time and be paid for services furnished during the stay. Given, too, that many of the supplier standards are designed to protect beneficiaries and prevent fraudulent activity, we believe retroactive revocations for Sec. 424.57(b) and (c) violations are warranted. Comment: A commenter supported all of our proposed retroactive revocation bases except for that involving the submission of false or misleading information on the enrollment application. The commenter was concerned that this retroactive revocation ground could be based on a small or inadvertent error by the provider. The commenter requested that CMS tailor this basis to intentional misrepresentations; other commenters, too, stated that evidence of intent should be a prerequisite for CMS action. Another commenter stated that there should be exceptions to this practice, such as if the supplier misunderstood the question or data elements on the application. Response: We appreciate the commenter's support. Regarding the retroactive revocation basis the commenters reference, revocations under Sec. 424.535(a)(4) are typically not imposed for minor, unintentional errors. Indeed, we take these actions infrequently and only when clearly appropriate. In light of the seriousness of falsifying information, we believe retroactive revocations are warranted in all of these cases. Comment: Several commenters opposed retroactive revocations for failure to submit certain changes of information. A commenter stated that in change of ownership situations: (1) state licensure or IRS delays regarding name changes (or other circumstances outside the supplier's control) could delay the provider's report of the change to CMS; and (2) it could be difficult for a large entity to report a change to numerous MACs for all of its locations. A commenter stated that retroactive revocation in these types of situations would be unfair. The commenter added that retroactive revocations on this basis could discourage providers from reporting any change due to the harsh penalties. Other commenters stated that CMS should be flexible regarding the 30-day reporting period and account for situations and extenuating circumstances beyond the provider's control and use a ``good-faith effort'' standard. Response: We thank the commenters for their feedback. As with all revocations, CMS under Sec. 424.535(a)(9) does not take action unless deemed truly necessary and only after a thorough examination of the circumstances of the case. This includes consideration of several factors outlined in Sec. 424.535(a)(9), such as the materiality of the data and, if reported, how belatedly. Nonetheless, while we recognize that not every potential Sec. 424.535(a)(9) case is the same: (1) it remains the provider's responsibility to timely report this information to us; and (2) numerous providers (including large entities enrolled with several MACs) do timely meet this requirement. The potential for revocation has not deterred the latter providers from fulfilling their reporting obligations, and we do not see this changing with a retroactive revocation application; in fact, we believe it will encourage providers to be more vigilant in their reporting responsibilities. Comment: A commenter stated that providers cannot reasonably operate under the risk of losing payment for services already rendered in good faith, explaining that this would punish compliant providers and create fear and instability in the marketplace. Response: We appreciate this concern but note that CMS has had retroactive revocation reasons in Sec. 424.535 for numerous years. During this period, and most respectfully, we have not seen widespread fear or instability in the provider community due to retroactive revocations. We again wish to assure providers that revocations (whether retroactive or not): (1) occur very infrequently when compared to the universe of well over 2 million Medicare-enrolled providers and suppliers; and (2) are not intended to harm or cause concern for legitimate providers but only to protect Medicare, the taxpayers, and the provider community at large from non-compliant ones. Comment: Several commenters generally stated that: (1) technical or administrative errors should not lead to severe consequences for providers; (2) the increased number of revocations under our proposals could lead to a reduction of providers and suppliers in certain areas (including low billing practitioners) and thus harm or interrupt patient care; (3) CMS' proposed retroactive revocations are based on unwarranted reasons, are too broad, and lack guardrails. Response: We appreciate these comments and note the following. First, and as previously indicated, we only revoke providers when justified and necessary under the circumstances; again, we recognize the significant consequences of revocations on providers and do not take action on merely spurious grounds. Second, we do not foresee a substantial increase in the number of revocations under our proposals. For instance, our addition of Sec. 424.535(a)(8)(i)(D) is merely a restatement of our existing authority under Sec. 424.535(a)(8)(i), not an expansion of it. Other revocation proposals, such as the change from Part B or D drugs to Medicare-covered drugs in Sec. 424.535(a)(13) and Sec. 424.530(a)(11) are, in our view, rather modest expansions intended to address specific vulnerabilities. Even if revocations were to increase, we have implemented many revocation reasons via rulemaking over the years and have not seen resulting access to care issues. Third, we detailed in the proposed rule and this final rule our rationales for our retroactive revocation bases; as we stated, we believe these grounds are warranted, specific, and necessary to prevent improper payments to non-compliant providers. Comment: Existing Sec. Sec. 424.535(a)(4) and 424.530(a)(4) permit revocation or denial if the provider or supplier certified as ``true'' misleading or false information on the enrollment application to be enrolled or maintain enrollment in Medicare. Several commenters stated that before any Sec. 424.535(a)(4) revocation is imposed: (1) the provider should have an opportunity to research and respond to the matter, since the problem could be a minor, correctable omission; and (2) the case should be reported to the Supplier Audit & Compliance Unit (SACU), which the commenters stated presently handles these investigations. Another commenter stated that CMS should define ``false or misleading'' as used in Sec. 424.535(a)(4). Response: We appreciate these comments. Respectfully, it was unclear whether they pertained to all Sec. 424.535(a)(4) revocations (regardless of whether they were retroactive) or were limited to retroactive revocations. In either case, we refer the commenters to our prior statements in this final rule regarding a pre-revocation quasi- appeals process and remedial action. If we were to require one in all potential Sec. 424.535(a)(4) situations, providers (especially fraudulent ones) might have little incentive to submit honest, accurate information since they could always correct it prior to any revocation. Regarding investigations, CMS works closely with the National Provider [[Page 55450]] Enrollment Contractors (NEPCs) (which process DMEPOS supplier Form CMS- 855S enrollment applications (OMB Control No. 0938-1056)) in reviewing and investigating potential Sec. 424.535(a)(4) situations. As for the final comment, we most respectfully believe that the terms ``false'' and ``misleading'' have been plain on their face since the promulgation of Sec. 424.535(a)(4) years ago. Comment: Several commenters expressed concern about Sec. 424.535(i), stating that CMS should only use this authority in egregious situations. A commenter stated that it would be unfair to revoke all locations of a large supplier (especially retroactively) based on, for example, a minor instance of non-compliance at one of its locations. Another commenter stated that each site should be examined on its own merits rather than directly tied to the enrollment status of the revoked provider unless systemic issues exist across the larger provider entity. An additional commenter stated that CMS should only revoke non-compliant locations rather than the provider's other ones, while another stated that the rule is unclear as to whether retroactive revocations would be applied to other supplier locations under the same TIN or to all supplier locations under a common ownership. Response: We appreciate these comments. Section 424.535(i) has been effective since 2019. We have generally only invoked this provision in exceptional circumstances and not for minor matters. The overwhelming preponderance of our revocations under Sec. 424.535 have been limited to the non-compliant enrollment/location in question without affecting the provider's other enrollments. In fact, and as we stated in the September 10, 2019, final rule with comment period titled, ``Medicare, Medicaid, and Children's Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process'' (84 FR 47794), Sec. 424.535(i) is not an ``all or nothing'' provision. We do not automatically revoke all of the provider's other enrollments in Sec. [thinsp]424.535(i) situations. We instead apply and consider a series of factors outlined Sec. [thinsp]424.535(i) to each individual enrollment in determining whether that enrollment should be revoked, too. Concerning the commenters' final comment, CMS can apply Sec. [thinsp]424.535(i) to any and all of a provider's enrollments-- including those under different names, numerical identifiers, or business identities. Comment: Several commenters stated that fraudulent activity tends to be limited to a small number of parties and not the preponderance of providers (such as community-based suppliers). Accordingly, a commenter stated, revocation policies should not indiscriminately penalize all suppliers--potentially disrupting care to thousands of beneficiaries who rely on otherwise compliant suppliers. Response: We appreciate this comment but stress that our revocation provisions would only impact non-compliant providers. They are not meant to penalize providers that adhere to Medicare enrollment requirements. Comment: As a concluding, overarching general comment, numerous commenters believed CMS's proposals were overly punitive towards legitimate providers. They believe that the provisions lacked due process and failed to allow providers and suppliers to correct honest mistakes before CMS takes action, with: (1) a commenter contending that the proposals would not deter fraud; and (2) another commenter stating that certified providers and certified suppliers are allowed to correct standard and condition-level deficiencies. Commenters stated that revocations in general unfairly occur based on minor transgressions and financially devastate providers. These commenters added that even if the revocation is overturned on appeal, the provider may be unable to economically recover and the burden on Medicare contractors in processing these matters can be significant. Commenters further stressed that any sanctions should be commensurate with the violation. Another commenter stated that CMS should: (1) consider the proposals' unintended consequences and update them to ensure that they exclude bad actors; (2) consider the burdens faced by solo practitioners, small groups, or independent providers; and (3) apply enforcement discretion when the totality of facts surrounding scrutinized activity does not demonstrate an intent to commit fraud or abuse. Concerning this third comment, another commenter stated that retroactive revocations should not occur if the harm to the supplier outweighs the harm to the Medicare program. Response: We appreciate these comments and again recognize the concerns expressed by many provider and supplier types (such as individual physicians, group practices, etc.). We reiterate our statements regarding: (1) our practice of only revoking providers when truly warranted and after careful investigation; (2) the need for CMS to take prompt action to prevent payments to non-compliant providers; and (3) the reasons for no existing pre-revocation appeals process. We believe due process rights are afforded by the appeals procedures in 42 CFR part 498 and that revocations have indeed helped stem fraud, waste, and abuse and kept problematic parties out of the Medicare program; this is a central purpose of our proposed revocation provisions. In addition, we note that stays of enrollments and deactivations have been utilized in situations where a revocation would be too severe an action or otherwise not commensurate with the violation. Regarding the commenters' final two comments, we respectfully remind stakeholders that enforcement action cannot be limited to situations where fraud is (or was intended to be) involved. If we did place this limit, this would permit non-compliant suppliers to remain enrolled, with billions of dollars in continued payments thereto, so long as there is no fraud. As already noted, providers must always remain adherent to Medicare enrollment requirements, and they are not entitled to payment if they are non-compliant, even if no fraud is involved. In this same vein, any improper payment harms the Medicare program. While we understand the harm that providers can experience with a revocation and, as already stated, do not revoke providers unless clearly necessary, it is ultimately the provider's responsibility to ensure constant adherence to Medicare enrollment requirements. We have an obligation to place the interests of Medicare beneficiaries, the program at large, and the taxpayers at the highest level; it is with this principle in mind that we have undertaken our program integrity measures over the years. After reviewing these comments, we are finalizing the proposals addressed in section VI.A.1.c.(1)(a) through (c) without modification. (2) New Deactivation Authority Regulations regarding the provider enrollment concept of deactivation are addressed in Sec. 424.540. Deactivation means that the provider's or supplier's billing privileges are stopped but can be restored (or ``reactivated'') upon the submission of information required under Sec. 424.540. One reason for which CMS can deactivate a provider or supplier is that the provider or supplier has not submitted any Medicare claims for 6 consecutive months. A core purpose of this provision is to prevent dishonest parties from: (1) deliberately obtaining multiple numbers so they could keep one `in reserve' [for future use] if their active billing number is subject to a payment suspension; and (2) obtaining information about [[Page 55451]] discontinued providers or suppliers and then, for example, using the Medicare billing number of a deceased physician Shutting down inactive billing numbers helps stem such activities. Indeed, deactivating the provider's billing number enables CMS to not only prevent it from being accessed by other parties but also confirm via the deactivation process whether the provider or supplier is in fact operational--specifically, whether the provider responds with a reactivation application. The deactivation concept has only applied to Medicare billing privileges rather than the ordering, certifying, and referring of Medicare services and items. Yet improper ordering, certifying, or referring can pose significant risks to the Medicare program and its beneficiaries, and we have established a number of provider enrollment requirements to prevent this activity. These include the following: Under Sec. 424.507(a) and (b), physicians and practitioners who wish to order or certify certain Medicare services and items must either opt-out of Medicare (in accordance with 42 CFR part 405, subpart D) or enroll in Medicare. Even if the individual does not seek to bill Medicare and only wants to order or certify the services and items addressed in Sec. 424.507, the person must still enroll in Medicare by submitting a Form CMS-855O application (Medicare Enrollment Application--Registration for Eligible Ordering and Referring Physicians and Non-Physician Practitioners (OMB control number. 0938-1135)). This enables CMS to screen the person to ensure that all Medicare requirements are met, hence reducing the payment safeguard risk that an unvetted physician or practitioner intent on fraudulent or abusive conduct can order or certify these services or items. Under Sec. 424.535(a)(21), CMS can revoke a physician's or eligible professional's enrollment if the individual has a pattern or practice of ordering, certifying, or referring Medicare Part A or B services or items that is abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements. This provision was established in response to instances of fraudulent or unnecessary ordering, certifying, and referring of Medicare services and items. Under Sec. 424.542(a), a physician or other eligible professional who has had a felony conviction within the previous 10 years that CMS determines is detrimental to the best interests Medicare and its beneficiaries may not order, refer, or certify Medicare services or items. As with Sec. 424.535(a)(21), the aim of Sec. 424.542(a) is to prevent fraud, abuse, and beneficiary harm. All the foregoing signifies that CMS takes improper and abusive ordering, referring, and certifying no less seriously than improper and abusive billing. The former can be as harmful to Medicare and its beneficiaries as the latter. For this reason, we do not believe that important program integrity safeguards such as deactivation must be limited to billing situations, and we accordingly proposed to address this topic in new Sec. 424.547. In Sec. 424.547(a)(1)(i) and (ii), we proposed that CMS may deactivate a physician's or practitioner's ability to order, certify, or refer the Medicare services or items described in Sec. 424.507(a) and (b) if the individual-- Is enrolled via the Form CMS-855O application solely to order, certify, or refer Medicare services or items; and Has not been listed as the ordering, certifying, or referring individual on a Medicare Part A or B claim received in the previous 12 consecutive months. To distinguish deactivations of billing privileges from those of ordering, certifying, and referring capabilities, we proposed in new Sec. 424.547(a)(2) that for purposes of Sec. 424.547 only, the term ``deactivate'' means that the physician's or practitioner's ability to order, certify, or refer Medicare services or items has been stopped but can be restored upon the submission of updated information. In a similar vein, because the current definition of deactivation in Sec. 424.502 is limited to billing privileges, we proposed to add the following language to the beginning of this definition: ``Except in the situations described in Sec. 424.547''. We also proposed to duplicate several of Sec. 424.540's deactivation and reactivation procedures in new Sec. 424.547 as follows: In Sec. 424.547(b)(1), we proposed that for a deactivated physician or practitioner to reactivate their ability to order, certify, or refer Medicare services and items, the individual must recertify that their enrollment information currently on file with Medicare is correct, furnish any missing information as appropriate, and be in compliance with all applicable enrollment requirements in Title 42. In Sec. 424.547(b)(2), we proposed that notwithstanding Sec. 424.547(b)(1), CMS may, for any reason, require a deactivated physician or practitioner to, as a prerequisite for reactivating the ability to order, certify, or refer, submit a complete Form CMS-855O application. In Sec. 424.547(c), we proposed that the effective date of a reactivation of the ability to order, certify, or refer Medicare services and items under Sec. 424.547 is the date on which the Medicare contractor received the individual's reactivation submission that was processed to approval. In Sec. 424.547(d), we proposed to clarify that a physician or practitioner may not order, certify, or refer the Medicare services or items referenced in Sec. 424.507(a) and (b) while deactivated under Sec. 424.547. We received the following comments on this proposal: Comment: Several commenters expressed concern about the impact of our deactivation provision in proposed Sec. 424.547 on HHAs and hospices. The commenters stated that it could prevent HHAs and hospices from billing for claims when the ordering or certifying provider was deactivated for 12 months of non-certifying, especially if the individual only performs this function on a very infrequent basis and is unaware of the 12-month provision. Commenters recommended that CMS ensure that: (1) databases identifying eligible physicians/ practitioners for ordering/certifying purposes are updated; (2) use careful discretion in exercising this authority, with particular consideration for physicians employed by hospices; (3) perform targeted outreach to potentially impacted physicians (including notices thereto as they approach the 12-month period and allowing them to indicate whether they wish to remain active); (4) ensure that the reactivation process is efficient with minimal delays; and (5) furnish training to HHAs and hospices regarding the new requirement. Another commenter stated that CMS' provision could inadvertently impact physicians who treat Medicaid or Medicare Advantage patients and requested an exceptions process (or a more nuanced threshold) that allows providers to demonstrate active practice via means other than Part B billing. An additional commenter stated that non-billing is not indicative of fraudulent activity. Response: We thank the commenters for their feedback. As we explained in the proposed rule and this final rule, this provision is intended to prevent unscrupulous parties from accessing unused billing numbers. This is the same motivation that triggered our promulgation of Sec. 424.540(a)(1) in 2006, which permitted a provider's deactivation for 12 consecutive months of non-billing (later revised to 6 months). While the final commenter is correct that non-billing is not necessarily indicative of fraudulent [[Page 55452]] behavior, the improper accessing of unused billing numbers can be. As for the other comments, we understand the concerns expressed about our proposal. As we implement this requirement, we will: (1) consider the commenters' third and fifth recommendations; (2) ensure that appropriate databases are updated; and (3) maintain the efficiency of the reactivation process. Regarding the second recommendation, our deactivation authority under Sec. 424.540(a)(1) has always been discretionary, and the same will be true with Sec. 424.547; we will exercise our authority only after careful consideration and when deemed necessary. With respect to the comment regarding Medicaid and Medicare Advantage, Sec. 424.547's purview is limited to individuals: (1) enrolled via the Form CMS-855O solely to order, certify, and refer certain Medicare services and items; and (2) who do not themselves bill Medicare for services and items furnished. Being exclusively a Medicare fee-for-service provision of a rather restrictive scope, we do not believe it will have a significant impact on Medicaid and Medicare Advantage supplier enrollees. Given, moreover, the critical program integrity safeguards of this provision, we are respectfully unable to carve out regulatory exceptions to Sec. 424.547's application. Comment: A commenter stated that our deactivation provision is contrary to CMS regulations because there is no requirement that hospice physicians or physician members of the interdisciplinary group (``IDG'') must order, certify, or refer for hospice services. The commenter recommended that CMS: (1) delay this proposal to give hospices time to prepare; or (2) exempt hospice providers from this provision or apply it only to providers in higher-risk areas. Response: While we appreciate this comment, our proposal does not in and of itself require any individual to order, certify, or refer services for payment to be made; any such requirements are addressed in other CMS regulations. It instead involves the separate issue of a lack of ordering, certifying, and referring over a 12-month period by those enrolled via the Form CMS-855O and the consequent program integrity risk due to dormant provider numbers. Due to this risk, we must respectfully decline to delay this requirement or to exempt certain physicians or practitioners therefrom. Nonetheless, we note again that this provision is discretionary, and stakeholders should not assume that deactivation will always occur in Sec. 424.547 situations. As a final point of clarification, we reiterate that Sec. 424.547 applies to all the services and items referenced Sec. 424.507. It is not limited to, for example, home health services. Comment: A commenter believed our deactivation proposal could harm practitioners with low Medicare billing volumes but who deliver quality care, adding that any disruption in enrollment status could interrupt patient care. Response: We thank the commenter for this feedback. However, our deactivation proposal involves ordering and certifying physicians and practitioners and not those who bill Medicare. After reviewing these comments, we are finalizing this proposal without modification. (3) Liability for Furnished Information As already mentioned, current Sec. Sec. 424.535(a)(4) and 424.530(a)(4) permit revocation or denial if the provider or supplier certified as ``true'' misleading or false information on the enrollment application to be enrolled or maintain enrollment in Medicare. We have encountered situations where a provider has another individual complete an enrollment application on the provider's behalf (for example, officer manager). The individual furnishes false or misleading information thereon, and the provider (or, if applicable, the provider's authorized official) signs the application. The provider then later states it was not responsible for the submitted false data because the other person, not the provider, had furnished it. This assertion is incorrect. Longstanding CMS policy is that the enrolling provider bears ultimate legal responsibility for the accuracy and thoroughness of all data on the application. The provider cannot transfer this responsibility to another party even if the latter completed the application. To emphasize this point, we proposed to add new paragraph (d)(10) to Sec. 424.510. Paragraph (d)(10) would state that all providers and suppliers are legally responsible for the accuracy, completeness, and truthfulness of all information they provide on or with their applications, regardless of whether another party completed the application. We received the following comments on this proposal: Comment: Several commenters supported our proposed revision to Sec. 424.510 emphasizing that providers and suppliers are legally responsible for the accuracy, completeness, and truthfulness of all information they provide on or with their applications, regardless of whether another party completed the application. A commenter stated that this is consistent with CMS' longstanding position on the matter. Response: We appreciate the commenters' support. Comment: Several commenters opposed our revision to Sec. 424.510(d)(1) regarding provider responsibility for submitted data. A commenter stated that it is unfair to shift legal liability to providers for all application information since providers often rely upon billing services and outside consultants. The commenter added that this puts small suppliers at risk of revocation for clerical errors they did not commit. Another commenter stated that providers must often rely upon third parties to accumulate data and that there are limits to the provider's ability to confirm the information's accuracy. The commenter noted that a provider should not be unduly penalized when: (1) a provider makes a good faith effort to accurately complete the application; and (2) the inaccuracy was the third party's fault. Response: While we appreciate these comments, we respectfully do not believe our Sec. 424.510(d)(1) addition shifts liability to the provider, for the ultimate responsibility for submitting truthful and accurate information has always rested with the provider. The provider, in fact, attests to the accuracy of the submitted data via the Form CMS-855 certification statement. We recognize that some providers use third-parties for application preparation and information gathering purposes. This is the provider's independent business decision. Yet this decision comes with the possibility that data from the third-party may be inaccurate. Should the provider elect to assume this risk, it also assumes the responsibility for the data's correctness when submitting it to Medicare. Indeed, if we absolved these types of providers from all liability for inaccurate third-party data, the provider would have no motivation to confirm it is correct or, to avoid responsibility, would always have a third-party collect and furnish the information. As we have regularly stated in the past, incorrect enrollment data can result in inaccurate payments (and even fraud, waste, and abuse), and the provider--not a third-party--must ensure its correctness. After reviewing these comments, we are finalizing this proposal without modification. (4) Submission of Documentation One of the many critical functions of MACs is to validate the accuracy of the [[Page 55453]] information the provider furnishes on its enrollment application (for example, the provider states it is licensed, but the MAC finds that the license has expired). If submitted data is incorrect, the potential exists for improper payments to be paid to non-compliant or unqualified providers and suppliers. Although MACs can validate certain data via electronic means, verifying documentation from the provider is sometimes needed. Existing Sec. 424.510(d)(2)(ii), (iii)(A), and (iii)(B) state that each submitted provider enrollment application must include the following: Documentation to identify the provider, such as proof of the legal business name, practice location, etc. All applicable Federal and State licenses and certifications. Documentation associated with regulatory and statutory requirements needed to establish a provider's eligibility to furnish Medicare covered items or services. This and other documentation is also identified on the Form CMS-855 enrollment applications as materials the provider must submit with its application. Notwithstanding the documents that providers must currently submit, we remain concerned about the MACs' ability to verify all information on the applications they receive. This is especially true regarding the provider's ownership and management. Consistent with sections 1124 and 1124A of the Act, providers must report this data on their enrollment applications. Inaccurate ownership and managerial information, like other reported data, could result in improper payments (for instance, a provider's owner is excluded by the OIG, meaning the provider is not entitled to Medicare payments). To strengthen our ability to validate ownership and managerial data--as well as other information that CMS or the MAC may be unable to verify through current means--we proposed in new Sec. 424.510(d)(2)(iii)(C) that CMS may require the submission of any other documentation needed to validate the data on the enrollment application; this includes, but is not limited to, documentation regarding the provider's ownership or management. We received the following comments on this proposal: Comment: Several commenters supported our change to Sec. 424.510 regarding CMS and MAC documentation requests. However, a commenter requested clear guidance (both sub-regulatory and via the contractors' requests to providers) on what documentation is required to better ensure consistency among the MACs. Another commenter requested grace periods or additional technical guidance for providers in Puerto Rico. Response: We appreciate the commenters' support. We will instruct MACs on what documentation to request and when. Concerning the final comment, we are respectfully unclear as to the types of grace periods and technical guidance the commenter is requesting. We will ensure, though, that providers (regardless of their location) understand what documentation is or may be required. After reviewing the comments, we are finalizing this proposal without modification. (5) Reassignment Effective Dates In the provider enrollment context, and consistent with 42 CFR 424.80, reassignment of benefits refers to the scenario where an individual physician or non-physician practitioner has granted another Medicare-enrolled provider or supplier the right to receive payment for the physician's or non-physician practitioner's services. Existing Sec. 424.522(a) states that a reassignment is effective beginning 30 days before the Form CMS-855R (OMB control number 0938-1179) is submitted if all applicable requirements during that period were otherwise met. However, the Form CMS-855R has been discontinued. Reassignments are now facilitated via information furnished on the Form CMS-855I (OMB control number 0938-1355) and Form CMS-855B (OMB control number 0938-1377). Accordingly, we must revise Sec. 424.522(a) to reflect both the elimination of the Form CMS-855R and the need to establish a new reassignment effective date. Under current Sec. 424.520(d)(1)(i) and (ii), the effective date of billing privileges for physicians and non-physician practitioners is the later of-- The date of filing of a Medicare enrollment application that a MAC subsequently approved; or The date the individual first began furnishing services at a new practice location. Notwithstanding Sec. 424.520(d)(1), physicians and non-physician practitioners under Sec. 424.521(a)(1) may retroactively bill for services when they have met all program requirements and services were provided at the practice location for up to-- 30 days before their effective date if circumstances precluded enrollment in advance of providing services to Medicare beneficiaries; or 90 days before their effective date if a Presidentially declared disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 through 5206 (Stafford Act) precluded enrollment in advance of furnishing services to Medicare beneficiaries. As reassignments are often initiated at the same time a physician or practitioner enrolls in Medicare via the Form CMS-855I, we believe the effective dates of the initial enrollment and the reassignment should be determined in the same manner. Hence, we proposed to modify Sec. 424.522(a) such that the reassignment's effective date and the ability to retroactively bill for services mirror the provisions in Sec. 424.520(d)(1) and 424.521(a)(1). New Sec. 424.522(a)(1) would state that the reassignment's effective date is the later of the two dates identified in Sec. 424.520(d)(1)(i) and (ii). New Sec. 424.522(a)(2) would state that retrospective billing in accordance with a reassignment is permissible if the circumstances in Sec. 424.521(a)(1) are applicable. We received the following comment on this proposal: Comment: A commenter requested that CMS increase the retroactive billing date to 60 days before their effective date instead of 30 days. The commenter stated that this would: (1) ensure that providers have sufficient time to balance administrative requirements for multiple enrollments and multiple providers; and (2) align with the maximum 60- day stay of enrollment period. Response: We appreciate this commenter's request but most respectfully must decline it. If we pushed the date back to 60 days, we may be unable to determine whether the provider was compliant with enrollment requirements between the 31st and 60th days, which would be well before the provider submitted their enrollment application. Also, enrollment stays are very different from billing effective dates. The former effectively stops payment due to the provider's non-compliance, whereas the latter addresses the point from which a provider can begin billing. It is therefore unnecessary that their applicable timeframes match. After reviewing this comment, we are finalizing our proposed provision without modification. (6) DMEPOS Liability Insurance Section 424.57(c) outlines a number of standards that DMEPOS suppliers must meet to become or remained enrolled in Medicare. One the standard, codified in Sec. 424.57(c)(10), requires the supplier to have a comprehensive [[Page 55454]] liability insurance policy of at least $300,000 that covers the supplier's place of business, customers, and employees. We have seen instances where the insurance policy is signed by a supplier employee who did not appear to have the authority to act on the supplier's behalf. Considering the importance of the liability insurance requirement, we must ensure that the supplier, through its signature on the policy, is bound by its terms. Accordingly, we propose to modify Sec. 424.57(c)(10) such that an ``authorized official'' of the supplier (as that term is defined in Sec. 424.502) must sign the liability insurance policy. We received the following comments on our proposal: Comment: Several commenters opposed our proposal to require an authorized official to sign the comprehensive liability insurance policy. A commenter stated that the authorized official's signature on the enrollment application is sufficient since the insurance policy must be submitted as part of the application process. Another commenter stated that this requirement could be problematic for larger, multi- layered providers because the authorized official may not be the provider's CEO or president; that is, the authorized official might not be the same person responsible for maintaining the company's liability insurance. An additional commenter stated that instead of requiring an authorized official to sign the policy, CMS should permit an approved member of management with signature authority to do so. Another commenter stated that because some suppliers work with brokers on all insurance requirements, it may not be possible for them to comply with this requirement. Response: We appreciate these comments and respond as follows. First, and strictly and solely for purposes of this particular requirement, a supporting document is distinct from the Form CMS-855 application itself. A person's signature on one of these two documents does not, with respect to provider enrollment, automatically confer an authority to sign the other; for instance, an individual who currently signs the liability insurance policy may not qualify as an authorized official under Sec. 424.502. In light of the importance of the liability insurance policy, we must ensure that the individual(s) signing both documents have the authority to do so. We cannot presume that the authorized official's signature on the Form CMS-855 means the liability insurance policy signer was similarly authorized. Second, the definition of ``authorized official'' does not require an individual to explicitly have the title of chief executive officer or president per se. The person must merely have the authority described in that definition. Moreover, a provider can have as many authorized officials as it wishes so long as the authorized official definition is met for each. (Indeed, larger providers often have multiple authorized officials.) This means that one authorized official could sign the Form CMS-855 and another the liability policy. They need not be the same person. We believe this will help suppliers comply with this requirement. Third, we are most respectfully uncertain as to the third commenter's reference to ``approved member of management with signature authority.'' If the commenter is stating that any manager should be able to sign the liability policy, this would defeat the purpose of our requirement, since--unless the person is an authorized official--we have no means of knowing whether the person is truly authorized to sign policy and, possibly, who the person even is. By requiring an authorized official to sign the liability policy, we can identify the signer (since the person will be reported on the Form CMS-855) and thereby screen the individual as we do all other authorized officials. Fourth, we appreciate the commenter's feedback regarding broker use. Yet we reiterate that the provider can have an indefinite number of authorized officials, meaning we believe the provider will be able to have at least of them sign the policy even if a broker is utilized. After reviewing these comments, we are finalizing this proposal without modification. (7) Adverse Legal Actions Consistent with Sec. 424.516(b) through (d), certain Medicare provider and supplier types, such as DMEPOS suppliers, must report any adverse actions (for example, felony convictions) imposed against them, their owners, managing employees or organizations, or corporate directors or officers within 30 calendar days of the action. However, other provider and supplier types have 90 days to report this information. To make these timeframes consistent and to ensure that we are alerted much sooner of the concerning actions, we proposed to revise Sec. 424.516(e)(1) to require all provider and suppliers, regardless of type, to report adverse legal actions to us within 30 days. We received the following comments on this proposal: Comment: Several commenters opposed our requirement for all providers and suppliers to report adverse action changes within 30 days, with one commenter stating that it may create compliance burdens without clear evidence of improved oversight outcomes. Response: We appreciate these comments but believe our proposal will indeed strengthen program integrity and provider oversight. The shorter reporting timeframe will help notify CMS much sooner of provider activity that could pose a serious risk to the Medicare program. We also reiterate that certain other provider and supplier types have long been subject to a 30-day adverse action reporting requirement, yet we are unaware of any undue burden that has resulted therefrom. We believe the same will hold true with our expansion of Sec. 424.516(e)(1). After reviewing these comments, we are finalizing this proposal without modification. (8) Certain Modifications to Provider Enrollment Paragraph References (Sec. Sec. 424.535(a)(23) and 424.530(a)(18)) and Enrollment Provisions (Sec. 424.205)) Under Sec. Sec. 424.535(a)(23) and 424.530(a)(18), CMS may revoke or deny a Medicare Diabetes Prevention Program (MDPP) supplier's enrollment if the supplier violates an enrollment condition or standard in Sec. 424.205(b) or (d). Since the promulgation of Sec. 424.205 in 2017: (1) Sec. Sec. 424.535(a)(23) and 424.530(a)(18) have been established; and (2) there have been revisions to the organizational structure of Sec. 424.205. To ensure that Sec. Sec. 424.535(a)(23), 424.530(a)(18), and 424.205 accurately reflect correct paragraph designations, we proposed changes to all three. First, the MDPP enrollment standards are now in Sec. 424.205(c) rather than Sec. 424.205(d). We thus proposed that references to paragraph (d) would be changed to paragraph (c) in the following regulatory provisions: Sec. 424.535(a)(23)(v). Sec. 424.530(a)(18)(v). Definition of ``Coach eligibility end date'' in Sec. 424.205(a) (reference to (d)(5) would change to (c)(5)). Sec. 424.205(b)(4) (reference to (d)(5) would change to (c)(5)). Sec. 424.205(b)(6). Sec. 424.205(c)(3) (reference to (d)(5) would change to (c)(5)). Sec. 424.205(c)(6) (reference to (d)(4) would change to (c)(4)). Sec. 424.205(c)(8) (reference to (d)(8)(i) would change to (c)(8)(i)). [[Page 55455]] Sec. 424.205(c)(8)(ii) (references to (d)(8)(i)(B) and (d)(8)(i)(C) would change to (c)(8)(i)(B) and (c)(8)(i)(C), respectively). Sec. 424.205(c)(10) (reference to (d)(8) would change to (c)(8)). Sec. 424.205(c)(11)(iii). Sec. 424.205(d)(2) (reference to (d)(5) would change to (c)(5)). Sec. 424.205(g)(1)(ii). Sec. 424.205(g)(1)(v)(A) (reference to (d)(3) would change to (c)(3)). Second, the following references in Sec. 424.205 would be revised to reflect that section's present structure. In paragraph (c)(3), (e)(1) would change to (d)(1). In paragraph (c)(12), (g) would change to (f). In paragraph (c)(15), (g) would change to (f). In paragraph (d)(2), (e)(1) would change to (d)(1). In paragraphs (g)(1)(i)(A) and (B), (h)(1)(i) would change to (g)(1)(i). In paragraphs (g)(1)(ii)(A) and (B), (h)(1)(ii) would change to (g)(1)(ii). In paragraphs (g)(1)(v)(B) and (B)(2), (h)(1)(v) would change to (g)(1)(v). Third, current Sec. 424.205(g)(1)(i)(A) and (B) state that the MDPP supplier's failure to meet the conditions in paragraph (b) is considered an enrollment denial or revocation under, respectively, Sec. Sec. 424.530(a)(1) or 424.535(a)(1). Likewise, Sec. 424.205(g)(1)(ii)(A) and (B) state that a failure to meet the standards in paragraph (d) is considered a denial or revocation, under, respectively, Sec. Sec. 424.530(a)(1) or 424.535(a)(1). We proposed to add ``or Sec. 424.530(a)(18)'' after paragraph references to Sec. 424.530(a)(1) and ``or Sec. 424.535(a)(23)'' after references to Sec. 424.535(a)(1). This is because in these situations we can deny or revoke under either the (a)(1) provisions or (a)(18)/(23). We received no comments on these proposed changes and are therefore finalizing them without modification. (9) Deactivation Reason Clarification Section 424.550(b) addresses ``change(s) in majority ownership'' (CIMO) (as that term is defined in Sec. 424.502) involving home health agencies (HHA) and hospices. Unless an exception applies, an HHA or hospice undergoing a CIMO must enroll in Medicare as a new HHA or hospice and undergo a state survey or accreditation. Since, in this situation, the seller will be departing the Medicare program, Sec. 424.540(a)(8) permits CMS to deactivate the seller's billing privileges. However, Sec. 424.540(a)(8) currently only references sellers in an HHA CIMO and not those in a hospice CIMO. As a technical clarification, we thus proposed to include the latter within the scope of Sec. 424.540(a)(8). We received no comments on this proposal and are thus finalizing it without change.

2. Medicaid and CHIP Enrollment and Termination

The Medicaid program (title XIX of the Act) is a joint Federal and State health care program that (as of October 2024) covers more than 72 million low-income individuals. States have considerable flexibility when administering their Medicaid programs within a broad Federal framework, and programs vary from State to State. The Children's Health Insurance Program (CHIP) (title XXI of the Act) is a joint Federal and State health care program that (as of October 2024) provides health care coverage to over 7 million children in families with incomes too high to qualify for Medicaid, but too low to afford private coverage. In operating Medicaid and CHIP, and as required by sections 1902(a)(78) and 2107(e)(1)(D) of the Act, respectively, each State requires providers to enroll in order to furnish, order, prescribe, refer, or certify eligibility for Medicaid or CHIP items or services in that State.\47\ States may also establish their own provider enrollment requirements which must be met in addition to the applicable Federal provider enrollment requirements. Similar to Medicare provider enrollment, the purpose of the Medicaid and CHIP provider enrollment processes is to ensure that providers: (1) meet all Medicaid or CHIP requirements (and any other State-specific or Federal requirements); (2) are qualified to furnish, order, prescribe, refer, or certify Medicaid and CHIP services, items, and drugs; and (3) are eligible to receive payment, where applicable. --------------------------------------------------------------------------- \47\ Section 1902(kk)(7) of the Act also requires physicians and other eligible professionals who order or refer Medicaid services and items to be enrolled in Medicaid. This requirement is made applicable to CHIP via section 2107(e)(1)(G) of the Act. --------------------------------------------------------------------------- Different States may have different provider enrollment processes in operating their Medicaid and CHIP programs. However, all States must comply with Federal Medicaid and CHIP provider enrollment statutory and regulatory requirements, including those in part 455, subparts B and E. One requirement, outlined in section 1902(a)(39) of the Act (and applicable to CHIP in accordance with section 2107(e)(1)(C) of the Act) is that the State must deny or terminate a provider's Medicaid or CHIP enrollment if the provider is-- Terminated under the Medicare program, or the Medicaid program or CHIP of any other State; and Currently included in the termination database under Sec. 455.417. CMS established this termination database in accordance with sections 1902(kk)(8) and 1902(ll) of the Act. These two sections are summarized as follows: Require the State to report the termination of a provider under Medicaid or CHIP to the Secretary within 30 days after the effective date of the termination. However, this reporting requirement is limited to terminations for reasons specified in Sec. 455.101, which, in turn, are restricted to terminations ``for cause'' (including, but not limited to, terminations for reasons relating to fraud, integrity, or quality); Provide that within 30 days of receiving notification of a Medicaid or CHIP provider termination, the Secretary must review the termination and, if the Secretary determines appropriate, include the termination in any database or similar system developed under section 6401(b)(2) of the Affordable Care Act. CMS has developed and currently operates a database in accordance with these statutory provisions. It contains information on Medicaid and CHIP terminations and Medicare revocations. It enables a State to: (1) review Medicaid and CHIP terminations in other States, as well as Medicare revocations; and (2) to deny enrollment under Sec. 455.416(c) or take its own termination action against a provider if the latter is also enrolled in the State. The previously referenced provisions of section 1902(a)(39) are currently incorporated in Sec. 455.416(c), though with one inadvertent exception. Rather than stating that the provider--along with being in the termination database--must be terminated under the Medicare program or the Medicaid program or CHIP of any other State, Sec. 455.416(c) states that the provider's termination must be from Medicare and the Medicaid or CHIP program of any state. That is, the word ``and'' is between the references to Medicare and Medicaid when the word ``or'' should be there instead, consistent with the statutory language. To correct this issue and to ensure compliance with section 1902(a)(39), we proposing to change the aforementioned ``and'' reference to ``or.'' We received no comments on this proposal and are thus finalizing it without change. [[Page 55456]] (3) Miscellaneous Comments We also received the following comments in response to our provider enrollment proposals: Comment: A commenter requested that CMS streamline its provider enrollment and revalidation processes to reduce administrative burden on compliant HHAs, adding that delays in enrollment can hinder patient care. Response: We appreciate this comment but believe it is outside the scope of this final rule. Comment: A commenter requested that CMS facilitate a balanced appeals process that avoids harming patient care over minor administrative oversights. Response: We appreciate this comment. However, because CMS did not propose provisions regarding its existing provider enrollment appeals process, we respectfully believe that this comment is outside the scope of this final rule. Comment: Several commenters stated that CMS should increase the deactivation non-billing period in Sec. 424.540(a)(1) from 6 months to 12 months, contending that some providers do not bill for 6 or more months for legitimate reasons. Response: We appreciate this comment but believe it is outside the scope of this final rule. Comment: Several commenters stated that CMS should: (1) work with MACs to establish clear and reasonable processing timeframes for provider enrollment and change of ownership applications, with transparent tracking of progress; and (2) require MACs to implement systems that prevent duplicate document requests and ensure that information already submitted is appropriately retained and applied to the pending file. Response: We appreciate this comment but believe it is outside the scope of this proposed rule. Comment: Concerned about inconsistency among the MACs, several commenters recommended that CMS ensure that providers have access to a MAC contact person who is responsible for holding enrollment analysts accountable for timely and accurate compliance with CMS requirements. Other commenters suggested that CMS: (1) hold MACs accountable for timeliness standards for application processing as well as prompt and accurate responses suppliers; (2) ensure more training of MAC representatives; and (3) establish a reporting escalation process to trigger oversight and accountability of the MACs related to timely processing, inconsistent performance, and unreasonable delays. Response: We appreciate this comment but believe it is outside the scope of this final rule. Comment: A commenter stated that CMS must furnish clear guidance to any provider under a provisional period of enhanced oversight (for example, the timeline for review). Response: We appreciate this comment but believe it is outside the scope of this final rule. Comment: A commenter stated that with respect to the current enrollment process for larger DMEPOS suppliers, CMS should: (1) utilize a central point of contact at the supplier's corporate headquarters for documentation requests (and other requests) rather than contacting each individually enrolled site; and (2) assess the benefit of the existing site visit process. Response: We appreciate the comment but believe it is outside the scope of this final rule. (4) Final Provisions Consistent with the foregoing, we are finalizing all of our proposed provider enrollment provisions without modification.

1. Introduction

a. Overview of DMEPOS Accreditation (1) DMEPOS Suppliers (A) Background and Program Integrity Concerns Among the types of providers and suppliers that must enroll in Medicare to bill the Medicare program are DMEPOS suppliers. Such suppliers include, but are not limited to, the following: Medical supply companies that exclusively furnish DME like wheelchairs, walkers, and canes. Physicians and non-physician practitioners who provide DMEPOS to their own patients. Home health agencies (HHAs) and hospitals that provide DMEPOS to their own patients Oxygen and oxygen equipment suppliers. Prosthetists and orthotists. Pharmacies. DMEPOS suppliers enroll in Medicare via the Form CMS-855S application (Medicare Enrollment Application--Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS); OMB Control No. 0938-1056). Per Sec. 424.57(b)(1)--and excluding locations it utilizes solely as warehouses or repair facilities--the supplier must separately enroll each physical location it uses to furnish Medicare- covered DMEPOS. We explained at length in the proposed rule that DMEPOS suppliers have long presented to the Medicare program a very elevated risk of fraud, waste, and abuse. In recognizing this threat, CMS has established particularly stringent requirements that DMEPOS suppliers must meet to enroll and maintain enrollment in Medicare. To illustrate, DMEPOS suppliers under Sec. 424.518(c) are one of only six provider and supplier types that are subject to the highest and strictest level of screening during the enrollment process. (They were also one of only two types (the other being HHAs) that were originally assigned to the ``high-risk'' screening category when Sec. 424.518(c) was promulgated in 2011.) This screening includes: (1) a site visit; and (2) submission of fingerprints of the supplier's 5 percent or greater owners for a Federal Bureau of Investigation (FBI) criminal background check. There are additional regulatory provisions besides the basic provider enrollment requirements in subpart P of 42 CFR part 424 (Sec. Sec. 424.500 through 424.575) that DMEPOS suppliers must meet. With certain exceptions based on the type of DMEPOS supplier involved, these requirements include, but are not limited, to the following: Compliance with the DMEPOS supplier standards outlined in Sec. 424.57(c). Acquisition and maintenance of a surety bond consistent with Sec. 424.57(d). Compliance with DMEPOS quality standards. Accreditation by a CMS-approved DMEPOS accrediting organization. Notwithstanding these and other DMEPOS program integrity efforts we have undertaken, serious concerns remain. We noted in the proposed rule that numerous Office of Inspector General (OIG) reports since 1998 have noted payment safeguard issues associated with DMEPOS suppliers. We specifically cited therein several recent OIG reports and alerts related to these matters.\48\ We also outlined a number of recent criminal convictions involving DMEPOS suppliers.\49\ Indeed, DMEPOS fraud, waste, and abuse is still a very significant problem, putting hundreds of [[Page 55457]] millions (even billions) of taxpayer dollars at risk and potentially resulting in patient harm, such as when beneficiaries use unnecessary or substandard items. The OIG reiterated the problem in 2024 when it stated: ``Although CMS has a number of safeguards in place to prevent bad actors from billing DMEPOS in Medicare, fraudulent billing for DMEPOS continues to be a major concern. Recent cases demonstrate that DMEPOS continues to be a target of fraudulent billing and that new schemes have developed.'' \50\ --------------------------------------------------------------------------- \48\ https://oig.hhs.gov/reports/all/2024/medicare-remains- vulnerable-to-fraud-waste-and-abuse-related-to-off-the-shelf- orthotic-braces-which-may-result-in-improper-payments-and-impact- the-health-of-enrollees/#:~:; https://oig.hhs.gov/reports/all/2025/medicare-improperly-paid-suppliers-for-intermittent-urinary-catheters/; https://oig.hhs.gov/fraud/consumer-alerts/consumer-alert-catheter-scam/. \49\ 90 FR 29200-29201. \50\ https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp. --------------------------------------------------------------------------- (2) Quality Standards Section 302(a)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 added section 1834(a)(20) of the Act. Section 1834(a)(20) of the Act requires the Secretary to establish and implement DMEPOS quality standards for suppliers of certain items. As authorized under section 1834(a)(20)(E) of the Act, CMS first established quality standards via sub-regulatory guidance in 2006 and has updated them as needed since then. Currently accessible at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/DMEPOSQuality/DMEPOSQualBooklet-905709.html, these standards address matters such as the following: Human resources, and information management. Equipment and item delivery and set-up. Patient and caregiver training and instruction. Patient follow-up. Two other sets of quality standards involve administration and finances. The administration standards require, among other things, that the supplier: (i) comply with all Medicare laws, regulations, and guidance; and (ii) implement business practices that prevent fraud, waste, and abuse. Part of this latter requirement involves the supplier using procedures and conduct that ensure its compliance with applicable laws and regulations, as well as assigning one or more company leaders to address compliance issues. The financial administration standards, meanwhile, state that the supplier must-- Use financial management practices that ensure accurate accounting and billing. Keep accurate, complete, and current financial records that reflect cash- or accrual-based accounting practices. Keep accounts that link equipment and items to the patient and manage patient service revenues and expenses regularly, including linking charges to patient equipment, supplies, and services with bills, receipts, and deposits. These requirements make clear that the quality standards go beyond matters of direct patient care and equipment quality to include administrative. legal, and financial compliance as well as fraud, waste and abuse prevention. The standards as a whole are both extensive and detailed because we must confirm that the supplier is bona fide and legitimate. (3) Accreditation Consistent with section 1834(a)(20)(F)(i) of the Act (and with certain exceptions), DMEPOS suppliers must be accredited by a CMS- approved accrediting organization (AO) to enroll in and bill Medicare. The main purpose of accreditation is to confirm that the supplier meets the DMEPOS quality standards. The accreditation process has been in effect since 2006. Section 424.57(c)(24) states that all DMEPOS supplier locations (owned or subcontracted) must be separately accredited in order to enroll in and bill Medicare. However, section 1834(a)(20)(F) of the Act exempts certain individuals from the accreditation requirements unless the Secretary determines the quality standards specifically apply to them. These persons include, for example, physicians and opticians. Per section 1834(a)(20)(B) of the Act, the Secretary designates and approves DMEPOS AOs, of which there presently are eight. To become or be retained or reapproved as an AO, the AO must meet the requirements of Sec. 424.58. As addressed in greater detail in the proposed rule and throughout section VI.B. of this final rule, these requirements include, but are not limited to, the following: Completing the application process, which includes submitting detailed information about the AO's operations and procedures. Undergoing various CMS reviews. Furnishing ongoing data to CMS about its activities, such as its accreditation decisions, complaints received about suppliers, etc. In general, DMEPOS suppliers may choose the AO it wishes to accredit them. In performing its DMEPOS accreditation activities--and contingent upon CMS approval--an AO has some discretion in the operational aspects of its review of a supplier's request for accreditation. One critical and common component of the review process is the AO's performance of an on-site survey of the supplier. Along with the AO's review of the information the supplier furnishes as part of its accreditation application, the survey enables the AO to examine first-hand the supplier's operations and credentials to help ascertain compliance with the quality standards. Per our sub-regulatory guidance, DMEPOS suppliers currently must be surveyed once every 3 years following initial accreditation. (4) Concerns About the Existing DMEPOS Accreditation Process The proposed rule contained a substantial number of proposed additions and revisions to our current DMEPOS accreditation process. Aside from the overarching need to improve and strengthen said process, and as we explained in the proposed rule, there were several other reasons behind our proposals. First, we have seen an increased number of reports of accredited suppliers not meeting the quality standards, which has raised questions as to the efficacy of some AO accreditation surveys and reviews. Second, given the previously noted AO discretion in various aspects of its DMEPOS accreditation processes, we are concerned that differences between the AOs in this regard could lead to inconsistencies in how the AOs make quality standard compliance determinations. Third, although surveys are typically part of the DMEPOS accreditation process, not every supplier receives one. This is particularly true for large chain suppliers with 25 or more separately enrolled locations (such as chain pharmacies). We see this as a potential vulnerability in our enforcement of the DMEPOS accreditation requirement. Fourth, while Sec. 424.58 outlines certain components of the DMEPOS accreditation process, it does not address other important topics that, in our view, should be outlined in regulation. We note that CMS regulations regarding the accreditation of certified providers, certified suppliers, and home infusion therapy suppliers (found in 42 CFR part 488) contain more extensive provisions than does Sec. 424.58; we believe some of the protections they afford the Medicare program in facilitating provider and supplier compliance should be duplicated in Sec. 424.58. Fifth, we have since 2006 neither reapproved any AOs nor undertaken a full reassessment of the performance and suitability of our [[Page 55458]] existing AOs. We believe both are now necessary--particularly considering this long passage of time--so we can ensure the DMEPOS accreditation program is functioning effectively. A recent criminal case underscores our concerns. In March 2025 an individual pled guilty in Federal court (Southern District of Florida) to accepting cash bribes and self-dealing as part of a conspiracy to impede and obstruct the lawful functions of the U.S. Department of Health and Human Services (HHS) and CMS in their administration and oversight of the Medicare program.\51\ According to court documents, the person was a contractor for a DMEPOS AO and performed inspections of hundreds of DMEPOS suppliers for compliance with the quality standards. The individual-- --------------------------------------------------------------------------- \51\ https://www.justice.gov/usao-sdfl/pr/miami-inspector-pleads-guilty-scheme-obstruct-us-department-health-and-human-services. --------------------------------------------------------------------------- Accepted cash bribes from numerous owners of DMEPOS suppliers to facilitate and expedite the accreditation process so these companies could enroll in and bill Medicare; Along with the individual's immediate family, established DMEPOS companies in the names of family members to conceal the individual's own personal interest in the companies. The person then sold some of these companies to others, having increased their value as Medicare-enrolled DMEPOS suppliers; and Directly or indirectly owned some of the suppliers the individual surveyed.\52\ --------------------------------------------------------------------------- \52\ Ibid. --------------------------------------------------------------------------- Considering that this case, and perhaps other situations where unqualified suppliers were accredited, may have resulted in many millions of dollars in improper Medicare payments, we believe we must exercise much closer scrutiny over DMEPOS supplier accreditation in general and DMEPOS AOs in particular to prevent such instances from occurring. Moreover, certain CMS concerns about provider and supplier accreditation are not limited to DMEPOS suppliers. In the February 15, 2024, Federal Register (89 FR 11996), we published a proposed rule titled ``Medicare Program; Strengthening Oversight of Accrediting Organizations (AOs) and Preventing AO Conflict of Interest, and Related Provisions''. This proposed rule would update and supplement provisions in 42 CFR part 488 (hereafter simply part 488) to enhance CMS' oversight of certified provider and supplier AOs; examples of proposed enhancements included addressing conflicts of interest and establishing additional regulatory definitions and procedures for clarity and consistency. We proposed in the July 2, 2025, proposed rule to do likewise for DMEPOS accreditation by incorporating several provisions in the February 15, 2024, proposed rule into Sec. 424.58, though with modifications to accommodate the unique characteristics of DMEPOS accreditation. b. Legal Authorities There are several discrete statutory authorities for our final provisions: Section 1834(a)(20)(A) of the Act requires the Secretary to establish and implement quality standards for the suppliers of the items and services described in section 1834(a)(20)(D) of the Act to be applied by recognized independent accrediting organizations. Notwithstanding section 1865(a) of the Act (regarding accreditation of providers and suppliers in general), section 1834(a)(20)(B) of the Act requires the Secretary to designate and approve one or more independent AOs for purposes of applying the quality standards referenced in section 1834(a)(20)(A) of the Act. Section 1834(a)(20)(F)(i) of the Act (and with certain exceptions) requires the Secretary to mandate that suppliers of the items and services described in section 1834(a)(20)(D) of the Act submit to the Secretary evidence of accreditation by an AO designated under section 1834(a)(20)(B) of the Act. Sections 1102 and 1871 of the Act provide general authority for the Secretary to prescribe regulations for the efficient administration of the Medicare program.

2. DMEPOS Accreditation Proposed Provisions

Given the extent of our proposed changes to Sec. 424.58, we proposed to entirely reorganize the current paragraph structure and designations. Except for current paragraph (a) or as otherwise noted, all finalized paragraph designations in Sec. 424.58 are labeled as new provisions even though the provision may already exist in current Sec. 424.58 under a different paragraph. We received over 350 timely pieces of correspondence on our proposed DMEPOS accreditation provisions. Many individual comments pertained to multiple topics discussed in this subsection VI.B.2. of this final rule. For this reason, all of the comments and responses--regardless of the regulatory provision they addressed--are contained in section VI.B.16. of this final rule. a. Definitions (New Sec. 424.58(b)) We proposed several new definitions in Sec. 424.58(b) to help clarify the regulatory provisions to which they relate. First, we proposed to define ``complaint'' as an allegation from any party (and via any format) that one of the AO's accredited suppliers may be non-compliant with one or more quality standards or other applicable CMS requirement; the complaint need not involve actual or potential beneficiary harm. As part of the AO approval or reapproval process, current Sec. 424.58(b)(1)(ix) requires the AO to establish procedures for responding to and investigating complaints against its accredited suppliers. Existing Sec. 424.58(c)(1)(iii), meanwhile, requires the AO to monthly provide CMS with notice of such complaints. Given these requirements, we believed a clear definition of ``complaint'' is warranted. Second, we proposed to define ``immediate jeopardy'' as a situation where the supplier's non-compliance with one or more quality standards or other applicable CMS requirement has caused, or is likely to cause, serious injury, harm, impairment, or death to a patient or to the health and safety of the general public. This definition was needed because AOs, under current paragraph Sec. 424.58(c)(4) thereof, must notify CMS within 2 calendar days of a supplier's deficiency that poses immediate jeopardy. Third, we proposed to define ``reasonable assurance'' as meaning that an AO has demonstrated to CMS' satisfaction that-- Its accreditation program requirements meet or exceed the Medicare program requirements; The suppliers the AO accredits meet or exceed Medicare requirements; and The AO is compliant with all provisions of Sec. 424.58. As discussed further in this section VI.B. of this proposed rule, we believe AOs should demonstrate that their accreditation programs comply with Sec. 424.58 and all other CMS requirements, hence the need for a reasonable assurance definition. Fourth, we proposed to define ``unannounced survey'' as meaning: A survey conducted without any prior notice of any type (through any means of communication or forum) to the supplier to be surveyed, such that the supplier does not expect the survey until the surveyors arrive; and The AO schedules its surveys so that suppliers cannot predict when they will be performed. [[Page 55459]] This definition reflects our belief that it is critical for DMEPOS supplier surveys to be unannounced (as they currently are) so that a non-compliant supplier cannot use prior notice of a survey to remedy its deficiencies solely to pass the survey, after which it may resume its non-adherence. b. Initial Application for Approval of AO's Accreditation Program (New Sec. 424.58(c)) Existing Sec. 424.58(b) outlines the process by which an entity may apply or reapply to become an AO. While the processes for both are largely similar, we proposed to separate them into two paragraphs for ease of comprehension. Initial application procedures would be addressed in new paragraph (c) and reapproval application procedures in new paragraph (d). Current Sec. 424.58(b)(1) outlines information that AOs must submit as part of the application process. We have neither revisited these data elements via rulemaking since 2006 nor, as already stated, reapproved or fully reassessed the AOs for many years. Given this lapse, we believe that requiring AOs to submit with their applications the additional data described in this subsection (B)(2)(b) would help us: (1) better ascertain the AO's qualifications; and (2) ensure that the AO will properly and competently perform its functions and remain in compliance with the requirements of Sec. 424.58. We accordingly proposed changes and enhancements to existing Sec. 424.58(b)(1), which would be redesignated as new paragraph (c)(1). (1) Reasonable Assurance Opening Statement (New Sec. 424.58(c)(1)) We proposed that the opening part of paragraph (c)(1) would state that an AO applying for approval of its DMEPOS accreditation program must furnish ``all the following information and materials to demonstrate that the DMEPOS accreditation organization provides reasonable assurance (as defined in paragraph (b) of this section) regarding its program.'' This language would emphasize that it would not be enough to merely submit the required information in paragraph (c)(1). Rather, the data must be sufficient to give CMS reasonable assurance. (2) Confirmation of Compliance (New 424.58(c)(1)(iii)) Existing Sec. 424.58(b)(1)(iii), which would become new Sec. 424.58(c)(1)(iii), starts with language that outlines the components of the AO's required explanation of its operational processes. We proposed to revise this provision to: Require a detailed description of the organization's survey and other accreditation processes (not merely its operational processes) to confirm that the suppliers it accredits meet or exceed the DMEPOS quality standards and Medicare program requirements. Re-designate the six elements of the required description of operational processes in current Sec. 424.58(b)(1)(iii) as new Sec. 424.58(c)(1)(iii)(A) through (F) in the same respective order they are listed in existing (b)(1)(iii). Add new paragraph (c)(1)(iii)(G) to require the description to address how the AO determines whether to perform a survey in situations where it has the discretion to do so; this would have to include a suggested methodology for sampling locations for surveys under a single tax identification number or organization. This would help us understand the factors and criteria the AO will consider in its determination and, more importantly, whether it will exercise its discretion prudently. (3) Redesignation of Existing Data Submission Provisions (New Sec. 424.58(c)(1)(i), (ii), (iv), (v), (vi), and (vii)(A), (B), and (C)) Strictly for organizational purposes and without making any changes in content, we proposed to redesignate Sec. Sec. 424.58(b)(1)(i), (ii), and (iv) through (vii)(A) through (C) (which describe additional information the AO must furnish) as new Sec. Sec. 424.58(c)(1)(i), (ii), and (iv) through (vii)(A) through (C). (4) Conflicts of Interest, Consulting Services, and Number of Surveyors (New Sec. 424.58(c)(1)(vii)(D) and (E)) We proposed additional requirements in new Sec. 424.58(c)(1)(vii). New paragraph (D) would require the AO to explain in detail its policies and procedures for avoiding conflicts of interest and the appearance thereof involving individuals who conduct surveys or participate in accreditation decisions. This information must include the organization's policies and procedures for all of the following: The separation of its consulting services from its accreditation services. Protecting the integrity of the DMEPOS AO's accreditation program (including the requirements of proposed Sec. 424.58(m) and (n) (discussed later in section VI.B. of this final rule)). Preventing and handling potential or actual conflicts of interest that could arise from situations where a DMEPOS AO owner, surveyor, or employee has an interest in, or relationship with, a DMEPOS supplier to which the AO provides accreditation services. Such interests or relationships include, but are not limited, to the following: ++ Being employed as a DMEPOS AO surveyor. ++ Being employed by a DMEPOS supplier that is accredited by the DMEPOS AO. ++ Having an ownership, financial, or investment interest in a DMEPOS supplier that is accredited by the DMEPOS AO. ++ Serving as a director of (or trustee) for a DMEPOS supplier that is accredited by the DMEPOS AO. ++ Serving on a utilization review committee of a DMEPOS supplier that is accredited by the DMEPOS AO. ++ Accepting fees or payments from a DMEPOS supplier or group of DMEPOS suppliers that is/are accredited by the DMEPOS AO. ++ Accepting fees for personal services, contract services, referral services, or for furnishing supplies to a DMEPOS supplier that is accredited by the DMEPOS AO. ++ Providing consulting services to a DMEPOS supplier that the DMEPOS AO accredits. ++ Having any member of their immediate family engaged in any of the previously stated activities. The term ``immediate family member'' would be defined in proposed Sec. 424.58(b) as any person with whom the AO owner(s), surveyors or employees have a lineal or immediate familial or marital relationship, including a husband or wife; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in- law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild. ++ Engaging in any activities during the course of the survey of the DMEPOS supplier that would be or cause a conflict of interest. For notifying CMS when a conflict of interest is discovered. We also proposed to clarify in new paragraph Sec. 424.58(c)(1)(vii)(D)(5) that for purposes of said paragraph, a conflict of interest exists when a DMEPOS AO, the DMEPOS AO's successors, transferees, or assigns, the DMEPOS AO owner(s), surveyors, or employees, or the immediate family members of the DMEPOS AO owners(s), surveyors and employees have an employment, business, financial or other type of interest in or relationship with a DMEPOS supplier that the DMEPOS AO accredits. As we explained in the proposed rule, DMEPOS AO avoidance of conflicts of interest is needed to help ensure the integrity and impartiality of its surveys [[Page 55460]] and accreditation decisions. We believe our proposed provisions regarding conflicts of interest and consulting would assist in this. Also, in new Sec. 424.58(c)(1)(vii)(E) we proposed to require the AO to outline its policies and procedures for ensuring it always has an adequate number of surveyors. (5) AO Program Deficiencies (New Sec. 424.58(c)(1)(viii)) We proposed in new Sec. 424.58(c)(1)(viii) that the AO describe its processes for identifying and correcting deficiencies within its accreditation program. It is important for AOs to very frequently review their accreditation programs for vulnerabilities and weaknesses. Without this, AOs may perform their functions in a substandard manner, which could lead to inadequate scrutiny of suppliers, the accreditation and enrollment of unqualified suppliers, and, hence, improper payments. (6) Use of Data To Ensure Program Compliance (New Sec. 424.58(c)(1)(ix)) Existing paragraph (b)(1)(viii) requires the AO to describe its data management, analysis and reporting system for its surveys and accreditation decisions, including the kinds of reports, tables, and other displays generated by that system. We proposed to designate this paragraph as new (c)(1)(ix) and include an additional requirement (taken from Sec. 488.5(a)(11)(i)) that the description explain how the AO uses its data to ensure that its accreditation program adheres to Medicare program requirements. (7) Complaint Process (New Sec. 424.58(c)(1)(x)) Current Sec. 424.58(b)(1)(ix) requires the AO to explain its procedures for responding to and investigating complaints against its suppliers; this includes processes for coordinating with licensing bodies, ombudsman programs, the National Supplier Clearinghouse (NSC), and CMS. A robust AO process for handling complaints is important because it involves reviewing a supplier's possible violation of a quality standard or other applicable CMS requirement. An AO's failure to properly execute this function could lead to improper Medicare payments to a non-compliant supplier. However, we believed the data that existing Sec. 424.58(b)(1)(ix) requires is insufficient to help us to determine whether the AO would handle complaints thoroughly, consistently, and diligently. We thus proposed several changes to this paragraph, which would be designated as new Sec. 424.58(c)(1)(x). First, we proposed to add procedures for closing out complaints as part of this information submission requirement. Second, we proposed to change the NSC reference to the ``applicable National Provider Enrollment contractor (NPEC)''. This is because the latter entities have replaced the NSC as CMS' DMEPOS enrollment contractors. Third, new paragraphs Sec. 424.58(c)(1)(x)(A) and (B), respectively, would require submission of the following information: The steps and research the AO will undertake in its review of the complaint. How the AO determines whether, in accordance with a complaint, non-adherence to a quality standard or other applicable CMS requirement exists, including the data it considers in its review and when and how it would take action against the supplier. (8) Redesignation of Additional Data Submission Provisions (New Sec. 424.58(c)(1)(xi) Through (xv)) Existing Sec. 424.58(b)(1)(x) through (xiv) address other types of information the AO must submit, such as: (1) policies and procedures for notifying CMS of non-compliant suppliers; and (2) a list of the organization's currently accredited DMEPOS suppliers. With two exceptions, we did not propose to revise these paragraphs but only to re-designate them as new Sec. Sec. 424.58(c)(1)(xi) through (xv). The two exceptions are as follows: In existing paragraph (xii)(B) (redesigned as new paragraph (xiii)(B)), we proposed to include each supplier's accreditation product codes as data the AO must submit with its initial or reapproval application. In existing paragraph (xii)(C) (redesigned as new paragraph (xiii)(C)), we proposed that the AO must also list each supplier's accreditation effective date with its initial or reapproval application. Both requirements would help ensure that CMS has sufficient information on each supplier's accreditation type and status. Current Sec. 424.58(b)(1)(xv) requires the AO to agree that it will permit its surveyors to serve as witnesses if CMS takes an adverse action based on accreditation findings. We did not propose to designate this paragraph as new Sec. 424.58(c)(1)(xvi) because, as explained later in this final rule, we proposed to include it as part of the broader agreement the AO must sign per proposed new Sec. 424.58(c)(1)(xxiii). (9) Knowledge and Experience (New Sec. 424.58(c)(1)(xvi)) Section 488.1010(a)(4), which pertains to home infusion therapy supplier accreditation, requires AOs in their applications to furnish information that demonstrates their knowledge, expertise, and experience in home infusion therapy. We proposed a similar provision in new Sec. 424.58(c)(1)(xvi) regarding DMEPOS so we could better understand the AO's credentials and qualifications. (10) Review Timeliness (New Sec. 424.58(c)(xvii)) We proposed in new Sec. 424.58(c)(xvii) that the AO furnish information about its ability to conduct timely reviews of supplier accreditation applications. This requirement would help us determine whether the AO has adequate resources to handle the accreditation requests it receives. (11) Decision-Making Process (New Sec. 424.58(c)(1)(xviii)) Akin to Sec. 488.5(a)(13) concerning certified providers and suppliers, new Sec. 424.58(c)(1)(xviii) would require the AO to describe its decision-making process, including its policies and procedures for approving, denying, or terminating a DMEPOS supplier's accreditation status. This would also include an explanation of the reasons for which the AO will deny or terminate a supplier's accreditation. We believe this information would give us a more thorough understanding of how the AO will make its decisions. (12) Surveys (Sec. 424.58(c)(1)(xix)) We proposed in new Sec. 424.58(c)(1)(xix)(A) and (B) that the AO outline its policies and procedures for the following: Determining whether and when a survey is performed (for example, the DMEPOS supplier is providing a new type of item). This must include the circumstances under which the AO will impose a corrective action plan (CAP) in lieu of performing a follow-up survey regarding a DMEPOS supplier deficiency. Ensuring that all onsite surveys are unannounced, including preventing unannounced surveys from becoming known to the supplier beforehand. Given the aforementioned importance of surveys in determining the supplier's compliance with the quality standards--and our earlier noted view that surveys should be unannounced--we believe Sec. 424.58(c)(1)(xix) is needed. [[Page 55461]] (13) CAPs (Sec. 424.58(c)(1)(xx)) In lieu of denying or terminating a supplier's accreditation for failing to meet the quality standards, an AO may apply a CAP to the supplier. In general, a CAP permits the supplier to attempt to remedy the problem(s) within a specified timeframe before the AO takes one of these two actions. Existing Sec. 424.58 only references CAPs in paragraph (c)(1)(i) thereof, whereby AOs must provide to CMS various survey-related information, which includes CAPs. To enable us to gain a clearer understanding of the AOs' CAP processes, we proposed in new Sec. 424.58(c)(1)(xx) that the AO outline the policies and procedures via which it would apply a CAP to the supplier. This would include-- The specific circumstances under which the AO would apply a CAP as opposed to denying or terminating accreditation, and the reason(s) for why the AO believes a CAP in these situations would be more appropriate; and How a CAP is developed, implemented, and enforced, including-- ++ How the AO determines whether a CAP is acceptable; ++ The requirements of (and the timeframe and deadline for) the supplier's resumption of compliance; ++ How the AO ascertains whether the supplier has returned to and maintains compliance; and ++ The circumstances under which the AO will impose a CAP instead of performing a follow-up survey for a supplier deficiency. (14) Describing and Defining DMEPOS Supplier Deficiencies (New Sec. 424.58(c)(1)(xxi)) We proposed in new Sec. 424.58(c)(1)(xxi) that the AO would be required to explain-- What it considers to be a supplier deficiency and how it defines the term ``deficiency''; and Whether the AO has different levels of DMEPOS supplier deficiencies. We are concerned that the meaning of ``deficiency'' and any AO- identified levels thereof may differ among AOs, resulting in inconsistent determinations. We thus believe we must understand the AO's policies regarding deficiency classifications. (15) Potentially Fraudulent Activity (New Sec. 424.58(c)(1)(xxii)) We proposed in new Sec. 424.58(c)(1)(xxii) that the AO would be required to describe its processes for: (1) detecting and addressing potential fraud, waste, and abuse by suppliers (including identifying the AO's definitions of the terms ``fraud'', ``waste'', and ``abuse''); and (2) reporting this conduct to CMS, and, as applicable, law enforcement. While the AO's principal function under Sec. 424.58 is to perform the accreditation activities described therein, we do not believe the AO should disregard possible fraud, waste, or abuse by suppliers. (16) Agreement of Compliance (New Sec. 424.58(c)(1)(xxiii)) (a) Introduction To ensure that we have the DMEPOS AO's binding commitment to adhere to all CMS requirements, we proposed in new Sec. 424.58(c)(1)(xxiii) that DMEPOS AOs must explicitly agree to certain conditions as part of the application process. (Some of Sec. 424.58(c)(1)(xxiii)'s requirements would refer to new paragraphs in Sec. 424.58 that will be addressed later in this section of this final rule.) In the opening paragraph of new Sec. 424.58(c)(1)(xxiii), we proposed that the AO's chief executive officer (CEO) (or similar official with authority to commit the organization to adhere to Medicare laws and regulations) provide written acknowledgement that, as a condition of CMS' approval or continued approval of the AO's accreditation program, the AO agrees to adhere to the provisions in Sec. 424.58(c)(1)(xxiii). The acknowledgement, which the official must sign and date and which must be on the AO's letterhead, must list all the data elements in Sec. 424.58(c)(1)(xxiii) and contain the AO's agreement to comply therewith. (b) Data Submission Within 3 Business Days We proposed in new Sec. 424.58(c)(1)(xxiii)(A)(1) and (2), respectively, that the AO must agree to provide CMS within 3 business days of the latter's request-- Any of the data described in Sec. 424.58(e)(1)(i) (which involves the AO's monthly submission of information to CMS); and Any other information CMS deems necessary to facilitate its oversight of the AO's accreditation program. Considering, again, our role as overseer of Medicare DMEPOS accreditation activities, we must be able to closely and constantly monitor AOs' activities via rapid access to critical information, hence the need for Sec. 424.58(c)(1)(xxiii)(A)(1) and (2). (c) Immediate Jeopardy Notifications We previously noted that existing Sec. 424.58(c)(4) requires the AO to send written notice to CMS within 2 calendar days of identifying an accredited DMEPOS supplier's deficiency if the deficiency poses an immediate jeopardy situation; any adverse action the AO accordingly takes must also be identified. Given this provision's importance, we believe that the AO's specific agreement in proposed paragraph (c)(1)(xxiii)(B) to comply with this requirement (which would be designated as new Sec. 424.58(e)(1)(iii)) is warranted. (d) Notification of Change in AO Program Current Sec. 424.58(c)(1)(v) requires an AO to notify CMS on a monthly basis of any proposed changes to its accreditation standards, requirements, or survey process. Such changes can significantly impact the AO's accreditation program and, in turn, our responsibility for the DMEPOS accreditation program as a whole. Accordingly, we proposed in new Sec. 424.58(c)(1)(xxiii)(C) that the AO must agree: (1) to furnish this notification to us in writing; and (2) that it will not implement such changes absent prior written notice of continued program approval from CMS consistent with Sec. 424.58(e)(2) (discussed later in this final rule). (e) Termination or Other Change in Supplier's Accreditation Status As accreditation is a requirement for DMEPOS enrollment under Sec. 424.57(c)(24), CMS must know as quickly as possible when a supplier's accreditation is terminated, revoked, withdrawn, or amended so we can take similar action concerning the supplier's enrollment; a belated notice from the AO could result in improper payments to an unaccredited supplier. We thus proposed in new Sec. 424.58(c)(1)(xxiii)(D) that the AO must agree to provide this notification in writing to CMS within 3 business days of the AO's action. (f) CAP Information Consistent with our previously mentioned rationale for proposed new Sec. 424.58(c)(1)(xx), we proposed in new Sec. 424.58(c)(1)(xxiii)(E) that the AO must agree to inform CMS of any decision to apply a CAP to a specific supplier within 10 calendar days of the decision. This must include-- The reason for the decision; A detailed explanation and justification as to why the AO applied a CAP instead of, as applicable, denying [[Page 55462]] or terminating the supplier's accreditation; and The details of the supplier's CAP. (g) Data for CMS Evaluation of Performance Section 488.5(a)(11)(ii) requires a certified provider or supplier AO to agree to submit timely, accurate, and complete data to support CMS's evaluation of the AO's performance. Data to be submitted includes, but is not limited to, provider/supplier identifying information, survey schedules and findings, and notices of accreditation decisions; the AO must submit this information according to the instructions and timeframes CMS specifies. We believe a general, overarching agreement to furnish the scope and breadth of data addressed in Sec. 488.5(a)(11)(ii) is warranted so we can ensure that we have all information needed to execute our oversight functions. To this end, we proposed new Sec. 424.58(c)(1)(xxiii)(F) would duplicate the requirements of Sec. 488.5(a)(11)(ii) (with modest modifications specific to DMEPOS suppliers). (h) AO Implementation of CMS Changes There are instances where CMS changes its DMEPOS accreditation program requirements. Current Sec. 424.58(c)(2) requires that within 30 calendar days of said change, the AO must submit to CMS: (i) an acknowledgment of CMS's notification of the change; (ii) a revised crosswalk reflecting the new requirements; and (iii) an explanation of how it will alter its standards to comply with CMS's new requirements within the timeframes that CMS specifies in the notification. As it is important for AOs to implement these changes timely and fully, we believe the AO should explicitly commit to do so. We therefore proposed in new Sec. 424.58(c)(1)(xxiii)(G) that the AO agree to adhere to the following: Submission of the data required in Sec. 424.58(e)(7). (New paragraph (e)(7) would reflect current requirements in paragraph (c)(2).) The proposed changes must be submitted to CMS within 30 calendar days of the date of CMS' written notice to the AO. The AO must not implement its proposed corresponding changes without prior CMS approval. (i) Deficiencies We previously noted that new Sec. 424.58(c)(1)(xxi) would require the AO to explain what it considers to be a DMEPOS supplier deficiency, how it defines the term, and whether it has different levels of deficiencies. However, and to facilitate consistency among the AOs, we believe CMS should retain the discretion to: (1) define the term deficiency; and (2) establish deficiency levels for use across all AO DMEPOS accreditation programs. Consequently, we proposed in new Sec. 424.58(c)(1)(xxiii)(H) that the AO agree to accept and adhere to any CMS-established deficiency definitions and levels and categories thereof. (j) Surveyors as Witnesses Consistent with our aforementioned intention to move current Sec. 424.58(b)(1)(xv) to new Sec. 424.58(c)(1)(xxiii), we proposed that new Sec. 424.58(c)(1)(xxiii)(I) would require the AO to agree that its surveyors can serve as witnesses if CMS takes an adverse action against a supplier based on an accreditation finding. (k) Sampling Though addressed in more detail later in this final rule, the concept of sampling involves the AO's use of a formula to determine which locations within a particular group should be surveyed. Consistent therewith, we proposed to require the AO's agreement in new Sec. 424.58(c)(1)(xxiii)(J) that if CMS permits the AO to perform surveys via a sampling process, the AO: (1) will submit to CMS its planned sampling methodology in detail; and (2) will not undertake sampling until CMS has approved the AO's methodology. (l) Patient Records As part of its survey of a supplier, the AO must examine the supplier's patient medical records to confirm that the supplier is actually serving patients and that the items and services furnished to them are legitimate. For this reason, and as stated in sub-regulatory guidance, the reviewed patient medical records must not include: (1) mock files; (2) fictional patient records; (3) simulated documentation; and (4) templates.\53\ Actual records of the patients are required. Given this, we proposed in new Sec. 424.58(c)(1)(xxiii)(K) that the AO agree not to use these four types of records in its surveys. We also proposed to include duplicate patient records as a fifth category, meaning the reviewed records must be of the supplier's own patients and not those of another supplier; this is because the latter records do not reflect the items and services that the surveyed supplier itself is furnishing. --------------------------------------------------------------------------- \53\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/DMEPOSQuality/DMEPOSQualBooklet-905709.html. --------------------------------------------------------------------------- Although we have elected to address this topic via rulemaking in new Sec. 424.58(c)(1)(xxiii)(K), we emphasize that we retain the authority under section 1834(a)(20)(E) of the Act to establish, add, and modify DMEPOS quality standards via sub-regulatory guidance. (m) Costs of Ad-Hoc Surveys As discussed further in the proposed rule and this final rule, we proposed in new Sec. 424.58(e)(8)(ii) that CMS may at any time direct the AO to perform a survey of any accredited supplier or a group thereof. We expressed concern in the proposed rule about potential delays in said surveys due to a potential disagreement between the AO and the supplier regarding which of them pays the cost of a CMS- directed survey. To help ensure that this cost issue is resolved well beforehand, we proposed in new Sec. 424.58(c)(1)(xxiii)(L) that the AO agree to have a binding written agreement with each supplier it accredits regarding whether the AO, the supplier, or both will assume the costs of the survey referenced in paragraph (e)(8)(ii). (n) Truthfulness and Accuracy To ensure that the AO understands its obligation to submit accurate and complete data to CMS at all times, we proposed in new Sec. 424.58(c)(1)(xxiii)(M) that the AO agree to submit all required information to CMS both before and after approval of its accreditation program in a truthful, accurate, and complete manner. (o) Compliance With Sec. 424.58 While the components of the proposed Sec. 424.58(c)(1)(xxiii) attestation statement include fairly specific elements (for example, an attestation to utilize CMS's deficiency definition), we emphasize that adherence to all provisions in Sec. 424.58 is still required. We hence proposed in Sec. 424.58(c)(1)(xxiii)(N) that the AO in its statement be required to agree to comply with all of the requirements in Sec. 424.58 at all times; this would include agreeing to adhere to the policies, procedures, practices, and agreements it outlined under Sec. 424.58(c) as part of its initial or reapproval application and any changes thereto made with prior CMS approval. (17) Additional Information Needed and Withdrawal of Application (New Sec. 424.58(c)(2) and (c)(3)) We proposed two changes in new Sec. 424.58(c)(2) and (c)(3). First, notwithstanding the wide scope of data [[Page 55463]] to be furnished per Sec. 424.58(c)(1), CMS may need additional information to fully assess the AO's credentials. Thus, we proposed in new Sec. 424.58(c)(2) that if CMS determines that further data is necessary to make a determination on the AO's request for approval, we would notify the organization and afford it an opportunity to provide this data. Second, we proposed in new Sec. 424.58(c)(3) that an AO may withdraw its application for approval of its accreditation program at any time before CMS posts the notice described in Sec. 424.58(c)(6) (discussed later in this proposed rule). (18) Reasons for Denial Section 424.530(a) lists 18 reasons for which CMS can deny provider or supplier enrollment applications, including those from DMEPOS suppliers. These provisions help prevent non-compliant and unqualified providers and suppliers--or those that present a program integrity risk--from being eligible to receive Medicare payments. While DMEPOS AOs, unlike DMEPOS suppliers, neither enroll in Medicare nor receive Medicare payments, they are responsible for ascertaining quality standard compliance for potentially hundreds of suppliers that may or do bill Medicare. We thus believe it is important to have clear reasons in Sec. 424.58 for which we can deny an AO's application for approval of its accreditation program. We must be able to protect the DMEPOS accreditation program from unqualified AOs. For reasons outlined in detail in the proposed rule, we proposed the following denial grounds in new paragraphs (c)(4)(i) through (viii), several of which duplicate those in Sec. 424.530(a): Denial Reason 1--The AO has failed to comply with all application, data, and agreement submission requirements outlined in Sec. 424.58(c). Denial Reason 2--The AO has failed to provide reasonable assurance (as defined in paragraph (b)). Denial Reason 3--The current number of CMS-approved DMEPOS AOs is sufficient to ensure the continued administration of CMS' DMEPOS accreditation program. Denial Reason 4--The AO's DMEPOS program was previously terminated, suspended, or placed on probation by CMS under, respectively, new Sec. 424.58(h), (i), or (j). Denial Reason 5--The AO, or any owner (as defined in Sec. 424.502), managing employee (as defined in Sec. 424.502), governing body member, W-2 or contracted surveyor, or W-2 or contracted health care or administrative or management services personnel thereof-- ++ Is OIG-excluded; ++ Is debarred, suspended, or otherwise excluded from participating in any Federal procurement or non-procurement activity; or ++ Within the preceding 10 years: ++ Was convicted of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries; ++ Has had a Medicare enrollment revoked under Sec. 424.535; ++ Has had a license to provide health care suspended or revoked by any State licensing authority; or ++ Has been suspended or terminated from participating in a Federal or State health care program. Denial Reason 6--The AO has submitted false or misleading information on its application in order to gain CMS approval or reapproval as a DMEPOS AO. Denial Reason 7--The AO is non-compliant with any provision in Sec. 424.58. Denial Reason 8--CMS otherwise determines that approval of the applicant as a DMEPOS AO would not be in the best interests of the Medicare program and its beneficiaries. (19) Notice of Approval/Denial, Public Notice, and Length of Approval (New Sec. 424.58(c)(5) Through (7)) Existing Sec. 424.58 does not address when and how an AO is notified of CMS' decision to approve or deny its application for approval of its accreditation program. To clarify these issues, we proposed several provisions, the rationales for each of which were outlined in the proposed rule (90 FR 29211-29212). Under Sec. 424.58(c)(5), CMS would send notice of its decision to the AO within 210 calendar days from the date CMS determines that the AO's application is complete. The notice would include: (i) the basis for the decision; (ii) if applicable, the effective date of approval; and (iii) if applicable, the length of the approval (not to exceed 6 years). Under proposed Sec. 424.58(c)(6), CMS would announce on its website its decision to approve or deny the application. The announcement would be posted within 210 calendar days from the date that CMS determines that the AO's application was complete. If the application is approved, the posting would also state the approval's effective date (no later than the notice's publication date) and length (6 years or less). In addition, Sec. 424.58(c)(7) would state that CMS may approve an accreditation program for any period up to a maximum of 6 years.

3. AO Reapproval Process (New Sec. 424.58(d))

New Sec. 424.58(d) would outline the procedures involving an AO's application for reapproval of its DMEPOS accreditation program. As earlier mentioned, and except as otherwise noted, these procedures would generally duplicate those for initial applications in terms of content and rationale. We proposed in new Sec. 424.58(d)(1)(i) that except as stated in paragraph (d)(1)(ii), an approved DMEPOS AO that seeks to continue as such must apply for reapproval of accreditation at least 9 months before its current approval term expires. This would afford CMS--prior to the current approval's expiration--sufficient opportunity to: (1) review the application; (2) consider the AO's qualifications and past performance; and (3) render a decision. CMS would have the discretion, though, to grant the AO an additional 30 days to reapply. We previously noted our concern that we have not reapproved any AO since the DMEPOS accreditation program's inception in 2006. Considering this nearly two-decade period, and as explained in the proposed rule, we believe it is imperative to commence a reapproval process for all current AOs as soon as possible after the effective date of any finalization of our proposals. Hence, we proposed in Sec. 424.58(d)(1)(ii) that CMS may require AOs to submit reapproval applications under paragraph (d) any time after January 1, 2026, which would be the effective date of our revisions to Sec. Sec. 424.57 and 424.58. The application would have to be submitted within 60 calendar days of CMS' submission request; if it is not, CMS terminates the AO's DMEPOS accreditation approval. We proposed in new Sec. 424.58(d)(2) that as part of its reapproval application submission: (1) the AO would have to furnish all information and statements identified in Sec. 424.58(c)(1); and (2) CMS could request additional information under Sec. 424.58(c)(2). We also proposed in new Sec. 424.58(d)(3) through (7) to duplicate our proposals in Sec. 424.58(c)(3) through (7), respectively. The same rationales would apply (for example, establishing clear reapproval application withdrawal procedures; giving CMS adequate time (a maximum of 210 days) to render its decision). [[Page 55464]]

4. Ongoing Responsibilities of a CMS-Approved AO (New Sec. 424.58(e))

Existing Sec. 424.58(c)(1) through (6) outline activities an approved AO must undertake on an ongoing basis. These functions, some of which have already been referenced, are as follows: Monthly submission of data concerning the AO's activities (such as copies of surveys; notice of accreditation decisions and complaints received; information about actions taken against suppliers, etc.). Submission of the acknowledgment, cross walk, and explanation in response to a change in CMS requirements. Allowing the AOs' surveyors to serve as witnesses if CMS takes an adverse action against a supplier based on an accreditation determination. Notification to CMS within 2 calendar days of a supplier's immediate jeopardy deficiency. Within 10 calendar days of receiving CMS notice that CMS intends to withdraw the AO's approval, provide written notice of the withdrawal to all the AO's accredited DMEPOS suppliers. Annually furnish CMS-specified summary information regarding the prior year's accreditation activities and trends. We proposed to include these requirements within new Sec. 424.58(e) but to also make certain changes and additions to them. a. Submission of Monthly Information, Requested Information, and Immediate Jeopardy Deficiencies (New Sec. 424.58(e)(1)) There are five categories of data in current Sec. 424.58(c)(1)(i) through (v) that the AO must furnish on a monthly basis. We proposed several revisions thereto. First, in the opening paragraph of (c)(1) (which we are redesignating as new paragraph (e)(1)(i)), we proposed for purposes of clarity to change the reference ``on a monthly basis'' to ``no later than the last day of each month.'' Second, existing paragraph (c)(1)(i) requires monthly submission of copies of all accreditation surveys, together with any survey-related information that CMS may require (including CAPs and summaries of findings with respect to unmet CMS requirements). We proposed that paragraph (c)(1)(i) would become new paragraph (e)(1)(i)(A), with the parenthetical in the previous sentence regarding CAPs and summaries constituting new paragraph (e)(1)(i)(A)(1). In new Sec. 424.58(e)(1)(i)(A)(2), and for the same reason behind proposed new Sec. 424.58(c)(1)(iii)(G), we proposed that the required data must include the instances in which the AO had the discretion to perform a survey but elected not to, including the reason(s) behind the AO's decision. Third, we proposed to delete the requirement in current Sec. 424.58(c)(1)(iii) of monthly notice to CMS regarding complaints. This is because we proposed in new Sec. 424.58(e)(3)--as discussed later in this final rule--a separate process and timeframe for the AO's submission of complaint data to CMS. Fourth, we proposed to add new paragraph (e)(1)(i)(C) that would require monthly notice of resolved deficiencies. As already mentioned, any DMEPOS supplier deficiency is of concern to us since it involves non-compliance with the quality standards or other applicable CMS requirement. Hence, we believe CMS should be made aware of them. We did not propose to change the general content of existing paragraphs (c)(1)(ii) and (iv) regarding the monthly reporting of accreditation decisions and adverse actions. These two provisions, with slight technical modifications, would serve as new paragraphs (e)(1)(i)(B) and (D). Current Sec. 424.58(c)(1)(v) requires the AO to report proposed changes to its accreditation standards or requirements or survey process on a monthly basis. It also states that CMS may withdraw its approval of the AO's accreditation program if the AO implements these changes without prior CMS approval. We proposed to delete this requirement because, as discussed later in this final rule, the question of AO process and standard changes is addressed more thoroughly in new Sec. 424.58(e)(2). In new Sec. 424.58(e)(1)(ii), and for the same reasons behind proposed Sec. 424.58(c)(1)(xxiii)(A), we proposed that-- CMS may at any time request the AO to submit any of the information described in new paragraph (e)(1)(i) or any other data CMS deems necessary to facilitate its oversight of the AO's accreditation program; and The AO must furnish this data to CMS within 3 business days of the request. We also previously discussed current Sec. 424.58(c)(4) and its 2- day notification requirement regarding immediate jeopardy deficiencies. We proposed to retain this requirement as part of new Sec. 424.58(e)(1)(iii). b. AO Standard or Requirement Changes (New Sec. 424.58(e)(2)) As mentioned earlier, existing Sec. 424.58(c)(1)(v) requires the AO each month to notify CMS of any proposed changes to its accreditation standards, requirements, or survey process; the AO cannot implement the change without prior CMS approval. While we did not propose to revise the basic requirements of Sec. 424.58(c)(1)(v), we believe that additional safeguards are needed so that we: (1) become aware of planned changes sooner than we presently do; (2) have enough information to fully understand the breath of the revision; and (3) have the authority to either authorize or prohibit the AO's proposed revision. Therefore, we proposed several changes to Sec. 424.58(c)(1)(v), which would become new Sec. 424.58(e)(2). First, we proposed in the opening paragraph of Sec. 424.58(e)(2) to incorporate the existing notice requirement in current Sec. 424.58(c)(1)(v) with two additions. One would require the notice to be written; this is current practice, but we wish to include this in regulation. To address questions from AOs regarding Sec. 424.58(c)(1)(v)'s scope, the other addition would state that Sec. 424.58(e)(2)'s scope includes the addition, modification, or removal of a DMEPOS product service category to the list of categories for which the AO accredits DMEPOS suppliers. Second, we proposed in new Sec. 424.58(e)(2)(i) that the notice must: Be submitted at least 60 calendar days before the proposed change's intended effective date; Contain a detailed explanation of the revisions and the rationale for them; and Include a detailed crosswalk (in table format) containing the exact language of the AO's revised accreditation requirements and the applicable Medicare requirements for each. In new Sec. 424.58(e)(2)(ii), we proposed that CMS would furnish the AO written approval or disapproval of the proposed change within 30 calendar days of the effective date of the revision. In new Sec. 424.58(e)(2)(iii), and to emphasize to AOs the need for prior CMS acquiescence, we proposed to largely restate our existing position in Sec. 424.58(c)(1)(v) that CMS may terminate or suspend its approval of the AO if the AO implements the change before or without CMS approval. c. Complaints (New Sec. 424.58(e)(3)) We previously noted that existing Sec. 424.58(c)(1)(iii) requires the AO to provide monthly notice to CMS of all complaints involving suppliers. As with certain other information falling under current Sec. 424.58(c)(1), we are concerned that only requiring the reporting of complaints on a monthly basis could leave us unaware for weeks of allegations of suppliers' non-compliance [[Page 55465]] with the quality standards or other applicable CMS requirement. Again, considering our obligation to safeguard the Trust Funds against improper payments and to protect beneficiaries, we believe complaint data should be furnished to us more frequently. We accordingly proposed the following requirements in new Sec. 424.58(e)(3). In paragraphs (e)(3)(i)(A) through (C) and (3)(ii), we proposed that upon receipt of a complaint, the AO must-- Provide written notice of the complaint to CMS no later than 5 calendar days after receipt; In accordance with its existing policies and procedures described in paragraph (c)(1)(x), perform an initial review of the complaint to determine whether, based on the complaint and any other data, the supplier may be non-adherent to one or more quality standards or other applicable CMS requirement; and Within 21 days after receiving the complaint, conduct a survey of the supplier if the initial review determines that such non- compliance may exist. No more than 10 calendar days after completing the action in paragraph (e)(3)(i)(B) or (C) (as applicable), give CMS written notice of the result of the initial review or, as applicable, the survey. (The notice must also inform CMS of any action the AO took or intends to take regarding the supplier, such as a termination of accreditation or imposition of a CAP.) These requirements would help ensure that: (1) we receive the complaint expeditiously; (2) it is thoroughly investigated; and (3) we are aware of the result. d. CAPs (New Sec. 424.58(e)(4)) We proposed in Sec. 424.58(e)(4) that the AO must give CMS written notice of any decision to apply a CAP to a particular supplier no later than 10 calendar days after its decision. The notice must include-- The reason for the decision; A detailed explanation and justification as to why the AO imposed a CAP instead of, as applicable, denying or terminating the supplier's accreditation; and The terms of the supplier's CAP (for example, deadline for compliance, the AO's plans for enforcement and ensuring compliance). This would help us ascertain the AO's: (1) compliance with its CAP policies contained in its application for CMS approval or reapproval; and (2) judgment in imposing CAPs instead of denying or terminating accreditation. e. Accreditation Denials and Terminations (New Sec. 424.58(e)(5)) We proposed in new Sec. 424.58(e)(5)(i) that the AO must give CMS written notice of any decision to deny, terminate, revoke, withdraw, or amend a supplier's accreditation within 5 calendar days of the decision; the notice must identify the reason for the AO's determination. Without our expeditious knowledge of such actions, an unaccredited and unqualified supplier might remain enrolled for a considerable period, possibly resulting in improper payments and beneficiary harm. Also, and as we explained in the proposed rule, this information could help CMS detect potentially systemic issues and trends among suppliers. We recognize the relative independence that AOs must retain in their operations and particularly their accreditation decision-making, Nonetheless, there are several situations where we believe we must require that the AO take action because of the serious program integrity risk the situation entails. Thus, we proposed in new paragraphs (e)(5)(ii)(A)(1) through (5) that notwithstanding any other provision in Sec. 424.58, an AO must deny or terminate a supplier's accreditation if-- The supplier fails to meet the licensure requirements in Sec. 424.57(c)(1)(ii); The supplier is not operational (as that term is defined in Sec. 424.502); The supplier's location fails to meet the accessibility requirements in Sec. 424.57(c)(7)(i)(B); The supplier's Medicare enrollment is revoked due to non- compliance with one or more DMEPOS quality standards and the reenrollment bar under Sec. 424.535(c) has not expired; or Directed by CMS. To ensure that the AO carries out a CMS-directed accreditation denial or termination, we further proposed in new paragraph (e)(5)(ii)(B) that the AO must: (1) deny or terminate the supplier's accreditation within 3 business days after receiving written notice from CMS to do so; and (2) provide CMS written notice that it has taken this action within 5 business days of receiving the written direction from CMS. f. Annual Summary of Data and CMS Changes (New Sec. 424.58(e)(6) and (7)) Existing Sec. 424.58(c)(6) requires the AO to annually furnish summary data specified by CMS that relates to the past year's accreditation activities and trends. Although we did not propose to change this requirement, we did propose to designate it as new Sec. 424.58(e)(6). We previously noted that as part of the AO statement that proposed Sec. 424.58(c)(1)(xxiii) would require, the AO per Sec. 424.58(c)(1)(xxiii)(G) must--in response to CMS notification of a change in the quality standards, survey process, or other requirement-- furnish CMS with corresponding changes in the AO's requirements. We proposed in new Sec. 424.58(e)(7) to outline the required timeframe and content of this data submission. The opening paragraph of Sec. 424.58(e)(7)(i) would: (1) include the requirement in proposed Sec. 424.58(c)(1)(xxiii)(G); (2) state that the AO's submission of concomitant revisions is to ensure continued comparability with the quality standards, survey process, and other requirements; and (3) require the AO to report its proposed changes to CMS no later than 30 days after receiving CMS' written notice. In addition, new paragraphs (e)(7)(i)(A) through (C) would include the data submission elements and formats required in existing Sec. 424.58(c)(2), specifically-- An acknowledgment of CMS's notification of the change; A revised crosswalk reflecting the new requirements; and An explanation of how the AO will modify its standards to conform to CMS's new requirements within the timeframes outlined in the notice it received from CMS. In new Sec. 424.58(e)(7)(ii), we proposed to state that the AO cannot implement its proposed corresponding revisions without CMS approval. This requirement would help CMS ensure that the AO understands and accurately implements CMS' revisions. g. Performance of Surveys (New Sec. 424.58(e)(8)) As we explained in the proposed rule, not every supplier receives an accreditation survey. For instance, CMS currently permits AOs to undertake sampling for large supplier chain surveys. Factors an AO considers in determining which chain locations are surveyed include: (1) the supplier's physical location (for instance, whether it is in a high-fraud area); and (2) the types of products the supplier furnishes. We have received information that various DMEPOS suppliers that were not surveyed were later found to be non-compliant with the quality standards. We emphasized throughout section VI.B. of the proposed rule CMS' obligation to prevent improper Medicare payments and to protect beneficiaries. By permitting AOs to forgo surveys in [[Page 55466]] certain instances, we risk the potential for patient harm and for millions of Medicare dollars to be paid to non-compliant suppliers. Believing that we must revisit the current process and establish stricter and broader requirements regarding the performance of surveys, we proposed the following requirements in new Sec. 424.58(e)(8). Proposed opening paragraph (e)(8) and paragraph (e)(8)(i)(A) would state that except as otherwise directed or permitted in writing by CMS (for instance, allowing sampling), the AO must perform a survey of all supplier locations for which the supplier seeks accreditation or reaccreditation with the AO. (This includes, but is not limited to, accreditations: (1) for a new item type the supplier has not previously furnished; or (2) as required under 42 CFR 424.551, discussed later in this final rule.) Per our concerns about non-surveyed suppliers, we believe the blanket survey requirement in paragraph (e)(8)(i)(A) is necessary. Nevertheless, we also recognize that isolated and limited instances of sampling or other survey exemptions could be warranted. While we were unable to specify or predict in the proposed rule what those instances may be and do not commit to allowing survey exceptions in this final rule, we believe our administration of the DMEPOS accreditation program requires that we have the flexibility to address particular circumstances as they arise. New paragraph (e)(8)(i)(B) would require the AO to perform all surveys as unannounced surveys. While the caveat in proposed opening paragraph of (e)(8)(i) would permit us to waive this requirement in certain situations, we do not anticipate doing so given the previously noted importance of preventing prior notice to the supplier. In new paragraph (e)(8)(i)(C), we proposed that the AO cannot accredit the supplier location before: (1) the survey is conducted; and (2) the AO deems the supplier compliant with the quality standards. Our concern is that if we permitted accreditation (and then enrollment) prior to the survey and it is later determined that the supplier does not meet the quality standards, many thousands of dollars in improper payments to the supplier could have resulted. We also proposed in new paragraph (e)(8)(ii) that CMS may, at any time, direct the AO to perform a survey of an accredited supplier or a group thereof. We do not believe surveys should be restricted to initial accreditation and reaccreditation situations, especially considering the aforementioned 3-year time gap between them. Suppliers must at all times be compliant with the quality standards and not merely upon initial accreditation and reaccreditation. To help verify that such adherence is always maintained, we believe we need discretion to direct an AO to conduct a survey at any time. Having to wait until reaccreditation to resurvey the supplier could lead in the interim to improper payments to a supplier that has fallen out of adherence to the quality standards. We further proposed in new paragraph (e)(8)(iii) that when performing a survey, the AO must also confirm that the supplier is licensed in accordance with Sec. 424.57(c). We believe most AOs perform this task during the survey, but we proposed to require this in regulation considering the importance of the supplier's compliance with State (and not only Federal) laws. h. Surveyor Witnesses (New Sec. 424.58(e)(9)) We have cited current requirements in Sec. 424.58(c)(3) that the AO allow its surveyors to serve as witnesses if CMS undertakes an adverse action against a supplier in response to an accreditation finding. Consistent with our reorganization of Sec. 424.58, we proposed to designate this requirement without change as new paragraph Sec. 424.58(e)(9). i. Entrance of Data Into System (New Sec. 424.58(e)(10)) Notwithstanding our proposed additional reporting requirements, we outlined our concerns in the proposed rule about our ability to access accreditation and survey data immediately. There could be instances where we need prompt information about a particular supplier in real- time and cannot wait for the AO to send it to us. Thus, we proposed in new Sec. 424.58(e)(10) that if directed by CMS, the AO must enter accreditation, survey, product code, and other data into a CMS- designated system. This system, to which CMS and the NPECs would have access, would enable us to review accreditation data at any time. To preserve our operational flexibility, we did not detail in the proposed rule either the specific system involved or the timing, content, and extent of the data entry. We may even later determine that the data entry is unnecessary if an alternative means of accessing this information in real-time is established. The implementation of Sec. 424.58(e)(10) is thus contingent upon CMS determining that the entry is needed, hence the ``if directed'' caveat at the beginning of paragraph (e)(10). j. Adverse Actions (New Sec. 424.58(e)(11)) As previously noted, we proposed under new Sec. 424.58(c)(4)(v) that CMS could deny an AO's application for approval or reapproval of its accreditation program if the AO, or any AO owner, managing employee, governing body member, surveyor, or health care or administrative or management services personnel, has any of the adverse actions specified in Sec. 424.58(c)(4)(v). Consistent therewith, we proposed in new Sec. 424.58(e)(11) to duplicate this denial reason as a general prohibition against such relationships on an ongoing basis, not simply as part of the AO's application determination. We believe this change would further underscore the importance of ensuring that parties associated with the AO do not pose program integrity risks.

5. Continuing Federal Oversight of AOs (New Sec. 424.58(f))

Existing Sec. 424.58(d) outlines procedures for our ongoing review of AOs. While we intend to retain some of the provisions of this section, which would become new Sec. 424.58(f), we proposed changes to parts of its contents and structure to improve clarity and strengthen our oversight. The opening paragraph of current Sec. 424.58(d) states that the paragraph establishes specific criteria and procedures for continuing oversight and for withdrawing approval of a CMS-approved DMEPOS AO. We proposed to revise this to state that CMS evaluates the performance of each CMS-approved DMEPOS accreditation program on an ongoing basis; means of monitoring include, but are not limited to, the reviews identified in proposed paragraph (f). We believe this new language would clarify that CMS' oversight procedures are not restricted to those in paragraph (f). We further proposed that existing Sec. 424.58(d) regarding terminations of AOs be in proposed new paragraph (h). Hence, the designation of Sec. 424.58(d) as new Sec. 424.58(f) will not include these paragraphs or any other reference to AO terminations. a. Equivalency Reviews (New Sec. 424.58(f)(1)) As described in current Sec. 424.58(d), an equivalency review involves our comparison of the AO's standards (and the AO's application and enforcement thereof) to CMS requirements and processes. Paragraphs (d)(1)(i) through (iii) outline the following instances in which CMS may perform this review: (i) CMS imposes new requirements or changes in its survey process; (ii) the [[Page 55467]] AO proposes new standards or changes in its survey process; or (iii) the AO's term of accreditation expires. We believe that retaining these three paragraphs in new paragraph (f)(1) would imply that we can only perform equivalency reviews in these three situations, which is not our intention. For reasons already noted, we must be able to constantly monitor the AO's operations--even if none of the three previous scenarios apply--and equivalency reviews are an important means of doing so. Consequently, we proposed in new paragraph (f)(1) that we may perform an equivalency review at any time; the contingencies in existing (d)(1)(i) through (iii) would not be included in paragraph (f)(1). b. Validation Survey of Suppliers (New Sec. 424.58(f)(2)) Another means of validating the AO's accreditation processes is to review the AO's survey procedures. Addressed in the opening paragraph of existing Sec. 424.58(d)(2), this can involve CMS or its designated survey team-- Performing a survey of an accredited DMEPOS supplier; Examining the results of the AO's survey of a supplier; or Observing an AO's survey of a supplier onsite. After the review, CMS identifies whether (as stated in current Sec. 424.58(d)(2)(i) through (iii)), the review indicates the following: At least a 10 percent disparity between the AO's and CMS' respective survey findings for non-immediate jeopardy standards. Any disparity between the AO's and CMS' respective survey findings for standards constituting immediate jeopardy. Regardless of the disparity rate, there are widespread and systemic problems in the AO's processes such that accreditation by the AO no longer provides CMS with adequate assurance that suppliers meet or exceed Medicare requirements. Additional provisions regarding CMS' performance of a supplier survey (as a means of ascertaining the AO's performance) are addressed in existing Sec. 424.58(b)(2). Specifically, the latter states that CMS performs supplier surveys on a representative sample basis or in response to substantial allegations of non-compliance. We proposed several modifications to the foregoing provisions to both consolidate and streamline our requirements and to enhance our ability to perform the aforementioned reviews. First, we proposed to incorporate all provisions regarding validation surveys within new Sec. 424.58(f)(2) rather than continue to have them split between Sec. 424.58(b)(2) and (d). We believe this would facilitate clarity and consistency. Second, we proposed in new paragraph (f)(2)(i) that CMS may survey suppliers to validate the AO's survey process. Such surveys can be comprehensive or focus on certain standards or requirements. We noted in the proposed rule that paragraph (f)(2)(i) would not include the three survey situations in the opening paragraph of existing Sec. 424.58(d)(2), the provisions in Sec. 424.58(d)(2)(i) through (iii), or references to sample bases and substantial allegations of non- compliance in Sec. 424.58(b)(2). This is because we believe that paragraphs (b)(2) and (d)(2), as currently written, could be erroneously read as restricting our flexibility to: (1) conduct supplier surveys; and (2) reach conclusions that indicate problems with the AO's accreditation program. It is crucial, in our view, to have much wider latitude in assessing an AO's performance and to take action as needed. Third, existing Sec. 424.58(b)(3) through (6) state, respectively, that-- If CMS discovers that the supplier is non-adherent to the quality standards, CMS may revoke the supplier's billing number or require the AO to perform a subsequent full survey at the AO's expense; A supplier selected for a validation survey must authorize: (1) the survey to occur; and (2) the CMS survey team to monitor the correction of any deficiencies found during the survey; If the selected supplier does not comply with the existing authorization requirements of paragraph (b)(4), it does not meet the quality standards and may have its supplier billing number revoked; and If the survey finds that the supplier is non-compliant with one or more quality standards, the supplier no longer meets the quality standards and may have its supplier billing number revoked. Except for changing ``supplier billing number'' to ``enrollment'' (the latter being the more accurate term), we did not propose revisions to these requirements, which we would designate as new Sec. 424.58(f)(2)(ii), (iii), (iv), and (v). c. Deficiencies (Sec. 424.58(f)(3)) As part of the proposed statement under new Sec. 424.58(c)(1)(xxiii), new paragraph (H) thereof would require the AO to agree to accept and adhere to any CMS-established deficiency definition as well as levels and categories of deficiencies. To reiterate CMS' discretion in both this regard as well with respect to CMS' authority to establish quality standards under section 1834(a)(20) of the Act, we proposed in new Sec. 424.58(f)(3)(i) that CMS may-- Define the term ``deficiency''; Establish levels and categories of deficiencies; and Revise the quality standards. New Sec. 424.58(f)(3)(ii) would require the AO in its accreditation activities to apply and adhere to: (1) any CMS- established definition of deficiency and categories and levels thereof; and (2) all CMS-established quality standards. d. Additional Reviews (Sec. 424.58(f)(4)) We proposed in new Sec. 424.58(f)(4)(i)(A) to expand upon the reviews addressed in new Sec. 424.58(f)(1) and (2) and permit CMS--at any time and for any reason--to conduct a review of the AO's processes or performance to-- Validate the AO's representations to CMS (for example, its statements in new paragraph (c)(1)(xxiii)); or Assess the AO's adherence to its own policies and procedures, the provisions of Sec. 424.58, and all other CMS requirements. We also proposed in new Sec. 424.58(f)(4)(i)(B) that the scope, length, and timing of the review would lie within CMS' discretion. Furthermore, evidence of the AO's potential non-compliance with any of the policies and requirements addressed in new Sec. 424.58(f)(4)(i)(A) is not required for CMS to perform a review. In new Sec. 424.58(f)(4)(ii)(A) through (H), we proposed to list some of the types of reviews that CMS may perform either collectively or individually. Paragraphs (f)(4)(ii)(A) and (B) would respectively reference the reviews in new Sec. 424.58(f)(1) and (2). Paragraphs (f)(4)(ii)(C) and (D) would reflect two of the previously mentioned reviews in existing Sec. 424.58(d)(2): examining the results of an AO's surveys of suppliers and observing onsite an AO's survey of a supplier. Proposed new paragraphs (f)(4)(ii)(E) through (H) would address the following reviews of the AO's onsite operations, similar to those for certified providers and certified suppliers in 42 CFR 488.8(h): Conducting onsite inspections of the AO's operations and offices. Requesting and reviewing documents. Interviewing AO personnel.