2025-12347: 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

1. Electronically. You may (and we encourage you to) submit

electronic comments on this regulation to https://www.regulations.gov. Follow the instructions under the ``submit a comment'' tab.

2. By regular mail. You may mail written comments to the following

address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1828-P, P.O. Box 8013, Baltimore, MD 21244-8013. Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments via

express or overnight mail to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1828-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. For information on viewing public comments, we refer readers to the beginning of the SUPPLEMENTARY INFORMATION section.

F. Amending the Data Non-Compliance Reconsideration Request

Policy and Process Beginning With the FY 2027 HH QRP G. Updates to Requirements for OASIS All-Payer Data Submission H. Proposed 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. Proposed Changes to HHVBP Measure Removal Factors C. Proposed 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

N. Definitions of Competition and Adjusted and Unadjusted Fee

Schedule Amounts Under Sec. 414.402 VIII. Collection of Information Requirements A. Statutory Requirement for Solicitation of Comments 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 proposed rule would update the CY 2026 Medicare payment rates for home health agencies (HHAs). In this proposed rule, we include an analysis of home health utilization, as well as analysis of the difference between assumed versus actual behavior change 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) case-mix adjustment methodology. This rule analyzes the difference between assumed versus actual behavior change on estimated aggregate expenditures and proposes permanent and temporary adjustments to the CY 2026 home health base payment rate. In addition, this rule proposes to recalibrate the PDGM case-mix weights and to update the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups under sections 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day periods of care in CY 2026. This proposed rule proposes to update 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 proposes 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 proposing updated quality reporting policies. We are proposing 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 is proposing the removal of four assessment items: one Living Situation item, two Food items, and one Utilities item. We are also proposing 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 can 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 proposing to implement a revised Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) Survey beginning with the April 2026 sample month. This rule would also update regulatory text to account for all-payer data submission of OASIS data. We are seeking information on a change to the final data submission deadline period from 4.5 months to 45 days. We are also seeking feedback on the digital quality measurement (dQM) transition for HHAs. We aim to solicit 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 are seeking input on future HH QRP quality measure (QM) concepts of interoperability, cognitive function, nutrition, and patient well-being. [[Page 29110]]

3. Expanded Home Health Value-Based Purchasing (HHVBP) Model

In accordance with the statutory authority at section 1115A of the Act, we are doing the following for the expanded HHVBP Model: (1) proposing a new measure removal factor for the expanded HHVBP Model applicable measure set; (2) proposing changes to the expanded HHVBP Model applicable measure set; and (3) including a request for information (RFI) related to potential future performance measure concepts. We propose to add a new measure removal factor for the expanded HHVBP Model applicable measure set for measures that are not feasible to implement. We propose to remove three HHCAHPS Survey-based measures, to align with proposed changes to the HHCAHPS survey. We also propose 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 propose to revise the weights of the individual HHVBP measures as well as the measure categories. We also include an RFI related to potential future measure concepts for the expanded HHVBP Model.

5. Medicare and Medicaid Provider Enrollment

Consistent with section 1866(j) of the Act, we are proposing 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 proposing 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 are proposing to revise and supplement 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 proposed revisions 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 would help better ensure that DMEPOS AOs closely oversee DMEPOS suppliers for compliance with the DMEPOS quality standards.

7. DMEPOS Prior Authorization

Consistent with provisions in section 1834(a)(15) of the Act and final rule provisions published in the November 8, 2019 Federal Register titled ``Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face- to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements'' (84 FR 60648), hereinafter referred to as the ``2019 ESRD PPS & DMEPOS final rule,'' we propose to clarify authority at Sec. 414.234(c)(1)(ii) to exempt compliant suppliers, while also establishing notice guidelines for establishing an exemption and withdrawal of an exemption. The 2019 ERSD PPS & DMEPOS final rule created the authority at Sec. 414.234(c)(1)(ii) to exempt suppliers from required prior authorization of DMEPOS items upon compliance with Medicare coverage, coding, and payment requirements. However, to clarify this process for exemption from prior authorization requirements, CMS is proposing to establish guidelines for granting and withdrawing exemptions. Furthermore, we are proposing to establish notification requirements to put suppliers on notice that the exemption has either been granted or withdrawn.

8. DMEPOS Competitive Bidding Program

We are proposing 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 The purpose of this proposal is to revise both how single payment amounts (SPAs) are calculated and how CMS determines the number of contracts to award in each ``competition,'' which is a term that we use under the DMEPOS CBP to refer to a competitive bidding area (CBA) and product category combination. b. Adjustments to SPAs The purpose of this proposal is 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 would be consistent with Medicare making annual covered item updates for other DMEPOS items and services. This would account for inflation in the cost of doing business for suppliers submitting bids for furnishing items under a multiyear contract. c. Bid Limits and Conditions for Awarding Contracts if Savings Are Not Expected The purpose of this proposal is 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. We believe these proposed changes would better ensure the DMEPOS CBP is responsive to rising costs over time while still ensuring alignment with the statutory requirement for achieving savings. [[Page 29111]] d. Revising the Definition of ``Item'' Related to Medical Supplies The purpose of this proposal is to specify 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 The purpose of this proposal is to create 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. We are proposing that 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 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. f. Payment for Continuous Glucose Monitors and Insulin Infusion Pumps The purpose of this proposal is 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. 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 proposal would 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 purpose of this proposal is to streamline 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 purpose of this proposal is to streamline 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 purpose of this proposal is to codify 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 purpose of this proposal is to add a Tribal exception to the DMEPOS CBP regulations. k. Addition of a Termination Clause for the DMEPOS CBP Supplier Contracts The purpose of this proposal is to add 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 purpose of this proposal is 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 The purpose of this proposal is to add 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 proposed rule, we provide monitoring and data analysis on the PDGM utilization. In section II.C.1. of this proposed rule, we propose a permanent adjustment and a temporary adjustment to the base payment rate under the HH PPS. In section II.D. of this proposed rule, we propose to recalibrate the CY 2026 PDGM case-mix weights and to update the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups. In section II.E. of this proposed rule, we propose to update the home health wage index. We also propose to 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 proposed home health payment update percentage for CY 2026 is 2.4 percent. Additionally, this rule proposes 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 proposed rule, we propose 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 proposed rule, we are proposing to remove the COVID-19 Vaccine: Percent of Patients Who Are Up to Date measure and the item related to the measure. CMS is proposing the removal of four assessment items: one Living Situation item, two Food items, and one Utilities item. CMS is also proposing to implement a revised HHCAHPS Survey beginning with the April 2026 sample month. We are also proposing to revise the policy to allow for providers to submit a request for reconsideration of an initial determination of non- compliance with the HH QRP data submission [[Page 29112]] requirements. They can request this if they believe that they can demonstrate full compliance. We are also proposing 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 are also seeking information on a change to the final data submission deadline period from 4.5 months to 45 days. We are also seeking feedback on the digital quality measurement (dQM) transition for HHAs. We aim to solicit feedback from the public on current adoption of health information technology (IT) and standards, including Fast Healthcare Interoperability Resources (FHIR), and what related challenges or barriers HHAs are facing. Finally, we are seeking 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 proposed rule, we propose to add a new measure removal factor for the expanded HHVBP Model applicable measure set. This ninth measure removal factor would allow CMS to propose removal of a measure when it is no longer feasible to implement the measure specifications. We also propose changes to the expanded HHVBP Model applicable measure set and changes to measure weights. We propose to remove three HHCAHPS Survey-based measures, to align with proposed changes to the HHCAHPS survey. We also propose 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 propose to revise the weights of the individual HHVBP measures and the measure categories. We also include an RFI related to potential future measure concepts for the expanded HHVBP Model.

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

Payer Submission Requirements In section V. of this proposed rule, we propose technical regulation text changes to the Home Health Conditions of Participation (CoP) 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 are proposing several Medicare provider enrollment provisions to strengthen and clarify certain aspects of the provider enrollment process. These include, but are not limited to, the following: Modifying grounds for denying, revoking, or deactivating a provider's or supplier's Medicare enrollment. Expanding the reasons for which CMS can apply a retroactive effective date for provider and supplier revocations. Expanding the reasons for which CMS can apply a stay of enrollment. Requiring providers and suppliers to report any adverse legal actions imposed against them, their owners, their managers, etc. within 30 days instead of the current 90 days. We believe these revisions would help keep unqualified providers and suppliers out of the Medicare program, which, in turn would prevent improper Medicare payments to such parties.

6. DMEPOS Supplier Accreditation Organizations

DMEPOS suppliers are required to be accredited by a CMS-approved accrediting organization to enroll in and bill Medicare. The purpose of accreditation is to confirm, typically through an on-site survey of the supplier, that the supplier meets the DMEPOS quality standards. Regulations promulgating our accreditation requirements were enacted in 2006 but have not been updated since then. We are concerned there may be instances where: (1) AOs are accrediting DMEPOS suppliers that do not meet the quality standards; and (2) DMEPOS suppliers are falling out of compliance with the quality standards (sometimes for extended periods) after becoming accredited. To enhance our ability to ensure that AOs are performing DMEPOS accreditation functions effectively and thoroughly, including verifying suppliers' compliance with the quality standards, we are proposing to add a number of provisions to our DMEPOS accreditation regulations. Among our proposed provisions are: 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 proposed rule, we propose to establish guidelines for 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. We are proposing to revise 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 proposing 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 [[Page 29113]] 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 proposing 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 proposed 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 proposing 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 proposing 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 proposes 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 proposing that in no event would the bid limit be allowed to exceed the unadjusted fee schedule amount. In addition, this rule proposes 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 proposing 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 proposing 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 proposing 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 proposing 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 proposing 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 proposing 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 proposal would reduce burden for suppliers submitting bids under the DMEPOS CBP. However, we are proposing 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 proposing 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 proposing 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 proposing 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 proposing 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 would 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 now proposing to codify this process in regulation for all future rounds. Additionally, we are proposing 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 proposing to add an exception to the DMEPOS CBP that would 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. [[Page 29114]] k. Addition of a Termination Clause for the DMEPOS CBP Supplier Contracts We are proposing 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 proposing 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) he 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), would 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 proposing 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 proposing 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 The purpose of this proposal is to add 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 29115]] [GRAPHIC] [TIFF OMITTED] TP02JY25.006 [[Page 29116]] [GRAPHIC] [TIFF OMITTED] TP02JY25.007 [[Page 29117]] 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. Payment 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 home health agencies 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 29118]] 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. BILLING CODE 4120-01-P Figure 1: Case-Mix Variables in the PDGM [[Page 29119]] [GRAPHIC] [TIFF OMITTED] TP02JY25.008 BILLING CODE 4120-01-C

1. Routine PDGM Monitoring

CMS routinely analyzes Medicare home health benefit utilization, including but not limited to, 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; the proportion of 30-day periods of care with and without any therapy visits, nursing visits, and/or aide/social worker visits, and monitoring of home health visits using telecommunications technology and remote patient monitoring. For the monitoring included in this rule, we examine simulated data for CYs 2018 and 2019 and actual data for CYs 2020, 2021, 2022, 2023, and 2024 for 30-day periods of care. We refer readers to the CY 2022 HH PPS final rule (86 FR 35881) for discussion about simulated data for CYs 2018 and 2019. (a) Utilization Table 2 shows the overall utilization of home health services. This data indicates the average number of 30-day periods of care per unique HHA beneficiary is higher in CY 2024 compared to CYs 2021, 2022, and 2023. The data also indicates that the number of 30-day periods of care decreased between CY 2018 and CY 2024. Table 3 shows the average utilization of visits per 30-day period of care by home health discipline. Table 4 shows the proportion of 30-day periods of care that are LUPAs and the average number of visits per discipline of those LUPA 30-day periods of care over time. The data show a decreasing trend in the average number of visits per 30-day period and average number of visits per discipline for LUPA 30-day periods of care between CY 2018 and CY 2024. [[Page 29120]] [GRAPHIC] [TIFF OMITTED] TP02JY25.009 [GRAPHIC] [TIFF OMITTED] TP02JY25.010 [GRAPHIC] [TIFF OMITTED] TP02JY25.011 (b) Analysis of 2023 Cost Report Data for 30-Day Periods of Care In the CY 2025 HH PPS proposed rule (89 FR 55320), we provided a summary of analysis on FY 2022 HHA cost report data, as this was the most recent and complete cost report data at the time of rulemaking, and CY 2023 claims to estimate 30-day period of care costs. Our analysis showed that the CY 2023 national, standardized 30-day period payment rate of $2,010.69 was approximately 32 percent more than the estimated CY 2023 estimated 30-day period cost of $1,527.23. Using this same process in this proposed rule to compare home health payment to costs, we examined 2023 HHA Medicare cost reports (CMS Form 1728-20, OMB No. 0938-0222), as this is the most recent and complete cost report data at the time of rulemaking. We also examined CY 2024 home health claims to estimate 30-day period of care costs. We excluded LUPAs and partial payment adjustments when calculating the average number of visits. The 2023 average NRS costs per visit is $4.58. To update the estimated 30-day period of care costs, we begin with the 2023 average costs per visit with NRS for each discipline and multiply that amount by the CY 2024 home health payment update percentage of 3.0 percent (or a home health payment update factor of 1.03). That amount for [[Page 29121]] each discipline is then multiplied by the 2024 average number of visits by discipline to determine the 2024 estimated 30-day period costs. Table 5 shows the estimated average costs for 30-day periods of care by discipline with NRS and the total 30-day period of care costs with NRS for CY 2024. [GRAPHIC] [TIFF OMITTED] TP02JY25.012 The CY 2024 national standardized 30-day period payment rate was $2,057.35, which is approximately 33 percent more than the CY 2024 estimated 30-day period cost of $1,548.39. Moreover, as shown in table3 in this proposed rule, HHAs have reduced visits under PDGM in CY 2024. (c) Clinical Groupings and Comorbidities Each 30-day period of care is grouped into one of 12 clinical groups, which describes the primary reason for which a patient is receiving home health services under the Medicare home health benefit. The clinical grouping is based on the principal diagnosis reported on the home health claim. Table 6 shows the distribution of the 12 clinical groups over time. [GRAPHIC] [TIFF OMITTED] TP02JY25.013 Thirty-day periods of care receive a comorbidity adjustment category based on 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. We refer readers to section II.D. of this proposed rule and the CY 2020 HH PPS final rule with comment period (84 FR 60493) for further information on the comorbidity adjustment categories. Home health 30-day periods of care can receive a low or a high comorbidity adjustment, or no comorbidity adjustment. Table 7 shows the distribution of 30-day periods of [[Page 29122]] care by comorbidity adjustment category for all 30-day periods. [GRAPHIC] [TIFF OMITTED] TP02JY25.014 (d) Admission Source and Timing Each 30-day period of care is classified into one of two admission source categories--community or institutional, depending on what healthcare setting was utilized in the 14 days prior to receiving home health care. Thirty-day periods of care for beneficiaries with any inpatient acute care hospitalizations, inpatient psychiatric facility (IPF) stays, skilled nursing facility (SNF) stays, inpatient rehabilitation facility (IRF) stays, or long-term care hospital (LTCH) stays within 14-days prior to a home health admission are designated as institutional admissions. The institutional admission source category also includes patients that had an acute care hospital stay during a previous 30-day period of care and within 14 days prior to the subsequent, contiguous 30-day period of care and for which the patient was not discharged from home health and readmitted. All other 30-day periods of care would be designated as community admissions. Thirty-day periods of care are classified as ``early'' or ``late'' depending on when they occur within a sequence of 30-day periods of care. The first 30-day period of care is classified as early and all subsequent 30-day periods of care in the sequence (second or later) are classified as late. A subsequent 30-day period of care would not be considered early unless there is a gap of more than 60 days between the end of one previous period of care and the start of another. Information regarding the timing of a 30-day period of care comes from Medicare home health claims data and not the OASIS assessment to determine if a 30-day period of care is ``early'' or ``late''. Table8 shows the distribution of 30-day periods of care by admission source and period timing. [GRAPHIC] [TIFF OMITTED] TP02JY25.015 (e) Functional Impairment Level Each 30-day period of care is placed into one of three functional impairment levels (low, medium, or high) based on responses to certain OASIS functional items associated with grooming, bathing, dressing, ambulating, transferring, and risk for hospitalization. The specific OASIS items that are used for the functional impairment level are found in table 7 in the CY 2020 HH PPS final rule with comment period (84 FR 60490). Responses to these OASIS items are grouped together into response categories with similar resource use and each response category has associated points. A more detailed description as to how these response categories were established can be found in the technical report, ``Overview of the Home Health Groupings Model'' posted on the HHA web page.\1\ The sum of these points results in a functional impairment score used to group 30-day periods of care into a functional impairment level with similar resource use. The scores associated with the functional impairment levels vary by clinical group to account for differences in resource utilization. A patient's functional impairment level remains the same for the first and second 30-day periods of care unless there is a significant change in condition that warrants an ``other follow-up'' assessment prior to the second 30-day [[Page 29123]] period of care. For each 30-day period of care, the Medicare claims processing system looks for occurrence code 50 on the claim to correspond to the M0090 date of the applicable assessment. Table 9 shows the distribution of 30-day periods by functional impairment level. --------------------------------------------------------------------------- \1\ https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model. [GRAPHIC] [TIFF OMITTED] TP02JY25.016 (f) Therapy and Non-Therapy Visits Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act eliminated the use of therapy thresholds in calculating payments for CY 2020 and subsequent years. Prior to implementation of the PDGM, HHAs could receive an adjustment to payment based on the number of therapy visits provided during a 60-day episode of care. We examined the proportion of actual 30-day periods of care with and without therapy visits. To be covered as skilled therapy, the services must require the skills of a qualified therapist (that is, PT, OT, or SLP) or qualified therapist assistant and must be reasonable and necessary for the treatment of the patient's illness or injury. As shown in table 3, we monitor the number of visits per 30-day period of care by each home health discipline. Any 30-day period of care can include both therapy and non-therapy visits. If any 30-day period of care consisted of only visits for PT, OT, or SLP, then this 30-day period of care is considered ``therapy only''. If any 30-day period of care consisted of only visits for skilled nursing, home health aide, or social worker, then this 30-day period of care is considered ``no therapy''. If any 30-day period of care consisted of at least one therapy visit and one non-therapy, then this 30-day period of care is considered ``therapy + non-therapy''. Table 10 shows the proportion of 30-day periods of care with only therapy visits, at least one therapy visit and one non- therapy visit, and no therapy visits. Figure 2 shows the proportion of 30-day periods of care by the number of therapy visits (excluding zero) provided during 30-day periods of care. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TP02JY25.017 [[Page 29124]] [GRAPHIC] [TIFF OMITTED] TP02JY25.028 Figures 2 and 3 indicate there have been changes in the distribution of both therapy and non-therapy visits in CY 2024 compared to CY 2023. For example, the proportion of 30-day periods with one through five therapy visits during a 30-day period increased in CY 2024 compared to prior years. Comparing therapy utilization from before the PDGM (CYs 2018 and 2019) to after the implementation of the PDGM (CYs 2020-2024), we also see an overall decline in therapy visits across all clinical groups, as shown in Figure 3. [[Page 29125]] [GRAPHIC] [TIFF OMITTED] TP02JY25.018 BILLING CODE 4120-01-C We also examined the proportion of 30-day periods of care with and without skilled nursing, social work, or home health aide visits. Table 11 shows the number of 30-day periods of care with only skilled nursing visits, at least one skilled nursing visit and one other visit type (therapy or non-therapy), and no skilled nursing visits. Table 12 shows the number of 30-day periods of care with and without home health aide or social worker visits. [GRAPHIC] [TIFF OMITTED] TP02JY25.019 [[Page 29126]] [GRAPHIC] [TIFF OMITTED] TP02JY25.020 (g) Home Health Services Using Telecommunications Technology As discussed in the CY 2023 final rule (87 FR 66858), we began collecting data on the use of telecommunications technology used during a home health period using three G-codes reported on home health claims. Collecting data on services furnished via telecommunications technology on claims allows CMS to analyze the characteristics of patients using services provided remotely. The monitoring discussion illustrates which services are most frequently furnished via telecommunication technology and generally how long remote patient monitoring is utilized. We began collecting this information from HHAs on a voluntary basis on January 1, 2023, and have required this information to be reported on claims starting on July 1, 2023 (87 FR 66858). The three G-codes help identify when home health services are furnished using synchronous telemedicine rendered via a real-time two-way audio and video telecommunications system (G0320); synchronous telemedicine rendered via telephone or other real-time interactive audio-only telecommunications systems (G0321); and the collection of physiologic data digitally stored and/or transmitted by the patient to the home health agency, that is, remote patient monitoring (G0322). We capture the usage and length of remote patient monitoring using the start date of the remote patient monitoring and the number of days of monitoring indicated on the claim. We also looked at the disciplines most often providing remote patient monitoring. We examined the utilization of telecommunications technology devices during a home health period and remote patient monitoring by looking at home health claims that included the three G-codes. Tables 13 and 14 shows that the use of telecommunications services reported on CY 2024 home health claims are low (roughly 2 percent of all CY 2024 claims) and are mainly associated with skilled nursing. [GRAPHIC] [TIFF OMITTED] TP02JY25.021 [[Page 29127]] [GRAPHIC] [TIFF OMITTED] TP02JY25.022 We will continue to monitor the provision of home health services, including any changes in the number and duration of home health visits, composition of the disciplines providing such services, telecommunications technology used during home health periods, and overall home health payments to determine if refinements to the case- mix adjustment methodology or other policies may be needed in the future.

1. Proposed Behavior Adjustments Under the HH PPS

a. Background As discussed in section II.A.1. of this proposed rule, starting in CY 2020, the Secretary was required by section 1895(b)(2)(B) of the Act to change the unit of payment under the HH PPS from a 60-day episode of care to a 30-day period of care. CMS was also required to make assumptions about behavior changes that could occur as a result of the implementation of the 30-day unit of payment and the case-mix adjustment factors that eliminated the use of therapy thresholds. In the CY 2019 HH PPS final rule with comment period (83 FR 56455), we finalized three behavior change assumptions which were also described in the CY 2022 and 2023 HH PPS rules (86 FR 35890, 87 FR 37614, and 87 FR 66795 through 66796). In the CY 2020 HH PPS final rule with comment period (84 FR 60519), we included these behavior change assumptions in the calculation of the 30-day budget neutral payment amount for CY 2020, finalizing a negative 4.36 percent behavior change assumption adjustment (``assumed behaviors''). We did not propose any changes for CYs 2021 and 2022 related to the behavior change assumptions finalized in the CY 2019 HH PPS final rule with comment period, or to the negative 4.36 percent behavior change assumption adjustment, finalized in the CY 2020 HH PPS final rule with comment period. In the CY 2023 HH PPS final rule (87 FR 66796), we stated that we had concluded, based on our annual monitoring at that time, that the three expected behavior changes did in fact occur as a result of the implementation of the PDGM and that other behaviors, such as changes in the provision of therapy and changes in functional impairment levels, had also occurred. We also reminded readers that in the CY 2020 HH PPS final rule with comment period (84 FR 60513), we stated we interpret actual behavior changes to encompass behavior changes that were previously outlined as assumed by CMS, and other behavior changes not identified at the time we established the budget-neutral 30-day payment rate for CY 2020. In the CY 2023 HH PPS final rule (87 FR 66796), we provided supporting evidence that indicated the number of therapy visits declined in CYs 2020 and 2021, as well as a slight decline in therapy visits beginning in CY 2019 after the finalization of the removal of therapy thresholds, but prior to implementation of the PDGM. In section II.B.1. of the CY 2025 HH PPS proposed rule (89 FR 55318), our analysis continued to show the actual 30-day periods are similar overall to the simulated 30-day periods as well as a continued decline in therapy visits, indicating that HHAs changed their behavior to reduce therapy visits. Although the analysis demonstrates evidence of individual behavior changes (for example, in the volume of visits for LUPAs, therapy sessions, etc.), we use the entirety of the behaviors in order to calculate estimated aggregate expenditures. The law 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. 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. This subsection of the CAA, 2023 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 complied with these requirements by posting 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 occurred upon implementation of 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 [[Page 29128]] 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 detailed instructions for each step. 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, OMB approved an updated version of the OASIS instrument, OASIS-E under OMB control number 0938-1279,\2\ on November 30, 2022, effective January 1, 2023. 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 2024 and CY 2025 HH PPS final rules for further information about the methodology. --------------------------------------------------------------------------- \2\ The current expiration date for this information collection request is December 31, 2027. --------------------------------------------------------------------------- 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 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 30-day base payment rate. This percent change is converted into an adjustment factor and applied in the annual rate update process. To account for increases or decreases in estimated aggregate expenditures that result from differences between assumed behavior changes and actual behavior changes from 2020 through 2026, we calculate one or more temporary prospective adjustments by calculating the dollar amount difference between the estimated aggregate expenditures from all 30-day periods using the recalculated 30-day base payment rate, and the aggregate expenditures for all 30-day periods using the actual 30-day base payment rate for each of those years once data is available (87 FR 66804). In other words, when determining the dollar amount of aggregate expenditures in prior years that we must offset in future years, we use the full dataset of actual 30-day periods using both the actual and recalculated 30-day base payment rates to ensure that the utilization and distribution of claims are the same. In accordance with section 1895(b)(3)(D)(iii) of the Act, each temporary adjustment applies prospectively but, as its name suggests, only with respect to the year for which such temporary increase or decrease is made. Therefore, after we determine the dollar amount we plan to reconcile in a given year, we calculate a temporary adjustment factor to be applied to the base payment rate for that year. The temporary adjustment factor is based on an estimated number of 30-day periods in the next 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 Preliminary Claims Results We will continue the practice of using the most recent complete home health claims data available at the time of rulemaking. While the CY 2024 analysis presented in this proposed rule uses the most complete data available at the time, it is considered preliminary and, as more data become available from the latter half of CY 2024, we would update our analysis in the final rule. The CY 2026 final rule would use the complete CY 2024 data for determining any permanent and temporary adjustments needed to the CY 2026 payment rate. However, while the claims data and the permanent and temporary adjustments results would be considered complete for CY 2026, any adjustments to future payment rates 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 proposed rule includes two files: the actual CY 2024 30-day periods and the CY 2024 simulated 60-day episodes. We remind readers a data use agreement (DUA) is required to purchase the CY 2026 proposed HH PPS LDS file using the CMS-R-0235A form under OMB control number 0938-0734. Access would 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.\3\ In addition, the proposed CY 2026 Home Health Descriptive Statistics from the LDS Files spreadsheet is available on the HH PPS Regulations and Notices web page,\4\ 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 that were used to determine the adjustments. The spreadsheet also provides information such as the number of episodes and periods by case-mix group, case-mix weights, and simulated payments. --------------------------------------------------------------------------- \3\ https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds. \4\ 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 Using the methodology finalized in the CY 2023 HH PPS final rule to apply for all the years in which an adjustment is appropriate, and described most recently in the CY 2024 HH PPS final rule (88 FR 77687 through 77688), as well as 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 [[Page 29129]] determine what the proposed 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 preliminary CY 2024 dataset, we began with 8,118,120 30- day periods of care and dropped 446,458 30-day periods of care that had a claim occurrence code 50 date after October 31, 2024. We also excluded 842,735 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 4,017 30-day periods were excluded. Additionally, we excluded 211,772 simulated 60-day episodes, which consist of 391,799 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 (69.5 percent) and single 30-day periods of care (30.5 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 proposed rule included 6,433,111 actual 30-day periods of care and 3,794,744 simulated 60-day episodes of care for CY 2024. Using the preliminary dataset for CY 2024 (6,433,111 actual 30-day periods which made up the 3,794,744 simulated 60-day episodes) we determined the estimated aggregate expenditures under the pre-PDGM HH PPS were lower than the actual estimated aggregate expenditures under the PDGM HH PPS. As shown in table 15, 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 $1,916.77 based on actual behavior changes. As stated in the CY 2025 HH PPS final rule (89 FR 88367) we determined for CYs 2020 through CY 2023 a total of -3.95 percent permanent adjustment was needed (after accounting for the -3.925 percent applied to the CY 2023 payment rate and the -2.890 applied to the CY 2024 payment rate). In order to determine behavior changes only to CY 2024, we simulated what the CY 2024 base payment rate would have been if the -3.95 percent adjustment that we determined using CY 2023 claims data had been implemented. To do so, we started with 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. For the CY 2024 annual permanent adjustment, we calculated the percent change between the two payment rates for only CY 2024. For the CY 2024 annual temporary adjustment we calculated the difference in aggregate expenditures in dollars for all CY 2024 PDGM 30-day claims using the two payment rates. This difference is shown as the retrospective dollar amount we will need to offset payment using 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 preliminary claims data is shown in table 15. [GRAPHIC] [TIFF OMITTED] TP02JY25.023 As shown in table 15, a permanent prospective adjustment of -2.087 percent to the CY 2026 30-day payment rate (assuming all adjustments from prior years were applied) for CY 2024 would be required to offset for such increases in estimated aggregate expenditures in future years. We remind readers, the permanent prospective adjustment of -2.087 percent is for illustrative purposes only and the annual (single year) permanent adjustment cannot be added to previous annual adjustments. As shown in table 15, we determined that our initial estimate of the CY 2024 base payment rate ($2,038.13) resulted in excess expenditures of approximately $840 million in CY 2024. Section 1895(b)(3)(D)(ii) of the Act requires us to annually analyze data from CY 2020 through CY 2026. We now have five years of claims data (CYs 2020 through 2024) under the PDGM, [[Page 29130]] and we have applied three partial permanent adjustments to the 30-day payment rate (CYs 2023 through 2025), which we summarize in table 16. 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. We remind readers that equation may result in slightly different results due to the underlying assumptions (for example, all prior year adjustments were taken) each year and rounding. [GRAPHIC] [TIFF OMITTED] TP02JY25.024 f. CY 2026 Proposed Permanent Adjustment and Temporary Adjustment Calculations In the preceding section we describe how we annually analyzed CY 2024 preliminary claims data to determine the effects of actual behavior change on estimated aggregate expenditures. Again, that analysis included simulations that assumed the full -3.95 percent payment adjustment was already taken. We note that CMS implemented a payment adjustment of -1.975 percent for CY 2024, rather than the -3.95 percent we calculated (89 FR 88373), so the calculations set forth later in this section reflect the remaining adjustments that are still needed. Therefore, the calculation in this section includes any of 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 16, we do not assume the full adjustment from prior years had been taken. As discussed in section II.C.1.d. of this proposed rule, using the preliminary dataset for CY 2024 (6,433,111 actual 30-day periods which made up the 3,794,744 simulated 60-day episodes) we determined the CY 2024 30-day base payment rate should have been $1,916.77 based on actual behavior. We then compared the $1,916.77 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 17, 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 $1,916.77 (based on actual behaviors) is the total permanent adjustment reflecting CYs 2020 through 2024 claims. [GRAPHIC] [TIFF OMITTED] TP02JY25.025 As shown in table 17 a permanent prospective adjustment of -5.954 percent to the CY 2026 30-day payment rate would be required to offset for such increases in estimated aggregate expenditures in future years. To illustrate this calculation: [GRAPHIC] [TIFF OMITTED] TP02JY25.026 [[Page 29131]] As we stated in the CY 2025 HH PPS final rule (89 FR 88373), applying a -1.975 percent (half of the proposed -3.95 percent) permanent adjustment to the CY 2025 30-day payment rate would 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 17, a permanent prospective adjustment of -5.954 percent to the CY 2026 30-day payment rate would be 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 proposed permanent adjustment, which would include estimated aggregate expenditures in CY 2024, by simply subtracting the -1.975 percent applied in CY 2025 from the total permanent adjustment of -5.954 percent as shown in table 17. 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 -) = (1-0.05954). To illustrate this calculation we used the following approach. [GRAPHIC] [TIFF OMITTED] TP02JY25.027 x = 1-0.95941 x = 0.04059 (that is, 4.059 percent) 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: 5 --------------------------------------------------------------------------- \5\ 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 = -2.087% (Table 16) 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)(1-0.02087) = (1-0.03925)(1- 0.0289)(1-0.01975)(1-x) Solving, x = 4.059%. In table 18, we provide the base payment rate for assumed behaviors (what CMS actually paid), the recalculated base payment rate for actual behaviors (what CMS should have paid), the total permanent adjustments calculated from the base payment rates (accounts for any adjustments taken prior), and the permanent adjustment applied. [GRAPHIC] [TIFF OMITTED] TP02JY25.056 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 18, we finalized only half of the permanent adjustment percentages in CYs 2023 through 2025 final rules. However, 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. Therefore, we believe it to be appropriate to propose the full permanent adjustment to help mitigate [[Page 29132]] this continued accrual of the temporary adjustment. Therefore, we are proposing to apply the full permanent adjustment of -4.059 percent to the CY 2026 home health base payment rate, noting that we expect to make minor adjustments to this percentage in the final rule using more complete claims data. Proposing the full permanent adjustment would satisfy the statutory requirements at section 1895(b)(3)(D)(ii) 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. As described previously in this proposed 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 proposed rule for the analysis of CY 2024 claims. Table 19 provides a summary of the temporary adjustment dollar amount for CYs 2020 through 2026. [GRAPHIC] [TIFF OMITTED] TP02JY25.029 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 behavioral adjustment 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 as shown in section II.B.1.b. of this proposed rule, 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's payments for home health care are substantially in excess of costs.\6\ --------------------------------------------------------------------------- \6\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch7_MedPAC_Report_To_Congress_SEC.pdf. --------------------------------------------------------------------------- Given these facts, we believe that it is an appropriate time to begin recoupment of the temporary dollar amounts. 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 amounts are 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 estimate that collecting the full temporary dollar amount of $5,301,103,945 in a single year (as shown in table 19) would require an approximate 34 percent reduction to the CY 2026 base payment rate. And we anticipate that we would 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, we propose only to implement a small 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. Beginning to apply a [[Page 29133]] temporary adjustment in CY 2026 balances the underlying statutory goal of budget neutrality against any hardship to HHAs. Therefore, 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. Specifically, we propose to implement 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 would occur in CY 2026. Using this estimated utilization, a 5.0 percent reduction to the CY 2026 30-day payment rate would begin to collect approximately $786 million of the total temporary adjustment dollar amount, equating to about 14.8 percent of the total $5.3 billion shown in table 19. In doing so, however, we would need to account for the remaining temporary adjustment dollar amount for CYs 2020 through 2024, plus any possible adjustments for CY 2025 and 2026, in future years. It is important to note that the estimated $786 million dollar amount anticipated to be collected by the implementation of the temporary adjustment factor is based on an estimate of the number of 30-day periods that would 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, the temporary adjustment is to be applied on a prospective basis and shall apply only with respect to the year for which such temporary increase or decrease is made. We interpret this to mean we would 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 and are not proposing that the -5.0 percent temporary adjustment would be applied each year after CY 2026. Rather, 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 will propose one or more temporary adjustments to account for retrospective overpayments. We refer readers to section II.E.3.b. for the CY 2026 base payment rates with and without the temporary adjustment. We solicit comments on the proposals to apply the permanent adjustment of -4.059 percent and the -5.0 percent temporary adjustment to the CY 2026 home health base payment rate.

D. Proposed CY 2026 Home Health Low Utilization Payment Adjustment

(LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub- Groups, and Case-Mix Weights

1. Proposed CY 2026 PDGM LUPA Thresholds

Under the HH PPS, LUPAs are paid when a certain numerical minimum 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 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 would 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 would be made using the per-visit payment amounts as described in section II.E.3.c. of this proposed 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, 70306) that we would 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 that 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 public health emergency (PHE) will 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 be more indicative of visit patterns in CY 2024 rather than continuing to use the LUPA thresholds derived from the CY 2018 pre-PDGM data. Therefore, we finalized a policy to update the LUPA thresholds for CY 2024 using data from CY 2022. For CY 2026, we are proposing to update the LUPA thresholds using CY 2024 home health claims utilization data (as of March 13, 2025), in accordance with our policy to annually recalibrate the case-mix weights and update the LUPA thresholds, functional impairment levels, and comorbidity [[Page 29134]] 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 15 case-mix groups have a decline in their LUPA threshold of a single visit and 4 case-mix groups have their LUPA threshold increase by 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 are listed in table 25. We are soliciting public comments on the proposed updates to the LUPA thresholds for CY 2026. The proposed LUPA thresholds will be updated based on more complete CY 2024 claims data in the final rule.

2. Proposed 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 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 are proposing 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 are proposing to use the same methodology previously finalized to update the functional impairment levels for CY 2026. The proposed updated OASIS functional points table and the table of functional impairment levels by clinical group for CY 2026 are listed in tables 20 and 21, respectively. BILLING CODE 4120-01-P [[Page 29135]] [GRAPHIC] [TIFF OMITTED] TP02JY25.030 [[Page 29136]] [GRAPHIC] [TIFF OMITTED] TP02JY25.031 BILLING CODE 4120-01-C We are soliciting public comments on the proposed updates to functional points and the functional impairment levels by clinical group.

3. Proposed 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 [[Page 29137]] 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 are proposing 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 (as of March 13, 2025). For CY 2026, we are proposing 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 are shown in tables 22 and 23. The proposed 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/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center. We invite comments on the proposed updates to the low comorbidity adjustment subgroups and the high comorbidity adjustment interactions for CY 2026. [GRAPHIC] [TIFF OMITTED] TP02JY25.032 BILLING CODE 4120-01-P [[Page 29138]] [GRAPHIC] [TIFF OMITTED] TP02JY25.033 [[Page 29139]] [GRAPHIC] [TIFF OMITTED] TP02JY25.034 [[Page 29140]] [GRAPHIC] [TIFF OMITTED] TP02JY25.035 [[Page 29141]] [GRAPHIC] [TIFF OMITTED] TP02JY25.036 [[Page 29142]] [GRAPHIC] [TIFF OMITTED] TP02JY25.037 [[Page 29143]] [GRAPHIC] [TIFF OMITTED] TP02JY25.038 [[Page 29144]] [GRAPHIC] [TIFF OMITTED] TP02JY25.039 [[Page 29145]] [GRAPHIC] [TIFF OMITTED] TP02JY25.040 BILLING CODE 4120-01-C

4. Proposed 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 [[Page 29146]] 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). These data are the most current and complete data available at the time of rulemaking. We believe that recalibrating the case-mix weights using data from CY 2024 would be reflective of PDGM utilization and patient resource use for CY 2026. The proposed recalibrated case- mix weights will be updated in the final rule based on more complete CY 2024 claims data. 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 20 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 2023 home health cost reports. We use 2023 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 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 24 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 29147]] [GRAPHIC] [TIFF OMITTED] TP02JY25.041 [[Page 29148]] [GRAPHIC] [TIFF OMITTED] TP02JY25.042 [[Page 29149]] The proposed case-mix weights for CY 2026 are listed in table 25 and will also be posted on the HHA Center web page \7\ upon display of this proposed rule. --------------------------------------------------------------------------- \7\ HHA Center web page: https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center. --------------------------------------------------------------------------- [[Page 29150]] [GRAPHIC] [TIFF OMITTED] TP02JY25.043 [[Page 29151]] [GRAPHIC] [TIFF OMITTED] TP02JY25.044 [[Page 29152]] [GRAPHIC] [TIFF OMITTED] TP02JY25.045 [[Page 29153]] [GRAPHIC] [TIFF OMITTED] TP02JY25.046 [[Page 29154]] [GRAPHIC] [TIFF OMITTED] TP02JY25.047 [[Page 29155]] [GRAPHIC] [TIFF OMITTED] TP02JY25.048 [[Page 29156]] [GRAPHIC] [TIFF OMITTED] TP02JY25.049 [[Page 29157]] [GRAPHIC] [TIFF OMITTED] TP02JY25.050 [[Page 29158]] [GRAPHIC] [TIFF OMITTED] TP02JY25.051 [[Page 29159]] [GRAPHIC] [TIFF OMITTED] TP02JY25.052 [[Page 29160]] [GRAPHIC] [TIFF OMITTED] TP02JY25.053 [[Page 29161]] [GRAPHIC] [TIFF OMITTED] TP02JY25.054 [[Page 29162]] [GRAPHIC] [TIFF OMITTED] TP02JY25.055 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 [[Page 29163]] period payment rate by a case-mix budget neutrality factor. Typically, the case-mix weight recalibration neutrality factor is also calculated using the most recent, complete home health claims data available. For CY 2026, we would continue the practice of using the most recent complete home health claims 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 produces a case-mix budget neutrality factor for CY 2026 of 1.0051. We invite public comments on the CY 2026 proposed case-mix weights and proposed case-mix weight budget neutrality factor.

1. Proposed 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 multifactor 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 (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 update percentage for CY 2026 is 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 would then be 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 is currently estimated to be 0.8 percentage point for CY 2026. Therefore, the proposed productivity-adjusted CY 2026 home health market basket update is 2.4 percent (3.2 percent market basket percentage increase, reduced by a 0.8 percentage point productivity adjustment). Furthermore, we are proposing that if more recent data become 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 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 is 0.4 percent (2.4 percent minus 2 percentage points). We invite public comments on the proposed CY 2026 home health market basket percentage increase and productivity adjustment.

2. Proposed 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 are proposing 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 [[Page 29164]] 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 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. Proposed 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 are proposing 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 proposed CY 2026 HH PPS wage index would 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 would include the 5 percent cap on wage index decreases as discussed previously. There exist some geographic areas where there are no hospitals, and thus, [[Page 29165]] 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 are proposing 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 are proposing the CY 2026 wage index value for Hinesville, GA, would be 0.8800. 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 would 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 are proposing that the CY 2026 HH PPS wage index for rural North Dakota would be 0.8346. 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 would 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 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 is 0.2452. However, because 0.2452 is more than a 5 percent decline in the CY 2025 wage index, we are proposing 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 would result in a proposed 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 are proposing that the CY 2026 wage index for rural Delaware would be 1.0133. 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 are proposing that HHAs that provide services in the Northern Mariana Islands and American Samoa would 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. The proposed 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. Proposed 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. 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 update [[Page 29166]] percentage, 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 would 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. Proposed 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 home health agencies in a budget-neutral manner. To determine the CY 2026 national, standardized 30-day period payment rate, we would 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 proposed rule, we are proposing the implementation of a permanent adjustment of -4.059 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 proposed permanent adjustment factor is 0.95941. 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 proposed case-mix weight budget neutrality factor for CY 2026 is 1.0051. 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 1.0019. We then apply the wage index budget neutrality factor of 1.0019 to the 30-day period payment rate. Next, we update the 30-day period payment rate by the proposed CY 2026 home health payment update percentage of 2.4 percent. As discussed in section II.C.1. of this proposed rule, we are also proposing the implementation of a temporary 5.0 percent reduction to the CY 2026 base payment rate. The proposed temporary adjustment factor is 0.95000. 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 proposed temporary adjustment and is calculated in table 26. [GRAPHIC] [TIFF OMITTED] TP02JY25.057 The CY 2026 national standardized 30-day period payment rate for an HHA that does not submit the required quality data would be updated by 0.4 percent (the proposed CY 2026 home health payment update percentage of 2.4 percent minus 2 percentage points) and is shown in table 27. [[Page 29167]] [GRAPHIC] [TIFF OMITTED] TP02JY25.058 c. Proposed 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 proposed 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 1.0004. 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. 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 proposed 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 proposed CY 2026 national per-visit rates for HHAs that submit the required quality data are updated by the proposed CY 2026 home health payment update percentage of 2.4 percent and are shown in table 28. [GRAPHIC] [TIFF OMITTED] TP02JY25.059 The CY 2026 per-visit payment rates for HHAs that do not submit the required quality data would be updated by 0.4 percent, which is the proposed CY 2026 home health payment update percentage of 2.4 percent minus 2 percentage points and are shown in table 29. [[Page 29168]] [GRAPHIC] [TIFF OMITTED] TP02JY25.060 We are soliciting comments on the proposed CY 2026 30-day home health payment rates and the per-visit payment rates. 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 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 [[Page 29169]] 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.

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 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- [[Page 29170]] 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. Proposed 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 are proposing an FDL ratio of 0.46 for CY 2026. CMS would update the FDL, if needed, in the final rule once we have more complete CY 2024 claims data.

F. Proposed Regulation Change to Face-to-Face Encounter

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 describes 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 (for example, 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 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 [[Page 29171]] 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. 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 plan to 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 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 propose 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 propose 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. The proposed 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. These proposed revisions would also address concerns that the current regulations do not align with the CARES Act language. We solicit comments on these proposed revisions to 42 CFR 424.22(a)(1)(v).

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. [[Page 29172]]

B. Summary of the Provisions of This Proposed Rule

In accordance with the statutory authority at section 1895(b)(3)(B)(v) of the Act, we are proposing the following policies and requests for information: We are proposing 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 is proposing the removal of four assessment items: one Living Situation item, two Food items, and one Utilities item. We are also proposing to revise the policy to allow for providers that fail to provide complete, timely data to CMS to submit a request for reconsideration if they can demonstrate full compliance. 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. CMS is also proposing to implement a revised HHCAHPS Survey beginning with the April 2026 sample month. This rule also includes a proposal to update regulatory text to account for all-payer data submission of OASIS data. We are seeking 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 are also seeking feedback on the digital quality measurement (DQM) transition for HHAs. We aim to solicit feedback from the public on the current adoption of health information technology (IT) and standards including Fast Healthcare Interoperability Resources (FHIR), what related challenges or barriers HHAs are facing. Finally, we are seeking 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 30. BILLING CODE 4120-01-P [[Page 29173]] [GRAPHIC] [TIFF OMITTED] TP02JY25.061 [[Page 29174]] BILLING CODE 4120-01-C

D. Proposed 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 We refer readers to the CY 2024 HH PPS final rule, where we adopted the ``COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date'' (``Patient/Resident COVID-19 Vaccine measure'') into the HH QRP (88 FR 77762 through 77764). For the HH QRP, we propose to remove the 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)). 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. We refer readers to section VII of this proposed rule for more details on the estimated burden reduction related to this 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). HHAs have expressed concerns about data collection challenges and increased provider burden in collecting patient immunization data.\8\ 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 \9\ is declining, and 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 this proposed rule for more details on this estimated burden reduction. --------------------------------------------------------------------------- \8\ 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. \9\ 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 propose that, effective with assessments completed on or after the date of publication of the 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 propose to remove the Patient/ResidentCOVID-19 Vaccination is Up to Date item (O0350) from the OASIS effective April 1, 2026, since it is not technically feasible to remove this item earlier. However, under our proposal, until this item could be removed from the OASIS, 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. 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 to not be rejected by the iQIES under existing submission specification edits. We invite public comment 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.

E. Proposed Removal of Four Standardized Patient Assessment Data

Elements Beginning With the CY 2026 HH QRP We refer readers to the CY 2025 HH PPS final rule (88 FR 88433 through 88439) where 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 this proposed rule, we are proposing to remove these four standardized patient assessment data elements under the SDOH category as we acknowledge the burden associated with these items at this time. We continuously look for ways to balance the need for data collections 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 would like to work towards the workflow for these specific data elements being part of a low burden interoperable electronic system. The focus would turn towards how these data and associated recommendations exchanged can improve care coordination, efficiency, reduction in errors and patient experience. As health information technology (HIT) advances and interoperability of data becomes more standardized, the burden to collect and share clinical data on these and other relevant patient information would 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 industry 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 recognize the burden that the collection of these additional data would impose on already overextended staff. We also acknowledge the additional cost and resources HHAs would bear for training HH staff and altering their workflows if they were 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 $1,132 per HH). We refer readers to section VII.A.3. of this proposed rule for more details on this estimated burden reduction. Under our proposal, 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. Under our proposal, these items would not be required to meet HH QRP requirements beginning with the CY 2026 HH QRP. We invite public comment on our proposal to remove four standardized patient assessment data elements collected under the SDOH category from [[Page 29175]] the HH QRP 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

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-percentage 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). We have become aware that there are inconsistencies in our preamble and regulation text regarding HHA requests for reconsideration. On this basis, in this proposed rule, we seek to address these inconsistencies.

2. HH QRP Reconsideration Policy: Proposal To Amend and Codify

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), Our policy also provides that, to support such 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 propose 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 propose 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 propose 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 propose to codify this process at Sec. 484.245(d)(5). We further propose that CMS would notify the HHA in writing of its final decision regarding its request for an extension to file a reconsideration of non-compliance request via an email from CMS. We propose to notify the HHA in writing via email because this would allow for more expedient correspondence with the HHA, given the 30-day reconsideration timeframe. We propose to codify this process at Sec. 484.245(d)(6). We note that we are considering proposing similar modifications across all post-acute care setting quality reporting programs to more closely align the reconsideration processes. We invite comment 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).

3. Proposal To Codify the Bases on Which CMS Can Grant a

Reconsideration Request As discussed previously, in CY 2013 HH PPS final rule, we stated that, after we review 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 [[Page 29176]] final rule (77 FR 67096). Our regulation at Sec. 484.245(d)(3) requires that an HHA's request for reconsideration include 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 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 propose 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 propose to modify Sec. 484.245(d)(4) to codify this modified policy in our regulation. We note that we are considering proposing similar modifications across all post-acute care setting quality reporting programs to more closely align the reconsideration processes. We invite comment on these 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 two 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 \10\ 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. --------------------------------------------------------------------------- \10\ https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf. --------------------------------------------------------------------------- The final rule \11\ 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'' 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 nonMedicare/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. --------------------------------------------------------------------------- \11\ 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 are proposing at Sec. 484.45(a) to remove the term ``beneficiary'' and replace it with the term ``patient.'' Thus, Sec. 484.45(a) would read, if finalized as proposed, ``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.'' Patients must receive, and an HHA must provide, a comprehensive assessment no later than five 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 [[Page 29177]] 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 are also proposing to remove the term ``beneficiary'' at Sec. 484.55(d)(1)(i). 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 and CY 2025 Home Health PPS final rules. We note that this policy does 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. Proposed 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, changes to the survey and the quality measures derived from testing include 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. Due to the very favorable recommendations from the PRMR, we are proposing to move forward with the five measures. CMS is proposing to implement the revised HHCAHPS Survey beginning with the April 2026 sample month. Table 31 provides a comparison of the current and proposed HHCAHPS Survey measures. BILLING CODE 4120-01-P [[Page 29178]] [GRAPHIC] [TIFF OMITTED] TP02JY25.062 [[Page 29179]] [GRAPHIC] [TIFF OMITTED] TP02JY25.063 [[Page 29180]] 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 are proposing to calculate 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 are proposing 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 would continue to be calculated using four rolling quarters and would 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 would 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 would be reported individually, we would 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 propose 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 would be updated to include the new measures would be October 2027, with scores calculated using data from Q2 2026 through Q1 2027. In the interim period, measure scores would 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-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 would 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 are 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, the diagnosis adjustments were no longer significant. As such, CMS proposes 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 is proposing to add a mode adjustment in addition to the case-mix adjustment, with the revised survey. Case- mix adjustment would 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 would 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 invite public comment on the HHCAHPS Survey proposals.

I. HH QRP Quality Measure Concepts Under Consideration for Future

Years--Request for Information We are seeking input on the importance, relevance, appropriateness, and applicability of each of the quality measure concepts under consideration listed in Table 32 for future years of the HH QRP. In the CY 2024 HH PPS proposed rule (88 FR 43738 through 43740), we included a request for information (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 are seeking input on four concepts for future measures for the HH QRP.

1. Interoperability

We are seeking 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 [[Page 29181]] 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 use of electronic health information from, other health IT without requiring special efforts by the user.\12\ 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.\13\ We request 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. --------------------------------------------------------------------------- \12\ 21st Century Cures Act, 42 U.S.C. 300jj(9) (2016). \13\ 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)).\14\ 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. --------------------------------------------------------------------------- \14\ 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 is requesting 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 seeks input on the feasibility of measuring improvement in cognitive functioning during a HH stay, which typically averages 56 days; \15\ 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. --------------------------------------------------------------------------- \15\ Based on home health episodes ending in CY2021 (the most recent year for which complete data are available). ---------------------------------------------------------------------------

3. Well-Being

We are seeking 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.\16\ This comprehensive approach emphasizes person-centered care by promoting well-being of patients and their family members. We are seeking 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. --------------------------------------------------------------------------- \16\ Well-Being Concepts. CDC Archives. WHPL_Canon_WB_Well- Being_Concepts___HRQOL___CDC_2017.pdf. ---------------------------------------------------------------------------

4. Nutrition

Finally, we are seeking 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 are seeking 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] TP02JY25.064 [[Page 29182]] We intend to use this input to inform our future measure development efforts.

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, only three-quarters (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 believe that by reducing this deadline from 135 days to 45 days, we can reduce the time between data collection and public reporting resulting in the improvement in timeliness with limited change in burden to providers. We are requesting feedback on this potential future reduction of the HH QRP data submission deadline from 4.5 months to 45 days. Specifically, we are requesting 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. We intend to use this input to inform our program improvement efforts.

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, we are issuing this request for information (RFI) to gather broad public input on the dQM transition in HHAs.

1. Background

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 information technology (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,\17\ 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: --------------------------------------------------------------------------- \17\ ``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 are considering opportunities to advance FHIR[supreg]-based reporting of patient assessment data for the submission of the OASIS. Our objective is to explore how HHAs typically integrate technologies with varying complexity into existing systems and how this affects HH workflows. In this RFI, we seek 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 are also seeking input on future measures under consideration including applicability of interoperability as a [[Page 29183]] 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 seek 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 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] \18\ applications integrated with your EHR or other health IT? --------------------------------------------------------------------------- \18\ 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? \19\ --------------------------------------------------------------------------- \19\ 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.\20\ 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? --------------------------------------------------------------------------- \20\ 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 invite any feedback, suggestions, best practices, or success stories related to the implementation of these technologies. While we would not be responding to specific comments in response to this RFI in the CY 2026 HH PPS final rule, we invite any feedback, suggestions, best practices, or success stories related to the implementation of these technologies and would use this input to inform our future dQM transition efforts.

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

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

1. Proposal To End 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, we are proposing to remove the Patient/Resident COVID-19 Measure beginning with the CY 2026 [[Page 29184]] HH QRP. However, if finalized as proposed, 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 propose 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 invite 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.

A. Background

As authorized by section 1115A of the Act and finalized in the CY 2016 HH PPS final ule (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.\21\ 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.\22\ --------------------------------------------------------------------------- \21\ https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt. \22\ 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.\23\ 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. --------------------------------------------------------------------------- \23\ https://www.cms.gov/newsroom/press-releases/cms-takes-action-improve-home-health-care-seniors-announces-intent-expand-home-health-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. Proposed 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. We are proposing to add and codify an additional measure removal factor at Sec. 484.358, Factor 9: It is not feasible to implement the measure specifications. This proposed new measure removal factor will 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 invite public comments on this proposal.

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

Set We are proposing to remove three measures from the current applicable measure set and add four measures starting in CY 2026. The removal of the three measures is necessary due to revisions to the HHCAHPS Survey that are proposed beginning with the April 2026 sample. These proposed survey revisions prevent the three HHCAHPS Survey-based measures from being calculated as currently specified. These measures will only be removed if the proposed changes to the HHCAHPS Survey are finalized.

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

Expanded HHVBP Model Applicable Measure Set The Home Health Consumer Assessment of Healthcare Providers and System[supreg] (HHCAHPS) Survey, a nationally standardized and publicly reported survey, is designed to measure the experiences of people receiving home health care from Medicare-certified home health agencies. It is conducted for home health agencies 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 this proposed rule, the Center for Medicare (CM) is proposing [[Page 29185]] changes to the HHCAHPS survey. These proposed changes will affect the survey questions used to calculate three measures that are used in the expanded HHVBP Model. CM 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 this proposed rule, and if finalized, will become effective in beginning with the April 2026 sample month. Given these proposed changes, we propose 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 propose to remove these three HHCAHPS Survey-based measures using the proposed Removal Factor 9: It is not feasible to implement the measure specifications. This proposed measure removal factor is described in more detail above. The proposed removal of these measures will be necessary if the proposed changes to the HHCAHPS Survey instrument are finalized, as the current measure specifications cannot be calculated using the proposed survey revisions. If 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 would be removed if the survey changes are 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.

2. Proposed Addition of Medicare Spending Per Beneficiary Post-Acute

Care (MSPB-PAC) to the Expanded HHVBP Model Applicable Measure Set We propose to add 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 anticipate that adding the MSPB-PAC measure will 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 home health agencies. 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 home health agencies 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.\24\ --------------------------------------------------------------------------- \24\ See https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/2016_07_20_mspb_pac_ltch_irf_snf_measure_specs.pdf for more details on the specifications for the MSPB-PAC measure. --------------------------------------------------------------------------- If this measure is finalized as proposed, 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 will use 2 years of data covering CY 2022 and CY 2023 as baseline data. Because the MSPB- PAC measure is a two-year measure, CY 2026 performance for the measure will 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 will 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 will 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 will allow the Model to better incentivize high- quality home health care across the country. [[Page 29186]]

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

HHVBP Model Applicable Measure Set We propose 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 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 decision 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 other 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.\25\ --------------------------------------------------------------------------- \25\ 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.\26\ --------------------------------------------------------------------------- \26\ 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. If these three measures are finalized as proposed, 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. HHAs that receive payment adjustments will have greater incentives to improve or maintain quality of care.

4. Updates to Individual Measure Weights and Category Weights

Along with the proposed revisions to the current HHVBP applicable measure set, we propose to revise the weights of the individual measures starting with the CY 2026 performance year as well as to the measure category weights. Table 34 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 propose 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 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 do not propose changing the measure category weights for the smaller-volume cohort [[Page 29187]] 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] TP02JY25.065

5. Alternatives Considered

We considered two alternative options for revising the HHVBP measure weights prior to choosing the previously discussed proposals. Table 35 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. [[Page 29188]] [GRAPHIC] [TIFF OMITTED] TP02JY25.066 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 seek comments on these proposals.

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.\27\ 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: --------------------------------------------------------------------------- \27\ 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 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 specifically request 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. We encourage stakeholders to consider how to reduce burden on HHVBP Model participants without compromising the quality of care when responding to the Deregulation RFI in the SUPPLEMENTARY INFORMATION section of this proposed rule.

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 \28\ \29\). Since 2022, CMS has reported rates for the Falls with Major Injury (FMI) measure on Care Compare. This measure is based on OASIS data. --------------------------------------------------------------------------- \28\ 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. \29\ 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 4021(b) of Pub. L. 100-203 (December 22, 1987)) required the Secretary to develop a comprehensive assessment for Medicare-participating HHAs. In 1993, CMS (then known as Health Care Financing Administration (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 CoP (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 two 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 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 [[Page 29190]] (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. 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'' 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). 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 will 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 CY 2025 HH PPS final rule (89 FR 88439-88441), 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.

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 align with the transition to OASIS all-payer submission requirements as outlined in the CY 2023 HH PPS final rule (87 FR 66790), we are proposing at Sec. 484.45(a) to remove the term ``beneficiary'' and replace it with the term ``patient.'' Thus, Sec. 484.45(a) would state, if finalized as proposed, 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. 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 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 5 days of every 60 days beginning with the start-date of care. Language at Sec. 484.55(d)(1)(i) describes 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 are also proposing to remove the term ``beneficiary'' at Sec. 484.55(d)(1)(i). 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 and CY 2025 HH PPS final rules. These updates to the CoPs do not propose any revisions to the specific requirements for submitting data to OASIS and does not have any bearing on the change to expand the data collected that was finalized in the CY 2023 HH PPS final rule (87 FR 66862). We note that this policy does 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. VI. Provider Enrollment, Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Accreditation Policies, and DMEPOS Prior Authorization

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 overarching purpose of the enrollment process is to help confirm 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 is, to an extent, a ``gatekeeper'' that prevents unqualified and potentially fraudulent individuals and entities from entering and inappropriately 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 such requirement is that the provider must complete, sign, and 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, which can be submitted via paper or electronically through the internet-based Provider Enrollment, Chain, and Ownership System (PECOS) process (SORN: 09-70-0532, PECOS), collects important information about the provider. Such data 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 a variety of provider enrollment transactions, including all of the following: 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. (Suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) 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 in accordance with Sec. 424.540; [[Page 29191]] 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. 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 proposed rule, we propose several changes to our existing Medicare provider enrollment regulations. (We note that section VI.A.2 of this proposed rule addresses a proposed change to one of our Medicaid provider enrollment provisions.) b. Legal Authorities There are two principal categories of legal authorities for our proposed 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 (1) Revocation and Denial Reasons and Revisions to Other Revocation Policies (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 believe that several additions and revisions to our revocation and denial policies in subpart P are needed at this time. (i) False or Misleading Information Revocation and Denial Ground (Sec. Sec. 424.535(a)(4) and 424.530(a)(4)) Existing Sec. Sec. 424.535(a)(4) and 424.530(a)(4) permit revocation or denial, respectively, 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 propose to update Sec. 424.510, which addresses certain general enrollment requirements, by adding new paragraph (d)(10). It would emphasize 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 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, 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. Such an assertion is incorrect. Our proposed revision would reiterate longstanding CMS policy 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 illustrate, the certification statement on the Form CMS-855I enrollment application (Medicare Enrollment Application-- Physicians and Non-Physician Practitioners (NPP) (OMB control number 0938-1355)) requires the enrolling physician or NPP to attest and certify, under penalty of perjury, to meeting a number of Medicare requirements. These include, but are not limited to, that the physician or NPP-- Has read the contents of the application, and that the information contained therein is true, correct, and complete; Has read and understands the Penalties for Falsifying Information, as printed in the application, and also understands that any omission, misrepresentation, or falsification of any information contained in the application or contained in any communication supplying information to Medicare may be punishable by criminal, civil, or administrative penalties; and Is indeed the physician or NPP applying for Medicare billing privileges and that the signature on the application is the physician's or NPP's. Nothing in these attestations, nor anything in the enrollment applications or subpart P, indicates that a party other than the provider is responsible for the data in the application. It is, in the end, the provider's information, and the provider is certifying to its correctness, hence the reason for our proposed clarification. (ii) 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 [[Page 29192]] 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 propose 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.'' Considering 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. (iii) 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. The purpose of this authority is to protect Medicare beneficiaries and the Trust Funds against harmful and non-compliant prescribing practices, and since the provision's inception we have revoked the enrollments of a number of practitioners who have engaged in such conduct. 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 be dependent on the setting in which the drugs were furnished. That is, 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 such prescribing during inpatient stays no less than in other environments. For these reasons, we believe that only by expanding Sec. 424.535(a)(14) to include drugs associated with Part A services can we be better able to address all instances of abusive Medicare prescribing--irrespective of the type of Medicare coverage or setting involved--to help shield beneficiaries and taxpayer monies from such conduct. We accordingly propose 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. (iv) Certain Modifications to Provider Enrollment Paragraph References (Sec. Sec. 424.535(a)(23) and 424.530(a)(18)) and Enrollment Provisions (Sec. 424.205)) Sections 424.535(a)(23) and 424.530(a)(18) allow CMS to revoke or deny, respectively, a provider's or supplier's enrollment if the provider or supplier violates certain conditions and standards pertaining to its provider or supplier type. One such supplier type is Medicare Diabetes Prevention Programs (MDPP). Aforementioned paragraphs (a)(23) and (a)(18) state, in part, that revocation or denial is permissible if an MDPP violates an enrollment condition or standard in Sec. 424.205(b) or (d), respectively. Although paragraphs (a)(23) and (a)(18) only apply to enrollment conditions and standards, Sec. 424.205 (which was established in 2017) contains several other enrollment-related provisions, such as grounds for revocation. Yet we have not updated the enrollment requirements in Sec. 424.205 post- 2017, since which time: (1) paragraphs (a)(23) and (a)(18) were promulgated (in 2023); and (2) there have been revisions to the organizational structure of Sec. 424.205. To ensure that (a)(23), (a)(18), and Sec. 424.205 accurately reflect current policy and paragraph designations, we propose changes to all three. First, the MDPP enrollment standards are now in Sec. 424.205(c) rather than Sec. 424.205(d). We accordingly propose 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)). 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, respectively, under 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, respectively, under Sec. Sec. 424.530(a)(1) or 424.535(a)(1). We propose 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 we can deny or revoke under either (a)(1) or (a)(18)/(23) in such situations. Our authority is not limited to (a)(1). (v) Abuse of Billing Privileges (Sec. 424.535(a)(8)(i)) Section 424.535(a)(8) permits revocation based on the provider's abuse of billing privileges. The latter term includes either of the following as outlined respectively in paragraphs (a)(8)(i) and (ii): 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; and CMS determines that the provider has a pattern or practice of submitting claims that fail to meet Medicare requirements. 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. When the equipment necessary for testing is not present where the testing is stated to have occurred. We propose to add new paragraph (i)(D) to Sec. 424.535(a)(8) to include [[Page 29193]] another potential paragraph (a)(8) situation: specifically, the beneficiary attests that the item(s) or service(s) identified on the provider's or supplier's claim or claims was not or were not rendered or furnished. We have recently seen cases where providers have submitted claims for payment involving services or items that the beneficiary states were never provided. Although paragraph (a)(8)(i) has a ``but are not limited to'' caveat, meaning 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 new paragraph (a)(8)(i)(D). This would make clear that Sec. 424.535(a)(8)(i) applies to such cases. (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. That is, the revocation effective date is prospective. However, paragraph (2) lists a number of situations where the revocation effective date is retroactive, meaning, generally, that the revocation becomes effective back to the date on which the provider's non-compliance with Medicare requirements commenced. To illustrate, paragraphs (g)(2)(ii) and (iii) outline the following retroactive revocation grounds and their corresponding effective dates: For revocations based on a felony conviction, the date of the felony conviction. For revocations based on a state license suspension or revocation, the date of the license suspension or revocation. The aim of these and other exceptions in paragraph (g)(2) is to prevent payment to a provider while it is non-compliant. 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. Indeed, it is for this reason that we added several new grounds for retroactive revocations (current paragraphs (g)(2)(v) through (viii)) in the Calendar Year (CY) 2024 Physician Fee Schedule (PFS) final rule (88 FR 78818).\31\ Yet because of our continuing serious concerns about improper payments to non-adherent providers and our responsibility to protect the Trust Funds, we propose to further expand the bases for which we can apply a retroactive revocation effective date. Our new grounds and effective dates, which would be designated as paragraphs (g)(2)(viii) through (xiv) (the requirement in current paragraph (g)(2)(viii) would be removed, as later explained), would respectively be as follows: --------------------------------------------------------------------------- \31\ ``Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies; and Basic Health Program''. --------------------------------------------------------------------------- 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. In the foregoing situations, the provider or supplier has 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, in our view reflects 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 are 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 [[Page 29194]] (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 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. Consequently, we propose to include revocation bases in Sec. 424.535(a)(8) as grounds for retroactive applicability. New paragraph (a)(8)(iii) would state that the revocation effective date in paragraph (a)(8)(i) would be the earliest date of service on the claim or claims that are triggering the revocation. For instance, suppose CMS revokes the provider for submitting three claims for non- furnished services; the claims' service dates were 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 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; using our prior example, this means the revocation effective date would be June 10. The reason for the different effective dates is that while paragraph (a)(8)(i) requires only one claim submission, paragraph (a)(8)(ii) requires a pattern or practice. . 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 would 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). There are several other technical changes involving retroactive revocations we believe are necessary. 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) since promulgation of Sec. 405.800(b)(2), we propose to replace the current language in the latter provision with a statement that the effective date of a revocation 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 propose 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 propose two changes involving Sec. 424.535(g)(2)(viii). One is that-- given proposed new Sec. 424.535(g)(2)(viii) through (xiv)--we propose to redesignate existing Sec. 424.535(g)(2)(viii) as new Sec. 424.535(g)(2)(xv). The other change would involve 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 are proposing to add certain standard violations to (g)(2) in paragraphs other than current (g)(2)(viii)(A), (B), and (C) (for example, including DMEPOS supplier standard violations in new Sec. 424.535(g)(2)(xiv)). (2) New Deactivation Authority Regulatory policies 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. While a deactivated provider or supplier is not revoked from Medicare, the provider's or supplier's ability to bill the program is halted pending its reactivation. There are currently eight reasons under Sec. 424.540(a) for which CMS can deactivate a provider or supplier, one of which is that the provider or supplier has not submitted any Medicare claims for 6 consecutive months. In an April 25, 2003, proposed rule titled ``Medicare Program; Requirements for Establishing and Maintaining Medicare Billing Privileges'' (68 FR 22064) that proposed this non- billing deactivation ground, we outlined our program integrity concerns related to inactive billing numbers. We noted our desire 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 discontinued providers or suppliers and then, for example, using the Medicare billing number of a deceased physician.\32\ Although we established a 12-month (rather than a 6-month) non-billing period in the subsequent final rule published in the Federal Register on April 21, 2006,\33\ the need to shut down inactive billing numbers for the reasons noted previously persisted. --------------------------------------------------------------------------- \32\ Ibid. (68 FR 22072). \33\ ``Medicare Program; Requirements for Providers and Suppliers to Establish and Maintain Medicare Enrollment'' (71 FR 20754). --------------------------------------------------------------------------- In the CY 2024 HH PPS final rule that appeared in the November 13, 2023, Federal Register (88 FR 77676)), we reduced this 12-month period to 6 months.\34\ We detailed our rationale for this change in the CY 2024 HH PPS proposed rule \35\ by expounding upon the concerns we expressed in the aforementioned April 25, 2003, proposed rule. We cited an increasingly common example of a fraudulent, ``whack-a-mole''-type scheme whereby a provider: (1) establishes multiple enrollments with multiple billing numbers; (2) abusively or inappropriately bills under one billing number; (3) receives an overpayment demand letter or becomes the subject of investigation; (4) voluntarily terminates the billing number in question; and then (5) begins to bill via another of its [[Page 29195]] billing numbers that is dormant (for example, 6 consecutive months without billing) but nonetheless active, repeating the same improper conduct as before. We also further outlined the program integrity risks of extended non-billing periods, noting that in some cases the provider may have ceased operations without notifying CMS. 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. In other words, action under Sec. 424.540(a)(1) helps protect the Medicare program by deactivating the number while enabling verification as to whether the provider remains in existence; if it does, and it subsequently submits a reactivation application, CMS can validate the data thereon to ensure the provider's continued credentials and compliance with Medicare requirements. --------------------------------------------------------------------------- \34\ ``Medicare Program; Calendar Year (CY) 2024 Home Health (HH) Prospective Payment System Rate Update; HH Quality Reporting Program Requirements; HH Value-Based Purchasing Expanded Model Requirements; Home Intravenous Immune Globulin Items and Services; Hospice Informal Dispute Resolution and Special Focus Program Requirements, Certain Requirements for Durable Medical Equipment Prosthetics and Orthotics Supplies; and Provider and Supplier Enrollment Requirements''. \35\ ``Medicare Program; Calendar Year (CY) 2024 Home Health (HH) Prospective Payment System Rate Update; HH Quality Reporting Program Requirements; HH Value-Based Purchasing Expanded Model Requirements; Home Intravenous Immune Globulin Items and Services; Hospice Informal Dispute Resolution and Special Focus Program Requirements, Certain Requirements for Durable Medical Equipment Prosthetics and Orthotics Supplies; and Provider and Supplier Enrollment Requirements''. (88 FR 43654 (July 10, 2023)). --------------------------------------------------------------------------- We recognize that the deactivation concept has only applied to Medicare billing privileges rather than the ordering, certifying, and referring (OCR) of Medicare services and items. Yet this does not mean improper OCR poses a significantly less risk to the Medicare program and its beneficiaries than billing for Medicare services. To the contrary, we have established a number of provider enrollment requirements to prevent inappropriate OCR. Several examples follow. First, 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 (pursuant to 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)). Though a shorter, more abbreviated form than other CMS-855 applications, the Form CMS-855O requires the individual to furnish important information regarding, for instance, licensure and final adverse actions. 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 such services or items. Second, pursuant to Sec. 424.535(a)(21) we may 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, which resulted in: (1) Medicare payment for services or items that beneficiaries did not require; and (2) potential harm to beneficiaries from these unnecessary services or items. We also believed the potential for revocation would deter physicians and other eligible professionals from engaging in such activity, thus reducing fraud and waste and enhancing beneficiary safety. Third, 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 just 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. A Form CMS-855O-enrolled physician or practitioner's unused ordering, certifying, or referring number (which CMS assigns to the individual upon enrollment) can be accessed by nefarious parties to the same extent as an unused billing number. Our obligation to protect beneficiaries and the Trust Funds, in our view, requires us to prevent such improper access, and we accordingly propose to do so in new Sec. 424.547. In Sec. 424.547(a)(1)(i) and (ii), respectively, we propose that CMS may deactivate a physician's or non-physician 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. We are comfortable with initially establishing a 12-month period. This would be consistent with the 12-month timeframe we originally established in 2006 for Sec. 424.540. Should we determine after implementation that a shorter timeframe is warranted, we may consider future rulemaking. To distinguish deactivations of billing privileges from those of ordering, referring, or certifying capabilities, we propose in new Sec. 424.547(a)(2) that for purposes of Sec. 424.547 only, the term ``deactivate'' means that the physician's or non-physician 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 propose to add the following language to the beginning of this definition: ``Except in the situations described in Sec. 424.547''. We also believe that some of the deactivation and reactivation procedures and impacts in Sec. 424.540 must be included within new Sec. 424.547. These have existed for numerous years and help us obtain updated information on non-billing providers to ensure the latter are still active and have not, for instance, ceased operations. We thus propose the following, which would mirror, respectively, current Sec. 424.540(b)(1), (b)(2), (d)(2), and (e): In Sec. 424.547(b)(1), we would state 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 would state 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 would state 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 would clarify that a physician or practitioner may not order, certify, or refer the Medicare [[Page 29196]] services or items referenced in Sec. 424.507(a) and (b) while deactivated under Sec. 424.547. (c) Revisions to Stay of Enrollment Authority (Sec. 424.541) As already noted, revocations and deactivations are two important vehicles CMS uses to prevent Medicare fraud, waste, and abuse as well as improper payments. In the CY 2024 PFS final rule, we promulgated a third vehicle labeled a stay of enrollment, which is addressed in Sec. 424.541. Under Sec. 424.541(a)(1) and (2), we can impose a stay of enrollment against a provider if the latter: 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 such cases would ease the burden on such providers without hindering our obligation to protect the Trust Funds. In further explaining our rationale for the stay of enrollment, we outlined in the CY 2024 PFS final rule several critical differences between this new action and revocations and deactivations. The first involves the length of the 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. A stay of enrollment, 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. The second pertains to 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. However, there is a critical caveat. Under Sec. 424.541(a)(2)(ii)(B), claims submitted by the aforementioned provider in this situation are, in fact, 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 the latter if the requirements of Sec. 424.541(a)(2)(ii)(B) are met. A third involves the timing and mechanism for how the provider can resume compliance. A revoked or deactivated provider cannot, respectively, 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 of enrollment 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. However, 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 Sec. 424.541(a)(1)(ii) (for example, Form CMS-855 change of information). With this, 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 believe its scope must be expanded to cover other situations. While this proposed rule has focused largely on preventing improper payments, we also believe that providers must not be excessively or unfairly penalized for minor instances of non-compliance that, in general, do not pose or potentially pose significant threats to the Medicare program. One such situation 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 (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. Accordingly, we do not believe the latter situations must be treated more harshly via a deactivation than the former. It would be inconsistent to allow the more concerning action of application non- submission to be subject to a stay and not situations where the provider actually submitted the form. To this end, and to further the goal of reducing provider burden, we propose to expand Sec. 424.541(a)(1)(i) to include instances where the provider's change of 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 believe two changes to this section are necessary. First, we propose 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. In light of 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. As an illustration, assume a provider became non-compliant on June 1 and the stay notice was postmarked on June 6. This means that the provider's claims for a 5-day period (June 1 to 6) can be paid even though the provider is non-compliant. With our proposed change, however, these claims would be rejected due to the stay's June 1 effective date. We believe the latter is a better approach for preventing payments to non-compliant providers. Second, we 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 policy, but we wish 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 propose 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 [[Page 29197]] 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 the stay period CMS has assigned may be less than 60 days, we propose to change ``60-day period'' to ``CMS-assigned stay period''. (d) Submission of Documentation One of the many critical functions of MACs is to validate the accuracy of the information the provider furnishes on its enrollment application. If submitted data is incorrect, the potential exists for improper payments based thereon. Consider the following: (1) an individual practitioner indicates on the application that all licensure and certification requirements have been met; and (2) a provider lists a particular address as its practice location. If these providers' respective applications were approved without verifying these data elements and it turns out the individual did not, in fact, meet licensure and certification requirements or had an invalid practice location, many thousands of dollars could be inappropriately paid to providers that did not meet Medicare requirements. Although MACs can validate certain data via electronic means, verifying documentation from the provider is sometimes needed. Sections 424.510(d)(2)(ii), (iii)(A), and (iii)(B) therefore 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, social security number, tax identification number (TIN), National Provider Identifier, and the business' owners. All applicable Federal and State licenses and certifications including, but not limited to, Federal Aviation Administration; and Documentation associated with regulatory and statutory requirements needed to establish a provider's eligibility to furnish Medicare covered items or services. Some of this documentation is also identified on the Form CMS-855 enrollment applications as materials the provider must submit with its application. These include, for example, proof of licensure, sales agreements for ownership changes, and Internal Revenue Service documentation of the provider's TIN. Notwithstanding existing Sec. 424.510 and 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. To illustrate, suppose a provider has five owners it must report but only discloses four. The fifth one was not listed because that owner is excluded by the OIG. If this provider is subsequently enrolled because of an inability to verify (1) the provider's current ownership and that (2) all owners are reported, we would be paying a provider with an excluded owner in violation of federal law. To therefore 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 propose in new Sec. 424.510(d)(2)(iii)(C) that CMS may require the submission of any other documentation needed to verify and confirm the information furnished on the enrollment application; this includes, but is not limited to, documentation regarding the provider's or supplier's ownership or management. We emphasize that our proposal does not necessarily mean that the amount of documentation providers must currently submit will greatly increase. It only means CMS reserves the right to request validating documents if needed to ensure the accuracy of the provider's information. (e) Reassignment Effective Dates In the provider enrollment context, and consistent with 42 CFR 424.80, reassignment of benefits refers to the scenario in which 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. The CMS-855R (Medicare Enrollment Application for Reassignment of Medicare Benefits) was long used by physicians and practitioners to reassign their right to Medicare payment to another party and for the latter to accept such reassignment. However, with the Form CMS-855R now obsolete and the collection of reassignment information currently facilitated via the Form CMS-855I (OMB control number 0938-1355) and Form CMS-855B (OMB control number 0938-1377) applications, 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. Because 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 two (that is, the initial enrollment and the reassignment) should be determined in the same manner, especially since, as noted, reassignments are now captured via the Form CMS-855I. In our view, it would be confusing to physicians, practitioners, and other stakeholders to have different regulatory effective dates for two separate transactions reported on the same form. Therefore, we propose 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). Specifically, 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 pursuant to a reassignment is permissible if the circumstances in Sec. 424.521(a)(1) apply. [[Page 29198]] (f) 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 such standard, codified in Sec. 424.57(c)(10), requires the supplier to have a comprehensive 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. (g) 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 propose to include the latter within the scope of Sec. 424.540(a)(8). (h) Adverse Legal Actions Consistent with Sec. 424.516(b) through (d), certain provider and supplier types--such as physicians, non-physician practitioners, DMEPOS suppliers, and independent diagnostic testing facilities--must report any adverse actions (for example, felony convictions, misdemeanor conviction related to health care, medical license revocation) imposed against them, their owners, managing employees or organizations, or corporate directors or officers within 30 calendar days of the action. Other provider and supplier types, however, have 90 days to report this information. Existing Sec. 424.516(e)(1) states that for all provider and supplier types other than those in Sec. 424.516(b) through (d) (as well as MDPPs), changes of ownership or control and practice location changes, additions, and deletions must be reported within 30 days. We propose to include adverse legal actions within Sec. 424.516(e)(1), meaning all providers and suppliers, regardless of type, would have 30 days, rather than 90 in some instances, to disclose this data. We believe this would establish more consistent reporting timeframes. More importantly, a 30-day requirement would alert us much sooner when the provider or an associated party poses a risk of fraud, waste, or abuse or and better allow us to take corresponding measures to protect the Medicare Trust Funds and Medicare beneficiaries.

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.\36\ 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. --------------------------------------------------------------------------- \36\ 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.\37\ One such requirement, outlined in section 1902(a)(39) of the Act and which will be the subject of this section VI.A.2. of this proposed rule, is that the State must deny or terminate a provider's Medicaid or CHIP enrollment if the provider is-- --------------------------------------------------------------------------- \37\ All of subpart E, and 42 CFR 455.107 in Subpart B, are applicable to CHIP in accordance with Sec. 457.990. --------------------------------------------------------------------------- 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 pursuant to 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 such termination and, if the Secretary determines appropriate, include such termination in any database or similar system developed under section 6401(b)(2) of the Affordable Care Act. CMS has developed and currently operates such a database. 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) of the Act 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 [[Page 29199]] 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) of the Act, we proposing to change the aforementioned ``and'' reference to ``or.''

1. Introduction

a. Overview of DMEPOS Accreditation (1) DMEPOS Suppliers (A) Background 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 42 CFR 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. DMEPOS suppliers have long presented to the Medicare program an elevated risk of fraud, waste, and abuse. In recognizing this threat, CMS over the years has established particularly stringent requirements that DMEPOS suppliers must meet to enroll and maintain enrollment in Medicare. For example, DMEPOS suppliers under 42 CFR 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 also are other 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. [thinsp]424.57(d). Compliance with DMEPOS quality standards. Accreditation by a CMS-approved DMEPOS accrediting organization. Such has been our longstanding concerns about DMEPOS program integrity that DMEPOS suppliers are also one of two only Medicare provider or supplier types (the other being Medicare Diabetes Prevention Programs) with an enrollment application (Form CMS-855S) devoted exclusively to a single provider/supplier type. (B) Continued Program Integrity Concerns With DMEPOS Suppliers Despite these and other DMEPOS program integrity efforts we have undertaken, serious concerns remain. Indeed, numerous Office of Inspector General (OIG) reports since 1998 have noted such payment safeguard issues associated with DMEPOS suppliers. Two recent OIG reports are illustrative. In May 2024, the OIG issued a report titled ``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'' (A-09-21-03019). The report noted that prior OIG reviews identified vulnerabilities associated with orthotic braces, such as: (1) questionable DMEPOS supplier billing practices; (2) improper payments made for braces that were not medically necessary or were not documented; and (3) fraud related to off-the shelf (OTS) braces.\38\ The May 2024 report also cited issues related to Medicare's oversight of OTS braces, including the following: --------------------------------------------------------------------------- \38\ 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/#:~:. --------------------------------------------------------------------------- Medicare paid for OTS braces that were-- ++ Ordered by suppliers that did not have treating relationships with beneficiaries. ++ Marketed to beneficiaries by telemarketers using prohibited direct solicitation. Payments to suppliers for fraudulently billed OTS braces have cost Medicare millions of dollars.\39\ --------------------------------------------------------------------------- \39\ Ibid. pp. 7-12. --------------------------------------------------------------------------- Given these issues, the OIG recommended that, among other things, CMS analyze DMEPOS supplier billing patterns, identify emerging fraud schemes related to OTS braces, and use CMS's authority to prevent further losses to the Medicare program.\40\ --------------------------------------------------------------------------- \40\ Ibid., p. 13. --------------------------------------------------------------------------- Another OIG report titled ``Medicare Improperly Paid Suppliers for Intermittent Urinary Catheters'' (A-09-22-03019) was released in February 2025. Citing the ongoing risk of improper payments, the OIG performed a nationwide audit to determine whether Medicare paid suppliers for catheters consistent with Medicare requirements for catheters furnished to beneficiaries between July 2021 through June 2022.\41\ The OIG found that payments for 15 sample items did not comply with Medicare requirements, in some cases because suppliers were non-compliant with requirements for catheter refills, proof of delivery, or a standard written order.\42\ This resulted in approximately $35.1 million in improper payments.\43\ Even before this report, however, CMS in early 2023 had identified a concerning rise in urinary catheter billings attributed to a fraud scheme involving 15 DMEPOS companies that had recently changed ownership. CMS' own investigation of this matter determined that: (1) Medicare beneficiaries did not receive catheters from these DMEPOS companies and were not billed directly; (2) physicians did not order these supplies; and (3) the supplies were not needed.\44\ Although CMS took prompt action to address this matter, including stopping payments from being made to these suppliers and revoking the Medicare enrollments of all 15 suppliers, both the OIG report and our investigation underscored the program integrity issues in the DMEPOS arena.\45\ --------------------------------------------------------------------------- \41\ https://oig.hhs.gov/reports/all/2025/medicare-improperly-paid-suppliers-for-intermittent-urinary-catheters/. \42\ Ibid. \43\ Ibid. \44\ https://www.cms.gov/files/document/cpi-urinary-catheter-case-study.pdf. See also https://oig.hhs.gov/fraud/consumer-alerts/consumer-alert-catheter-scam/. \45\ Ibid. --------------------------------------------------------------------------- Yet these issues go far beyond the aforementioned OIG and CMS reviews. There have been a considerable number of criminal convictions and other findings over the years involving DMEPOS suppliers. Below is a non-exhaustive list of several recent cases: [[Page 29200]] In May 2024, a Florida man was sentenced to 96 months in prison for his role in a DMEPOS kickback scheme. He and others owned and operated marketing call centers and telemedicine companies through which they secured physicians' orders for DMEPOS for Medicare beneficiaries without regard to medical necessity. They then furnished the physicians' orders in exchange for bribes from DMEPOS companies that provided the braces to beneficiaries, causing over $11 million in losses to the Medicare program.\46\ --------------------------------------------------------------------------- \46\ https://www.justice.gov/usao-nj/pr/florida-man-sentenced-96-months-prison-role-multimillion-dollar-health-care-kickback. --------------------------------------------------------------------------- A California woman was sentenced in December 2023 to 15 years in prison for billing Medicare for over $24 million by submitting fraudulent claims for medically unnecessary DME--mostly power wheelchairs (PWC)--and PWC repairs. As the de facto owner of two DMEPOS supplier companies (both of which were Medicare-enrolled in the names of her out-of-state relatives), the individual orchestrated a scheme in which she paid marketers for patient referrals and then directed them to take patients to physicians, who prescribed medically unnecessary DME (including PWCs) that her companies used to submit fraudulent claims to Medicare. Two other defendants were convicted in this case, including one who worked at both DMEPOS companies as a repair technician.\47\ --------------------------------------------------------------------------- \47\ https://www.justice.gov/usao-cdca/pr/redondo-beach-woman-sentenced-15-years-prison-leading-24-million-scam-billed-medicare. --------------------------------------------------------------------------- A Texas man in March 2023 was sentenced to 66 months in prison for conspiring to defraud Medicare of more than $2 million. The individual, who owned and operated a Virginia DMEPOS supplier, submitted thousands of fraudulent claims for DME, such as back and knee braces. Working with other companies and individuals, the DMEPOS supplier would unlawfully obtain the personal identification information of Medicare beneficiaries, mail them braces that they never wanted or needed, and then submit fraudulent claims to Medicare.\48\ --------------------------------------------------------------------------- \48\ https://www.justice.gov/usao-edva/pr/texas-man-sentenced-2-million-medicare-fraud. --------------------------------------------------------------------------- In September 2023, a federal district court entered a judgment against a Virginia DMEPOS supplier for damages and penalties under the False Claims Act for over $12 million. In its complaint filed in district court, the United States alleged that over a nearly 6-year period, Medicare paid the supplier over $600,000 for medical braces furnished to Medicare beneficiaries related to DMEPOS prescriptions that the supplier illegally purchased from marketing companies. The DMEPOS supplier paid a fee for each prescription that it purchased and then used these prescriptions (along with personal and medical data provided by the marketing companies) to submit 923 fraudulent Medicare claims.\49\ --------------------------------------------------------------------------- \49\ https://www.justice.gov/usao-edva/pr/virginia-medical-equipment-provider-ordered-pay-12-m-medicare-fraud-scheme-civil. --------------------------------------------------------------------------- A California father and son in March 2024 were sentenced to prison for their roles in fraudulently receiving over $21 million in Medicare payments. The pair, along with others, conspired to commit Medicare fraud by billing for medically unnecessary DME, such as knee, ankle, shoulder, wrist and back braces. They had established two DMEPOS supplier companies; to find customers, they entered into sham agreements with ``marketing'' companies that, instead of marketing, provided information about Medicare beneficiaries for $125 to $350 each. The packets included, among other things, a signed prescription from a physician (obtained via telemedicine) claiming that the brace was medically necessary for the beneficiary. In almost all cases, however, the physician signing the prescription had no previous doctor- patient relationship with the beneficiary. The two men then billed Medicare through their DMEPOS companies for the unnecessary items.\50\ --------------------------------------------------------------------------- \50\ https://www.justice.gov/usao-sdca/pr/father-and-son-duo-sentenced-prison-21-million-dollar-medicare-scheme. --------------------------------------------------------------------------- A Texas man was sentenced to prison in February 2024 for conspiring to pay health care kickback payments for unnecessary DME, resulting in over $20 million in claims to--and $13 million in payments from--the Medicare program. The individual owned and operated two DMEPOS suppliers. Through another entity, the individual secured access to thousands of Medicare beneficiaries' information by paying, on a weekly basis, kickbacks in exchange for signed physician orders for the braces.\51\ --------------------------------------------------------------------------- \51\ https://www.justice.gov/usao-ndga/pr/operator-durable-medical-equipment-companies-sentenced-healthcare-kickback-scheme. --------------------------------------------------------------------------- In August 2023, a Florida man was sentenced to prison for conspiring to defraud the Medicare program. The individual and another person illegally paid kickbacks of over $565,000 to buy fraudulent DMEPOS orders, including orders purportedly ``signed'' by physicians who, in fact, never signed or authorized these orders and did not know their names and identities were being used in this manner. They also resold some of the fraudulent orders to other DMEPOS suppliers-- receiving more than $425,000 in proceeds--so that those suppliers, in turn, could fraudulently bill Medicare for the DMEPOS. Furthermore, the two individuals acquired five of their own fraudulent DMEPOS supply companies and themselves used fraudulent DMEPOS orders to file more than $11 million in fraudulent Medicare claims.\52\ --------------------------------------------------------------------------- \52\ https://www.justice.gov/usao-sdny/pr/florida-business-owner-sentenced-five-years-prison-defrauding-medicare-more-11-million. --------------------------------------------------------------------------- A Texas woman in December 2024 was sentenced to 60 months in prison for conspiracy to commit health care fraud. According to court documents, she engaged in fraudulent billing practices as the owner of a DMEPOS supplier. Her scheme involved substituting and providing lesser valued items to Medicare beneficiaries and then billing Medicare for the greater valued items. The items were primarily continence supplies and included adult diapers, wipes, and bed liners.\53\ --------------------------------------------------------------------------- \53\ https://www.justice.gov/usao-wdtx/pr/el-paso-medical-equipment-supplier-sentenced-federal-prison-17-million-healthcare. --------------------------------------------------------------------------- Several DMEPOS suppliers in January 2024 agreed to pay $2.1 million to resolve allegations that they violated the False Claims Act by submitting false claims for payment to Medicare and other federal health care programs. The settlement resolved resolve allegations that over a 9-year period, the companies: ++ Sold used beds but billed federal health care programs as if they were new beds. ++ Sold various hospital beds and pressure support surfaces to beneficiaries of federal health care programs under a miscellaneous code, which sometimes resulted in the federal program paying a higher price. ++ Presented claims to the federal government and its contractors that mischaracterized travel time as DMEPOS repair time in order for it to be reimbursable by federal health care programs.\54\ --------------------------------------------------------------------------- \54\ https://www.justice.gov/usao-sc/pr/durable-medical-equipment-companies-pay-millions-false-claims-settlement. --------------------------------------------------------------------------- A Florida man was sentenced to 87 months in prison in September 2022 for his role in using a DMEPOS company to commit Medicare and Medicaid fraud. Having established the company, he sought to conceal his role as its true owner who exercised control over the company (and the fraud) by listing a nominee or ``straw'' owner as the owner on its corporate records and bank account. The individual admitted that [[Page 29201]] he--and not a straw owner--bought lists of Medicare ``patients'' and then directed a ``biller'' to submit fraudulent claims to Medicare for DMEPOS that a physician did not prescribe, that were not medically necessary, and that were not being supplied to any Medicare beneficiary or Medicaid recipient. During a three-month period--and under the individual's direction--the supplier submitted over $2.3 million in fraudulent claims to Medicare and Medicaid and was paid over $1.6 million. The proceeds of the fraud were transferred from the supplier's account to accounts held in the names of shell companies. Those proceeds were then withdrawn from the shell company accounts by others so they could not be traced to the individual.\55\ --------------------------------------------------------------------------- \55\ https://www.justice.gov/usao-sdfl/pr/miami-man-who-used-durable-medical-equipment-company-front-health-care-fraud-sentenced. --------------------------------------------------------------------------- A Florida man was sentenced to prison in October 2022 for submitting fraudulent claims to Medicare. The individual owned a DMEPOS supplier. The supplier purported to provide DMEPOS to eligible Medicare beneficiaries. Over a five-month period, the supplier submitted approximately $2.2 million in fraudulent Medicare claims (and received $1.4 million in Medicare payments) for DMEPOS that the business never provided and that Medicare beneficiaries never requested.\56\ --------------------------------------------------------------------------- \56\ https://www.justice.gov/usao-sdfl/pr/durable-medical-equipment-company-owner-sentenced-health-care-fraud. --------------------------------------------------------------------------- A Texas couple pled guilty in April 2025 to defrauding Medicare. The couple operated a DMEPOS supplier that claimed to provide parts and repairs for power wheelchairs, among other services. They admitted that they received millions of dollars for parts and repairs that were never performed or provided. Medicare was billed approximately $14 million for power wheelchairs, parts and repairs for just 37 Medicare beneficiaries between 2019 and 2023 as a result of their scheme.\57\ --------------------------------------------------------------------------- \57\ https://www.justice.gov/usao-sdtx/pr/harlingen-couple-guilty-multimillion-dollar-medicare-fraud-scheme. --------------------------------------------------------------------------- A Georgia woman pled guilty in June 2024 to an information charging her with conspiracy to commit health care fraud. The individual and her conspirators owned, operated, and had a financial interest in DMEPOS companies through which they obtained physicians' orders for DMEPOS for Medicare beneficiaries without regard to medical necessity. They obtained the DMEPOS orders using marketing call centers and telemedicine companies, caused the submission of false and fraudulent Medicare claims, and paid illegal kickbacks.\58\ --------------------------------------------------------------------------- \58\ https://www.justice.gov/usao-nj/pr/georgia-chiropractor-admits-149-million-health-care-fraud-and-kickback-scheme-related. --------------------------------------------------------------------------- A South Carolina man was sentenced to 9 years in prison in March 2024 for his role in a nearly $100 million healthcare fraud scheme. The individual controlled and operated at least 10 DMEPOS companies located throughout the United States. The person and his conspirators used these companies to submit false and fraudulent claims to Medicare for braces that were not medically necessary and/or were obtained through the payment of kickbacks and bribes. Specifically, the companies entered into agreements with an offshore, advertised call center to purchase physicians' orders so the DMEPOS companies could bill Medicare. When a Medicare beneficiary called the applicable 1-800 number, the beneficiary would be screened for eligibility and then convinced that the beneficiary needed a brace and oftentimes upsold on other braces. The call center would then contact a telemedicine company whose physician or nurse practitioner would issue a prescription without regard to the medical necessity. Beneficiaries were prescribed braces without ever being examined by, seeing, or, in some instances, even speaking to a medical professional.\59\ --------------------------------------------------------------------------- \59\ https://www.justice.gov/usao-sc/pr/mt-pleasant-man-sentenced-nine-years-federal-prison-role-one-largest-medicare-fraud. --------------------------------------------------------------------------- A North Carolina woman in April 2023 pled guilty to an information charging her with one count of conspiracy to commit health care fraud. The individual owned and operated various DMEPOS suppliers through which she obtained physicians' orders for DMEPOS. She paid an individual and others for each DMEPOS order for braces provided to her DMEPOS supply companies. She then billed Medicare for the DMEPOS orders that she obtained in exchange for kickbacks. She observed indicators that these DMEPOS orders were not medically necessary, in part because Medicare beneficiaries would frequently call to complain that they had not ordered the DMEPOS that they received. In addition, to disguise the scheme she put her DMEPOS supplier companies in the names of nominee owners, including her sisters and a friend.\60\ --------------------------------------------------------------------------- \60\ https://www.justice.gov/usao-nj/pr/north-carolina-woman-admits-participating-health-care-fraud-scheme. --------------------------------------------------------------------------- A Kentucky DMEPOS supplier agreed to pay $200,000 to resolve allegations that it violated the False Claims Act by fraudulently billing Medicare and Medicaid for respiratory devices (specifically, non-invasive ventilators) that beneficiaries did not need or use.\61\ --------------------------------------------------------------------------- \61\ https://www.justice.gov/usao-edky/pr/floyd-county-company-agrees-pay-200000-resolve-allegations-fraudulent-billing. --------------------------------------------------------------------------- Elderly diabetics have also been a target for DMEPOS suppliers. For example, a Florida diabetic shoe company and its president agreed in January 2022 to pay over $5.5 million to settle claims brought under the False Claims Act that it sold custom diabetic shoe inserts that were not actually custom-fabricated in accordance with Medicare standards. The company billed Medicare for the custom version or sold the inserts to other providers who then billed Medicare, which allowed the company to produce and sell more inserts and increase profits by ``cutting corners.'' \62\ --------------------------------------------------------------------------- \62\ https://www.justice.gov/usao-sdfl/pr/diabetic-shoe-company-agrees-pay-55-million-resolve-false-claims-act-allegations. --------------------------------------------------------------------------- All of the foregoing indicates several things. First, DMEPOS fraud, waste, and abuse is still a very significant problem, putting hundreds of millions (even billions) of taxpayer dollars at risk and potentially resulting in patient harm, such as in cases where 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.'' \63\ Second, DMEPOS fraud schemes do not necessarily follow a consistent pattern but can vary widely in their particular facts. Third, DMEPOS fraud, waste, and abuse is not restricted to certain types of items or certain areas of the country but occurs with numerous different product types and in many geographic areas. Considering the wide and ever-changing range of payment safeguard risks associated with DMEPOS supplies, we must continually take measures to address them. --------------------------------------------------------------------------- \63\ 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 [[Page 29202]] of certain items. As stated in section 1834(a)(20)(D) of the Act, these items are as follows: Covered items, as defined in section 1834(a)(13) of the Act, for which payment may be made under section 1834(a) of the Act; Prosthetic devices and orthotics and prosthetics described in section 1834(h)(4) of the Act; and Items described in section 1842(s)(2) of the Act (for example, medical supplies; home dialysis supplies and equipment; therapeutic shoes; parenteral and enteral nutrients, equipment, and supplies). Section 1834(a)(20)(E) of the Act authorizes the Secretary to establish the DMEPOS quality standards by program instruction or otherwise after consultation with representatives of relevant parties. 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: Administration Financial, human resources, and information management Equipment and item delivery and set-up Patient and caregiver training and instruction Patient follow-up. The standards are both extensive and detailed because we must confirm that the supplier is bona fide and legitimate. Per Sec. 424.57(c)(24), all DMEPOS supplier locations, whether owned or subcontracted, must meet the DMEPOS quality standards to enroll in and bill Medicare. (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. Although Sec. 424.57(c)(24) states that all DMEPOS supplier locations (owned or subcontracted) must be separately accredited, 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. The following DMEPOS supplier types are currently exempted: Physicians Other eligible professionals (as defined in section 1848(k)(8) of the Act), such as a physician assistant or nurse practitioner Opticians Prosthetists and orthotists Qualified audiologists Certain types of DMEPOS items are also exempt from accreditation, including: (1) DME drugs (inhalation drugs and DME pump-infused drugs); (2) HHAs' medical supplies; and (3) other Part B drugs, such as immunosuppressive and antiemetic drugs. Per section 1834(a)(20)(B) of the Act, the Secretary designates and approves DMEPOS AOs, of which there presently are eight. To become an AO or be retained or reapproved as one, the AO must meet the requirements of Sec. 424.58. As addressed in greater detail throughout section VI.B. of this proposed rule, these requirements include, but are not limited to the following: Completing the application process, which includes the submission of 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 subject to CMS approval--an AO generally has some discretion in the operational aspects of its review of a supplier's request for accreditation. However, 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 subregulatory guidance, DMEPOS suppliers currently must be surveyed once every 3 years following initial accreditation. (4) Concerns About the Existing DMEPOS Accreditation Process We are proposing various regulatory changes to our current DMEPOS accreditation process to improve and strengthen it. There are several reasons for this. 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 aforementioned 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 quality standard compliance determinations are made. Third, although surveys are typically part of the DMEPOS accreditation process, not every supplier receives one. This is especially true for large chain suppliers with 25 or more separately enrolled locations (such as chain pharmacies). We believe this is a potential vulnerability in our enforcement of the DMEPOS accreditation requirement. Fourth, while Sec. 424.58 outlines certain components of the DMEPOS accreditation process (for example, AO data submission to CMS, applying to become an AO), it does not address other important topics that, in our view, should be outlined in regulation. Indeed, CMS regulations regarding the accreditation of certified providers, certified suppliers, and home infusion therapy (HIT) suppliers (found in 42 CFR part 488) contain more extensive provisions than does Sec. 424.58, and 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 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. Sixth, and perhaps most importantly, the unique, aforementioned program integrity risks that DMEPOS suppliers continue to pose require, in our view, stricter oversight of the process that helps determines their qualifications. An additional 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.\64\ According to court documents, the person was a contractor for a DMEPOS [[Page 29203]] AO and performed inspections of hundreds of DMEPOS suppliers for compliance with the quality standards. The individual-- --------------------------------------------------------------------------- \64\ 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, formed 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.\65\ --------------------------------------------------------------------------- \65\ 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. In addition, 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 seek to do likewise for DMEPOS accreditation in the subject proposed rule in part 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. (5) Linkage and Conclusion We previously noted our desire and obligation to continually strive to reduce DMEPOS fraud, waste, and abuse and, in turn, to limit improper payments and help protect beneficiaries. Although means such as high-risk screening, site visits, surety bonds, and our existing accreditation program have assisted in this regard, the criminal cases and other concerning situations we have seen make clear that more is needed. Our current DMEPOS payment safeguards are not enough. We view stricter accreditation requirements for both the AOs and DMEPOS suppliers as a mechanism that could effectively supplement our existing measures and halt a certain degree of ongoing fraud, waste, and abuse by facilitating closer and more frequent oversight of the suppliers. While the remainder of this section (section VI.B. of this proposed rule) describes our specific proposals in detail, we present several scenarios--similar to some of the aforementioned criminal cases--where a strengthened accreditation program could help limit or prevent the activities in question: Scenario 1--Supplier U is accredited by a DMEPOS AO and is Medicare-enrolled. It undergoes a stock transfer of 60 percent 15 months after initially enrolling, and the new owner assumes control of the business. The new owner is uncommitted to complying with the quality standards and the quality of U's services consequently deteriorate, potentially harming beneficiaries for a considerable period because U's 3-year deadline for another survey will not arrive for another 21 months. However, with more frequent surveys and reaccreditations, such as when the ownership change occurred, the AO could more quickly and closely scrutinize the supplier under its new ownership--before beneficiaries are harmed and further payments to the non-compliant supplier are made. Scenario 2--Supplier V is accredited and Medicare- enrolled. Encountering financial problems 1 year into its accreditation, V begins purchasing very substandard (and thus less expensive) DMEPOS in order to cut costs. Without another survey and reaccreditation of V for 2 more years, CMS might have no means of knowing that V's poor-quality products are being furnished to beneficiaries, that these individuals are possibly being harmed, and that Medicare could be paying tens of thousands of dollars for items that do not meet Medicare requirements. Scenario 3--Supplier W is accredited and Medicare- enrolled. Nine months after accreditation--or 27 months before its next survey--it begins to engage in fraudulent practices, a few of which are similar to those addressed in the previously noted criminal cases. To help shield its activities, W does not keep records that comply with the DMEPOS quality standards pertaining to financial management, such as: (1) implementing financial management practices that ensure accurate accounting and billing; and (2) maintaining accounts that link equipment and item(s) to the beneficiary. If surveys and accreditations were required to be annual, however, W's activities could be detected earlier and, given W's failure to comply with the above financial management quality standards, its accreditation and enrollment could be revoked and many Medicare dollars saved. Scenario 4--Accredited and enrolled Supplier X becomes so deficient over a multi-month timeframe in (1) furnishing instructions to beneficiaries on how to use equipment and (2) properly setting up the equipment, that several beneficiaries are injured towards the end of this period. X also repeatedly failed to conduct investigations of beneficiary complaints about X's actions. If surveys could be performed with greater regularity, though, the AO could have discovered these violations of various quality standards involving product safety and consumer services before any harm occurred. Scenario 5--Y has been a DMEPOS AO for 1 year. It hires two individuals as managing employees who will also participate in surveys and accreditation decisions. One is a physician whose medical license is currently revoked for engaging in fraudulent activity, while the other is a non-physician practitioner whose Medicare enrollment is revoked for furnishing false or misleading information on the Medicare enrollment application. This could raise concerns about the integrity of Y's operations--particularly the physician's participation in surveys--yet existing Sec. 424.58 contains no prohibitions against such hirings. Scenario 6--Entity Z seeks to become a DMEPOS AO. As part of its application, it submits the data currently required in Sec. 424.58(b). This data, though, does not include information about the AO's policies and procedures for avoiding conflicts of interest and the appearance thereof involving individuals who perform surveys for the AO. In fact, there is no explicit prohibition in Sec. 424.58 against, for example, an AO surveyor making an accreditation decision regarding a DMEPOS supplier in which the surveyor has an ownership interest. Given this, AO Z has three individuals who perform surveys of suppliers that the individuals partially own. These suppliers did not meet the quality standards, but the surveyors found them [[Page 29204]] compliant regardless, meaning the suppliers would improperly receive Medicare payments despite their quality standard non-adherence. Yet if CMS had had application information on Z's conflict of interest policies and Sec. 424.58 contained a prohibition against such activities, the obvious conflict of interest involving Z could possibly have been avoided and Medicare dollars preserved. b. Legal Authorities There are several principal categories of legal authorities for our proposed 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, 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

Section 424.58, which governs DMEPOS accreditation, contains the following principal paragraphs: Paragraph (a)--Purpose of Sec. 424.58 Paragraph (b)--AO application and reapproval application procedures Paragraph (c)--Ongoing responsibilities of AOs Paragraph (d)--Continuing Federal oversight of approved AOs Paragraph (e)--AO reconsiderations/appeal rights Considering the extent of our proposed changes to Sec. 424.58, we propose to entirely reorganize the current paragraph structure and designations. Existing provisions would be moved, revised, deleted, or supplemented as warranted. We believe this restructuring would help stakeholders better understand requirements of Sec. 424.58. Except for current paragraph (a) or as otherwise noted, all paragraph designations are labeled as proposed new provisions even though the provision may already exist in current Sec. 424.58 under a different paragraph. (For example, current paragraph (b) would be noted as new paragraph (c) even though Sec. 424.58 presently has a paragraph (c)). To the extent needed, we will in this proposed rule cross-reference current Sec. 424.58 paragraph designations to new ones to further assist stakeholders. In this proposed rule, and unless otherwise indicated-- ``Supplier'' refers to a DMEPOS supplier, including its individually enrolled location; ``AO'' refers to an accrediting organization with a DMEPOS accreditation program; ``Accreditation program'' or ``program'' refers to a DMEPOS accreditation program; and ``Quality standards'' refers to DMEPOS quality standards. a. Definitions (New Sec. 424.58(b)) We propose several new definitions in Sec. 424.58(b). We believe they would help clarify the regulatory provisions to which they relate. First, we propose 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 believe a clear definition of ``complaint'' is warranted. Moreover, we do not believe beneficiary harm should be a prerequisite for meeting the complaint definition, for any type of non-compliance with the quality standards or other applicable CMS requirement is of concern to us. Second, we propose 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--with minor modifications for purposes of DMEPOS accreditation--has precedent in that it mirrors the term's definition in Sec. 488.1 regarding certified providers and certified suppliers. The definition is needed for Sec. 424.58 partly because AOs, under current paragraph (c)(4) thereof, must notify CMS within 2 calendar days of a supplier's deficiency that poses immediate jeopardy. Third, we propose 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. We note that paragraph (1) of our proposed definition duplicates that in Sec. 488.1 in both terminology and purpose. Fourth, we propose 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. It is critical that DMEPOS supplier surveys 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. Given this, we believe our proposed definition of this term--which, with technical modifications, is similar to the proposed definition of this term in the previously noted February 15, 2024, proposed rule--will emphasize to AOs that no early notification of any kind is permitted. We solicit comment on the propriety of these definitions and welcome any suggested edits thereto. 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 propose to separate them into two paragraphs for ease of comprehension. Initial application procedures would be [[Page 29205]] 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. This data is intended to help CMS understand the AO's background, operations, planned procedures, skill, number of staff, etc. However, we have not revisited these data elements via rulemaking since promulgation in 2006. Considering, too, the previously noted lack of CMS reapproval or full reassessment of AOs for many years, we believe that more detailed and comprehensive data should be submitted so we can fully ascertain a current or prospective AO's qualifications. We accordingly propose the following changes and additions 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)) The opening part of existing paragraph (b)(1) states that an AO applying for approval or reapproval of its DMEPOS accreditation program must furnish certain information to CMS. This requirement would serve as the opening statement for new Sec. 424.58(c)(1) but with two revisions to its current language. First, we would remove the reference to ``re-approval'' since reapproval application processes would be addressed separately in new Sec. 424.58(d). Second, we would replace the current phrase ``the following to CMS:'' with ``all the following information and materials to demonstrate that the accreditation organization provides reasonable assurance (as defined in paragraph (b) of this section) regarding its program.'' The new language, which is akin to that in the opening paragraph of Sec. 488.5(a), would emphasize that it would not be enough to merely submit the required information. 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 details the AO's description of its operational processes. We propose to revise this to require a detailed description of the organization's operational, survey, and other accreditation processes to confirm that the suppliers it accredits meet or exceed the DMEPOS quality standards and Medicare program requirements. We believe this expanded data would give us a broader understanding of the AO's procedures in full, instead of those simply relating to operations. We propose two other changes involving this paragraph. Current paragraph (b)(1)(iii) contains six elements of the required description, such as: (1) an explanation of the frequency with which surveys will be performed; and (2) guidelines and instructions to surveyors. To improve organizational clarity, we propose to designate these elements as new Sec. 424.58(c)(1)(iii)(A) through (F) in the same respective order they are listed in existing (b)(1)(iii). In addition, new paragraph (c)(1)(iii)(G) would 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. As explained further in section VI.B.2. of this proposed rule, surveys of DMEPOS suppliers may not be required in all instances. That is, CMS may permit the AO to determine whether a survey is necessary; this could involve, for example, sampling, whereby the AO uses a formula to determine which locations within a particular group (such as a large chain pharmacy) should be surveyed. To help us understand the factors and criteria the organization will consider in its determination and, more importantly, whether it will exercise its discretion prudently, we believe new Sec. 424.58(c)(1)(iii)(G) is necessary. (3) Redesignation of Existing Data Submission Provisions (New Sec. 424.58(c)(1)(i), (ii), (iv), (v), (vi), and (vii)(A), (B), and (C)) Current Sec. Sec. 424.58(b)(1)(i), (ii), and (iv) through (vii)(A) through (C) describe additional information the AO must furnish. Although we are not proposing to change the content of these paragraphs, they would constitute, respectively, 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 propose additional requirements in new Sec. 424.58(c)(1)(vii). 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 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 this section VI.B. of this proposed rule). The prevention and handling of potential or actual conflicts of interest that could arise from situations in which 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 members of their immediate family engaged in any of the above stated activities. The term ``immediate family member'' would be defined in proposed 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. (This definition would be included in proposed revised paragraph (b) of this section.) ++ 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 would also clarify in new paragraph Sec. 424.58(c)(1)(vii)(D)(5) that [[Page 29206]] 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. We discuss in more detail later in this proposed rule our concerns about potential conflicts of interest within a DMEPOS AO's accreditation programs. Along with the aforementioned March 2025 criminal case in the Southern District of Florida, there might be other situations where, for instance, an AO employee or owner has a familial or other relationship with a supplier the AO is about to survey. This could raise questions as to whether the AO will be entirely objective in its survey or review of the supplier at issue. We also note that the previously mentioned February 15, 2024, proposed rule would require the submission of this proposed data as part of the initial application process for AOs seeking to accredit certified providers and certified suppliers. We believe this requirement should be duplicated for DMEPOS AOs in paragraph (D). It is imperative, in our view, that DMEPOS AOs take measures to avoid such conflicts to help ensure the integrity and impartiality of its surveys and accreditation decisions; without this, unqualified suppliers could become accredited and enrolled due to subjective AO determinations, placing the Trust Funds and beneficiaries at risk. In proposed Sec. 424.58(c)(1)(vii)(E), we would require the AO to outline its policies and procedures for ensuring it always has an adequate number of surveyors. Our concern is that surveys could be delayed--and perhaps more importantly, a particular survey might not be performed as diligently and thoroughly--due to an insufficient number of surveyors. We therefore believe paragraph (E), which would be somewhat similar to current Sec. 488.5(a)(6), is necessary. (5) AO Program Deficiencies (New Sec. 424.58(c)(1)(viii)) We propose 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. This risks the possibility that suppliers receive inadequate scrutiny, which, in turn, could lead to them furnishing items and services while non-compliant with the quality standards. Among other things, improper Medicare payments would result. By describing its procedures for ascertaining and rectifying deficiencies, the AO can help assure CMS that its program will adhere to Medicare requirements and, if there is an indication that compliance may be at risk, it will remedy the matter. (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 propose 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. Surveys and accreditation decision- making are obviously critical components of an AO's accreditation program, but there are other AO requirements under Sec. 424.58. Since we need to ensure that the AO will adhere to all of the provisions in Sec. 424.58, we believe an understanding of how the AO will use data to maintain this compliance is necessary. (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. We propose several changes to this paragraph, which would be designated as new Sec. 424.58(c)(1)(x)). First, we would add procedures for closing out complaints as part of this information submission requirement. Responding to and investigating complaints is only part of the complaint process. We need to know how the AO would resolve a particular complaint and deem the matter concluded. That is, we believe our analysis of the AO's qualifications regarding complaints must include an understanding of the complaint's entire life cycle from beginning to end. Without this knowledge, we cannot be assured that the AO will effectively handle the complaint to an appropriate conclusion. Second, we would change the NSC reference to the applicable National Provider Enrollment (NPE) contractor. 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; and 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. As with our proposed change regarding complaint closure, we believe the data in existing Sec. 424.58(b)(1)(ix) is insufficient to help us to determine whether the AO will handle complaints thoroughly, consistently, and diligently. Hence, we believe new Sec. 424.58(c)(x)(A) and (B) are warranted. (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 are not proposing to revise these paragraphs but only to designate them as new 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 propose 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 propose 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. [[Page 29207]] We note that 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 are not designating this paragraph as new Sec. 424.58(c)(1)(xvi) because, as explained later in this proposed rule, we are proposing to include it as part of the larger 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 propose a similar provision in new Sec. 424.58(c)(1)(xvi) regarding DMEPOS. Despite the volume of information required per existing Sec. 424.58(b), there is no specific requirement that the AO detail its credentials and experience in the DMEPOS arena. Put otherwise, the current data furnished under Sec. 424.58(b) does not, by itself, give us adequate assurance that the AO understands the intricacies of, for example, the quality standards, DMEPOS enrollment and payment, etc. We believe new Sec. 424.58(c)(1)(xvi) would help remedy this. (10) Review Timeliness (New Sec. 424.58(c)(xvii)) We propose 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, which mirrors that in Sec. 488.1010(a)(6)(vii), 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 must also include an explanation of the reasons for which the AO will deny or terminate a supplier's accreditation. Since, as already mentioned, accreditation decisions are among the most important AO functions, we must have a full understanding of how the AO will make them. This could help us ascertain, for instance: (1) the criteria the AO will use in its determinations; (2) how broadly or narrowly the AO interprets the quality standards; and (3) the AO's procedures for notifying a supplier of accreditation approval, denial, or termination. (12) Surveys (Sec. 424.58(c)(1)(xix)) We propose in new Sec. 424.58(c)(1)(xix)(A) and (B), respectively, that the AO outlines its policies and procedures for the following: Determining whether and when a survey is performed (for example, the DMEPOS supplier is providing a new item type). 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 DMEPOS supplier deficiency. Ensuring that all onsite surveys are unannounced, including for 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, we believe the AO should explain when it will and will not perform a survey. Regarding proposed Sec. 424.58(c)(1)(xix)(B), which parallels Sec. 488.1010(a)(7)(i) for home infusion therapy accreditation, we previously explained the need for surveys to be unannounced. We believe new Sec. 424.58(c)(1)(xix)(B) would help assure us that they will be. (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. We believe this dearth of CAP provisions in Sec. 424.58 must be addressed. To illustrate, we do not know the following: The circumstances under which an AO will impose a CAP and, if a CAP is applied, why the AO chose this approach instead of, as applicable, denial or termination of accreditation. The AO's procedures for imposing, monitoring, and terminating a CAP. How the AO oversees the supplier's efforts to comply with the CAP and whether a follow-up survey is performed. How the AO establishes the CAP's terms (for example, the length of the CAP). How the AO ensures that the CAP is adequate to address and correct the deficiencies in question. Whether AOs are more inclined to permit CAPs for certain DMEPOS supplier types than for others and whether the supplier's length of enrollment, adverse history (if any), and other factors impact the AO's decision. We are particularly, though not exclusively, concerned about the first bulleted item. While a CAP (instead of denial or termination) may be justified in some instances if the non-compliance is extremely minor and can be quickly corrected, we have no understanding of the criteria the AO uses in its CAP determinations. In fact, we have received information that, depending on the AO, CAPs are being applied in many instances of non-compliance, even for significant violations of the quality standards. As already noted, compliance with the quality standards is a requirement of Sec. 424.57(c)(24), and non-adherence to any Sec. 424.57(c) supplier standard can result in improper Medicare payments or perhaps grounds for revoking the supplier's Medicare enrollment. If CAPs for such instances of non-compliance are being regularly permitted, we must know the reasons and bases for this. Accordingly, we propose several provisions to enable us to gain a clearer understanding--and, more importantly, to exercise greater oversight--of the AOs' CAP processes. (Additional CAP-related provisions are addressed in section VI.B.2.c.(4). of this proposed rule.) As part of new Sec. 424.58(c)(1)(xx), and for the foregoing reasons, we propose that the AO outline the policies and procedures via which it will apply a CAP to the supplier. This includes: The specific circumstances under which the AO will apply a CAP as opposed to denying or terminating accreditation, and the reason(s) for why the AO believes a CAP in these situations is 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. [[Page 29208]] (14) Describing and Defining DMEPOS Supplier Deficiencies (New Sec. 424.58(c)(1)(xxi)) We propose in new Sec. 424.58(c)(1)(xxi) that the AO must 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. Therefore, we believe we must understand the AO's policies regarding deficiency classifications. (15) Potentially Fraudulent Activity (New Sec. 424.58(c)(1)(xxii)) We propose in new Sec. 424.58(c)(1)(xxii) that the AO must 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, the AO must not disregard possible fraud, waste, or abuse by suppliers. For instance, suppose an AO is performing a survey and discovers that certain records the supplier furnishes to the AO appear to be falsified. We believe the AO should have procedures in place for handling these and other situations and referring them to CMS and, as applicable, law enforcement. (16) Agreement of Compliance (New Sec. 424.58(c)(1)(xxiii)) (a) Introduction As part of the AO application process for certified provider and certified supplier accreditation, 42 CFR 488.5 requires the AO to furnish various written acknowledgements stating that the AO will perform certain activities. These include, for example, providing CMS with the following: Copies of all survey reports and related information for providers and suppliers seeking Medicare participation. Timely notification of when a survey or complaint investigation identifies an immediate jeopardy situation. Notification of any proposed changes in the AO's accreditation program and that it will not implement them without written notice of continued program approval from CMS. No concomitant requirement to submit acknowledgement statements exists in current Sec. 424.58(b). This is concerning because, in our view, without a written, binding AO commitment to execute functions required under Sec. 424.58, we are less assured the AO will, in fact, do so. Indeed, providers and suppliers enrolling in Medicare must sign a certification statement on their Form CMS-855 application in which they agree to adhere to various requirements, including the Medicare laws, regulations, and program instructions applicable to the provider or supplier. We see no appreciable difference between this certification and one that would require an AO to make similar agreements--a particularly important consideration given that we are entrusting the AOs with the role of confirming DMEPOS suppliers' compliance with the quality standards. In both cases, millions of Trust Fund dollars could be at stake if we lack confidence in the party's willingness and readiness to adhere to all Medicare requirements. We accordingly believe that, as in Sec. 488.5, DMEPOS AOs should have to explicitly agree to certain conditions as part of the application process. (We note that some of the requirements in Sec. 424.58(c)(1)(xxiii) would refer to proposed new paragraphs in Sec. 424.58 that will be addressed later in this section of this proposed rule.) In the opening paragraph of new Sec. 424.58(c)(1)(xxiii), we propose 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. Two matters should be noted regarding this proposal. First, the requirement that the CEO or similar official with binding authority sign the statement is consistent with the provision at Sec. 424.510(d)(3)(1)(C) that an authorized official (as defined in Sec. 424.502) must sign an initial provider enrollment application of behalf of an organization. Second, several of the paragraphs in 42 CFR part 488 require acknowledgement statements as a condition of AO approval. We believe our proposed statements should also apply to reapprovals and continued approval, particularly the latter. It is not enough for the AO to comply with Sec. 424.58 only upon initial approval and reapproval. We believe the AO should acknowledge that compliance must be constant and that, as discussed further in this proposed rule, a failure to maintain it could result in the termination or suspension of the AO's approval status. (b) Data Submission Within 3 Business Days We propose 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); and Any other information CMS deems necessary to facilitate its oversight of the AO's accreditation program. Concerning (c)(1)(xxii)(A)(1), AOs are presently required each month under Sec. 424.58(c)(1)(i) (which, as explained later in this proposed rule, will be designated as new paragraph (e)(1)(i)) to furnish CMS with certain information, such as copies of all survey results and CAPs. Considering, again, our role as overseer of Medicare DMEPOS accreditation activities, we must be able to closely and constantly monitor AOs' activities. Having to wait up to a month to receive copies of survey reports and other survey data is antithetical to this. We believe a 3-business day period would effectively balance our need to secure this data expeditiously and the AO's need for several days to acquire, organize, and submit the information to us. This does not necessarily mean we will frequently request this information outside of the previously mentioned monthly reports. It only means we reserve the right to ask for it if, in our view, circumstances warrant. We believe proposed paragraph (c)(1)(xxiii)(A)(2) is especially important. Even with the extensive information submissions we would require in revised Sec. 424.58, this may not capture all the data we need to ensure our effective oversight of the AOs. As the steward of the Medicare Trust Funds, we should be able to collect any additional information required to ascertain whether the AOs are properly executing their respective accreditation programs. We believe the broad scope of paragraph (c)(1)(xxiii)(A)(2) would afford us this flexibility. (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 [[Page 29209]] DMEPOS supplier's deficiency if the latter poses an immediate jeopardy situation; any adverse action the AO accordingly takes must also be identified. Given our obligation to protect Medicare beneficiaries and the consequent need for us to know when their safety may be threatened, we believe that the AO's specific agreement 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. Any such changes can significantly impact the AO's accreditation program, which, in turn, can affect our responsibility for the DMEPOS accreditation program as a whole. Hence, we propose 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 proposed rule). (e) Termination or Other Change in Supplier's Accreditation Status Section 488.1010(a)(17)(iv) requires a home infusion therapy supplier AO to acknowledge that it will notify CMS of any decision to revoke or revise the accreditation status of a specific HIT supplier within 3 business days of the date the AO took the action. 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. Thus, we propose 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 propose 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 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. This regulatory provision encompasses a wide range of data. Though some of it may overlap other data referenced in proposed new Sec. 424.58(c)(1), we believe a general, overarching agreement to furnish the scope and breadth of data addressed in Sec. 488.5(a)(11)(ii) is justified so we can ensure that we have all information necessary to execute our oversight functions. To this end, 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 notification. As it is important for AOs to implement these changes timely and in full, we believe the AO should explicitly commit to do so. New Sec. 424.58(c)(1)(xxiii)(G) would thus require 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. New Sec. 424.58(c)(1)(xxiii)(H) would thus require the AO to 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 propose 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 We earlier addressed in this proposed rule the concept of sampling, in which the AO utilizes a formula to determine which locations within a particular group should be surveyed. We propose 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. Considering that certain suppliers will be not surveyed under a sampling approach, we must ensure that the AO's methodology aligns with CMS' obligation to protect Medicare beneficiaries and the Trust Funds against non-compliant suppliers. (l) Patient Records As part of its survey of a supplier, the AO must examine the supplier's patient medical records. This helps 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 patients; (3) simulated documentation; [[Page 29210]] and (4) templates.\66\ Actual records of the patients are required. With the aforementioned importance of verifying the bona fide provision of these items and services, we propose 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 propose to include duplicate patient records as a fifth category. This means that the reviewed records must be of the supplier's own patients and not those of another supplier. We have encountered situations where multiple suppliers within a larger organization have similar patient records. We do not believe that records of other suppliers' patients should be considered in the survey, for they do not reflect the items and services that the surveyed supplier itself is furnishing. --------------------------------------------------------------------------- \66\ 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)(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 section VI.B.2.d.(7). of this proposed rule, we are proposing 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. Given this, we are concerned there could be delays in the survey's performance due to a potential disagreement between the AO and the supplier regarding which of them pays the cost of a CMS- required survey. To avoid such situations, we believe the cost issue should be resolved well beforehand. Accordingly, we propose in new Sec. 424.58(c)(xxiii)(L) that the AO must 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 a survey that CMS directs the AO to perform under paragraph (e)(8)(ii) of this section. (n) Truthfulness and Accuracy To ensure that the AO understands its obligation to submit accurate and complete data to CMS at all times, we propose in new Sec. 424.58(c)(xxiii)(M) that the AO must 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 In general, the components of our proposed Sec. 424.58(c)(1)(xxiii) AO attestation statement address fairly specific elements (for example, an attestation to utilize CMS's deficiency definition). Yet we reiterate that adherence to all provisions in Sec. 424.58 is still required. Merely because Sec. 424.58(c)(1)(xxiii) is silent regarding a certain provision in Sec. 424.58 should not, in our view, exempt the AO from agreeing to comply therewith. Consequently, we propose in Sec. 424.58(c)(1)(xxiii)(N) that the AO in its statement must agree to comply with all of the requirements in Sec. 424.58 at all times. We note this would include agreeing to adhere to the policies, procedures, and practices it outlined under Sec. 424.58(c) as part of its initial or reapproval application and any changes thereto made with prior CMS approval. In making its decision whether to approve or reapprove an AO's accreditation program, CMS relies upon the explanations the AO furnished in the application. Furthermore, in approving any change to an AO's policies, procedures, and practices, CMS does so with understanding that the AO will adhere to the new processes. We therefore believe the AO should abide by: (1) its representations in its application; and (2) any policy, procedural, or practice change that CMS authorized. (17) Additional Information Needed (New Sec. 424.58(c)(2)) Despite the wide scope of data to be furnished per Sec. 424.58(c)(1), CMS may need additional information to fully assess the AO's credentials. Thus, we propose 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. (18) Application Withdrawal (New Sec. 424.58(c)(3)) Similar to Sec. 488.1010(c) with respect to AO applications for HIT supplier accreditation, we propose 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 approval described in Sec. 424.58(c)(5) (discussed in section VI.B.2.(b).(20). of this proposed rule). This would give the AO adequate opportunity to withdraw its application if it wishes while setting forth a specific withdrawal deadline. (19) 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. Among these grounds are the following as outlined in Sec. 424.530(a)(1) through (4) and (12)(i), respectively: The provider or supplier is non-compliant with the enrollment requirements in Title 42. The provider or supplier or any owner, managing employee, managing organization, officer, director, authorized or delegated official, medical director, supervising physician, or other health care or administrative or management services personnel furnishing services payable by a Federal health care program, of the provider or supplier is-- ++ Excluded by the OIG from Medicare, Medicaid, and any other Federal health care program; or ++ Debarred, suspended, or otherwise excluded from participating in any other Federal procurement or non-procurement activity in accordance with section 2455 of the Federal Acquisition Streamlining Act (FASA). The provider, supplier, or any owner, managing employee, managing organization, officer, or director of the provider or supplier was, within the preceding 10 years, convicted of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries. The provider or supplier has submitted false or misleading information on the enrollment application to become Medicare-enrolled. The provider or supplier is terminated, revoked or otherwise barred from participation in a State Medicaid program or any other Federal health care program. The central purpose of these provisions is to 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. In other words, in general contrast to a single supplier, an AO's qualifications and performance can impact the payment of hundreds of millions of Medicare dollars. Consequently, considering the likely greater effect an AO has on the Trust [[Page 29211]] Funds, we believe it is especially 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 propose the following denial reasons in new paragraphs (c)(4)(i) through (viii), several of which duplicate those in Sec. 424.530(a), given the latter's effectiveness in keeping unqualified providers and suppliers out of the Medicare program. Specifically, denial of an AO's application can occur if CMS determines that-- The AO has failed to comply with all application, data, and agreement submission requirements outlined in Sec. 424.58(c). In our view, if the applicant does not submit all the required information and agreements in Sec. 424.58(c), the application is deficient, and the AO therefore cannot be approved. The AO has failed to provide reasonable assurance (as defined in paragraph (b)). CMS must have confidence that the AO's accreditation program will comply with all applicable CMS requirements and, above all, ensure that only qualified DMEPOS suppliers are accredited. The current number of CMS-approved DMEPOS AOs is sufficient to ensure the continued administration of CMS' DMEPOS accreditation program. We believe that limiting the number of DMEPOS AOs would allow us to exercise closer scrutiny of each AO because there would be fewer to oversee. 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). As explained further in this section VI.B.2. of this proposed rule, we are proposing that CMS may terminate, suspend, or place on probation an AO's accreditation program in certain circumstances, such as non-compliance with the provisions of Sec. 424.58. In light of the significance of such a CMS action, we do not believe we should be required to approve an AO's accreditation program that was previously found to be deficient in some manner. The fifth and sixth denial reasons are akin to, respectively, those in previously referenced Sec. Sec. 424.530(a)(2), (3) and (12) as well as Sec. 424.530(a)(4). (The fifth also includes types of actions in our current definition of ``final adverse action'' in Sec. 424.502 (for example, revocation of Medicare enrollment).) These are intended to help ensure that neither the AO nor certain entities or individuals closely associated therewith pose program integrity risks.