Like last year, June is my month to take a step back from the news and give myself a break from the constant stream of aggravating headlines, and head throbbing reports. Which is why there was no piece last month.
Federal Outlook
How the Supreme Court Chevron Ruling Could Affect Home Care
In a historic decision, the Supreme Court overturned a longstanding precedent that gave regulatory agencies greater authority to carry out broad mandates. Two weeks ago, the Supreme Court ruling on a case brought by herring fisherman, undid the legal precedent known as Chevron Deference, a 40-year-old precedent that had instructed lower court judges to defer to reasonable agency interpretations of ambiguous federal statutes. The Court ruled along ideological lines, 6-to-3.
This is a momentous decision that could immensely impact on providers ability to stop CMS from implementing further cuts to the home health payment rate. As you all aware, over the last couple years CMS has consistently proposed/implemented more and more cuts to the home health payment rate. Most recently CMS proposed a 1.7%, or $280 million, decrease to aggregate home health payments for 2025. In response to the cuts in 2023, The National Association for Home Care and Hospice (NAHC) filed a lawsuit against HHS and CMS over their cuts. NAHC argues that CMS methodology used to determine that home health providers have been overpaid is wrong and that their cuts would have substantial effect on access to home care.
In the wake of the undoing of Chevron Deference, the courts could rule that CMS overstepped by proposing massive cuts to home health payments and that they must reverse the cuts. The Supreme Court has also ruled in recent years against regulatory agencies. In 2022, the Supreme Court ruled against HHS and CMS, when prior to 2020 CMS proposed a series of policy changes for hospitals, one of which would have reduced payment, specifically through the 340B drug pricing program, which generally serve lower-income or rural populations. Hospitals argued like NAHC has, that CMS those cuts would hurt patient care, and that CMS did not have the power to levy those cuts in the first place. In ruling against HHS and CMS, they were ordered to pay hospitals back for underpayments.
While nothing is set in stone, recent rulings show that the Supreme Court has changed their longstanding view on how regulatory agencies can use their powers to regulate.
Federal Recap
CMS Proposes Home Health Payment Rate Rule for CY25
In late June, released their proposed home health payment rate rule for CY25. Once again, CMS is proposing cuts to the home health payment rate. According to CMS calculation, to rebalance the Patient-Driven Groupings Model (PDGM) and make it budget neutral, CMS is proposing a permanent prospective adjustment to the CY 2025 home health payment rate of -4.067%. CMS came to this conclusion by determining that Medicare still paid more under the new system than it would have under the old system. This comes after CMS applied a 3.925% and a 2.890% reduction in CY23 and CY24 respectively. If implemented this would result in a 10% reduction over the last 3 years.
CMS also has updated the level of the alleged overpayment reflecting claims from 2020 through 2023 at $ 4,455,407,087 up from $3,489,523,364. The added amount reflects the impact of postponing 2.89% in the 2024 permanent adjustment along with 2023 claims experiences. CMS does not propose to collect any of the Temporary Adjustment in 2025, consistent with its actions in 2023 and 2024.
The CMS proposed rule includes a CY 2025 home health payment update of 2.5%, which is offset by an estimated 3.6% decrease related to the PDGM rebalancing and an estimated 0.6% decrease that reflects a proposed fixed dollar loss. Overall, CMS estimates that Medicare payments to home health agencies in CY 2025 would decrease in the aggregate by 1.7%, or by about $280 million, compared to 2024 levels. The proposal includes a net 2.5% inflation update (3.0%% Market Basket Index — 0.5% Productivity Adjustment).
NAHC highlighted in their report on the proposal that CMS continues to refuse to recognize its unprecedented forecasting error in CY2022 and 2023 rates where the inflation update fell far short of reality by a cumulative 5.2%. All Medicare sectors have suffered from the CMS forecasting error with CMS rejected all calls for correcting the error with an adjustment.
- A 4.067%% Budget Neutrality permanent adjustment to account for the one-half of the remaining adjustment from CY2024 (2.89%) plus the additional 2023 data year adjustment of 1.125%
- A $4,455,407,087 alleged cumulative overpayment in 2020-2023. CMS has not scheduled a collection of the alleged overpayment in 2025 or any other year yet.
- Recalibration of the 432 case mix weights as CMS has done multiple times in recent years. The recalibration leads to a separate budget neutrality adjustment in the payment rates of 1.0035%.
- Modification of wage index weights and wage index area designations leading to an budget neutrality adjustment of 0.9885%.
- The LUPA add-on for LUPA-only episodes has been modified for each qualifying discipline of service (SN: PT: OT: SLP)
- The qualifying Fixed Dollar Loss ratio for outlier payment is increased from the current 0.27 to 0.38. This proposal would decrease the number of episodes qualifying for outlier payment.
- Overall, CMS estimates that the Proposed Rule will decrease CY2025 Medicare spending by $280 million (+$415 million inflation update – $595 million rate adjustment – $100 million outlier FDL change).
State Outlook
Not All New Traditions Are Good Traditions
When one thinks of traditions, images of yearly family trips, sporting events, and clam bakes come to mind. July 1st marked the continuation of a new tradition in Massachusetts. For the 14th year in a row the state legislature failed to pass a budget before the start of the new fiscal year.
Last week, in preparation of missing the July 1st deadline to pass a budget for FY25, The Legislature passed, and Governor Healey signed, an interim budget that cover state expenses through the end of July, or until a new budget for FY25 is agreed upon. The last time Beacon Hill had a budget in place in time for the start of a new fiscal year was 2010.
This is a tradition that Massachusetts should not be proud of. At a time when partisan bickering at the federal level squashes any chance of a budget or meaningful legislation being passed, states, including Massachusetts, should look to lead by example, not follow suit. While politicians argue that it’s better to deliberate over a budget rather than rush one, continuously failing to pass a budget on time sets a poor precedent and poses a dark image of the effectiveness of the legislature. Especially this legislature which is controlled by democrats by a wide margin in both chambers.
Failing to pass a budget on time also leads to many important provisions that would be passed through the budget being delayed. Last year, the delay in passing the budget led to the legislature rolling out new initiatives such as free community college and free school meals being delayed over a month. Erin O’Brien, a political science professor at UMass Boston, says those may seem like small inconveniences. But together, they fuel a simmering disillusionment with the government. Growing disfunction within the state house only leads to further resentment by its citizens. The Massachusetts legislature should not take its citizens for granted and should do everything in their power to pass their budgets on time.
State Recap
Senate Passes Housing Bill
The State Senate recently passed their own version of a housing bill that would authorize $5.4 billion in borrowing to spur housing production, and included an amendment that would prohibit most home purchase offers that are conditioned on the buyer waiving or limiting their right to a home inspection.
The bill includes many policy proposal, such as language directing the Executive Office of Housing and Livable Communities to promulgate regulations stating that no offer to purchase a home can be conditioned on the buyer waiving their right to an inspection. Sen. Lydia Edwards, Senate chair of the Housing Committee projected the bill would prompt the creation of 40,000 housing units, a bite out of the 200,000-unit shortage Massachusetts faces. While some senators touted the housing bill as historic in the scope of its bond authorization, the state is currently limited to about $400 million a year in capital spending on housing under its latest five-year capital budget.
This bill comes as housing has become more and more unaffordable for many residents. Home sales across Massachusetts fell to a 12-year low in 2023. Through May, there have been 14,005 single-family homes sold across all of Massachusetts in 2024, a 2.1 percent increase over the sales volume of the same five months of 2023, The Warren Group reported this month. Meanwhile though, the year-to-date median single-family home price has increased 9.3 percent to $590,000.
The House passed their own housing bill a couple weeks ago. Most likely a six-person conference committee will be created with the responsibility to reconcile the House and Senate approaches into a compromise bill that would still need additional votes to get to Healey’s desk.
State House Approves Maternal Health Bill
Recently, the House passed a maternal health bill that aims to expand physical and mental health care options for pregnant women and new mothers. Massachusetts has one of the highest rates of severe maternal morbidity in the country. State health regulators say complications during pregnancy and delivery can cost twice as much in medical spending compared to patients who don’t experience SMM.
Representatives say the legislation could stem the tide of deteriorating maternal health outcomes, particularly among people of color, by creating a pathway for certified professional midwives (CPMs) and lactation consultants to be licensed in Massachusetts, and removing regulatory barriers to open birth centers that offer home-like environments during labor.
The House passed the bill unanimously 153-0. The bill now moves to the Senate who will either vote on the bill as it is or pass their own maternal health bill.
Chen Steps Down As Secretary of Executive Office of Elder Affairs
Last Friday, Elizabeth Chen, who served as the state’s secretary of elder affairs since 2019, announced she was stepping down effective immediately. Health and Human Services Secretary Kate Walsh informed staff of the change Monday and said that Deputy Secretary Robin Lipson would take over the elder affairs secretary position on an interim basis, a spokesperson confirmed.
It is not known at the time why Chen chose to step down from her position. The Healey administration declined to provide any additional information about Chen’s departure. “We are grateful for Secretary Chen’s five years of service to older adults in Massachusetts and wish her well on her future endeavors,” Walsh wrote in an email to the Executive Office of Elder Affairs. “I am also truly grateful to Robin for so kindly agreeing to step into this interim role. EOEA is in good hands — I’m confident this will be a stable transition.”
EOEA Gets a Rebrand
Last week, Governor Healey filed legislation that would change the name of the Executive Office on Elder Affairs to the Executive Office of Aging & Independence. The proposal, which coincides with Older Americans Month in May, is a result of “significant research” that found aging adults do not resonate with the term “elder,” Healey’s office said. Rather, they prefer terms such as “aging” and “older people.”
The bill is meant to reduce stigma around getting older, normalize the aging process, and emphasize that older individuals value their independence and self-determination, according to the administration, which also says the new name will help the agency reach more people. The proposal would remove language — including the terms “elder,” “elderly person(s)” and “handicapped” — and replace those terms with “older adult(s)” and “adult with a disability,” in addition to using gender-neutral language, Healey’s office said.
Mayor Wu Looks to Push Through Tax Plan
After meeting with Boston’s delegation of state legislators Monday, Mayor Michelle Wu said she’s holding out hope that her plan to shift the city’s property tax burden to avoid a residential tax hike could pass through the State House before a quickly approaching deadline.
“Most likely there will be a hearing next week on this,” Wu said during the “Ask The Mayor” segment of GBH Radio’s “Boston Public Radio” on Tuesday. Wu’s plan — which got approval from the City Council and now sits before the Joint Committee on Revenue as a Rep. Rob Consalvo bill (H 4805) — seeks permission to tilt a bit more of the city’s property tax burden onto commercial owners instead of residential owners for a few years. The mayor says her plan would protect residential property owners from larger increase in taxes due to declining commercial values.
The Wu administration wants to get approval for the tax change before it has to send tax bills out to residents. And since there has been some controversy around the idea, Wu likely wants to see it passed in formal sessions — which end July 31 — before any single lawmaker’s objection could block the plan from moving forward during informal sessions in the final five months of 2024.
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