What's New from CMS: Why Home Care Agencies Should Be Paying Attention

Regulatory change from CMS has been a constant feature of the home care landscape for years, but the pace and scope of what's come out of the agency over the past 24 to 36 months represents a level of operational impact that many agencies are still working to fully absorb. The combination of payment model changes, expanded quality reporting requirements, EVV enforcement, and proposed rules for 2025 and 2026 creates a regulatory environment that demands active monitoring and proactive operational response — not reactive compliance once a rule is finalized.

The Patient-Driven Groupings Model (PDGM), which took effect in January 2020, fundamentally restructured Medicare home health reimbursement. The shift from a volume-based model to one grounded in clinical characteristics, functional status, and comorbidities was intended to align payment more closely with patient need — but it also introduced significant operational complexity around clinical episode management, OASIS accuracy, and the management of Low Utilization Payment Adjustments (LUPAs).

LUPA risk — the payment reduction that occurs when a 30-day period includes fewer than the threshold number of visits — has become one of the most consequential financial risks in Medicare home health. Agencies that haven't built LUPA tracking into their clinical management workflow are discovering revenue variance that's difficult to explain and harder to recover from.

Beyond LUPA management, PDGM has made OASIS accuracy more financially consequential than ever. The clinical grouping that determines an episode's base payment rate flows directly from the OASIS data — specifically from the functional and clinical items that drive the HIPPS code. Agencies with weak OASIS training programs are leaving money on the table through systemic miscoding, often without knowing it. Regular clinical audits of OASIS accuracy, benchmarked against expected case mix given patient population, are now an operational necessity.

The federal EVV mandate, authorized under the 21st Century Cures Act, has been rolling out in stages since 2020, but 2024 and 2025 represent the period when CMS is moving from guidance to enforcement. States that have not achieved acceptable EVV compliance rates are beginning to see Federal Medical Assistance Percentage (FMAP) reductions, and those penalties are being passed through in various forms to Medicaid managed care contracts and state plan amendments.

For agencies, the practical implication is that EVV compliance is no longer a best-practice recommendation — it's a financial requirement. Agencies with EVV compliance rates below 90 percent are at increasing risk of contract action from their Medicaid managed care payers, many of whom have begun including EVV compliance floors in their provider agreements.

The nuance that many agencies miss is that EVV compliance is not simply about having an EVV system in place. CMS and state Medicaid agencies are increasingly focused on the quality of EVV data — whether timestamps are accurate, whether GPS coordinates are plausible given the client's address, whether manual override rates are within acceptable bounds. Agencies with high manual override rates are drawing audit attention even when their overall EVV compliance percentages look acceptable.

The No Surprises Act, primarily associated with surprise medical billing in hospital and physician settings, has implications for home care agencies — particularly those serving privately paying clients or operating in managed care environments where cost-sharing and out-of-network billing can arise.

Specifically, the Good Faith Estimate requirements under the Act apply to home health providers in certain circumstances, requiring agencies to provide written cost estimates to clients who are uninsured or who are receiving care outside of their insurance coverage. Agencies that serve any significant volume of private-pay clients need to have processes in place to deliver Good Faith Estimates upon request. The enforcement posture around this provision is evolving, but agencies that aren't prepared face both compliance risk and client relations problems.

CMS's proposed rule for the 2025 home health prospective payment system update included a permanent payment rate adjustment designed to recalibrate the methodology used to set PDGM payment rates — a change that has generated significant concern across the industry. The National Association for Home Care & Hospice and other advocacy organizations have pushed back strongly on the proposed methodology, and the final rule has moderated some of the more significant cuts. However, the directional pressure on Medicare home health payment rates has been downward for several consecutive years, and agencies should not expect that trend to reverse.

The proposed HHVBP expansion — moving Home Health Value-Based Purchasing from the nine-state pilot to a national model — has significant operational implications. Under HHVBP, agencies can earn bonuses or face penalties based on their performance on specific quality measures, including measures related to hospitalization, emergency department use, and functional outcomes. Agencies that are not actively tracking their HHVBP performance scores against their benchmark are flying blind in a financial environment where those scores directly affect their Medicare payment rates by up to 5 percent.

The agencies that navigate regulatory change most effectively share a common posture: they treat regulatory monitoring as an ongoing operational function, not an annual compliance exercise. Practically, this means having someone — whether internal staff, an external consultant, or a combination — who reads CMS final rules and transmittals, tracks state Medicaid policy updates, and translates regulatory changes into operational action items with clear timelines.

For immediate action, agencies should prioritize: auditing their OASIS accuracy and LUPA management processes, reviewing their EVV compliance data for manual override patterns, ensuring Good Faith Estimate processes are documented and followed, and building their HHVBP performance metrics into regular leadership review cycles.

The regulatory environment in home care is not getting simpler. The agencies that invest in understanding it deeply — and in building the operational infrastructure to respond to it effectively — will have a meaningful advantage over those that don't.