Billing Home Health in 2025: What’s Changed and What Still Works

Home health billing continues to evolve each year, shaped by ongoing policy updates, reimbursement rate adjustments, and new compliance standards. As of 2025, agencies are adapting to a tighter regulatory environment and a more performance-driven payment model. While many familiar principles still hold true, the details around how claims are billed, documented, and justified have shifted significantly.

Understanding what’s changed—and what still works—is essential for agencies that want to remain financially stable, compliant, and survey-ready. Below is an overview of the key changes impacting billing in 2025 and the proven practices that still form the backbone of successful home health reimbursement.

What’s New in 2025

Payment Adjustments and Reimbursement Shifts

For 2025, home health agencies are seeing modest reimbursement updates under the Home Health Prospective Payment System (HH PPS) and Patient-Driven Groupings Model (PDGM). Although there is a slight overall payment increase, this gain is offset by a permanent behavior adjustment that reduces payments based on CMS projections of provider behavior under PDGM.

Agencies should expect tighter margins across many case-mix categories as recalibrations take effect. CMS has updated case-mix weights, comorbidity subgroups, and functional impairment levels, along with revised low-utilization payment adjustment (LUPA) thresholds. This means that case assignment accuracy, coding precision, and utilization management will matter more than ever.

Additionally, wage index adjustments for 2025 have been updated to reflect new core-based statistical areas. Agencies in urban and rural areas may experience differences in payments based on these local economic updates. Overall, even small rate changes can have significant downstream impacts on budgeting, staffing, and resource allocation.

New Condition of Participation: Acceptance-to-Service Policy

A major compliance update in 2025 is the new Condition of Participation (CoP) requiring agencies to implement and publicly post an acceptance-to-service policy. This policy must clearly define which services an agency provides, the criteria for accepting or declining patients, and how decisions are documented.

This new rule strengthens transparency and accountability, ensuring that agencies do not discriminate in patient selection while maintaining realistic operational limits. From a billing perspective, this policy also helps clarify which types of cases align with the agency’s clinical and financial capacity—reducing the likelihood of unprofitable or high-risk admissions that may lead to denials, recertification issues, or compliance concerns later in the episode.

Telehealth and Virtual Service Reporting

Telehealth continues to play a growing role in home health delivery, although it remains a non-reimbursable encounter under traditional billing. What’s changing in 2025 is how these visits are documented and reported. Agencies are now required to indicate telehealth encounters on claims when applicable, using specific visit codes or modifiers.

Even though these services do not increase direct reimbursement, accurate reporting demonstrates compliance and may support future payment opportunities as CMS evaluates virtual care models. Agencies should ensure their documentation clearly outlines how telehealth was used to supplement, not replace, in-person visits—and that patient outcomes are appropriately reflected in the medical record.

Disposable Negative Pressure Wound Therapy (dNPWT) Billing

In 2025, disposable negative pressure wound therapy (dNPWT) devices are now billed directly on the standard home health claim rather than separately. This change simplifies the billing process but requires that agencies update their systems and documentation to ensure that the professional component (the clinician’s work) and the device cost are properly captured.

Agencies providing wound care should review their billing workflows, update charge masters, and educate staff on how to code, document, and bill for dNPWT under the new structure.

Quality Reporting and Value-Based Purchasing Expansion

CMS continues to integrate quality and equity measures into reimbursement models. The Home Health Value-Based Purchasing (HHVBP) program now places greater emphasis on patient outcomes, care coordination, and health equity.

Billing teams must therefore collaborate closely with clinical and quality departments to ensure that data accuracy, OASIS completion, and outcome reporting are aligned. Inaccurate or incomplete data not only skews performance metrics but can also result in reimbursement penalties or reduced payment adjustments in future cycles.

What Still Works in Home Health Billing

While regulatory details shift every year, the fundamental principles of compliant, successful billing remain consistent. The agencies that perform best are those that adhere to disciplined documentation, coding accuracy, and proactive revenue cycle management.

Accurate Documentation Remains the Foundation

In 2025, as always, documentation is the single most important factor in successful billing. Every billed visit, assessment, and intervention must be supported by clinical records that clearly describe what was done, why it was necessary, and how it contributed to the patient’s plan of care.

This applies not only to skilled nursing and therapy but also to ancillary services and supplies. Documentation must reflect the medical necessity of care and demonstrate that services meet Medicare’s homebound and skilled criteria. Thorough records not only protect against claim denials but also safeguard the agency during audits and reviews.

Consistent Coding and PDGM Accuracy

PDGM remains the foundation of home health billing. Although the model is not new, its recalibration for 2025 means agencies must pay attention to detail when grouping cases. Accurate coding based on clinical grouping, admission source, timing, functional impairment, and comorbidity remains essential.

Coders and clinicians must work closely to ensure that primary and secondary diagnoses are clinically justified, well-documented, and compliant with current ICD-10 standards. Over-coding or vague documentation can trigger medical review and recoupments, while under-coding may result in lost revenue.

Regular audits and coding education can help agencies stay consistent, especially as new comorbidity groupings take effect.

Managing LUPA Thresholds and Outliers

Low-utilization payment adjustment (LUPA) thresholds continue to influence revenue. Episodes that fall below the required number of visits for full payment are reimbursed at a reduced per-visit rate. Agencies should monitor visit frequencies closely and understand the number of visits required to exceed each LUPA threshold.

Outlier payments, which provide additional reimbursement for high-cost cases, remain available in 2025, though the fixed-dollar loss ratio has been adjusted. Proper documentation of resource use, supplies, and skilled interventions can help ensure that qualifying episodes receive appropriate compensation

Denial Prevention and Appeals

Claim denials remain one of the most costly revenue cycle issues in home health. Most denials still arise from documentation deficiencies, incorrect coding, or failure to meet face-to-face encounter and eligibility requirements.

Agencies should maintain a strong denial management system, with pre-billing audits that verify documentation, signatures, orders, and OASIS alignment. Staff responsible for appeals should be trained in regulatory language, understanding how to frame clinical and compliance arguments that support payment recovery.

Denial prevention starts with clinician education—teaching field staff how to chart in a way that supports medical necessity and passes audit scrutiny.

Internal Controls and Pre-Bill Audits

A structured pre-bill review process remains one of the most effective tools for compliance and revenue protection. Agencies that conduct systematic pre-submission audits—checking orders, visit notes, OASIS data, and plan of care consistency—tend to have fewer denials and smoother cash flow.

Pre-bill audits also provide an opportunity to correct minor errors before they reach Medicare’s systems. In 2025, this process is especially valuable as CMS increases data validation and cross-referencing between clinical and financial submissions.

Timely Claims Submission

Timeliness continues to be critical. Late submissions can result in payment delays or rejections. Agencies should use billing software or dashboards that track claim status, highlight unbilled episodes, and alert staff to missing documentation.

Claims should be submitted within the required window, and resubmissions or corrections should be completed promptly to avoid unnecessary revenue loss.

Strategic Steps for 2025 Success

To thrive in 2025, home health agencies should view billing as an integrated part of compliance and quality—not an isolated back-office task. The following strategies can help ensure continued success:

First, perform a 2025 rate analysis to model how case-mix changes and payment adjustments affect revenue. Use this data to anticipate financial challenges and adjust staffing, visit patterns, or referral targets accordingly.

Second, review your acceptance-to-service policy and make sure it accurately reflects your agency’s capabilities. This is now a required CoP element, but it also serves as a strategic roadmap for aligning clinical capacity with financial sustainability.

Third, train your billing, coding, and clinical staff on the 2025 updates. In-service education should cover new PDGM calibrations, LUPA changes, dNPWT billing updates, and compliance expectations for the acceptance-to-service CoP. Education should be ongoing, not one-time, and supported by internal audits that measure learning outcomes.

Fourth, strengthen your pre-bill and post-payment review processes. Implement checkpoints that verify documentation, coding, and compliance before submission, and analyze remittance data afterward to identify trends.

Finally, integrate quality performance data into billing oversight. As value-based purchasing and health equity measures expand, the intersection between billing accuracy and quality reporting will continue to grow. Agencies that can demonstrate both clinical excellence and billing integrity will be best positioned for success.

Risks and Challenges to Watch

While 2025 brings opportunities, there are also new risks. The permanent behavior adjustment and recalibrated case-mix weights mean that reimbursement for many episodes will be lower than expected. Margin compression is real, and agencies must improve efficiency without compromising care.

Auditors are also focusing more closely on coding justification and documentation accuracy. Errors or patterns that appear to exploit comorbidity adjustments could lead to additional scrutiny.

Agencies implementing dNPWT billing changes must be careful to separate device and service components correctly. Errors here could cause claim rejections or trigger post-payment reviews.

Lastly, failure to comply with the new acceptance-to-service CoP can result in survey deficiencies. Agencies must ensure that their policies are publicly available, internally consistent, and followed in practice.

Conclusion

Home health billing in 2025 continues to build on familiar foundations—accurate documentation, compliant coding, and diligent oversight—but now demands even greater precision and adaptability. The Medicare payment landscape is evolving toward transparency, accountability, and data-driven reimbursement.

Agencies that stay ahead of regulatory shifts, educate their teams, and integrate compliance with billing operations will thrive even in a tighter financial environment. The key is to combine operational discipline with strategic foresight: know what’s changed, master what still works, and remain survey-ready every single day.

At SummitRidge Consulting, we help home health agencies navigate exactly these challenges. From PDGM impact assessments to staff training, internal audits, and compliance strategy, our team provides the tools and insight to ensure that your billing practices are accurate, efficient, and fully aligned with the 2025 Conditions of Participation.