Hatch Asks CMS Not To Finalize Home Health Pay Cuts

Senate Finance Committee Chair Orrin Hatch (R-UT) urged CMS, in a Friday (Sept. 22) letter to CMS Administrator Seema Verma, not to finalize changes to Medicare home health agencies pay in 2018 and 2019, citing concerns that the agency may be implementing complex policy changes to the Home Health Grouping Model too quickly. The home health pay rule, which was proposed July 25, would cut nearly $1 billion from Medicare reimbursement for home health services in 2019 by changing the unit of payment for home health episodes from 60 days of care to 30 days.

“I am concerned that CMS may be rushing to finalize complex policy changes too quickly,” Hatch wrote. “CMS’ efforts to implement policies similar to the Medicare Payment Advisory Commission (MedPAC) recommendations as well as those of the Senate Committee on Finance are a good first step…It is equally as important, however, that these proposed changes are methodologically sound and implemented in a reasonable timeframe.”

The proposed changes would result in an estimated cut of $950 million — 4.3 percent — in 2019. Hatch noted that regulatory pay reforms of this magnitude are usually budget neutral, though CMS had asked for comments on whether the to implement the policy in a non-budget neutral manner or use a partial budget neutrality adjustment. Hatch said that CMS may be exceeding its regulatory authority in this proposed rule, and that the agency should work with members of the House and Senate to craft better policy.

In the proposed rule, CMS says that this cut to home health agencies is the result of certain “assumptions on behavioral responses,” as a result of the proposed policy, but does not clarify what those behavioral assumptions are or how changes in assumed behavior will impact Medicare spending directly or indirectly. Hatch said without clarification of this language, as well as clarification of cost impacts– such as state-by-state financial impact analyses or an analysis of the proposed rule’s impact based on patient characteristics– it is difficult for stakeholders to provide good input.

“Ultimately, behavioral assumptions can trigger payment swings that produce sizable reimbursement reductions or windfalls in the Medicare payment system,” Hatch wrote. “Because errors sometimes do occur in the impact modeling phase, it is vital that CMS conduct a more comprehensive impact analysis prior to the agency finalizing the HHGM proposal.”

Stakeholders are also unhappy with CMS’ lack of information about its behavioral estimates, and as Hatch predicted, have said they need more information before being able to fully comment on the rule.

The Partnership for Quality Home Healthcare in their comments on the proposed rule said that it is unable to comment on the effect of any behavioral changes due to CMS’ lack of information. The group also asked CMS to respond to questions about the baseline from which impacts were assessed, what these assumed behavioral responses are, and how assumed behavioral responses are treated in the impact analysis.

The National Association for Home Care and Hospice said CMS should withdraw the proposed policy because “it will cause massive disruption in the industry” and the agency does not have the statutory authority to impose these changes without congressional action. The group also asks what the justification is for CMS’ assumption of behavioral changes.

The Coalition to Preserve Rehabilitation also called on CMS to rescind the proposed rule, saying it would add incentives for home health agencies to serve people with short term needs and those who have had a prior hospital stay rather than those who need care for a longer period of time. The coalition also expressed concern that, over time, patients will have to be admitted to an inpatient setting before gaining access to home health services.

“The proposed rule will create unnecessary institutional care for many individuals who could otherwise stay home, because they will be less able to obtain access to home health care based on the relatively low payment weights in the proposed rule,” Coalition to Preserve Rehabilitation wrote in their comments to CMS.

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