December 22, 2014

Home Health Leaders Express Concern About Flaws in Rebasing Impact Report

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The Partnership for Quality Home Healthcare expressed concern today that a rebasing impact report issued by the Medicare Payment Advisory Commission (MedPAC) suffers from data and methodological flaws, which appear to be due to the limited time given to MedPAC by the Affordable Care Act (ACA) to complete this ACA-mandated report. As stated by MedPAC in its Executive Summary, “This mandated report is due before claims or quality data will be available to allow us to directly assess the impact of rebasing.” The MedPAC report further states, “Empirical data on the effects of the payment rebasing called for by PPACA do not yet exist, and the Commission will continue to review access to care and quality as data for additional years become available.” According to the Centers for Medicare and Medicaid Services (CMS), there currently is insufficient data with which to accurately assess the impact of rebasing. Specifically, the Agency stated the following on page 117 of the Home Health Prospective Payment System (HHPPS) Final Rule for CY2014: Comment: “Several commenters were concerned with the impact of the rebasing adjustments and urged CMS to monitor the impact of the reductions and provided suggestions for the impact and monitoring analyses.” Response: “As we noted in the CY 2015 HH PPS proposed rule, sufficient claims data for CY 2014 is not available for analysis. We plan to provide an update on our monitoring efforts once sufficient CY 2014 claims data become available.” [emphasis added] Claims data from CY 2014 is essential to any rebasing impact analysis because 2014 is the first year in which the home health rebasing cut is in effect. Absent such data, only projections (rather than data-based impact analyses) can be made. Unfortunately, the ACA mandated that MedPAC issue its report by January 1, 2015 rather than await the availability of sufficient claims data, as CMS is doing. As detailed in a letter issued by the Partnership with the Visiting Nurse Associations of America and the Council of State Home Care Associations:

  • The ACA-mandated report does not include data from any year in which rebasing is in effect: Due to the unavailability of sufficient claims data from CY 2014, MedPAC built projections of the impact of rebasing based on outdated Medicare data from 2001-2012 – years which preceded the January 1, 2014 implementation of rebasing.
  • The ACA-mandated report does not appear to correctly apply the market basket update: Specifically, it applies the home health market basket update as an offset to the rebasing cut, rather than as an offset to the higher market basket costs for which the update is intended. While this exercise masks the true impact of rebasing, it doesn’t alter the reality facing providers: an $80.95-per-episode cut.
  • The conclusion stated in the ACA-mandated report is significantly different from CMS’ projection: In the HHPPS Final Rule for CY 2014, CMS conceded that “approximately 40 percent” of all home health providers will be operating at a net loss by 2017 as a result of the ACA rebasing cut. By contrast, the ACA-mandated report suggests that “quality of care and beneficiary access to care are unlikely to be negatively affected” by the rebasing cut.
  • The ACA-mandated report estimates margins using dated and incomplete data: The report excludes commonly borne costs such as telehealth as well as government-mandated costs such as taxes. In addition, the estimate varies markedly from the findings of an Avalere Health analysis of independently audited financial reports filed with the U.S. Securities and Exchange Commission (SEC).

Notwithstanding the significant costs that are left out of MedPAC’s margin methodology, home health leaders noted that MedPAC’s margin estimate for CY 2015 represents a drop of nearly one-third since 2012. Avalere Health’s analysis of home health margins using independently audited financials filed with the SEC found that the largest and arguably best-capitalized providers had average margins of 1.3 percent in 2012. In addition to the above issues concerning the ACA-mandated rebasing impact report, home health leaders also expressed concerns with MedPAC’s republished recommendation that homebound seniors be compelled to bear additional cost for the care that is enabling them to stay home and out of more costly institutional settings. Re-imposition of beneficiary cost-sharing would put Medicare’s most vulnerable patient population at greater risk. Congress repealed Medicare home health cost-sharing in 1972 because it was ineffective in reducing costs and was found to create “a financial burden to many elderly persons living on marginal incomes,” limiting patient access to care and driving patients into expensive facility-based settings. As shown below, an Avalere Health analysis found that Medicare home health beneficiaries are older, sicker, and poorer and are more likely to be female, disabled, and a member of an ethnic or racial minority than all other Medicare beneficiaries combined:

Avalere Home Health Beneficiary Study: Key Findings Medicare Home Health Beneficiaries All Other Medicare Beneficiaries
Women 60.07% 53.9%
Beneficiaries aged 85+ 24.4% 12.1%
Beneficiaries with 4+ chronic conditions 74.7% 48.5%
Beneficiaries needing assistance with 2+ Activities of Daily Living (ADLs) 23.5% 7.6%
Beneficiaries at or below 200% of Federal Poverty Level (FPL) 66.2% 47.9%
Beneficiaries from ethnic or racial minority population 19.3% 14.9%

“In mandating that MedPAC issue a rebasing impact report by January 1, 2015, the ACA has forced MedPAC to produce an analysis even though CMS has confirmed that ‘sufficient claims data … is not available’. Due to this problem and other methodological issues, the ACA-mandated report does not provide the accurate and comprehensive information that policymakers need,” stated Eric Berger, CEO of the Partnership for Quality Home Healthcare. “As a result, the Partnership urges lawmakers to continue seeking alternatives to the ACA’s deep rebasing cut and to continue advancing policy solutions that protect patients, increase Medicare efficiencies and reduce spending.” As an alternative to further across-the-board payment cuts and the re-imposing of a home health copayment, the Partnership strongly supports pro-patient policy solutions that can achieve sustainable savings, improve care coordination and advance program integrity measures: The Securing Access Via Excellence (SAVE) Medicare Home Health Act, H.R. 5110: This bill would replace the ACA rebasing cut beginning in 2015 and achieve budget neutrality by establishing a value based purchasing program that would reduce hospital readmissions via incentives that reward positive outcomes. The Bundling and Coordinating Post Acute Care Act (BACPAC), H.R. 4673: This legislation would establish bundled payments for post-acute care services and utilize post-acute care coordinators and their networks of post-acute care providers to manage patient care utilizing a site-neutral bundled payment. The Skilled Home Health Integrity and Program Savings (SHHIPS): This proposal targets Medicare fraud and abuse by preventing payment of aberrant claims, strengthening the claims review processes, improving participation standards and establishing temporary entry limitations to prevent excess growth. “We are grateful to the many MedPAC Commissioners who support the Medicare home health benefit, understand the value it delivers, and seek to target the isolated occurrences of aberrant behavior,” added Berger. “Because our nation’s seniors deserve access to quality, skilled home healthcare, we stand ready to support Commissioners’ efforts to advance quality improvement and program integrity reforms, which we believe are superior to further across-the-board cuts or the re-imposition of beneficiary cost-sharing.”