November 25, 2013

Home Health Leaders: Unprecedented Medicare Cut Endangers Millions of Seniors’ Access to Home Healthcare

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Washington, DC – Home health leaders warned that the Home Health Prospective Payment System (HHPPS) Final Rule, released Friday by the Obama Administration’s Centers for Medicare and Medicaid Services (CMS), will directly impact the homebound seniors and disabled Americans who are the Medicare program’s most vulnerable beneficiaries and will limit their access to the clinically advanced, cost effective home health care they need.

The HHPPS proposed rule initially included a 3.5 percent annual rebasing cut to Medicare home health funding – the maximum allowable under the Affordable Care Act (ACA) – which was calculated using an incorrect base year. While the Final Rule now uses the correct base year (2010), it maintains the maximum annual rebasing cut of 3.5 percent, thereby imposing an unprecedented total rebasing cut of 14 percent over 4 years.

“From start to finish, this is a patient care issue,” said Chairman Billy Tauzin, Senior Counsel to the Partnership. “The stated purpose of the Affordable Care Act legislation was to expand Americans’ access to healthcare, but this ACA regulation will do the exact opposite. Despite pleas by lawmakers, seniors and stakeholders, CMS has decided to impose unprecedented cuts to the home health services on which the nation’s most vulnerable Medicare population depends. These cuts directly impact homebound seniors in rural, minority, and underserved communities who are among the Medicare program’s oldest, sickest, and poorest beneficiaries.”

“Despite the concerns expressed by more than 200 bipartisan Members of Congress, leading senior advocacy organizations, and dozens of other stakeholders, CMS chose to cut Medicare home health payments to the fullest extent allowed by the ACA,” added Eric Berger, CEO of the Partnership. “On a technical basis, this rule is also deeply flawed in that required analyses were never conducted on its impact over the full 4 years in which its cuts will go into effect or on the thousands of small businesses and their employees who will be impacted by it.”

“Just as troubling, the actual nature of this Final Rule has not been accurately disclosed,” continued Mr. Berger. “Although CMS releases seem to suggest that the Final Rule provides rebasing relief, the reality is that the cut in the Final Rule is the maximum allowable under the law. The ACA authorized the Secretary to impose an annual rebasing cut of not more than 3.5 percent of the 2010 Medicare home health standardized payment rate. The proposed rule exceeded the law in that it incorrectly applied the 3.5 percent cut to 2013 payment rates. By contrast, the Final Rule applies the maximum allowable 3.5 percent annual cut to 2010. As a result, all that can be said of the Final Rule is that, by properly replacing 2013 with 2010 as the base year, it no longer exceeds the law.”

  Base Year: 2013   Base Year: 2010
Proposed Rule 3.5% equals 4.5%
Final Rule 2.7% equals 3.5%

“While there are so many people across the country whose health care will be adversely affected by this Final Rule, we are deeply thankful to the many lawmakers who devoted so much of their time and energy in an effort to protect Medicare home health beneficiaries,” Mr. Berger added. “They and the vulnerable Medicare beneficiaries they valiantly serve deserve better than this regulation.”

Since the proposed rule was released, tens of thousands of patients, family members, providers, advocates, and state associations have cautioned the Administration that these cuts go too far and will have severe implications on the delivery of skilled home healthcare. Extensive action was undertaken, including data and policy analyses, grassroots engagement, and extensive direct dialogue. In addition, letters were filed by leading advocates including AARP, the American Hospital Association (AHA), the National Association of Home Care and Hospice (NAHC), the Visiting Nurses Association of America (VNAA) and many other stakeholders, all of whom expressed concern that the proposed cuts would negatively impact homebound seniors who depend on home health.

“The extraordinary cuts announced on Friday are alarming, especially in light of the deep cuts that Medicare home health has already suffered in recent years,” added Senator John Breaux, Senior Counsel to the Partnership. “Even before these latest cuts, funding for Medicare home health services had been reduced by more than $72 billion since 2009. When factoring in these additional cuts, two of the nation’s leading health care consulting firms – Avalere Health and Dobson|DaVanzo Associates – project that the home health delivery systems in nearly every State will experience net losses by 2017, which greatly jeopardizes seniors’ access to high-quality, low-cost home healthcare. In fact, even CMS concedes – on page 117 of the HHPPS Final Rule – that ‘approximately 40 percent of providers will have negative margins in CY 2017’ and that more than 8-in-10 of these providers are already experiencing negative margins as a result of pre-existing cuts! For these reasons, we strongly urge decision makers to protect homebound seniors from this regulation and any further cuts in the weeks and months ahead.”

“The fact that this extreme regulation is a result of the ACA means it cannot help but have political in addition to access implications,” concluded Chairman Tauzin. “The Medicare cuts in the 2010 ACA bill angered seniors so much that voters over age 65 helped give Republicans control of the U.S. House in the President’s first midterm elections. These newest Medicare cuts, coming right out of the ACA, could now put the Democrats’ Senate majority in jeopardy when senior voters cast their ballots next November. Both Democratic and Republican leaders tried to stop the White House from issuing this unprecedented cut, and both were ignored. Three and a half million seniors depend on home health, they vote, and they are not likely to take these cuts lying down.”

With an estimated 10,000 American seniors entering the Medicare program every day, the Medicare home health benefit is widely recognized as a clinically advanced, cost-effective and patient preferred means for meeting the post-acute and long-term care needs of this rapidly growing patient population. Medicare home health services are delivered to approximately 3.5 million Medicare beneficiaries, who are documented as being more likely to be poor, old, sick, and minority than the Medicare beneficiary population as whole. In light of its importance to millions of seniors and their families, the Medicare home health sector has been one of the nation’s leading creators of new jobs according to the Bureau of Labor Statistics.


1 HHPPS Final Rule for CY 2014, page 117.