July 7, 2011

New Analysis: Proposed Medicare Beneficiary Cost Sharing for Home Health Care Would Place Significant Burden on America’s Poorest, Most Vulnerable Seniors

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(WASHINGTON) — America’s home health care community is calling attention to a newly released analysis by Avalere Health, LLC that underscores the significant impact cost sharing for Medicare home health services could have on low-income and clinically-disadvantaged seniors. While some have recommended instituting a co-payment for home health services as a way to generate Medicare savings, the home health community warns that such a policy would unfairly place a financial burden on American seniors.

Specifically, the analysis found that 78 percent of non dual-eligible home health beneficiaries without secondary Medigap coverage could be responsible for the full co-payment of as much as $300 per 60 day episode depending on the proposal, which is seen as a significant financial burden on this population. In examining how this financial requirement would impact beneficiaries, Avalere found that these home healthcare beneficiaries tend to be poorer than the typical Medicare beneficiary; 52 percent have incomes below 200 percent of the poverty line (less than $21,780 per year for an individual), compared to 41 percent of the overall Medicare population. The average home health patient, who has two episodes per year, could be faced with $600 in co-payments, thus, making a mandatory co-payment particularly burdensome to these low-income seniors.

“America’s sickest and poorest seniors should not be burdened with a co-payment that will clearly have a negative impact on them and result in increased costs to the Medicare program and taxpayers in the long-term. The home health community has identified very clear solutions for reducing annual Medicare spending — without shifting the cost to vulnerable seniors,” said Val Halamandaris, President of the National Association for Home Care and Hospice, and a Partnership member. “We strongly urge our leaders in Congress to reject a Medicare home health co-payment as they seek solutions for extending the nation’s debt ceiling and take part in budget discussions.”

Instead of establishing a mandatory cost sharing for low-income seniors, the home health community believes that a strong focus should be placed on fraud and abuse within the Medicare program. Analyses of Medicare data shows that focusing on and eliminating the small number of fraudulent providers from the Medicare program who are costing taxpayers millions would significantly reduce annual Medicare spending.

“Congress should target the criminals — the “˜outlaws and outliers’ — who are taking advantage of the Medicare program and look to strengthen the Medicare program through reforms such as required provider compliance, criminal background checks and enhanced conditions of participation, instead of overwhelming our nation’s sickest seniors with an expensive co-payment,” added Billy Tauzin, former chairman of the House Energy and Commerce Committee, and senior advisor to the Partnership for Quality Home Healthcare.

“In addition to looking at the potential financial implications of a co-payment on Medicare beneficiaries, we found that Medicare Part B home health users without Medigap coverage are more likely to have five or more chronic conditions, more likely to have severe disabilities, and more likely to live alone than other beneficiaries — which suggests that the negative effects of cost-sharing would disproportionally affect poorer and sicker beneficiaries,” said Emil Parker, a director in the Post-Acute Care/Long-Term Care practice at Avalere.

The analysis also found that mandating co-payments on home health could result in a variety of unintended consequences including cost-shifting from Medicare to Medicaid and increased Medicare costs resulting from greater use of inpatient care services. Beneficiaries, when faced with a costly co-payment for home health services, may forego needed home health care and, as a result, experience an adverse health event requiring treatment in an institutional setting.

The Medicare Payment Advisory Commission (MedPAC) has also acknowledged that co-payments could drive patients to more expensive care noting, “A disadvantage of requiring beneficiary cost sharing for post-hospital episodes of home health care is that it could encourage beneficiaries to use higher cost post-acute care settings, such as skilled nursing facilities or inpatient rehabilitation facilities.”

Home health care allows patients to receive clinically effective care at home — where they overwhelmingly prefer to be — and is generally less expensive than care provided in other institutional settings. Nationwide, more than 3.2 million Medicare beneficiaries receive skilled home health care services to treat acute illness, long-term health conditions, permanent disability, or terminal illness.