Proposed Home Health Payment Cuts Would Have Devastating Impact, Groups Warn

A Centers for Medicare & Medicaid Services proposed rule that would cut home health Medicare payments by 14 percent over the next four years would have a devastating impact on beneficiaries’ access to care, home health stakeholders said in an Aug. 28 briefing.

Representatives from the National Association for Home Care and Hospice (NAHC), the Visiting Nurse Associations of America (VNAA), and the Partnership for Quality Home Healthcare said the 14 percent reduction proposed in the rule would result in a cut of $22 billion over 10 years.

A study released in conjunction with the briefing, by Avalere Health and Dobson DaVanzo Associates, found the proposed rule “will threaten the financial stability of small home health agencies, which have lower margins and are more likely to serve in minority areas with health professional shortages.”

In the home health prospective payment system proposed rule, published July 3, CMS proposed to reduce Medicare home health funding by instituting a rebasing rate set at the maximum level permitted by law—3.5 percent annually from 2014 to 2017— totaling a 14 percent cut over the next four years (125 HCDR, 6/28/13).

Total Medicare payments to home health agencies (HHAs) in calendar year 2014 would decrease by 1.5 percent, or $290 million, under the proposal. It also would make changes to the home health agency quality reporting program. According to CMS, the changes in the proposed rule would foster greater efficiency, flexibility, payment accuracy, and improved quality. They would take effect Jan. 1, 2014.

Billy Tauzin, a partner with Tauzin Strategic Networks and senior counsel to the Partnership for Quality Home Healthcare, said that in addition to the $22 billion cut from the proposed rule, the home health sector is already facing $72.5 billion in Medicare cuts due to legislative and regulatory changes from the Affordable Care Act. Specifically, the groups said home health Medicare savings from the ACA provisions, case-mix adjustments, and sequestration will total about $72.5 billion between 2011 and 2020.

Tauzin said CMS did not need to recommend the maximum rebasing rate.

“We have heard that some may think there is no option but to rebase payments at the highest percentage, but we respectfully disagree,” he said in a statement. “The secretary has full discretionary authority under this provision and should use it to ensure continued access to quality services.”

Eric Berger, chief executive officer of the Partnership for Quality Home Healthcare, said during the briefing that if finalized, the proposed rule would impose net losses on 47 of the 50 states and the District of Columbia by 2017.

“In crafting the proposed rule, CMS appears not to have undertaken a full assessment of the home health sector’s economics for all four years in which rebasing will take place,” Berger said in a statement. “Congress directed the Secretary to undertake such an analysis, and we are hopeful that it will be completed before this rule is finalized.”

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