Tauzin Says Savings From Home Health Outlier Cap Bolster Case For Coinsurance Alternative

A home health industry group estimates that Medicare saved $853 million in 2010 thanks to a cap on outlier home health payments, and home health lobbyist Billy Tauzin says those savings are proof that a proposal he is lobbying for, which uses similar approaches, would also save money. The Partnership for Quality Home Health Care has given its savings estimates to the Senate Finance Committee while the Congressional Budget Office works on an official estimate of savings based on CMS’ 2010 data, and the group hopes the eventual official savings estimate will convince lawmakers that industry’s proposal is better than a proposal to charge beneficiaries 10 percent coinsurance for home health services.

The lobby effort comes as Congress is in the midst of a debate over paying for a replacement to the Medicare physician-pay formula and other budget negotiations. The home health coinsurance proposal emerged during last year’s super committee negotiations.

Tauzin hopes the new data will help shoot down the coinsurance proposal. In 2009, the home health community convinced Congress to include in the health overhaul law a measure limiting home health outlier claims to 10 percent of a provider’s total reimbursement. Industry proposed that approach because it targeted the bad actors, instead of cutting pay for all home health care providers.

The one-year savings of $853 million represents a greater than 50 percent drop in the Medicare home health benefit’s spending growth rate, according to industry, which based its findings on the National Health Expenditure data that were released on Jan. 9. Because the CBO typically multiplies a single year savings by a factor of 13 to calculate a 10-year savings or cost figure, the Partnership figures the $853 million single-year savings would equal close to $11 billion in savings over 10 years.

“We now know it works, and not only that it works, that it’s significant,” Tauzin told Inside Health Policy.

The former House Energy and Commerce Committee Chair added that the Medicare data also show that 17 out of 20 home health agencies did not have their payments cut by the outlier caps. Half of the problematic agencies were located in two counties, Miami-Dade in Florida and Hidalgo County in Texas, according to the Partnership’s analysis, and 90 percent were located in five states. That shows what industry has been saying for years: that a sliver of home health agencies are causing problems for the rest of the industry. Also, no seniors were hurt by the caps, Tauzin said.

“You put that all together and it’s an extraordinary story,” he said.

The savings from the existing outlier cap show that Congress would save significantly with parts of a proposal being pushed by the Partnership, Tauzin said. The proposal would cap payment at a per-provider average of 2.7 therapy episodes per beneficiary for non-rural providers and at 3.3 episodes per beneficiary for rural providers. The Partnership estimates this measure would save Medicare $13.8 billion over 10 years. The proposal also would incorporate a minimum annual LUPA rate of 5 percent for all episode payments, which the group estimates would save $1.4 billion.

Tauzin said that even if Congress does not block a 2 percent sequestration in Medicare next year for all providers, the Partnership would continue to push its proposal.