CMS Reveals Proposed Rule with Further Cuts to Home Health Care

After Medicare payment cuts to home health agencies amounting to an estimated $72.5 billion over a 10-year period, the Centers for Medicare and Medicaid Services (CMS) released the proposed rule on the Home Health Prospective Payment System with further cuts reducing payments by $290 million.

CMS announced the rule in a press release, which estimates that approximately 3.5 million beneficiaries received home health services from nearly 12,000 home health agencies, costing Medicare approximately $18.2 billion in 2012.

The release continues that the proposed decreases reflect the effects of the 2.4 percent home health payment update percentage ($460 million increase), the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the non-routine medical supplies (NRS) conversion factor ($650 million decrease), and the effects of ICD-9-CM coding adjustments ($100 million decrease). In addition, the rule proposes routine updates to the HH PPS payment rates such as updating the payment rates by the HH PPS payment update percentage and updating the home health wage index for 2014.

The CMS proposal is based on a projected 2013 differential between cost and revenue (margins) of 13.63 percent, which is at “severe odds” with calculations by the National Association for Home Care & Hospice (NAHC) and MedPAC.

Using a larger database than employed by CMS, NAHC estimates the 2013 margin at 8 percent to 9 percent. NAHC is seeking clarifications and a full disclosure of its calculation data and methodology. At this point, NAHC believes that the proposal is based on an unsupportable calculation.

“The proposal places the 3.5 million Medicare beneficiaries receiving home care services at risk of losing access to care as nearly half of the providers of this vital service would be paid less than the cost of care. It is neither fair nor right and needs to be changed,” stated Val J. Halamandaris, president of NAHC.

The Home Care Alliance is working with NAHC and other organizations to analyze the full extent of the proposed rule and advocate against these additional cuts.

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