Comments Due on Home Health 2014 Payment Rule

The Home Care Alliance is in the process of preparing comments on the June 27, 2013 Centers for Medicare and Medicaid Services (CMS) proposed rule that sets out the proposed rates for home health services in 2014. The proposed changes for 2014 include the first of a planned four year “rebasing” of home health rates.

By way of background:  The requirement that rates be rebased in 2014 and phased-in proportionately over a four year period was included in Patient Protection and Affordable Care Act of 2010 (PPACA). The language reflects a MedPAC recommendation that rebasing is needed due to significant changes in services provided during the 60 episode of care,  along with what MEDPAC believes to be “overpayments” for services,  evidenced by profit margin calculations. The average episode of care in the base year used for rate setting involved 37 visits primarily made up of nursing and aide services.  The current care utilization in an episode is less than 20 visits with few aide services and significantly more therapy visits. . From 2001 through 2011, MedPAC’s calculation of Medicare profit margin shows freestanding HHAs with an average ranging from 16-18%.  For purposes of rebasing, the CMS profit margin calculation is 14%.

The proposed rated for 2014 reflect a 2.4% Market Basket Index adjustment to reflect estimate costs increases in 2014.  CMS also proposes a total rebasing payment reduction of 14 percent, or the maximum cap of a 3.5% payment reduction for each year, over the next four years.   CMS estimates that the overall impact of the proposed rate rebasing and other rate changes is a reduction in Medicare spending of $290 million in 2014.

The Alliance’s comments will reflect concerns that:

  • the methodology utilized by CMS to calculate home health margins is  flawed in that it excluded hospital based cost report and does not include critical factors such as the impact of the recent sequestration cuts
  • the analysis in the rule is a one year impact assessment rather that the full four years of the rebasing action and is national in scope, ignoring regional and state impacts
  • is based on average national costs.  Other methodologies produce very different results.   For example, NAHC’s calculation is that using the median would produce a per episode cost $113.98 higher than the CMS proxy estimated

The Alliance welcomes member input on the local impact of these changes and also encourages members to submit their own comments with the local impact. (Send to Tim Burgers,    Comments will be accepted by CMS through 5pm on Monday August 26th.  Instructions on Electronic comments on this regulation can be found at: The regulation in its entirety is here.

Author: Pat Kelleher

Pat Kelleher is Executive Director of the Home Care Alliance of Massachusetts.

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