Home Health & Hospice Week

If MedPAC gets its way, you'll be seeing significantly less reimbursement starting next year.

In its Jan. 14 meeting, the Medicare Payment Advisory Commission voted to tell lawmakers to eliminate the inflation update for home health agencies next year (see box, this page). The advisory body to Congress also wants to see HHA rates rebased to a lower level.

And MedPAC proposes safeguards against care stinting due to rebasing, more quality measures, and stronger fraud and abuse enforcement action from the Department of Health and Human Services.

The recommendation for cuts should come as no surprise. MedPAC hasn't been happy with the rate of growth in the industry. In 2009 there were about 10,400 HHAs -- almost a 50 percent increase since 2002, noted MedPAC staffer Evan Christman in the meeting.

Plus, HHA margins continue to be relatively high at an estimated 13.7 percent for 2010, according to MedPAC. Most other provider types have margins in the lower single digits, commissioners noted.

Commissioners also dislike the vague nature of the home care benefit. It is "ill-defined," said Commissioner Francis Crosson, a physician with Permanente Medical Group affiliated with Kaiser Permanente.

And a final nail in agencies' payment coffin could be the highly publicized fraud and abuse occurring in the benefit in places like South Florida. "[The Centers for Medicare & Medicaid Services] and others need to be more aggressive in identifying and recovering fraudulent payments," Christman noted in the meeting. "Under current authority, CMS has had difficulty addressing fraud, even in areas that have rampant patterns of abuse, such as Miami."

"MedPAC and others have witnessed patterns of utilization ... suggesting the need for greater vigilance," he continued.

After some prolonged discussion regarding physician certification of care, MedPAC tabled a recommendation to require a physician visit before certifying the plan of care.

HHAs take issue with MedPAC's depiction of the industry as high rollers with money to burn. "MedPAC once again has used a flawed data analysis to recommend cuts that would severely damage the ability of thousands of home health care agencies to provide valuable services to the most vulnerable of Americans," the National Association for Home Care & Hospice protests.

MedPAC's analysis artificially inflates the profit margins of the entire industry, insists NAHC's Val Halamandaris. For one thing, it excludes hospital-based agencies' data.

"In fact, about 23 percent of freestanding home health providers lose money on their Medicare business, and about 30 percent of them make less than 5 percent on their Medicare services," he says.

Agencies have a hard time absorbing big payment cuts because their costs largely go to labor, NAHC adds. And many of agencies' legit expenses, such as telehealth, aren't recognized by Medicare.

Watch out: MedPAC's recommendations are damaging enough when they are merely advisory. They could get a whole lot worse if Congress finalizes its proposal to have a similar body actually make rate-reducing changes instead of just recommending them, points out Tom Boyd with Rohnert Park, Calif.-based Boyd & Nicholas.

Numerous provider groups including the Leadership Council of Aging Organizations have come out against the formation of the Medicare Independent Payment Advisory Board (IPAB), NAHC notes. And some lawmakers have protested that the board would take Medicare rate-setting out of their hands. But that opposition may not be enough to take the money-saving new "Super- MedPAC" off the legislative table.

Providers will have to keep a close watch on Washington to see how legislative changes for 2011 take shape, now that the health care reform package's fate is up in the air following the Republicans' victory in the Massachusetts Senate race Jan. 19.

"Gridlock ... may be good for the HHA industry," Boyd tells Eli.

But even without a comprehensive health care system overhaul, providers can probably count on lawmakers raiding their Medicare payments for funding for their initiatives.