Home Health & Hospice Week

Hospice would get whacked with a $5 billion budget chop.

As expected, Medicare Payment Advisory Commission members have approved recommendations that would drastically reduce Medicare payments to home health agencies.

As discussed in its December meeting, MedPAC wants Congress to cut Medicare payment rates by 5 percent in 2019, rebase Home Health Prospective Payment System rates over two years, and remove therapy from the PPS calculation (see Eli's HCW, Vol. XXVII, No. 2).

The rate cut and rebasing would reduce Medicare payments by up to $2 billion in 2019 and as much as $10 billion over five years, MedPAC staffer Evan Christman said in the advisory body's Jan. 11 meeting. Medicare spending on home health services totaled about $18.1 billion in 2016.

The therapy change would be "budget-neutral ... but redistributive," Christman told commissioners. "The policy would shift funds to hospital based agencies that generally do less therapy and away from freestanding for-profit agencies, which typically do more therapy."

Christman also noted that Medicare-certified HHAs number about 12,200. (Eli's HCW previously erroneously reported that figure as 4,200.)

Commissioners approved the recommendations unanimously under expedited voting, and the advice will appear in the influential body's March report to Congress.

MedPAC Keeps It Cold With Hospice Rate Freeze Rec

Also as expected, Commissioners voted to recommend a 0 percent rate update for hospices in 2019. Contributing to their reasoning were hospices' 2015 profit margin of 10 percent. Also in its Jan. 11 meeting, MedPAC staffer Kim Neuman noted a 4 percent increase to the number of hospice providers, totaling about 4,400.

The rate freeze would cut up to $750 million from Medicare hospice payments in 2019 and up to $5 billion over five years. Total spending for hospice services was $16.9 billion in 2016.

Commissioners approved the hospice recommendation unanimously under expedited voting as well, and it will appear in the March report.

Whether members of Congress will heed MedPAC's advice as they look for pay sources for other changes remains to be seen. The combination of these recommendations, high improper payment rates (see story, p. 26), being painted with a broad brush for fraud by the HHS Office of Inspector General, the Department of Justice and other authorities, and negative mainstream media attention leave the home health and hospice industries vulnerable to cuts, experts warn.