Home Health & Hospice Week

Is an IPS-style industry shakeout on the horizon?

Are you sitting in the middle of the location of Medicare’s next enrollment freeze?

Observers are not surprised to see high-profile Miami included in the first wave of home health agency enrollment moratoria (see related story, p. 210). Chicago is also known as a fraud hot spot and boasts its own HEAT Medicare Fraud Strike Force.

"I am not surprised but certainly disappointed that Chicago was among the first to receive a moratorium," says regulatory consultant Rebecca Friedman Zuber of her home city. "We have known for some time that there has been unprecedented growth in provider organizations in Illinois, primarily in the Chicago metro area."

Some observers were surprised not to see more areas included in the HHA moratorium announcement — particularly cities with notorious fraud cases like Detroit and Houston.

But just wait. CMS will almost certainly have another round of moratoria on deck, predicts financial consultant Rick Ingber with VantaHealth Consulting in Plymouth Meeting, Pa.

In addition to Texas and Michigan, don’t be surprised to see freezes announced for California and Oklahoma, says Washington, D.C.-based health care attorney Elizabeth Hogue.

If CMS likes how the moratoria go in Chi-cago and Miami, attorney Troy Brooks with Brooks Acevedo in Houston expects to see more in Hou-ston, Dallas, and Los Angeles specifically, he tells Eli. Those cities all have HEAT Strike Forces, like Miami and Chicago.

Locations in states without Certificate of Need (CON) requirements that limit the number of agencies are also vulnerable to a moratorium, believes financial consultant Dave Macke with VonLehman in Ft. Mitchell, Ky.

Proponents: Lawmakers and industry reps are rooting for an expansion of the moratoria. "I hope to see more action like this from CMS," Sen. Orrin Hatch (R-Utah) says in a release.

"We look forward to continue working with CMS as it considers other areas of the country where a moratorium may be needed," says the National Association for Home Care & Hospice’s Val Hal-amandaris in a release.

The Visiting Nurse Associations of Amer-ica would like to see the moratoria expanded to hospices too, the trade group says.

Industry On Verge Of A Downsize

CMS’s use of its moratorium power is just the latest indicator that industry consolidation is in the cards in the near future. "Between the moratorium, the draconian cuts in reimbursement that are promised in the proposed 2014 rule for the coming and subsequent years" (see Eli’s HCW, Vol. XXII, No. 24), and Medicaid changes, "I think there will be a significant washout of providers over the next few years.," Zuber predicts.

When CMS (then HCFA) implemented the interim payment system (IPS) in 1997, the industry was at a then-high of more than 10,000 HHAs, Macke notes. Now HHA numbers have exceeded 12,000, with the vast majority of program entrants in recent years being for-profits. That leaves CMS with an itchy trigger finger, observers believe.

"Unfortunately, some of the compliant agencies will close while some of the less compliant agencies will stay open because of their willingness to push the limits of the payment and quality regulations," Zuber predicts. "We saw this in the late 90s with IPS, and will be seeing it again over the next several years," she forecasts.