Home Health & Hospice Week

Plus: You may not have to give up hope for the rural add-on quite yet.

While the news that Medicare officials were pulling HHGM from the 2018 HH PPS Final Rule was met with universal pleasure from the home health industry, many home health agencies still will be facing tough budget times ahead thanks to yet another year of reimbursement cuts.

Reminder: The 0.4 percent decrease that takes effect in January, which stayed the same from the proposed to the final rule, reflects the effects of a 1 percent home health payment update ($190 million increase); a -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account for nominal case mix growth for an impact of -0.9 percent ($170 million decrease); and the sunset of the rural add-on provision for an impact of -0.5 percent ($100 million decrease), the Centers for Medicare & Medicaid Services explains on its website.

HHAs have faced years of payment cuts: 0.7 percent in 2017; 1.4 percent in 2016; 0.3 percent in 2015; 1.05 percent in 2014; 0.01 percent in 2013; 2.3 percent in 2012; and a whopping 5 percent in 2011. You have to reach back to 2010 to see the last Medicare payment rate increase, which was 1.75 percent.

The HH PPS base rate for Calendar Year 2018 will be $3,039.64, up slightly from the $3,038.43 amount proposed in July. That compares to $2,989.97 in 2017.

Per-visit rates are up slightly from the proposed amounts as well, notes the National Association for Home Care & Hospice (see chart, p. 311).

But thanks to wage index and case mix changes, the overall 0.4 percent reduction stays the same.

Wage Index Winners, Losers For 2018 Revealed

Of course, this year's cut doesn't necessarily mean you'll see less reimbursement in the coming year, points out finance expert Dave Macke with VonLehman & Co. in Ft. Wright, Kentucky. The base rate change, the newly updated case mix formula and your wage index all work together to determine your rate. (For top changes in both wage index and case mix categories, see charts, p. 312 and 313.)

As usual, multiple Core Based Statistical Areas will see double-digit changes to their wage index figures this year.

For example: The largest wage index drop is in the Battle Creek, Michigan CBSA, which will plummet more than 11 percent. The next-largest reduction is in the Gainesville, Florida CBSA with a 10.4 percent drop, according to a year-to-year comparison by Macke.

But other CBSAs will welcome increases. The Cumberland, Maryland-West Virginia area will see a 13.2 percent increase, and Jacksonville, North Carolina's index will rise by 10.8 percent.

Overall, 195 CBSAs will see wage index cuts, one will stay the same, and 213 will see increases, according Macke's analysis.

Rural Nevada will see a particularly harsh swing with a 12 percent reduction to a wage index value of 0.7890, which will be compounded by losing the rural add-on, Macke notes. The cut is even more punishing, considering rural Nevada had an even higher index value in 2016 of 0.9299.

On the other end, the state with the biggest rural increase is New Hampshire at 4.1 percent.

"Some areas are going to take a pretty big hit," Macke warns. And they will all be impacted by the loss of the 3 percent rural add-on.

Industry reps including NAHC have long urged CMS to come up with a better wage index system.

But as in previous years, CMS demurs. "We continue to believe that, in the absence of HHspecific wage data, using inpatient hospital wage data is appropriate and reasonable for the HH PPS," the agency says in the final rule published in the Nov. 7 Federal Register.

Using inpatient hospital wage data to determine the home health wage index is rife with problems, Macke notes. For one, the data is old. This year's index is based on hospital data from Oct. 1, 2013, through Sept. 30, 2014, CMS notes in the rule.

Hospitals are also able to request reclassification to a higher category, while HHAs have no such option.

And hospitals in CBSAs have a rule requiring that their index levels can't go below the rural level for their states. Agencies don't have that either, Macke tells Eli.

Result: That policy - or the lack of it - produces cases where CBSAs are well below the state's rural wage index level. One example is Wheeling, West Virginia/Ohio, which in 2018 has a wage index of 0.6717 compared to Ohio's 0.8053 index. Wheeling has been well below the state's rural index for years, Macke notes.

There may not be a perfect alternative to using hospital data, however. The scant home health wage data include in cost reports often is not reliable, Macke judges.

NAHC has said it would at least like to see some limitations on the amount wage index levels can change from year to year and for HHAs to have some of the same options hospitals have in regards to changing index levels.

Don't Make Rural Add-On Assumptions

Meanwhile, HHAs in rural areas are holding out hope for an extension of the rural add-on. The current 3 percent bonus is set to expire in January.

Legislation to extend the add-on, S. 353 introduced by long-time home care ally Sen. Susan Collins (R-Maine), would pay for the measure through a reduction in the outlier adjustment formula, NAHC notes. "But it is not yet known how popular this idea is with other lawmakers," the trade group cautions.

A recent Senate Finance Committee draft discussion paper suggests keeping the add-on in 2018, but phasing it out gradually over five years and reducing it for less needy counties, NAHC adds. Stay tuned to see whether that idea gets picked up.

Macke advises that agencies make budget plans for 2018 and beyond assuming that the rural add-on will stay expired. "It's not looking good," he observes.

Note: Links to the final rule, case mix weights and wage index values are at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices-Items/CMS-1648-F.html.