Home Health & Hospice Week

Rural areas see access problems, reps say.

Home health agencies should see an increase in their Medicare payment rates next year instead of them staying relatively flat, insist commenters on the 2013 home health prospective payment system proposed rule.

In the rule published in the July 13 Federal Register, the Centers for Medicare & Medicaid Services proposes a microscopic 0.0016 percent in-crease to the PPS episodic base rate (see Eli's HCW, Vol. XXI, No. 25). The increase to $2,141.95 next year includes a 2.5 percent inflation update minus a 1 percent reduction required by the Affordable Care Act, and a 1.32 percent reduction for so-called case mix creep, the rule explains.

Added together with all the proposed rule's provisions, Medicare payments to HHAs would actually decrease by 0.1 percent or $20 million next year, CMS says in a press release.

CMS's comment period on the rule closed Sept. 5, and many of the 130+ commenters gave the agency an earful about the unfairness of the 1.32 percent case mix creep cut.

"The annual reductions to the national standardized episode rate to adjust for growth in 'nominal case mix' are ill-conceived," blasted the Home Care Alliance of Massachusetts in its comment letter.

The case mix cuts "are not well thought out," agrees the Association for Home & Hospice Care of North Carolina. "Using such an across-the-board approach to reducing home health payment rates penalizes those agencies and regions where case mix increases have been less than the national average."

Plus: "The case mix reductions do not take into account the cost of new regulatory burdens imposed in recent years," the Alliance says. Those include face-to-face requirements, Home Health CAHPS, therapy reassessment burdens, and more.

CMS's methodology for figuring out whether case mix increases are real or just "creep" is flawed, maintains the Texas Association for Home Care & Hospice in its comment letter. One problem: "Reliance on hospital DRG data whereas over half of all Medicare home health patients are admitted to care from a setting other than a hospital and many of the patients receive care far extended past an initial episode," TAHC says.

Another problem: "Data demonstrates that home health care patients have increased functional limitations and more complex clinical conditions than in past years," TAHC argues.

"The proposed coding adjustment ... does not yet fully reflect the clinical acuity of the patients served by home health agencies," agrees publicly traded chain LHC Group based in Lafayette, La.

CMS also shouldn't assume that the case mix creep will continue. Switching to ICD-10 in 2014 may disrupt the case mix growth the agency has observed since PPS began in 2000, the association cautions.

Cuts Strip Money From Struggling Providers

About 40 percent of HHAs already are running negative Medicare margins, maintains the Na-tional Association for Home Care & Hospice in its comment letter. When all provider costs are considered, freestanding HHAs will average a 3 percent margin overall in 2012, NAHC estimates.

"The across-the-board rate cuts and cost increases suffered in recent years are taking their toll on those HHAs with below average margins," NAHC tells CMS. "Any efficiency available to control the cost of an episode of care has been implemented, and rate cuts are now having a direct, linear impact on providers."

Medicare is spending less on home health under PPS than the Congressional Budget Office estimated, LHC points out. "Medicare expenditures have been equal to or lower than projections and estimates by CBO since the beginning of HH PPS. For example, CBO projected $16.5 billion in spending in 2008 and spending equaled $16.5 billion in 2008."

Struggling HHAs can ill afford the annual infliction of payment cuts due to case mix creep and other factors, commenters stressed to CMS.

For example: "Currently many Missouri Home Health agencies have profit margins at or below zero," the Missouri Alliance for Home Care writes in its comment letter. "Missouri has a large rural population and many home health and hospice agencies operating in rural Missouri are small in size." Many of the rural agencies are already struggling, and "in the last few weeks at least three rural agencies have closed their doors," MAHC's Mary Schantz reports.

In one instance, "a rural home health provider in mid-Missouri reported that they have been impacted by the closing of two providers leaving parts of that area with no coverage for home health," the letter says. "It is not feasible for agencies to serve patients in distant parts because of the cost of sending staff so far. The agency has received multiple calls with referrals for patients who have ended up without any home health because the referral sources cannot find anyone to cover them."

Warning: "If reimbursement continues to decline and regulatory burdens increase more agencies will be closing," MAHC tells CMS. "We encourage you to look at what impact these proposed rules will have on smaller agencies and those operating in rural Missouri."

"NAHC encourages CMS to evaluate the current payment model in terms of its ability to secure and maintain access to care to all within the Medicare population who are eligible for coverage," the trade group says. In other words, the repeated Medicare cuts are likely to lead to access problems for beneficiaries in underserved areas. That's despite the Medicare Payment Advisory Commission's repeated statements that there's no problem with access to Medicare home health care.

Think ahead: "The wide range in financial consequences under Medicare highlights a need for an improved payment model," NAHC maintains. "While the number of HHAs may continue to grow, that growth is limited to certain geographic areas."

The slow "'hollowing-out' of the Medicare home health program is already creating access problems for higher cost patients and ultimately threatens the viability of this cost-saving program," cautions Nicole Fedeli-Turiano, legislative affairs director for Home Nursing Agency in Altoona, Pa.

Numerous commenters suggest that CMS target so-called upcoding with fraud and abuse-fighting tools like medical review and audits from its array of contractors, rather than implementing across-the-board cuts that punish providers with case mix weights that are below the national average.

Will Outlier Problems Ease?

Multiple commenters thanked CMS for finally fixing the system problem that has prevented accurate outlier cap calculation and payments since the 10 percent cap went into effect in 2010. But that's not the only outlier problem.

"We are somewhat dismayed that the proposed rule does not include any adjustments to outlier payments, especially given the analysis that projects that total outlier payments in 2011 and 2012 have been significantly below the 2.5 percent target," the Home Care Alliance of Massachusetts says. "We urge CMS to recalculate outlier payment levels for 2011 and 2012 now that the claims processing errors for outliers have been corrected, and make appropriate adjustments to the outlier calculations in the Final Rule."

NAHC pegs outlier payments for 2011 at 2.12 percent. If outlier payments do fall below CMS's 2.5 percent goal, the agency should adjust the fixed dollar loss (FDL) ratio in future years to allow Medicare to make more outlier payments, the trade group suggests.

"With a few exceptions, the annual spending on outliers has fallen below the budgeted levels" in past years, NAHC highlights. "The use of the outlier 10 percent revenue cap means that an over-spend is highly unlikely. When the outlier expenditures fall below the budgeted levels, the absence of a reconciliation to the budget level permanently deprives home health services of the mandated payment."

Timeline: CMS expects to issue the 2013 home health PPS final rule in early November.

Note: For more public comment analysis on PPS proposed rule provisions such as therapy reassessment, face-to-face changes, alternative sanctions, and others, see future issues of Eli's Home Care Week.