Home Health & Hospice Week

Reimbursement is below cost of care already, rural provider tells CMS.

If Medicare wants to increase its overall spending at a faster rate, its Home Health Prospective Payment System should certainly help achieve that goal.

Why? The 1 percent pay cut that the Centers for Medicare & Medicaid Services has proposed for 2017 will limit patients’ access to home care, said many of the 89 commenters who submitted feedback on the HH PPS proposed rule released in June. That cut will trim about $180 billion from Medicare home health spending next year, CMS estimated in the rule published in the July 5 Federal Register.

Both CMS and the Medicare Payment Advisory Commission insist that home health agency profit margins persist in running too high (see story, p. 264). But for many agencies serving the most vulnerable patient populations, costs already exceed Medicare payment levels.

For example: Eastern Maine HomeCare, which includes VNA Home Health Hospice, Visiting Nurses of Aroostook, Bangor Area Visiting Nurses, and Hancock County HomeCare, is located in New England’s lowest wage index area, the health system-based provider said in its comment letter submitted to CMS. “From 2007 to current Medicare payments have fallen below the cost of providing care (with the exception of 2009 and 2015),” the Caribou-based organization said. “Over 75 percent of our episodes of care are located in rural settings.”

Severe shortfalls on the Medicaid side compound the problem, EMHC added. “The financial burden of governmental payer underfunding results in chronic financial challenges for our organization,” the agency lamented.

The largest portion of the 1 percent cut for next year, $420 million, is due to the final year of CMS’s four-year PPS rebasing initiative. But rebasing is no longer necessary, many commenters insisted. For starters, key data indicators including the number of home health episodes, home health users, and agencies have all fallen, CMS acknowledged in the proposed rule (see Eli’s HCW, Vol. XXV, No. 25-26). And rebasing addresses a problem that no longer exists, maintained the American Physical Therapy Association in its comment letter. “Coding accuracy over the past few years has been drastically improved, and further cuts are no longer warranted in order to fulfill CMS’s stated purpose,” APTA said. “Rebasing adjustments are no longer practical or necessary.”

Unfair: Plus, “the home care industry is the only post-acute provider absorbing an additional year of payment reductions in 2017,” protested Advocate at Home based in Downers Grove, Ill., in its comment letter.

The cut is particularly punishing for those agencies undergoing Pre-Claim Review, which is currently operating in Illinois and set to begin soon in Florida, Texas, Michigan and Massachusetts, says health system-based Advocate. HHAs report PCR denial rates of up to 80 percent, while Medicare Administrative Contractor Palmetto GBA puts the figure a bit lower (see story, p. 265).

Advocate “is incurring increased costs in both clinical and clerical labor to assemble, review, and submit requested documents” for PCR, the agency told CMS in its letter. “Advocate at Home will be pre-qualifying or seeking affirmation of nearly 1,100 Medicare home health claims or $2.3 million dollars in revenue per month. To accomplish this, we anticipate we will need to hire an additional nine full time equivalent positions, both clerical and clinical,” the agency said on the eve of implementation.

“With each pre-claim submission taking 30 to 60 minutes to prepare, this is a significant administrative burden.”

HHAs face other increased costs as well, ranging from recruitment and retention to labor law compliance to information technology. Agencies currently grappling with or preparing for Value-Based Purchasing also face steep associated costs, pointed out the Visiting Nurse Associations of America in its letter.

Rate Cut Increases Rehospitalization Risk

“The rebasing of payment rates puts access to home care in jeopardy in various parts of the country,” warned the National Association for Home Care & Hospice in its comment letter on the rule. “That risk is triggered by a combination of rebasing-driven rate adjustments that are applied across the board along with a payment model that does not adequately address cost variations in patients and locations.”

“If this rule is finalized as proposed, VNAA is concerned that access barriers to home based care will emerge, as agencies shutter their doors,” the trade group said.

NAHC took CMS to task for focusing on average costs. “No business can survive if it only receives reimbursement for its costs,” the trade group said. “No health care delivery infrastructure can continue to meet the needs of a diverse patient population across the widely varying economies throughout the United States if reimbursement is limited to average cost.”

“The Medicare home health benefit is critical to ensure patients aren’t readmitted to the hospital,” Scott Lara in Florida said in his comment letter. “However, year after year, CMS continues to cut funding to this program.”

Impact: “To prevent primary hospitalizations and to keep beneficiaries in the least costly setting, an increase in the use of home health services is appropriate and desirable,” VNAA said. “VNAA is deeply concerned about another negative payment adjustment,” the trade group added. “Additional payment reductions will be devastating to home health agencies and will impact access to critically needed services, safety net providers and the agencies who serve underserved regions and/or the most vulnerable beneficiaries. This inevitably reduces access to care in the very populations (underserved and minority) that HHS has identified as requiring better access to high quality care in their own communities.”

San Francisco-based health system Dignity Health “continues to be very concerned the cumulative effect of proposed cuts to HH will be disproportionately felt by home health agencies that care for the most medically complex and frail patients, many of which are hospital-based,” the system says in its comment letter. Across-the-board cuts have a very different impact on low-margin providers that serve the most needy patients, Dignity warned. They will “jeopardize the already fragile continuum of care for our most complex patients with special needs.”

“Dignity Health urges CMS to consider the current trend in decreasing Medicare margins and take steps to ensure that any additional changes to reimbursement rates and policies do not unravel a critical component of the continuum of care,” it said.

“To successfully transform delivery of care, providers need adequate resources to make necessary changes.”

“Across the board cuts have the unintended but inevitable effect of reducing investment in infrastructure and thus compromise the future viability of safety net providers,” VNAA agreed.

CMS Should Focus On Bad Apples

Instead of implementing indiscriminate rate cuts for all HHAs, CMS should target its efforts on bad actors in the program, said one fed-up commenter from Missouri. “Continued cuts are not the answer,” the commenter said. “If someone is abusing the system, whether it’s a doctor, hospital, or home health agency, shut them down,” the person said. “But don’t penalize every[one] else by adding to their paper load and cutting their reimbursement.”

The commenter offered this observation shared by many industry veterans. “I became a nurse some 33 years ago, and I no longer enjoy being a nurse like I used to due to all the red tape involved in caring for a patient.”

Timeline: See whether CMS heeds the industry’s feedback when it issues the final rule, expected at the end of October or beginning of November.

Note: See the rule and links to the comments at https://www.federalregister.gov/d/2016-15448.