Home Health & Hospice Week

But watch out for legislative reimbursement cuts.

For the first time in years, home health agencies won't see a cut to their prospective payment system base rate in 2013 if a new proposed rule is finalized. But HHAs shouldn't cheer quite yet.

The home health PPS episodic rate would rise a miniscule 0.0016 percent under the new 2013 PPS proposed rule, published in the July 13 Federal Register. The current base rate is $2,138.52, and under the rule released July 6 it would be $2,141.95 in 2013.

That increase 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, the Centers for Medicare & Medicaid Services says in a press release.

Plus: Episodes furnished to patients in rural CBSAs would have a 3 percent rural add-on, while agencies who fail to submit required CAHPS and OASIS data will be docked 2 percent.

Background: This very slight increase comes after two years of cuts -- a 2.3 percent reduction in 2012 and 5 percent in 2011. The two years before that saw only small rate increases at 1.75 percent in 2010 and 0.15 percent in 2009.

Last year, CMS decided to phase in a 5.06 percent case mix adjustment, leaving a 1.32 percent cut left over for 2013. Many observers expected CMS to up the case mix creep cut based on additional case mix data as it has in previous years. CMS did consider implementing a higher 2.18 percent adjustment, it says in the rule. But the agency ultimately decided to stick with the amount set out last year.

"This is a welcome action from CMS, as providers have experienced significantly increased costs with the face-to-face encounter and therapy assessment rules," says William Dombi with the National Association for Home Care & Hospice.

"Politics, the CMS workload, and the requirements of the PPACA have slowed the hammering of the home health care industry by regulations via this approach for now," suspects financial consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, Calif.

Remember: Your individual agency's rates' increase or decrease will rest on your wage index calculations. For example, CMS expects rural agencies to take a bigger wage index hit than urban agencies, it says in the rule.

Watch Out For ACA Cut Looming In January

Home care providers shouldn't count on their rates remaining as proposed, however. Even if CMS finalizes the rates as-is this fall, ACA "sequestration" cuts are slated to take effect in January.

They will be 2 percent across-the-board cuts for areas including Medicare payment rates.

The chance of these cuts taking effect is "highly likely," Dombi says in NAHC's member newsletter.

"I don't see how Congress will pass legislation" to avert the cuts in an election year, agrees financial consultant Rick Ingber with VantaHealth Consulting in the Philadelphia area.

And HHAs should expect to see cuts for case mix creep continue in future years. In the rule, CMS already indicated it found more coding creep than what is represented in the 1.32 percent reduction. "CMS will continue to monitor any future changes in case-mix and make updates as appropriate," the agency says in its release.

Calm Before The Rebasing Storm Next Year

Compared to some years, this year's PPS proposed rule contains no big reimbursement methodology shake-ups. That may be because CMS is gearing up for its major PPS rebasing project next year, as required by the ACA. (See Eli's HCW, Vol. XXI, No. 22 for rebasing audit information.)

Concern: PPS rate adjustments based on rebasing are likely to be significant, experts warn. Clients being audited under the program "have asked me why should they bother responding as the audits will not affect them," Boyd tells Eli. "I am largely doing the responses for them as a labor of love and concern (and free), because I worry about massive adjustments and the rebasing if all providers feel that way."

CMS may use the rebasing project as an opportunity to retool the therapy portion of PPS reimbursement based on ongoing concerns from the Medicare Payment Advisory Commission and others, suspects Cindy Krafft with Fazzi Associ-ates. "Everyone sees the need for the therapy counting to stop," since Medicare reimbursement based on therapy utilization seems to induce behavioral changes, Krafft observes.

The hitch: CMS hasn't yet come up with a viable alternative method to predict therapy resource utilization. In case mix model testing, diagnosis and other clinical drivers aren't doing the job. CMS may look to its work with outpatient therapy reimbursement for guidance, Krafft suggests.

If CMS can't come up with another good predictor of therapy utilization, it will have to continue paying based on visit numbers, Krafft expects. That's because HHAs couldn't afford to furnish therapy without increased payment for it.