Home Health & Hospice Week

Home health agencies will see a nice little increase in Medicare payment rates come October - if Congress doesn't slash them first.

HHA payment rates will increase 3.3 percent in 2004, the Centers for Medicare & Medicaid Services announces in the July 2 Federal Register (see charts "Fiscal Year 2004"). That translates to $340 million in additional Medicare payments to HHAs in fiscal year 2004, which begins Oct. 1, CMS says.

"It is a decent increase and, along with the wage adjustment update, it will help many HHAs do well," says Gene Tischer of the trade association Associated Home Health Industries of Florida.

But Congress is seriously considering cutting that inflation update in its mammoth Medicare bill (see story, "Legislation:  Lawmakers Dig in For Long Haul on Medicare Bill" ). If that happens, HHAs could see a much less beneficial increase, or even none at all.

The biggest change this year is that there is no rural versus urban split for the base payment amount, notes Dana Strong with Scarborough, ME-based Strong Consulting. "The elimination of the 10 percent rural add-on will adversely impact providers," Strong notes. CMS cut the add-on in April.

"We do need the rural add-on restored," Tischer says, but for now it remains all one rate. That could change, just like the amount of inflation update, depending on the fate and final contents of the Medicare bill pending in Congress.


Outliers, LUPAs Considered for Change

CMS adds some information to this year's rate notice, further expounding on the components that make up the market basket index. That index determines HHAs' inflation update amount.

In response to a comment on last year's updated payment rates, CMS also promises it will issue detailed information on outliers as soon as it gathers the data. That information will include the frequency of outlier payments, any HHRG connections to outliers, the range of discipline-specific visits occurring in outlier cases and a reevaluation of the outlier methodology.

CMS also will reevaluate low utilization payment adjustment (LUPA) methodology as more data becomes available, the agency pledges. In LUPA cases, agencies are paid per-visit for episodes of four or fewer visits.

Responding to another commenter, CMS defended last year's 7 percent, across-the-board cut to HHA payment rates. Language of the Balanced Budget Act of 1997 required CMS "to determine the payment amount for FY 2003 as if there were a 15 percent reduction to the limits under the [interim payment system] updated to FY 2003."

CMS' methodology for determining that amount, which led to the 7 percent cut, was justified, the agency insists in the notice. Further, using alternative methods suggested by the industry to compute the cut could have led to an even larger reduction, CMS warns.

CMS will take comments on the FY 2004 notice until Aug. 29.

Editor's Note: The rate notice, including a full list of wage index changes, is at www.access.gpo.gov/su_docs/fedreg/a030702c.html.