Home Health & Hospice Week

Advisory body favors cuts due to high HHA profit margins. The fight will be on in Congress next year over home health agency payment rates from Medicare. The Medicare Payment Advisory Com-mission is considering which of two recommendations it wants to give Congress in its March report. Bad: The influential advisory body to Congress may recommend another rate freeze for 2010, it said in a Dec. 4 meeting. That draft recommendation is based on the average 12.2 percent profit margin it projects for HHAs in 2009. Worse: Or MedPAC may go a step further and recommend no inflation update plus a 5 percent cut. That would be a 7.71 percent cut added with the case-mix creep reduction already slated for that year, or a more-than-10 percent cut from what rates would be if the market basket inflation factor were allowed to go through. "MedPAC staff has definitely set the stage for a heated contest on what MedPAC should ultimately recommend," notes the National Associa-tion for Home Care & Hospice. "Further, they have fired the first salvo in the 2009 legislative battle for home care." MedPAC's analysis underlying the recommendations is "seriously flawed," NAHC contends. Nearly 35 percent of HHAs today have negative margins, and under the 5 percent reduction more than 50 percent of agencies would be in the red. "That result will be very difficult for any congressional office to accept," NAHC hopes. Commissioner Rhetoric Escalates Part of MedPAC's concern rises from the industry's significant growth. While HHA numbers still haven't reached the 1997 peak, the number of agencies has increased more than 30 percent from 2003 to 2008 with nearly 9,700 providers, MedPAC staffer Evan Christman pointed out. And from 2003 to 2007, the number of home health users increased 16 percent to 3.1 million. In 2007, 8.9 percent of Medicare fee for service beneficiaries used home health as opposed to 7.6 percent in 2003, Christman explained. Therapy use surges: Some types of services have risen more than others. Therapy-intensive episodes rose from 0.9 percent of all episodes in 2002 to 1.6 percent in 2007 -- nearly 12 percent. One big reason for the agency's perceived overly generous payment rates is utilization. The Centers for Medicare & Medicaid Services based its prospective payment system rates on historical data that showed 31.6 visits per episode time, Christman said. But in reality, HHAs now furnish an average of 22 visits per episode. MedPAC contends that a rate freeze, which would strip up to $750 million from HHA payments in 2010, would have "no adverse impact on beneficiaries or providers' willingness to deliver care." The commission doesn't make that claim about a 5 percent cut, which would cut up to $5 [...]