Home Health & Hospice Week

Influential commission calls for 5 percent cut.

If you thought the Medicare Payment Advisory Commission’s yearly reports to Congress were hampering the industry’s efforts to secure adequate reimbursement, just wait for the next one.

In its Dec. 8 meeting, MedPAC commissioners approved a draft recommendation to cut home health agency Medicare reimbursement rates by 5 percent in 2018. That’s compared to last year’s recommendation for a 0 percent pay increase for 2017. The Centers for Medicare & Medicaid Services actually cut rates 0.7 percent following MedPAC’s recommendation, but did not entirely eliminate the inflation update as the Commission called for.

Why the big difference? Profit margins may be one key. Last year, MedPAC projected an 8.8 percent profit margin for HHAs in 2016. This year, Commission staffer Evan Christman announced an 11 percent margin projection for 2017. “Margins have remained substantial … despite [rebasing] reductions,” Christman pointed out in the meeting. He pegged HHAs’ 2015 margin at 15.6 percent.

And as with last year, MedPAC found declines in the number of Medicare-certified HHAs (a 115-agency drop in 2015 to more than 12,300). But “the supply of agencies in 2015 was 63 percent higher than 2004,” Christman told commissioners.

Change: Unlike last year, MedPAC found volume of episodes increased slightly. “The small increase in 2015 reverses the trend of modest declines we have seen observed since 2011,” Christman said.

And “the number of users and the share of fee-for-service beneficiaries using the benefit increased slightly,” Christman added.

“Medicare has overpaid for home health since the PPS was established in 2000,” Christman contended. “The fact that home health can be a highvalue service does not justify the excessive overpayments.”

In addition to supporting the 5 percent cut recommendation, commissioners also approved calling for two more years of rate rebasing and eliminating therapy from the Prospective Payment System case mix system.

The latter suggestion is already in the works under CMS’s Home Health Groupings Model plan for HHA payment reform (see Eli’s HCW, Vol. XXV, No. 44).

Commissioners Voice Distrust Of Freestanding HHAs

In the meeting, commissioners voiced frustration that CMS isn’t cutting HHA rates as advised. “We’ve made these recommendations … but they don’t get adopted,” said Commissioner Crag Sammit with Anthem.

Commissioner Rita Redberg blamed “the pressure on CMS … from industry which clearly has financial interest.” Redberg called industry projections of low margins under rebasing “really off.”

“We need to step up the volume” on the recommendations, suggested MedPAC Chair Francis Crosson.

On the other hand: Commissioner David Nerenz with the Henry Ford Health System in Detroit expressed concern about the recommended cut as a “blunt instrument.” But he added, “I feel much more comfortable as it applies to the freestandings than I do as it applies to the hospital-based.” Discussion ensued over whether MedPAC could recommend cuts for freestanding agencies only.