Medicare Compliance & Reimbursement

Published 2006 rates may not be here to stay.

Home health providers should not get too comfortable with the recently issued 2006 Medicare payment rates for home health agencies--Congress could wipe out the increase in the blink of an eye.

The Centers for Medicare and Medicaid Services issued the new HHA base rate of $2,327.68 and new per-visit rates. That's a 2.8 percent increase over 2005 rates, according to the 2006 PPS update final rule.

The final 2006 episode rate is up nearly $7 from the proposed rate CMS issued in July, but the increase isn't exactly motivating HHAs to dance in the streets. For an agency with 1,000 episodes annually, the bump up represents a mere $7,000 increase compared to total revenues of $1.8 to $2.5 million, estimates Abilene, TX-based consultant Bobby Dusek. "Nobody's going back to the drawing board to figure out how to spend that money," Dusek tells MLR.

The 2006 update comes at a time when many rural HHAs are struggling without the 5 percent rural add-on that ended in March, notes consultant Jim Hamilton with David-James in Baltimore, MD. Nevertheless, "every little bit helps," points out consultant Melinda Gaboury with Nashville, TN-based Healthcare Provider Solutions.

And "this is the type of increase that keeps giving," notes consultant Mark Sharp with BKD in Springfield, MO. "It establishes a higher base for future year increases."

The difference between the proposed and final rates equals $40 million in 2006 alone, the National Association for Home Care & Hospice says. The total increase from 2005 to 2006 is $370 million, NAHC adds.

Congress still deliberating: The final PPS rates might not be as final as HHAs would like, experts warn. The Senate and House budget packages so far haven't included home care cuts. But home care is still ripe for congressional budget trimming, especially if lawmakers bow to pressure to increase physician payment rates that are scheduled for a 4.4 percent cut in 2006. "Everybody perceives home care as very profitable," Dusek laments. HHAs may find out only right before the new rates' implementation date that they aren't coming through after all, Dusek worries.

Fuel Costs An Issue For Providers

One of the 35 commenters on the proposed rule asked CMS to consider cost increases, especially increasing fuel expenses, in its market basket index inflation update. But CMS says the MBI methodology, which bases the inflation update on 2000 data, "reflect[s] the price changes of fuel," according to the final rule in the Nov. 9 Federal Register.

Experts roundly agree, however, that the MBI does not account for the tremendous gas price spikes that have hit HHAs hard this year.

No one thinks "the PPS rates could have possibly taken into account the higher costs of gas prices, since much of the spike occurred in September,"  according to Hamilton.