Medicare Compliance & Reimbursement

Latest Medicare rate update brings bad news for home health agencies.

The Centers for Medicare & Medicaid Services (CMS) plans to save $350 million in the coming financial year. The third year of CMS’ four-year rebasing initiative will reduce the home health base payment rate by $80.95, CMS notes in the 2016 home health prospective payment system proposed rule released July 6.

CMS also proposes to reduce HHA rates in calendar years 2016 and 2017 by 1.72 percent in each year “to account for estimated case-mix growth unrelated to increases in patient acuity … between CY 2012 and CY 2014” — in other words, so-called case-mix creep.

The math: The rebasing reduction is 2.5 percent, while the case-mix creep adjustment for 2016 is 1.6 percent. An Affordable Care Act requirement reduces the 2.9 percent inflation update by 0.6, resulting in only a 2.3 percent update. The end result: proposed rates decreased by 1.8 percent, CMS details in the rule. That will lead to a $350 million cut to Medicare payments next year, the agency estimates.

Another cut: The proposal doesn’t mention the 2 percent sequestration cut, notes the National Association for Home Care & Hospice (NAHC). “It is definitely expected it will continue,” NAHC says.

“This is yet another example of CMS being heavy-handed and imposing unwarranted cuts beyond those required by Congress,” NAHC’s Val Halamandaris says of the case-mix creep cuts. “They will severely affect Medicare patients and participating home health providers.”

Rebasing cuts “will force many agencies already teetering on the brink to close their doors,” Halamandaris warns in a message to members. “The additional cuts, along with the veiled and inaccurate accusation that all home health agencies are abusing the Medicare program, may very well be the straw that breaks the camel’s back.”

“How much more are we supposed to give up?” asks attorney Robert Markette Jr. with Hall Render in Indianapolis.