Medicare Compliance & Reimbursement

Advisory body favors cuts due to high HHA profit margins. The fight will be on in Congress next year over Medicaids home health agency payment rates. The Medicare Payment Advisory Commission 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 Association for Home Care & Hospice. Further, they have fired the first salvo in the 2009 legislative battle for home care. MedPACs analysis underlying the recommendations is seriously flawed, NAHC contends. Nearly 35 percent of HHAs today have negative margins, and another 5 percent reduction would put more than half of agencies in the red. Commissioner Rhetoric Escalates Part of MedPACs concern rises from the industrys significant growth. While HHA numbers still havent 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 said. 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. Utilization is one big reason for the agencys perceived overly generous payment rates. 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 doesnt make that claim about a 5 percent cut, which would cut up to $5 billion in 2010. But some commissioners see the reduction -- or an even bigger one -- as sorely necessary [...]