Please note: This posting was compiled with information supplied by the National Association for Home Care and Hospice (NAHC)
Our earlier review of the health care bill that passed the House late last night was purely an overview of the major components of health care reform, and how it will affect Americans. Now let’s take a look at some of the provisions and how it will affect the home health care industry and your business.
The health care bill is sweeping legislation in every sense, beginning with a ground-up transformation from an acute care-based, institutionally oriented health system to one that focuses on disease prevention and home and community-based care, the latter primarily through the bill’s inclusion of a program called the Community Living Assistance Services and Supports (CLASS) Act and significant expansions of Medicaid. As you may already know, the Florida Medicaid program’s annual budget now surpasses the statewide education budget. If (and it’s a BIG if) this CLASS act does what it says it will do, it could provide an opportunity for expansion of home health care services over time as changes are implemented and the cost savings that can be attributed to home health care versus institutional care are realized. This is a longer view rather than a short term perspective.
“The Congress completed a historic process yesterday — the new legislation will transform American health care and place home and community-based care at the center of the action,” said Val J. Halamandaris, president of the National Association for Home Care & Hospice (NAHC). “But our work is far from finished. NAHC intends to remain vigilant and engaged as the act is implemented to ensure it reaches its potential and meets the needs of patients and providers alike.”
Among the changes NAHC is recommending are:
- adjustments to the “full-time employee” definition to address workforces with intermittent schedules appropriately
- tax credits for the private pay client
- an increase in the Federal Medical Assistance Percentage, or FMAP, to offset the increased costs of extending health insurance coverage to employees — with a mandate on the states to pass through the increase to agencies.
In addition, the legislation seeks to move toward payment parity for traditional fee-for-service Medicare and Medicare Advantage (MA) programs, as Democrats have assailed the higher payments made to private insurers under the MA program. The Medicare Advantage program has been extremely popular in Florida, and was earmarked for protection by Senator Bill Nelson (D-FL) in the Senate version of the bill that passed Christmas Eve. In time, payment parity could potentially reduce the number of Medicare beneficiaries who opt to enroll in MA plans.
Impact on Home Health and Hospice
The White House and Congress agreed to a combination of tax increases (including a tax on investments) and spending reductions to help finance the expansion of health insurance coverage to an estimated 32 million Americans. Roughly half of the financing comes from changes to the Medicare program. The original House legislation would have imposed deeper cuts in projected home health and hospice spending over the next 10 years (approximately $55 billion for home health and $10 billion for hospice). The Senate version which was approved last night is a kinder, gentler version of home health care cuts, taking effect in smaller doses and a later implementation date than the original House bill so that agencies could adapt their operations and care practices to the changes.
Please see NAHC’s summary below:
NAHC’s efforts led to:
• Delayed imposition of a home health productivity adjustment (from 2011 to 2015);
• A delayed and phased approach to rebasing of home health payments (rebasing would begin in 2014 and be phased in over four years, as compared with the House’s proposal of complete rebasing in 2011);
• Rejection of the Medicare Payment Advisory Commission’s proposed acceleration to 2010 of the 2011 case-mix creep adjustment;
• Preservation of the full market basket update for 2010, with 1 percentage point reductions off the market basket in 2011, 2012, and 2013;
• Substitution of modifications to the outlier payment policy in lieu of approximately $7 billion in payment rate reductions; and
• Reinstatement of the rural payment differential (add-on) at 3 percent from April 1, 2010 until Jan. 2, 2016.
As a result, rather than reducing scheduled home health outlays by $57 billion over the next 10 years, this final legislation reduces projected growth by approximately $39 billion over the same period. The table below shows the modified spending projections for home health under the bill, compared with the March 2009 CBO baseline for home health spending. In total, projected outlays for home health were expected to total $318 billion, while under the new legislation overall 10-year spending is estimated to be roughly $279 billion. Under the original House health reform bill, 10-year spending for home health was projected to be $261 billion.
| Fiscal Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
| CBO* | 19.0 | 21.1 | 23.5 | 26.2 | 29.0 | 32.2 | 35.7 | 39.7 | 43.9 | 47.9 |
| Original House bill | 18.3 | 18.5 | 19.9 | 22.0 | 24.1 | 26.6 | 29.1 | 32.0 | 35.1 | 37.9 |
| Senate** | 19.0 | 20.7 | 22.7 | 25.1 | 27.1 | 28.9 | 30.4 | 32.2 | 34.9 | 37.6 |
*March 2009 CBO baseline
**revised CBO score — January 2010
The following table shows the variation in the rate of growth in the Medicare home health program based on March 2009 estimates by CBO as compared with the growth rates anticipated under the reform legislation expected to be signed by the President:
| Home Health Growth Rate Percentage | |||||||||
| Fiscal Year | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
| Without reform | 11.0 | 11.4 | 11.5 | 10.7 | 11.0 | 10.9 | 11.2 | 10.6 | 9.1 |
| Under reform bill | 8.9 | 9.7 | 10.6 | 8.0 | 6.6 | 5.2 | 5.9 | 8.4 | 7.7 |
To illustrate the year-by-year impact of the legislation on the Medicare home health program, the following chart shows projected outlays for home health services under March 2009 CBO estimates (broken black line), as compared with the legislation approved last night (green line) and the original House-passed legislation (red line).
The year-by-year impact on Medicare hospice payments is less clear, mainly because cost estimates for some hospice provisions such as the productivity adjustment are lumped in with the impact on other provider types. Even so, the bill approved last night delays imposition of an annual productivity adjustment to the hospice market basket until the beginning of fiscal year 2013, as opposed to January 2010 under the original House-passed reform bill. The final legislation also takes major steps toward modernizing the hospice program by laying the groundwork for a revamp of the Medicare hospice payment system and through a Medicare demonstration that will allow hospice beneficiaries to receive, concurrently, regular Medicare services. In addition, the legislation allows Medicaid-eligible children to receive hospice care without forgoing other health care services under the program.
What Does the Future Hold?
The health care reform bill that passed the House must still be approved by the Senate before it heads to the President’s desk for signature. Once implemented, all provisions of the bill will be under close scrutiny as we embark on a new frontier of health care services. Is the bill the end point for health care reform? No, it’s the starting point. Consider it a work in progress, with future legislative debate and changes almost guaranteed. Since most of the changes are not slated to take effect until 2014, there will be opportunities to review the current plan before implementation.
What Do You Need to Do?
- Stay abreast of industry changes – read everything you can on health care reform
- Participate in Legislative Day in Tallahassee on April 7th –advocacy is more important than ever
- Attend the NAHC meetings in Washington DC in April – look for more information on the e-FORUM tomorrow
- Get to know your legislators- they are holding the purse strings for your business now more than ever
Look for more updates on how health care reform will affect your business and how you can participate in the process tomorrow.
Return to www.homecarefla.org
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