Obama’s 2013 Budget Recommendations Call for Home Care Copays Beginning in 2017

President Obama today announced his recommendations for the 2013 federal budget, which totals $3.8 trillion in spending and includes $1.5 trillion in new taxes, much from allowing the Bush-era tax cuts to expire. As it relates to home health, the President recommends a $100 copayment for Medicare home health care services that do not follow a hospital stay, set to begin in 2017. The budget announcement prompts an election year spending showdown with Republicans, who have repeatedly clashed with the President over spending.

The copay proposal is one that HCAF and the National Association for Home Care & Hospice opposed last fall along with any other copay proposal that had surfaced. Next year promises to be a very challenging year for all Medicare providers as it is expected that deep restructuring of all aspects of Medicare will be on the table for both Democrats and Republicans in Congress.

The White House budget overview for the Department of Health & Human Services notes that home health copays will help improve the financial stability of the Medicare program. The President recommends a $100 copay to “encourage appropriate use” of home care for episodes that are not preceded by inpatient care and for episodes with five or more visits. This proposal will save $350 million over 10 years.

In addition, the budget reduces the federal subsidy of Medicare costs for beneficiaries with Medigap plans because these beneficiaries “have less incentive to consider the costs of health care services, thus raising Medicare costs and Part B premiums for all beneficiaries.” As such, the Budget applies a premium surcharge for new beneficiaries beginning in 2017 if  they choose such Medigap coverage.

In addition, the President recommends revising market basket updates for post-acute care providers, including home care agencies, nursing homes, long-term care hospitals and inpatient rehab facilities. The reduction amounts to 1.1 percentage points each year, in addition to the 2014 home health rebasing and the productivity adjustments starting in 2015. The proposal indicates that the payment update would not drop below zero. If that standard is applied, providers would face no cuts under it since rebasing is very likely to bring the annual update to zero or below in 2014-2017 with an additional cut coming with an annual productivity adjustment (1-1.5 points) starting in 2015.

Medicare Payment Advisory Commission (MedPAC) analysis indicates that Medicare payment significantly exceeds the cost of patient care in post-acute care settings, resulting in high Medicare margins. The President’s proposal would gradually realign payments with costs and encourage efficient care delivery through adjustments to payment rate updates for these providers. These adjustments build on recommendations from MedPAC’s March 2011 Report to the Congress, in which they recommended that the Congress eliminate payment updates for each of these provider types in 2012. Between 2013 and 2022, this is expected to save Medicare more than $56 million.

Beyond home care budget issues, the President’s proposal implements $1 trillion in spending cuts over the next decade, as agreed upon under the Budget Control Act. It also calls for increased transportation spending and the Buffett Plan, named after the billionaire Warren Buffett, which raises taxes on millionaires.

The recommendations will be sent to Congress where the Senate and House of Representatives will craft their own budgets, which will later be conferenced into one version for President Obama to sign into law.

Take action!

Medicare home care copays were a major topic of discussion during last fall’s budget deliberations in Congress. President Obama and both parties in Congress supported copays for as little as $150 per episode, but other issues resulted in Congress’ failure to implement copays.

HCAF encourages Florida home care professionals to call on Congress to oppose Medicare home health copays. Click here to send a prepared message to Senators Nelson and Rubio and your U.S. representative!

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