MedPAC Offers Positive Comments for Future of Home Health

The Medicare Payment Advisory Commission (MedPAC) met in Washington, D.C. last week for its annual review of draft recommendations for legislative consideration related to Medicare providers. HCAF’s Bobby Lolley and Monica Smith were in attendance, at which the Commission reviewed Medicare home health services.

As the Commission considers how to reduce Medicare expenditures, ensure quality of care and seek innovative approaches to providing health care, it was home health and hospice that received positive comments from MedPAC commissioners. Commissioners were quick to acknowledge that the future is dependent on the “valuable” services offered through our care. MedPAC commissioners also recognized that home health care services will have to be relied upon more in the near future. The Commission also referenced the Jimmo v. Sebelius settlement that is still being finalized in the courts, and acknowledged that exactly how that will be accomplished will have to be worked out with the Centers for Medicare and Medicaid Services (CMS) going forward but that MedPAC may want to offer recommendations.

The positive refrain from MedPAC Commissioners further supports a willingness by health care policymakers to be more reliant on home-based services as the Congress and the Obama Administration grapples with finding significant savings from entitlement programs next year

In its meeting, MedPAC commissioners noted the following industry stats:

  • $18.4 billion in Medicare home health expenditures
  • 6.9 million episodes for 3.4 million beneficiaries
  • 12,199 Medicare-certified home health agencies
  • 73% increase in agencies since 2002
  • Net increase of 512 home health agencies; 218 exiting program
  • Growth concentrated in relatively few areas
  • Home health expenditures increased 93% between 2002 and 2011 to $18.4 billion

Relatively Efficient HHAs Outperform Other Agencies in Cost and Quality

Compared to other HHAs relatively efficient agencies:

  • Costs per visit that were 15% lower and Medicare margins that were 28% higher;
  • Larger in median size (episodes) by 29%;
  • Rates of hospitalization that were 20% lower; and
  • Similar patients and provided similar services on most measures.

And finally, Medicare home health margins were reviewed. In 2011, the Medicare home health margin was 14.8% and MedPAC projects that the margins will be 11.8% in 2013.

Commission’s Draft Recommendations

The Commission recommended a compressed rebasing of two-years rather than the legislatively mandated four-years and elimination of the CY2014 market basket update.

Commissioner’s Discussions

Commissioners acknowledged that Medicare home health services is a “valuable” service to the Medicare program and indicated that it should be relied upon more frequently as our healthcare system evolves. Prompted by data provided by the Partnership for Quality Home Healthcare, several commissioners raised questions related to the five States showing the largest numbers of new providers and largest amount of Medicare expenditures. Those States include California, Texas, Florida, Illinois and Ohio. The Commissioner’s requested that the MedPAC staff review these five States along with the 25 counties with the highest utilization to analyze aberrant behavior and determine if the Commission should offer recommendations. Further, commissioners asked to evaluate the margins of the areas showing aberrant behavior in comparison to quality providers.

As mentioned previously, the Jimmo settlement was also raised with questions as to how to treat patients suffering with chronic conditions lasting a longer period of time in comparison to those treated from acute care hospitals with short term medical needs.

Commissioners also raised questions related to the 3% rural add-on provision as mandated from the Affordable Care Act. Several Commissioners stated that the costs associated in rural areas may not differ as significantly as those in urban areas. There was a request to see if a better definition may be determined for providing funding to areas in need of additional help impacting access to care rather than the current “rural” vs. “urban” definition.

Finally, one commissioner recommended that the MedPAC include their previous recommendation that CMS move to a case mix adjusted therapy reimbursement and eliminate the therapy thresholds.

Post Acute Care Reform

Glen Hackbarth, MedPAC chairman, reminded the commissioners that work needs to be done on restructuring the Medicare post acute care program. The new Congress will be under pressure to develop billions of dollars in savings related to the Medicare program next year. One area of interest is restructuring the post acute care benefit.

MedPAC staff laid additional groundwork during the meeting. The staff has been reviewing four specific areas for post acute care changes. Those areas include:

  • Bundled and ACO models: Potential implications for post acute care services
  • Common patient assessment instruments (CMS has developed the CARE tool for all post acute care services)
  • Risk-adjusted, patient outcomes measurement
  • Alignment of all post acute care providers to readmission penalties

The Commission plans to return to its post acute care discussions following their finalizing their recommendations to Congress on Medicare payment changes. The Commission will finalize those recommendations at its January meeting.

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