MedPAC Reissues 2012 Recommendations

Last week, the Medicare Payment Advisory Commission met to finalize its 2013 Medicare recommendations to Congress. MedPAC reiterated its 2012 recommendations including the following:

  • The Secretary of the U.S. Department of Health and Human Services, with the Office of Inspector General, should conduct medical review activities in the counties that show aberrant home health utilization. The Secretary should implement the new authorities to suspend payments and the enrollment of new providers if they indicate significant fraud.
  • The Congress should direct the Secretary to begin a two-year rebasing of home health rates and eliminate the market basket increase.
  • The Secretary should revise the home health case mix system to rely on patient characteristics to set payments for therapy and non-therapy services and should no longer use the number of therapy visits as a payment factor.
  • The Congress should direct the Secretary to establish a per-episode copayment for HH episodes that are not preceded by hospitalization or post acute care use.

In its discussions, MedPAC staff noted their concerns about the upcoming Jimmo v. Sebelius legal settlement and its implications on higher utilization. Because of the settlement, the Obama administration has agreed to scrap a decades-old practice that required many beneficiaries to show a likelihood of medical or functional improvement before Medicare would pay for skilled nursing and therapy services. As a result of their concerns, MedPAC believes that a compressed rebasing would be beneficial to eliminating higher utilization before the settlement goes into effect. Further, they are really pushing for some controls on community based services for the same reason. Estimates show that the Medicare program will save $5-10 billion over a decade because of rebasing.

MedPAC Staff Presentation Highlights

  • MedPAC staff discussed the differences between efficient HHAs in comparison to non-efficient providers. Efficient providers were those with lower costs, larger size and had lower rates of hospitalizations. Efficient providers also had a lower share of community-admitted episodes and were more likely to be located in the West, Pacific, and New England regions and less likely to be from the Southwest and Southeast.
  • HHAs with more therapy services in 2010 had higher margins, but MedPAC staff noted that that has narrowed since the Centers for Medicare & Medicaid Services revised the payments in 2012.
  • HHAs with high shares of Medicare/Medicaid patients and very high shares of community-admitted episodes had lower margins that other HHAs. Agencies with these very high groups were disproportionately from Texas and other high utilization states.
  • High rates of home health use are concentrated in five states: Florida, Louisiana, Mississippi, Oklahoma and Texas. MedPAC staff stated that they reviewed home health episodes per 100 FFS beneficiaries. In the top five states, it was 35 episodes per 100 FFS beneficiaries. In all other states, it was 14 episodes per 100 FFS beneficiaries – so doubling and sometimes tripling the number of episodes.
  • MedPAC staff also used their 25 problematic counties in the United States – many concentrated in those top five states, including Miami-Dade County in Florida. MedPAC found that by reducing utilization in the top 25 counties to the 75th percentile (18.5 episodes per 100 beneficiaries) would have lowered spending by $840 million or 5% in 2011.
  • MedPAC staff did not have a formal recommendation to eliminate the rural add-on payments but did do research and found that HHAs with higher utilization were also receiving higher percentages of the rural add-on payments – suggesting that the rural add-on payment does not appropriately help HHAs needing additional help due to rural concerns for providing care to beneficiaries.
  • A prominent focus of the MedPAC presentation was the community based referrals. MedPAC data suggests that some 51% of referrals (down from 60% previously) accounted for some >60% of the episodes. For the community-based referrals, beneficiaries have 2.6 episodes and for post-hospitalization it is 1.4 episodes. Staff asked if the possibility of a long term care benefit was beginning with the community based referrals.

MedPAC Commissioners Discussions

  • Several Commissioners reiterated their support of home health and its “valuable” service to the health care delivery system. Commissioners also stated that they wanted the staff to continue to focus on program integrity concerns and the top five states, especially related to high utilization.
  • One Commissioner stated that there is an urgency to move forward with compressed rebasing – again, this was in relationship to the finalizing of the Jimmo settlement.
  • One Commissioner raised copayments as a way to control utilization from the community referrals.

What’s Next?

MedPAC will release its official report to Congress in March. In the meantime, the home care industry must take action! Click here to send an email to Congress letting them know that the Medicare home health industry cannot afford further cuts, accelerated rebasing and copays

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