What Sequestration Means for Home Care

Tomorrow’s deadline for Congress to reduce federal spending or face an across-the-board two percent cut to federal programs comes with many unanswered questions for the impact on home health providers. According to multiple sources, the cut, also referred to as “sequestration,” is all but certain to happen.

According to the National Association for Home Care & Hospice, the Centers for Medicare & Medicaid Services had punted all questions on sequestration to the White House’s Office of Management and Budget. OMB has yet to put out anything on the specific approach that sequestration will take in Medicare and any of its provider sectors. However, here is what industry leaders have pieced together from a variety of sources as to what is the most likely scenario:

1. On March 1, President Obama will issue a sequestration order.

2. Medicare sequestration under the law will occur beginning the first day of the first month following the sequestration order. With an expected March 1 order, Medicare sequestration begins April 1.

3. The sequestration law further provides that the payment reductions will be based on the date of services. However, there is no specificity in that law as to what is considered the date of services for home health care given that it is an episodic payment.

4. Past payment rate adjustments implemented by CMS have been based on a episode end date. If CMS/OMB follows that approach, home health agencies will be subject to a 2% payment reduction for episodes ending April 1 and later for a 12 month period.

5. It is possible that CMS/OMB will use an episode start date as a trigger point for sequestration. We consider that approach to be less likely than an episode end approach because the law provides that hospital payment sequestration will be based on the discharge date of the patient. (This is specifically stated in pre-existing sequestration law.) It is highly unlikely that home health sequestration will split an episode of care in some manner to take a proportionate reduction for service days from April 1 and later. NAHC understands that certain officials are indicating that home health sequestration will be based on the date of discharge. NAHC believes the officials confuse a date of discharge approach with an episode end date approach.

6. For hospice services, it would be expected that the 2% reduction will affect all days of care beginning April 1. As such, if a hospice bill includes services in March and April, only those services dates beginning April 1 will face the 2% reduction. This is an unlikely occurrence because of the requirement that hospice services be billed on a calendar monthly basis.

7. All of the above in items 4-6 are NAHC’s best consideration of likely sequestration approaches. HCAF will keep you apprised of any developments as soon as they are known.

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