Obama Budget Calls for Home Health Copayments

act-nowPresident Obama yesterday released his proposed budget for the 2014 fiscal year, which calls for a copayment for home health services of $100 per home health episode. The copay would apply to episodes with 5 or more visits not preceded by a hospital or post-acute care stay for new beneficiaries in 2017 and thereafter. Obama’s budget proposal comes after Congress announced proposed budgets last month which do not call for a copay.

If enacted, the President’s copay would reduce Medicare payments for home health services by $60 million over 5 years and $730 million over 10 years. Click here to review a side-by-side comparison of budget proposals from the President, Congress and the Simpson-Bowles Commission (which called for a 20% uniform copay).

The bad news

It is not a good sign when Democratic leaders propose cutting the Medicare home health benefit, since the service has traditionally been more popular with Democrats. It is likely that such a proposal by the White House to cut an entitlement program will become the new baseline on which budget negotiations will take place. It is unlikely that, having put this cut on the table, that it will be taken off. If this proposal were to become law, the home health reimbursement methodology would be rebased (with certainly some additional cuts) in 2014 phasing in through 2018, with copayments being imposed in 2017.

The danger with copayments is that, as the Medicare Payment Advisory Commission noted, they reduce both necessary and unnecessary services. So, copayments reduce the ability of home health to demonstrate that it can produce savings. Also, they create a temptation on the part of Congress to expand and increase copayments in future budget crises.

The good news

The good news, with respect to the home health benefit, is that the provider community now has three years to diversify and/or revise the Medicare reimbursement methodology to avoid the imposition of copayments.

Tell Congress no copays!

The home care industry has been sounding the “no copays” alarm for the past couple years steadily, but our message is resonating and working. Click here to send the message to Congress that home health copays will mean seniors going back to the hospital and increased costs for the Medicare and Medicaid program!


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