President’s Budget Proposes Bundled Medicare Payment to Post-Acute Care Providers

In his proposed budget released last week, the President included a proposal to implement bundled payments beginning in 2018 for post-acute care providers including long-term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, and home health providers. Under the proposal, payments would be bundled for at least half of the total payments for post-acute care providers. Rates, based on patient characteristics and other factors, would be set to produce a permanent and total cumulative adjustment of -2.85 percent by 2020. The Administration estimates this proposal would save $8.2 billion over 10 years. Beneficiary copayments, where applicable under current law, would still apply.

The home care industry has opposed the bundling of home health payments with payments to other providers because it could cause a major disruption to the health care industry, would be anti-competitive, would increase the federal regulatory burden, and would erect a new and unnecessary barrier to beneficiaries’ access to quality care.

The idea of bundling post-acute care services into other combined payments has been advanced by some members of Congress as well as the Medicare Payment Advisory Commission (MedPAC). In recent years, the House and Senate Budget Committees, as well as the congressional committees with jurisdiction over Medicare, have suggested bundling as an option to achieve Medicare savings. The Patient Protection and Affordable Care Act (PPACA) (H.R. 3590; P.L. 111-148) called for launching a post-acute care bundling pilot program by 2013. Among the bundling options authorized by PPACA for testing is one where the bundled payments for post-acute services would be held by home health agencies.

The National Association for Home Care & Hospice has called on Congress to ensure that the bundling pilot program authorized by PPACA include testing a post acute care bundling program where all provider payments would be held by home health agencies. This would deter unnecessary re-hospitalizations, thus reducing the administrative burden and cost, as well as increase the quality and availability of home health care. This approach is comparable to the tried and tested Medicare hospice program where payment is bundled to a community-based hospice program – where hospitalization is the exception rather than standard practice.

In a recent launch of pilot bundling projects, the Administration announced that some home health companies were selected to receive post-acute care bundled payments.

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