Posts Tagged ‘MedPAC’

Rate Rebasing in the 2014 HHPPS Proposed Rule

August 9, 2013

The National Association for Home Care & Hospice (NAHC) recently published a white paper entitled, Rate Rebasing in Medicare Home Health Services: A Review of the 2014 HHPPS Proposed Rate Rule, which offers home health care providers an in-depth look at how CMS’ proposed rebasing rules will affect them. Below are some excerpts from the white paper:


The Patient Protection and Affordable Care Act of 2010 (PPACA) requires that Medicare reset or rebase the home health services episode payment rate beginning
in 2014 and phased-in proportionately over a four (4) year period. The legislative mandate provides some direction to Medicare on the factors required to be considered in the calculation of the rebased payment rate.

MedPAC recommended that home health services payment rates be rebased because of significant changes in the nature of the services provided during the
 60 episode of care along with what it perceived to be “overpayments” for services evidenced by continuing double-digit Medicare margins in comparison to costs. The average episode of care in the base year used for rate setting involved 37 visits primarily made up of nursing and home health aide services while the current care utilization in an episode is less than 20 visits with few aide services and significantly more therapy visits. From 2001 through 2011, MedPAC’s calculation of margins shows freestanding HHAs with an average ranging from 16-18%

On June 27, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that sets out the proposed rates for home health services in 2014 along with the methodology used by CMS in calculating such.

While the proposed rule states that the impact on home health services spending would be a reduction of $290 million in
CY 2014, in actuality it is far greater as the proposal, if finalized, would trigger four consecutive years of 3.5% reductions in the primary payment rates, totaling a 14% reduction by 2017. That level of rate cuts is estimated to reduce Medicare home health spending by well in excess of $25 billion over the next ten years.

The proposed rule is open for the submission of written public comments through August 26, 2014. This White Paper offers a report on the makeup of the proposed rule, an impact analysis, and a critical review of its shortcomings.

The Proposed Rule


The CMS proposed rule combines a rebasing of the base-level rates for normal episodes, per visit payments for Low Utilization Payment Adjustment (LUPA) episodes, and the add-on payments for Non- Routine Supplies (NRS) along with a recalibration of the case-mix weights assigned to each of the categories within the case-mix adjuster.

This presents a complication in an initial review as it makes the 2014 proposed rates seem much greater than the 2013 rates. However, the recalibration is proposed in a budget neutral manner by reducing each of the case-mix categories by 26.02%. (Alternatively, by dividing the case mix weights by 1.3517 which CMS states is the average weight in early 2012).

The Proposed Rates

The proposed rated for 2014 reflect a 2.4 Market Basket Index adjustment to reflect estimate costs increases in 2014. In addition, these rates reflect a rebasing adjustment of -3.5% for episodes, +3.5% for per visit LUPA rates, and -2.58% for Non-Routine Supplies.

Impact of Proposed 2014 HHPPS Rates

CMS estimates that the overall impact of the proposed rate rebasing and other rate changes is a reduction in Medicare spending of $290 million in 2014. That represents a decrease of approximately 1.5% in comparison to estimated 2013 payments.

The impact analysis performed by NAHC demonstrates that the continued delivery of home health services throughout the country is at high risk if the proposed rule is finalized. NAHC estimates that by 2017, 72.29% of all HHAs will be paid less than the cost of care and that the average Medicare margin will be -9.77%.

This estimate come by way of reviewing over 8,200 FYE 2011 cost reports from all types of HHAs from all over the country. In Alaska (91.7%), Hawaii (100%), New York (89.9%) and Oregon (87.2%) in can be expected that the entire home health infrastructure is at risk of crumbling to nothing. That is certain to lead to an access to care crisis and increased Medicare spending as patients seek care in the only viable option remaining: high cost care settings.


Rate rebasing is not a simple task for CMS. It has serious consequences to Medicare, providers of care and the patients served. As such, it must be performed carefully and correctly.

The CMS proposal fails on numerous counts, but most notably in the absence of any consideration as to its impact on access to care. The proposal should be abandoned and replaced with one that puts care access first, considers all methods of calculating rates, recognizes all of the current costs of care, and includes an appropriate margin to secure operating capital and a fair return on investment to allow for continued modernization of home health care for today’s health care delivery innovations.

The full text of the white paper is available here.

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Analysis: Florida Home Health Medicare Margins on Steep Decline

June 6, 2013

The Home Care Association of Florida in coordination with the Partnership for Quality Home Healthcare today released data demonstrating that the rebasing of Medicare home health payments within the proposed Home Health Prospective Payment System (HHPPS) rule for 2014 will negatively impact Florida’s home health sector and the 342,570 vulnerable Medicare beneficiaries receiving home health by driving Medicare margins to an all-time low. Leaders are urging regulators to carefully consider home health sector’s current-law economics when implementing this policy.

Under the Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) is directed to rebase home health payments between 2014 and 2017 by a percentage determined appropriate by the Secretary.  This percentage is to be implemented in equal increments during each year from 2014 through 2017. (more…)

Home Health Medicare Co-Pay: A Study in Unintended Consequences

April 23, 2013

By Robert A. Book and Doug Holtz-Eakin, Forbes

The budget that President Obama submitted to Congress last week contains a call for, among other things, an increase of $1.4 billion in discretionary spending for the administrative expenses related to implementation of the Affordable Care Act (Obamacare). In a budget that claims to reduce the deficit, where is all this money coming from?

Some of it – $730 million – is supposed to come from instituting $100 co-payments for Medicare patients who use home health care. Home health care is primarily for patients who need frequent care that requires the attention of a physical, occupational, or speech therapist, or a nurse on a part-time basis, but does not require the patient to be hospitalized. The patients are homebound, and have difficulty accessing outpatient care in the usual settings. In fact, home health care is a significant factor in keeping patients out of the hospital. (more…)

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

April 19, 2013

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. (more…)

Obama Budget Calls for Home Health Copayments

April 11, 2013

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). (more…)

MedPAC Calls on Congress to Reform the Medicare Home Health Benefit

March 21, 2013

medpac-dataThe Medicare Payment Advisory Commission last week submitted recommendations to Congress calling for major changes to the Medicare home health benefit, including accelerated rebasing of Medicare home health reimbursement rates and a per-episode copay. MedPAC is required to annually review Medicare payment policies and make recommendations to Congress.

MedPAC also called for medical review activities in counties with excessive utilization of home health services, including Miami-Dade County, and revision of the case-mix system for therapy and non-therapy services.

MedPAC found that in 2011, about 3.4 million Medicare beneficiaries received home care, and the program spent about $18.4 billion on home health services. That figure has swelled in comparison to the 7,528 agencies in operation in 2000, which totaled $8.5 billion in spending. The number of agencies participating in Medicare reached 12,199 in 2011, including Florida’s 1,001 certified agencies, which account for 8.2% of the nation’s agencies. The number of agencies continues to increase, with over 700 new agencies in 2011, most of which were for-profit agencies concentrated in a few states. Some good news: MedPAC found that quality of care provided was steady or showed a small improvement in measures of beneficiary function. (more…)

Industry Meets with MedPAC Staff About IOM Recommendation to Allow NPs to Certify Home Health Plans of Care

February 20, 2013

The Medicare Payment Advisory Commission (MedPAC) intends to review the Institute of Medicine’s 2010 report, “The Future of Nursing: Leading Change, Advancing Health,” and examine its implications for future Medicare policies. Commission Chairman Glenn Hackbarth and Commissioner Mary Naylor suggested that the Commission review the IOM study. The report specifically recommends that Congress amend the Medicare program to authorize advanced practice nurses to certify patients for home health care services. (more…)

Broader Therapies Could Further Strain Medicare

February 13, 2013

By Brett Norman, POLITICO

A lawsuit may have lit the fuse on a budgetary time bomb in Medicare, even though it simply reaffirms what should be a routine payment policy for services like physical therapy that the massive federal health care program has always had.

People on Medicare are entitled to various kinds of rehab and therapeutic services — occupational or speech therapy, for instance. But over the past 30 years or so, the coverage became spotty. Some people were able to get that care only if it could help them get better — not if it was aimed at keeping them stable or slowing a predictable decline. That became known as the “improvement standard.” The care was only for those who would improve. (more…)

MedPAC Says Home Health Providers Had 14.8% Margins in 2011

January 30, 2013

In its draft recommendations to Congress due this spring, the Medicare Payment Advisory Commission (MedPAC) points out that home health providers in 2011 had 14.8% average margins. MedPAC projects 11.8% average margins for 2013. (more…)

MedPAC Reissues 2012 Recommendations

January 14, 2013

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. (more…)