New across-the-board Medicare cuts may place many patients and providers at risk

Oct 31 2015

The Partnership for Quality Home Healthcare – a coalition of home health providers dedicated to improving the integrity, quality, and efficiency of home healthcare for our nation's seniors – today warned that additional across-the-board cuts by the Centers for Medicare & Medicaid Services (CMS) made in the Final Home Health Prospective Payment System (HHPPS) Rule for calendar year 2016 could threaten access to patient preferred, cost effective and clinically advanced care for America's home health patients, whom data show are already at significant risk. The Final HHPPS Rule includes an additional overall 1.4 percent cut to Medicare's home health benefit.

This cut comes on top of significant Medicare cuts imposed on the home health benefit in recent years. For example, CMS issued a final regulation in 2013 that implemented a four-year (2014-2017) rebasing cut totaling -14 percent. When CMS released the rebasing regulation, it projected that "approximately 40 percent" of all home health agencies (HHAs) would be operating at a net loss by the end of 2017 as a direct result of the four-year, 14 percent rebasing cut. Now that an additional cut is going into effect, it is projected that an even larger share of HHAs will be negatively impacted, putting home healthcare services for seniors and the jobs of many home health professionals at even greater risk.

Data indicate this latest cut will be especially challenging for rural and underserved communities. More than 600,000 Medicare home health beneficiaries live in America's rural communities and are served by some of the smallest HHAs in the US. The new 1.4 percent cut poses a real hardship to these providers as they are already being negatively impacted by current law cuts and could be forced to shut their doors altogether, which would force thousands of rural seniors out of their communities and into costlier institutional facilities far from home.

"We are deeply grateful to the many Members of Congress who urged CMS to moderate the negative impact of this regulation, and we commend CMS for reducing the impact of the Final Rule relative to the proposed regulation," stated Eric Berger, CEO of the Partnership for Quality Home Healthcare. "That said, we are very concerned that imposing another cut on top of those already in effect will place many patients and providers at risk. CMS has already estimated that 4-in-10 home health agencies will operate at a loss by 2017 as a result of the rebasing cuts that went into effect last year. Reducing Medicare home health funding even further – as this regulation will do – will increase the share of providers who will be driven under, putting their patients and dedicated caregivers at tremendous risk."

In its draft regulation, CMS also proposed a home health value based purchasing program (HHVBP) in nine states that would put between five and eight percent of HHAs' Medicare reimbursement at risk, with penalties and incentive payments made on the basis of participants' performance relative to specified measures. The Final HHPPS Rule adjusts the penalty and incentive percentage range to three percent for the first year of the program, gradually increasing to eight percent over five years.

"Partnership members deliver high-quality, cost-effective services to more than 1-in-6 Medicare home health beneficiaries. Our performance demonstrates not only that high-value care is possible but that it is being delivered every day," added Berger. "For that reason, we applaud CMS' efforts to enhance value so that seniors and taxpayers alike benefit from high quality, cost-saving care, and we commend the Agency for moderating the incentive and penalty percentages in the final rule to improve the sustainability of Home Health Value Based Purchasing program."

Today, skilled home health professionals serve one of the Medicare program's most vulnerable patient groups. Data compiled by Avalere Health reveal that Medicare's 3.5 million home health beneficiaries are older, sicker, poorer and are more likely to be female, a minority, and disabled than all other beneficiaries in the Medicare program combined. Nationwide, 3.5 million homebound Medicare beneficiaries depend on the Medicare home health benefit to receive clinically advanced, cost effective and patient preferred care.