NAHC Releases Statement Opposing Home Health Copay and Inflation Update Cuts in President's Budget
April 11, 2013 09:13 AM
The President’s FY2014 Budget released yesterday proposes to reduce Medicare and Medicaid spending by $400 billion over 10 years. The spending cuts in the proposed budget would hit almost every sector in healthcare, particularly pharmaceuticals, hospitals, and skilled nursing facilities. The President’s budget would replace the across-the-board cuts required by the sequester law.
The proposal includes a home health copay identical to the President’s proposal in September 2011 along with reduced Market Basket Index (inflation) updates in 2014 to 2023. The copay proposal would create a co-payment for new Medicare beneficiaries of $100 per home health episode, starting in 2017. Consistent with MedPAC recommendations, this co-payment would apply only for episodes with five or more visits not preceded by a hospital or inpatient post-acute stay. The budget estimates that the copay would reduce Medicare spending by $730 million through 2023.
The proposed update reductions of 1.1 percentage points each year for ten years would affect post-acute providers. Hospice is not affected. These reductions would be in addition to the 2014 home health rate rebasing and the productivity adjustments starting in 2015.
The proposal indicates that the payment update would not drop below zero. If that standard is applied, HHAs may face no cuts during the 4-year rebasing period since rebasing might bring the annual update to zero or below in 2014-2017 with an additional cut coming with an annual productivity adjustment (estimated about 1 percentage point) starting in 2015.
Medicare beneficiaries would pay a surcharge if they purchase private insurance that supplements Medicare coverage. The budget would also increase Part B and D Medicare premiums for high-income beneficiaries and increase the Part B deductible for new beneficiaries in 2017.
$20 billion of the Administration’s proposed savings would come through
Medicaid reforms, including:
Apply Medicare competitive bidding rates to Medicaid DME ($4.5 billion).
Rebase DSH payments in 2023 ($3.6 billion).
Improve drug rebates ($8.8 billion).
Waste, fraud, and abuse reductions ($3.7 billion)
In many respects, the President’s budget is a restatement of many of the Administration’s previous policy proposals. The budget will be just one of several proposals that Congress will consider in 2013. NAHC strongly opposes home health copays and any further cuts to home health payments -particularly with rebasing on the near horizon.
Early reaction to the budget proposal is that it is dead on arrival. That is usually the reaction when at least one house of Congress is held by the opposition party.
The National Association for Home Care & Hospice (NAHC) issued a strongly
worded statement opposing the Administration’s proposed home health copayments (a “sick tax”) and payment cuts.
NAHC President Val J. Halamandaris said that, “essential home health services are at risk. Previously enacted changes will cut Medicare spending on home health services by $77 billion over the next ten years - while less than $20 billion is spent annually. As a result of these cuts, 50 percent of all Medicare participating agencies will be under water in 2014 — that is, paid less than their costs by Medicare. Congress should therefore resist making additional cuts and imposing home health copays for any reason, including postponement or elimination of scheduled cuts in physician fees or for deficit reduction.”
Halamandaris continued, “with regard to the reimbursement rates for doctors through Medicare, the home health community supports reforms that will stabilize Medicare payments to physicians. However, the costs of these reforms should not be funded by indiscriminate across the board cuts to home health care.”
To make the case against further home health cuts, the NAHC statement outlines the cuts that the Medicare home health benefit has already incurred:
Congress included $39.7 billion in home health payment cuts under the Patient Protection and Affordable Care Act (PPACA) through 2019. It reduced the home health inflation update one percentage point for 2011, 2012, and 2013, mandated rebasing of home health payment rates beginning in 2014 with a 4-year phase-in, and imposed a productivity adjustment in the inflation update beginning in 2015 that will reduce the inflation update by an estimated 1 percentage point each year. While home health represents about 5 percent of Medicare spending, it took a disproportionate 10 percent share of Medicare payment cuts used to pay for the Patient Protection and Affordable Care Act.
The Centers for Medicare and Medicaid Services (CMS) issued rules that cut home health payment rates by 2.75 percent in 2008, 2.75 percent in 2009, 2.75 percent in 2010, 3.79 percent in 2011, 3.79 percent in 2012, and 1.32 percent in 2013 — for total reductions of over 16 percent which was in addition to the PPACA rate cuts.
The Congressional Budget Office (CBO) recently revised its projection on Medicare home health spending, reducing it by over $32 billion to reflect the impact of legislative and regulatory cuts along with other factors.
As a result of sequestration, Congress’s agreement in August 2011 reducing the federal budget deficit, home health providers will take an additional 2 percent cut in payments in 2013, reducing projected home health spending by $6 billion dollars over ten years.
Halamandaris asserted that the proposed copay will not save $730 million as claimed by CBO. “Studies have demonstrated that the opposite is true. A home health copay will take Medicare spending in the wrong direction -forcing patients out of high-quality, cost-effective care into much more costly care settings such as hospital, ER and assisted living-based treatment,” said Halamandaris. “Health care that is cost effective for taxpayers, preferred by patients, and results in positive health outcomes should be encouraged and incentivized—not punished with additional payment cuts and a misguided “sick tax.”