MedPAC Expected to Again Recommend Home Health Payment Rate Freeze, Copays and Accelerated Rebasing: New Recommendation on Rehospitalization Penalties
January 4, 2014 09:02 AM
The Medicare Payment Advisory Commission (MedPAC) met recently as part of its annual ritual of developing recommendations to Congress. This year, MedPAC appears poised to simply restate last year’s recommendations and add a new one focused on penalizing home health agencies with abnormal levels of rehospitalizations.
The recommendations expected to be repeated are a zero inflation update and shifting rebasing from a four year phase-in to a two year phase-in. MedPAC staff expressed that home health agencies maintained a 14.6 percent margin in 2012 and that the current rate rebasing is “too modest” and should be deepened. MedPAC staff forecast that home health agencies will be able to offset most of the rate cuts through cost reductions leading to continued “overpayments” from Medicare.
NAHC does not agree with MedPAC’s assessment of the impact of rebasing nor the ability of home health agencies to sufficiently control cost growth to maintain current Medicare margins. Data demonstrates that margins are declining while care costs are increasing.
MedPAC commissioners also raised concerns with the growth in patients initiating home care without a prior hospitalization. For some unexplained reason, the commissioners think that avoiding the high cost of a hospitalization through prudent use of home health services is a bad thing. In the past, MedPAC has had a misunderstanding of the home health benefit, believing that it is intended to fit only as a post-acute care service. In reality, Congress had the wisdom back in 1965 to include a home health benefit under Medicare Part A and Part B with the latter allowing for extended coverage without a prior hospitalization requirement.
For the first time, the commissioners were presented with a “Chairman’s Recommendation” that would establish a financial penalty for home health agencies that have too many patient rehospitalizations.
That recommendation is embryonic at this point with details intentionally lacking. The commissioners expressed general support for pursuing the concept in the recommendation while advising staff to look at all variations on the theme including a combination of payment bonuses to reward high performance along with penalties for substandard performance. MedPAC staff and the commissioners recognized the need for a reliable risk adjuster to fairly apply any performance-based payment adjuster.
NAHC has previously supported a performance-based payment reform in home health services with rehospitalizations rates as one of the metrics applied. Most recently, NAHC advanced this concept in recommendations to the Senate Finance Committee which had request input on post-acute payment reform options.
MedPAC will meet again in January to further debate the draft recommendations and vote on final ones. A report to Congress will then be prepared and submitted in March, 2014. For a transcript of the MedPAC meeting, please HYPERLINK "http://www.medpac.gov/transcripts/12-2013 MedPAC.pdf." click here.