NAHC to Submit Additional Comments to MedPAC on Rebasing
Additional comments are needed because MedPAC commissioners are not fully informed with respect to the severe consequences that rebasing will have on access to and quality of home care services
April 4, 2014 10:10 AM
Bill Dombi, NAHC Vice President for Law, recently attended a MedPAC session on the topic of home health rebasing. The session made clear that MedPAC still does not see rebasing as adversely affecting quality or access to home health care. To support that view, MedPAC staff offered flawed statistics that home health agencies will experience a net rate cut of just 1.6 percent by 2017 – or 3.6 percent if sequestration is considered. That cut level is calculated by offsetting the rebasing cuts with annual Market Basket Index inflation updates. As such, it is based on the unfounded assumptions that home health agencies will face no cost increases in the next four years or that Medicare revenue increases can offset higher costs.
MedPAC staff explained that previous rate cuts have had little to no effect on Medicare margins, as home health agencies increased revenue per episode through case mix weight upcoding.
This analysis is nothing more than a retread of what MedPAC has said for years -most recently in its March report to Congress. The analysis continues the same flawed approach that ignores costs that home health agencies incur, such as telehealth, and further assumes that home health agencies will somehow find opportunities for further upcoding and cost reductions. The most recent data from 2011 and 2012 belie those assertions as coding weight changes have been negligible, episode costs have increased with new regulatory requirements, and average Medicare margins have declined for two consecutive years.
Essentially, MedPAC offers a forecast based on incomplete information that goes well beyond reasonable assumptions and accepted methodologies for policy recommendations. Notably, MedPAC staff glossed over the significant fact that margins have declined precipitously in both 2011 and 2012, suggesting that the cost/revenue/coding assumptions MedPAC used is well-founded. MedPAC’s own analysis shows a cumulative 4.8-point drop in freestanding HHA margins during that period; NAHC data also confirms these margin reductions.
As a group, the MedPAC commissioners noted the importance that home health care plays in a calibrated and evolving healthcare delivery system. However, the MedPAC commissioners also expressed the belief that just because home health is a highly valuable service, that does not justify “overpaying” for it. In other words, the MedPAC commissioners are weary of any individual segment that has perceived “high” Medicare margins.
Commissioners and MedPAC staff have been unwilling to publicly state what level of average margin should be considered “high” or leading to “overpayments.” In other health care sectors, MedPAC continues to suggest limited inflation updates even when margins average below zero, e.g. inpatient hospital Medicare margins average -7 percent.
With respect to the CMS admission that at least 43 percent of home health agencies will have negative margins by 2017, MedPAC staff expressed the belief that it has been normal to have 30-plus percent of home health agencies with negative margins and no access problems. Furthermore, MedPAC staff expressed the opinion that the CMS estimate is wrong.
The full transcript of the session should be available in the coming days. MedPAC accepts comments for one week following their sessions. NAHC is in the process of drafting comments and submitting them to MedPAC. Once the comments are prepared, they will be shared via NAHC Report.
For more on MedPAC’s recommendations and NAHC’s advocacy, please see NAHC Report, March 21, 2014.