MedPAC Outlines Upcoming Report to Congress
September 22, 2014 02:46 PM
The Medicare Payment Advisory Commission met on September 12, 2014 to go over its pending report to Congress regarding the impact of home health payment rebasing on beneficiary access to quality of care. This meeting was the second time MedPAC staff offered an outline of the direction of its report to Congress. That report was mandated as part of the Affordable Care Act changes that included the current rebasing of Medicare payment rates affecting home health agencies.
MedPAC staff presented several key points to the commissioners. These included a positive assessment of the value of home health, expressing that the home health benefit can be a useful tool for keeping beneficiaries out of the hospital. As we have seen frequently in the past, however, MedPAC staff also raised concerns about a history of fraud and abuse in home health. Staff explained that the home health industry had a history of tailoring their services to reflect Medicare payments and that the sector was marked with excessive overpayments brought on by "high" payment rates and unnecessary utilization.
The MedPAC staff also outlined that the supply of home health services has increased over the years despite payment adjustments in the past. They noted that there has been an increase the supply of urban located home health agencies with a slight reduction in the number of agencies located in rural areas. Staff also noted that quality of care continues to show improvement despite payment reductions that occurred over the past 10 years. It is the staffs' opinion that any reduction in the utilization of home health services is not related to payment rate changes, but rather efforts to combat fraud, such as the moratorium on new home health agencies and new regulatory requirement such as the face-to-face encounter rule.
With respect specifically to its report on developments related to rate rebasing, a variety of statistical analyses were presented to the MedPAC commissioners. These included a finding that Medicare margins have averaged over 17% from 2001 through 2012. Also, the staff explained that payment rate reductions in that period of time did not lead to any marked reduction in Medicare margins. Staff posited that increases in case mix weights offset these rate reductions.
However, the data presented did not always paint a rosy picture for home health agencies. While in early years margins stayed steady following rate reductions, MedPAC data also shows a marked decline in margins in 2011 and 2012. Specifically, data from 2010 shows margins for freestanding home health agencies at 19.2%, but dropping to 14.4% in 2012. This data is consistent with the NAHC analysis that demonstrates a trend towards margin reductions that will accelerate during the rebasing of payment rates.
MedPAC data also shows that share of Medicare beneficiaries using home health services increased from 6.2% to 9.6%, a 54% increase. At the same time, episodes per home health user increased from 1.4 to 1.8%, a greater than 30% increase. MedPAC staff considers it most notable that non-post acute episodes account for the majority of the episode growth. At the same time, MedPAC data shows that hospitalization rates have not changed significantly between 2003 and 2012.
In the course of discussion regarding the staff report, commissioners emphasized that home health is a critical component of a well functioning program of integrated care. They further expressed that the primary issue is home health services is not often will integrated with other parts of the delivery system. The commissioners also discussed some of the points that had been made by the home health industry in the past as to why rate rebasing was problematic. The chair of MedPAC, Glenn Hackbarth, indicated that while the home health argues that it needs money to invest in staff, technology, and other capital improvements, high margins indicate that this reinvestment is not happening.
Chairman Hackbarth also dismissed industry arguments that other payers fall far short of costs and that the loss of Medicare revenues would affect a broad base of patients served by agencies who care for Medicaid, Medicare advantage, and traditional Medicare beneficiaries. He expressed that Medicare is not meant to subsidize other payers.
The commissioners also focused on areas for future consideration. Specifically, commissioners are interested in understanding more about the substantial difference in home health care received by those immediately out of the hospital in comparison to those admitted directly from the community. In addition, the commissioners are interested in examining differences between hospital-based and freestanding home health agencies, for-profits and not for profit home health agencies, along with dual eligible patients (Medicare – Medicaid beneficiaries).
While the report to Congress was mandated in the ACA, NAHC is concerned that the MedPAC analysis will be insufficient to fully appreciate the significant rate reduction impact on access to care and the quality of services. MedPAC staff is relying upon data from a time period that precedes the rate rebasing. At the same time, MedPAC staff seems to ignore the emerging trend in financial outcomes triggered by rate reductions. That data shows in 2011 and 2012 that the payment rate cuts are directly affecting the home health industry's bottom line. As such, NAHC expects that the rate reductions in rebasing, along with payment reductions under sequestration and the new productivity adjustment will deteriorate margins to a point where home health agencies struggle to survive.
NAHC has developed a robust analysis regarding financial outcome and is working with its affiliate, the Home Care and Hospice Financial Managers Association, to provide real-time analytics to the current cost/revenue status of home health agencies in the first year of rate rebasing.
Congressional support for rebasing reform continues to grow as concerns regarding the impact of unprecedented rate cuts take hold. Currently, legislation is pending that would rollback rebasing. It is expected that rebasing reform legislation will advance for the first quarter of 2015 as Congress takes up, once again, payments to physicians under Medicare. The so-called "physician fix" legislation can be a vehicle to include Medicare home health legislation as well.
NAHC has learned that MedPAC intends to submit its report to Congress well in advance of the January 1 deadline. That report will be shared with NAHC in draft form prior to its finalization. Nevertheless, it is fully expected that the report will mirror the outline presented to the MedPAC commissioners on September 12. It can be anticipated that the report will recommend that Congress not step back from the rate rebasing it mandated in the ACA in 2010. In fact, it is expected that MedPAC in its March recommendations to Congress will once again recommend the rate rebasing be accelerated and cut deeper into the payment rates.
NAHC encourages its member home health agencies to participate in any data gathering effort that focuses in on real time cost and revenue data. It will be a combination of good data along with solid political support that will gain traction in the industry's efforts to reform rate rebasing.
A central figure in this effort is Sen. Ron Wyden, chairman of the Senate Finance Committee. Senator Wyden will be addressing the NAHC annual meeting on October 19. It is crucial that the industry make its voice heard at that time. Along with Senator Wyden, Senator Rob Portman, a Republican leader regarding Medicare and home health industry issues, will address the NAHC Annual Meeting on Tuesday, October 21. We encourage everyone to join us for the NAHC Annual Meeting and to lend their voices in support of congressional efforts to reform rate rebasing.