MedPAC Issues Preliminary Recommendations on Home Health Payment
December 22, 2015 06:53 AM
The Medicare Payment Advisory Commission (MedPAC) held a public meeting on December 11 to discuss tentative recommendations on Medicare home health payment policy for 2017. MedPAC is an advisory body to Congress that annually evaluates payment policy in all provider sectors in Medicare. The December meeting is a prelude to its March Report to Congress that outlines its recommendations and supporting analysis.
The preliminary recommendations regarding home health services essentially mirror those made in recent years. These tentative recommendations include:
A zero percent inflation update in 2017
Elimination of therapy utilization as a payment level determinant in the home health prospective payment system
The institution of a second round of rate rebasing in 2018
While MedPAC recommendations are taken very seriously by Congress, those recommendations are not universally adopted. Nevertheless, the National Association for Home Care & Hospice (NAHC) develops its advocacy plan with full consideration of the annual MedPAC recommendations. With the 2017 version, NAHC once again finds that MedPAC’s analysis of the home health community comes up short in terms of information and depth of analysis. More importantly, MedPAC’s forecast regarding the future financial status of home health agencies is not consistent with its own trend data.
MedPAC staff presented data at the meeting focused on access, volume, quality, and Medicare margins. In 2014, MedPAC reports that there was a decline of 152 HHAs to 12,461 with that reduction mainly in states that had high growth in previous years. Volume and spending declined in terms of episodes (-2.1%), users (-1.3%), and Medicare spending (-1.6%) compared to 2013. Those declines were primarily in the same states that showed a decline in the number of HHAs.
Quality of care continues to improve, but with a minor increase in hospitalizations at the end of the episode of home health care (26.5% in 2013/27.8% in 2014).
With respect to Medicare margins, the effects of sequestration and rate rebasing are starting to show. Last year, CMS reported that the 2013 Medicare margin for freestanding HHAs (MedPAC disregards hospital-based HHAs) was 12.7%. In 2014, the first year of rate rebasing, the freestanding HHA Medicare margin dropped to 10.8%. MedPAC also presented a Marginal profit calculation indicating that the value of adding additional patients at an HHA is a profit of 13.3 percent.
As in the past, MedPAC staff has provided a narrow view of home health services by focusing on national averages. Data strongly shows that Medicare margins vary significantly from state to state. Also, the exclusion of hospital based HHAs creates a false picture in that these HHAs are the only or primary home care provider in certain geographic areas. With varying margins, reliance on a national average is a high risk when determining whether access to care is in jeopardy.
While the continuing failure of MedPAC to provide the whole picture in evaluating the financial status of HHAs is very important, MedPAC adds to the concerns in offering an estimate that Medicare margins will drop to 8.8% in 2016 as a way of supporting the recommendation on further rate rebasing. NAHC has analyzed the Medicare margin trends and concludes that, when using MedPAC’s own numbers, the 2016 margin for freestanding HHAs would be 5.23%, dropping to under 2% in 2017 because of the added case mix creep adjustments and the annual productivity adjustment. NAHC has conveyed this analysis to MedPAC with no response to date.
NAHC does support MedPAC’s recommendation that the therapy utilization factor be pulled from the HHPPS case mix model. Unfortunately, CMS has not found a way to so to its satisfaction so far.
MedPAC will reconvene in January to finalize their Congressional recommendations. In the meantime, NAHC continues to work to convince MedPAC to take a more reliable analytical approach. Fortunately, members of Congress have been willing to listen to the concerns with MedPAC’s recommendations and the same is expected in 2016.