President’s Budget Proposes More Than $470 Billion in Medicare Savings Over 10 Years
Proposals Include Home Health Copays, Additional Payment Cuts for Post-Acute Care Providers, New Hospice Market Basket Cuts, and Other Changes
February 10, 2016 08:53 AM
On Tuesday, February 9, U.S. President Barack Obama released his $4.1 trillion fiscal year (FY) 2017 budget proposal, laying out his agenda and legislative priorities for the coming year. While the President’s proposed FY2017 budget has been dubbed by some on Capitol Hill as “dead before arrival,” it includes a new proposal related to hospice services titled, “Reform of Medicare Hospice Payments” of significant concern. The budget document also contains several repeat proposals from last year of great concern to the home health community including the introduction of a home health copayment; further cuts to post-acute care providers, including home health care; provisions for a bundled payment program for post-acute providers; as well as value-based purchasing for post-acute care providers. The National Association for Home Care & Hospice (NAHC) has expressed its opposition to and concerns with these proposals, as described in greater detail below.
Introduce Home Health Copayments for New Beneficiaries
This proposal creates a copayment for new beneficiaries of $100 per home health episode, starting in 2020. Consistent with MedPAC recommendations, this copayment will apply only for episodes with five or more visits not preceded by a hospital or inpatient post‐acute stay. Home health services represent one of the few areas in Medicare that do not currently include some beneficiary cost-sharing. [$1.3 billion in savings over 10 years]
NAHC opposes the introduction of a home health copayment, stating explicitly in its Legislative Blueprint for Action that: “Congress should oppose any copay proposal for Medicare home health services and prohibit Medicare Advantage plans from charging a home health copay. Reinstating the copay today would directly conflict with the goal of Congress to modernize the Medicare program.”
Adjust Payment Updates for Certain Post-Acute Care Providers
This proposal reduces market basket updates for inpatient rehabilitation facilities, long‐term care hospitals, and home health agencies by 1.1 percentage points in FY2017 and each year FY 2019 through FY2026. For 2018, the statute requires an update of 1 percent for these post‐acute care providers. Payment updates for these providers would not drop below zero as a result of this proposal. This proposal will reduce market basket updates for skilled nursing facilities under an accelerated schedule, beginning with a ‐2.5 percent update in FY2017; ‐2 percent in FY 2019; ‐1 percent in each year FY 2020‐2023; and tapering down to a ‐0.97 percent update in FY 2024. Payment updates may drop below zero as a result of this proposal for skilled nursing facilities. [$86.6 billion in savings over 10 years]
NAHC opposes Medicare home health payment cuts, and states in its Legislative Blueprint for Action that, “Congress should reject any proposals to reduce the market basket inflation update or impose additional rate reductions for home health agencies.”
Implement Bundled Payment for Post-Acute Care Providers
Beginning in 2021, this proposal would implement bundled payment for post-acute care providers, including long-term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, and home health providers. Payments would be bundled for at least half of the total payments for post-acute care providers. Rates based on patient characteristics and other factors would be set so as to produce a permanent and total cumulative adjustment of -2.85 percent by 2023. [$9.9 billion in savings over 10 years]
NAHC believes that bundled payments for post acute care should provide an appropriate focus and emphasis on home health. In its most recent Legislative Blueprint for Action, NAHC states that:
Congress should monitor the bundling pilot program authorized by PPACA to ensure a reasonable and fair opportunity for home health agencies to participate in and/or manage the payment bundle for post acute care. Such an approach would deter unnecessary re-hospitalizations, thus reducing administrative burden and cost, as well as increase the quality and availability of home health care. This approach is comparable to the tried and tested Medicare hospice program where payment is bundled to a community-based hospice program where hospitalization is the exception rather than standard practice. Congress should oppose any legislative proposals, such as the BACPAC Act, that do not ensure reasonable and fair opportunities for home health agencies to manage the payment bundle.
Implement Value-Based Purchasing
This proposal implements a budget neutral value‐based purchasing program for several additional provider types, including skilled nursing facilities, home health agencies, ambulatory surgical centers, hospital outpatient departments, and community mental health centers beginning in 2018. At least two percent of payments must be tied to the quality and efficiency of care in the first two years of implementation and at least five percent beginning in 2020. [No budget impact]
CMS has already begun its value-based purchasing demonstration for home health in nine states (see previous NAHC Report article here). NAHC has met with CMS officials to discuss a multitude of open implementation issues. Home health agencies in these states are anxiously awaiting more detailed information on the pilot program that promises to be the most significant Medicare change since the 2000 implementation of prospective payment. NAHC has also laid out a series of principles in its Legislative and Regulatory Blueprints for Action, including that the incentive pool must not “exceed 2 percent of home health payments.”
New Hospice Market Basket Cuts, Other Changes Proposed
The budget includes a new proposal related to hospice services titled, “Reform of Medicare Hospice Payments” of significant concern. The proposal includes several changes, including a proposed 1.7 percent market basket reduction for hospice in FY2018, 2019 and 2020 (payments updates would NOT drop below zero); establishment of a hospice-specific market basket (as opposed to the one currently in use which is designed for hospitals); and suggests additional “budget neutral” changes to the hospice payment system that are not specified. The combination of changes is estimated to save $170 Million in 2018, with total savings over 5 years of $2.590 Billion. Over the FY2017-2026 10-year budget time frame the total estimated savings are $9.250 Billion.
In its Legislative Blueprint for Action with regards to hospice payments, NAHC stated that “Congress should oppose any reductions in the annual updates until such time as all payment reforms are instituted and then only after the impact of such changes are fully examined.”
Ensuring Quality of Care, Integrity of Medicare/Medicaid
The President’s budget also references stepped-up oversight efforts by Office of the Inspector General to support the challenges the Department of Health and Human Services (HHS) faces in “ensuring that beneficiaries who require [hospice, home health, or skilled nursing facility] services receive ….high‐quality care.”
In a separate documentissued today by the Office of the Inspector General, the OIG states the following, “With respect to hospice care, OIG has raised concerns about insufficient monitoring of hospice service use, as well as inadequate oversight of hospice certification surveys and hospice-worker licensure requirements. OIG has significant enforcement work in the area of HCBS and hospice care, with a focus on those cases that may result in patient harm.”
Survey and Certification
The budget references plans to continue hospice surveys at least every three years (as now required in statute), and also includes a request that a resurvey “user fee” be charged for all survey and certification resurveys. It also indicates that the Centers for Medicare & Medicaid Services (CMS) is currently engaged in “an effectiveness and efficiency strategy aimed at quality improvement while identifying risk-based approaches to surveying.” Presumably this means that CMS is exploring ways to better target surveys to poor-performing providers, something that NAHC has endorsed as part of its Hospice Regulatory Blueprint for Action in recent years.
The budget includes a number of references to oversight of the Part D program but these make no specific references to hospice.
The Budget includes new proposals to improve benefits and facilitate coverage in Medicaid, including ensuring a full 3 years of 100 percent federal funding for newly eligible coverage in all Medicaid expansion states, guaranteeing comprehensive coverage for pregnant beneficiaries, and strengthening Medicaid in Puerto Rico and the U.S. Territories.
The President’s FY2017 budget also contains proposals to allow prior authorization for Medicare fee-for-service items and services, and to allow civil monetary penalties for providers and suppliers who fail to update enrollment records.
The FY2017 proposed budget contains numerous other Medicare and Medicaid proposals, which can be reviewed in the HHS Budget at a Glance document, available here. NAHC Report will provide further coverage of these and other proposals affecting home care and hospice patients and the providers that serve them as additional detail becomes available.