NAHC Opposes Proposed Home Health Copays and Inflation Update Cuts in President’s 2014 Budget

NAHC Opposes Proposed Home Health Copays and Inflation Update Cuts in President’s 2014 Budget


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Barbara D. Woolley
National Association for Home Care & Hospice
(202) 547-7424

WASHINGTON, D.C. (April 10, 2013) –The National Association for Home Care & Hospice (NAHC) strongly opposes the Obama Administration’s proposed home health copayments and believes deficit reduction should not come in the form of a “sick tax” on the nation’s poorest, sickest and most vulnerable individuals. The President’s Budget also includes a reduced Market Basket Index (inflation) updates in 2014 through 2023. The proposed update reductions of 1.1 percentage points each year affect all post-acute care providers. These reductions would be in addition to the 2014 home health rate rebasing and the productivity adjustments starting in 2015

NAHC President Val J. Halamandaris said: “essential home health services are at risk. Previously enacted changes will cut Medicare spending on home health services by $77 billion over the next ten years – while less than $20 billion is spent annually. As a result of these cuts, 50 percent of all Medicare participating agencies will be under water in 2014 — that is, paid less than their costs by Medicare. Congress should therefore resist making additional cuts and imposing home health copays for any reason, including postponement or elimination of scheduled cuts in physician fees or for deficit reduction.”

Halamandaris continued, “with regard to the reimbursement rates for doctors through Medicare, the home health community supports reforms that will stabilize Medicare payments to physicians. However, the costs of these reforms should not be funded by indiscriminate across the board cuts to home health care.”

The cumulative effect of these billions of dollars in cuts has been to limit patient access to home care – pushing thousands of providers to the point of bankruptcy and forcing patients into costlier care options.  With 78 million baby boomers reaching their 65th birthday at the rate of 10,000 per day for the next 19 years, the need for home health services will only increase.  Home health keeps families together, and is the option overwhelmingly preferred by patients.  Home care is far more cost-effective for Medicare than institutional options – saving the program tens of billions of dollars annually.

Congress included $39.7 billion in home health payment cuts under the Patient Protection and Affordable Care Act (PPACA) through 2019. It reduced the home health inflation update one percentage point for 2011, 2012, and 2013, mandated rebasing of home health payment rates beginning in 2014 with a 4-year phase-in, and imposed a productivity adjustment in the inflation update beginning in 2015 that will reduce the inflation update by an estimated 1 percentage point each year. While home health represents about 5 percent of total Medicare spending, it took a disproportionately high 10 percent cut in Medicare payments in order to finance the Patient Protection and Affordable Care Act (PPACA).

The Centers for Medicare and Medicaid Services (CMS) issued rules that cut home health payment rates by 2.75 percent in 2008, 2.75 percent in 2009, 2.75 percent in 2010, 3.79 percent in 2011, 3.79 percent in 2012, and 1.32 percent in 2013 — for total reductions of over 16 percent on top of the PPACA rate cuts.

The Congressional Budget Office (CBO) recently revised its projection on Medicare home spending, reducing it by over $32 billion to reflect the impact of legislative and regulatory cuts along with other factors.

As a result of sequestration, Congress’s agreement in August 2011 reducing the federal budget deficit, home health providers will take an additional 2 percent cut in payments in 2013, reducing projected home health spending by $6 billion dollars over ten years.

There was much speculation that the President would outline a new “social contract” in his budget.  The budget proposal submitted by the Administration, however, fails to do so – and in fact reduces access to critical health services. The president’s budget estimates that a home health copay would reduce Medicare spending by $730 million through 2023. Studies have demonstrated that the opposite is true – a home health copay will take Medicare spending in the wrong direction – forcing patients out of high-quality, cost-effective care into much more costly care settings such as hospital, ER and assisted living-based treatment.

Healthcare that is cost-effective for taxpayers, preferred by patients, and results in positive health outcomes should be encouraged and incentivized – not punished with additional payment cuts and a misguided “sick tax.”

About NAHC
The National Association for Home Care & Hospice (NAHC) is a non-profit organization that represents the nation’s 25,000 home care and hospice organizations. NAHC also advocates for the more than two million nurses, therapists, aides and other caregivers employed by such organizations to provide in-home services to some 12 million Americans each year who are infirm, chronically ill, disabled and dying. Along with its advocacy, NAHC provides information to help its members provide the highest quality of care and is committed to excellence in every respect. To learn more about NAHC visit