Affordable Care Act’s cuts for home health draw fire, with critics saying other changes could end up raising costs
Home health providers wary over cuts, other proposed changes
Before they feel the sting of nearly $40 billion in Medicare cuts from last year’s health reform law, home healthcare advocates are busy addressing a more urgent concern: the possible requirement of a home health copayment for beneficiaries.
As part of the Patient Protection and Affordable Care Act, the home healthcare industry will experience a reduction in the marketbasket starting in 2012 and a “rebasing” of the payment system that will be phased in from 2014 to 2017, according to an analysis from the Kaiser Family Foundation.
The rebasing would account for the number, mix and intensity of services provided and the average cost of providing care; authorize the HHS secretary to account for differences in providers (such as hospital-based versus freestanding, urban versus rural, or not-for-profit versus for-profit providers); and limit the annual adjustments to no more than 3.5% per year, relative to 2010 payment levels.
The reason for the payment rebasing is primarily because the home health product has changed since the original prospective payment rates in 2000 were based on use of services in the late 1990s, says Bill Dombi, vice president of law at the National Association for Home Care & Hospice in Washington. Back then, there were about 34 or 35 visits per 60-day home health episode, while today it’s more like 25 visits, he says.
And while skilled-nursing visits have gone up, home health aide visits have gone down. The change has been a good one for patients, Dombi says, because the visits today focus on rehabilitation, whereas the home health aide visits promoted more dependence on the home health visit—which increased utilization.
As Dombi explains, the original House version of the reform legislation included about $57 billion in cuts for home health. So while he says the amount of cuts in the final law was seen as “somewhat of a success” given the alternative, he contends the cuts—spread out over 10 years—are still large in context of overall Medicare spending.
“Of the hundreds of billions cut from Medicare spending, $39.7 billion is home health—or about 9%,” of the total cuts, Dombi says. “It’s disproportionate for home health because home health is about 4% of Medicare spending.” According to the Medicare Payment Advisory Commission, Medicare spent about $19 billion on home health in 2009.
There are two primary explanations why the industry took such a hit, Dombi says. First, MedPAC has indicated that Medicare margins for the sector are too high. “In other words, that the service is overpriced,” Dombi says. “When you look at the margins, MedPAC’s calculation is they average over 17%,” he says, adding that this is probably the “No. 1 reason” for the cuts. But Dombi’s group doesn’t agree with the advisory commission’s calculation methodology, saying the analysis does not account for all costs of services in the segment, such as telehealth.
Former U.S. Rep. Billy Tauzin (R-La.), who served as chairman of the House Energy and Commerce Committee from 2001 to 2004, currently serves as special counsel to the Partnership for Quality Home Healthcare, a lobbying group established last year that represents more than 1,800 home health agencies nationwide. After retiring from Congress, Tauzin served as head of the Pharmaceutical Research and Manufacturers of America from January 2005 until June of
In home healthcare, the use of skilled-nursing services has increased while visits by home health aides have declined.