Medicare Cuts May Hit Oregon Hard
Published by The Bend Bulletin
February 27, 2014
Advocates for the home health care industry say the 14 percent cut in Medicare payments it will see over the next four years is unprecedented and could result in a loss of services for thousands of homebound seniors and disabled individuals in Oregon.
The Centers for Medicare and Medicaid Services, calling upon authority afforded by the Affordable Care Act, issued the final rule in November that carries 3.5 percent cuts in payments from 2014 to 2017 to providers who support patients in their homes, ensuring they take their medications and providing certain therapies.
The federal agency estimates 40 percent of providers will see negative margins in 2017 as a result of the cuts, but those in the industry say the impact will be much worse in Oregon, where the far-reaching rural regions make the cost of doing business much higher for providers, who are forced to drive long distances to reach clients.
An analysis by the Washington, D.C.-based consulting firm Avalere Health found that 72 percent of Oregon’s home health providers will see negative margins in four years, the highest besides Alaska, at 75 percent.
“These patients can’t leave their homes and so the caregivers have to go to them,” said Eric Berger, CEO of Partnership for Quality Home Healthcare, a group that advocates on behalf of home health providers. “It’s a whole lot more expensive for that to occur day in, day out in Oregon than it is in, say, Rhode Island.”
By contrast, only about 14 percent of home health providers in Rhode Island — the smallest state by area — are expected to see negative margins, according to Avalere Health.
PQHH estimates the cuts will amount to $22 billion over the next four years and could result in more than 15,000 clients in Oregon and nearly 1.5 million nationwide losing services because nearby agencies had to close.
Eric Alexander, the CEO of Partners in Care, a home health provider in Bend, predicts the cuts will take a mid-to-high five-figure toll on the nonprofit organization. That’s on top of a nearly $300,000 cut last year due to federal government sequestration and smaller Medicare cuts in previous years.
Even though these Medicare cuts are bigger than they’ve been in the past, they are nothing new to Alexander. In fact, being forced to find new efficiencies is just the nature of doing business in health care today, he said.
“As Medicare squeezes down on the operating costs of these organizations, at some point, we’ve got to be viable and sustainable in order to help the overall goal of reducing the costs of health care in this country,” Alexander said. “It doesn’t happen by magic. You’ve got to be a really effective and efficient provider — but you’ve still got to be in business.”
About 40 percent of Partners in Care’s clients are in its home health program. Another 60 percent receive hospice care, Alexander said.
Holli Holland, the director of St. Charles Home Health Services, said providers like hers, which are backed by the support of a larger organization, will fare better under the cuts than smaller ones will.
If small agencies in rural parts of the state such as Eastern Oregon need to close, there may not be others that can serve homebound patients in that region, Holland said. That’s because an Oregon regulation limits home health providers to serving within a 60-mile radius.
U.S. Rep. Greg Walden, R-Hood River, has been vocal about his dismay over the cuts. His planned visit to St. Charles Home Health in Redmond on the subject this month was canceled due to weather.
Both Walden’s parents and his wife’s parents received home health care, which he said allowed them to stay home and stay healthy longer.
“I’ve just seen it firsthand and I know it’s efficient and affordable and effective,” he said.
Walden said he’s spoken with home health providers in Grants Pass, Medford and elsewhere in the state that are trying to evaluate what the cuts mean for them.
“I haven’t met with anybody that said they’ll actually go out of business, but they’re going to have to make some dramatic changes to make these cuts,” he said.
The approval rule
A regulation that took effect about two years ago requires a physician to verify that a patient is homebound in order for Medicare to pay for home health services.
That’s put a strain on home health providers, who don’t get paid for the care they provide unless the patient sees a doctor, Holland said.
“A lot of times that happens because the patient is sick and can’t get to the doctor. … We really don’t have control over it,” she said.
Walden introduced legislation that would allow nonphysician providers, including nurse practitioners, clinical nurse specialists, certified nurse midwives and physician assistants, to approve home health services.
Holland said she thinks that would help home health providers deliver better care.
“Right now we kind of, in some situations, have our hands tied because we can’t get the physician to sign it or we can’t get the patient in to see the physician,” she said, “and that’s kind of a barrier to care for the patient.”
The irony in this new round of Medicare cuts is that keeping patients in their homes rather than in more expensive settings like nursing homes or hospitals actually reduces health care costs, Alexander said.
“We really look to home health to keep the readmissions to hospitals down by giving them great care at home,” he said. “That saves clinics, physicians and the overall system money.”