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Home Health Tried To Persuade MedPAC To Delay Rebasing Conclusions

Published by Inside Health Policy
John Wilkerson
December 19, 2014

The home health industry said it's too soon for Medicare payment advisers to determine whether home health pay cuts impede seniors from getting good care, even though the Medicare Payment Advisory Commission must report to Congress by year's end on the impact of rebasing on beneficiary access and quality of care. MedPAC Chair Glenn Hackbarth said Thursday (Dec. 18) that commissioners already sent the report to Congress and a commission spokesperson said the report will be public next week.

The Affordable Care Act requires CMS to rebase pay for home health services, starting this year, and it requires MedPAC to report on the impact of those pay cuts by the end of the year. MedPAC discussed preliminary findings at an April meeting and went over findings again in September.

One of industry's complaints is that MedPAC is relying on data collected before pay was rebased. Rebasing started this year, and the data that MedPAC reviewed runs only through 2012.

“MedPAC is charged by the ACA with assessing the impact of home health rebasing cuts, but this analysis does not include data from any year in which the cuts are in effect,” according to an Oct. 30 letter to MedPAC from trade groups representing for-profit and nonprofit home health agencies, and the Council of State Home Care Associations.

CMS also stated in this year's final home health pay rule that it's too early to determine the impact of home health rebased pay. “[S]ufficient claims data for CY 2014 is not available for analysis. We plan to provide an update on our monitoring efforts once sufficient CY 2014 claims data become available,” the final rule states.

MedPAC staff acknowledged to commissioners during this week's meeting that the report is due before data from the first year of rebasing is available. Instead, they built a model based on data from 2001-2012 and used it to make projections.

The commission's long-held position is that Medicare overpays for home health services and past efforts to cut profit margins mostly haven't worked. In 11 of 12 years, Medicare cut pay rates for home health services, but the reduction was large enough to lower the base rate in only three of those years, and in even those years, an increase in case mix helped offset those cuts -- CMS multiplies the base rate by the case-mix value to compute payment. In years that the base rate increased, the rise in case mix compounded growth in average pay per episode, according to MedPAC research.

Thus, MedPAC researchers told commissioners that they don't anticipate the rebasing of pay rates this year to significantly hurt patient access or the quality of care.

However, industry points out that CMS estimated 40 percent of home health agencies would have negative profit margins by 2017 under rebasing. Industry says if that many home health agencies are losing money, rebasing hurts seniors’ access to home health providers.

MedPAC on Thursday projected that the home health industry would have profit margins of about 10.3 percent in 2015, but industry disagrees with MedPAC's assertions of high profit margins. The Partnership for Quality Home Healthcare asked Avalere Health to review the financial documents filed with the Securities and Exchange Commission of the four biggest publicly traded home health companies, and it found that in 2013, their average profit margin was 1.3 percent. That margin combines all payers, but Medicare accounts for about 80 percent of their reimbursement.

The industry letter states that MedPAC grossly underestimated the cost of rebasing by not factoring in market basket increases. Also, the commission doesn’t account for costs such as taxes and telehealth technology.

See the original article here.

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