Home Health Leaders: $100 Billion in Medicare Cuts Would be “Cataclysmic”

Home health industry leaders gathered today for a teleconference to discuss the alarming impacts of a rule that would bring Medicare payment cuts to tally nearly $100 billion in the coming years.

The proposed rebasing rule from the Centers for Medicare & Medicaid Services (CMS) looks to cut Medicare reimbursement payments 3.5% annually from 2014 through 2017. An analysis of the rule reveals that a 14% reduction in home health reimbursement would result in a cut of $22 billion over 10 years, according to industry leaders during Wednesday’s teleconference. 

These cuts, coupled with the $72.5 billion in Medicare home health funding that has been cut since 2009 due to legislative and regulatory changes, would bring the total amount of cuts since 2009 to nearly $100 billion.

“This will be a cataclysmic event,” said Val J. Halamandaris, president of the National Association for Home Care & Hospice (NAHC), speaking on the impact these cuts will have on home health providers, especially smaller agencies that serve rural and underserved areas.

“If we lose agencies in rural Montana, we are not going to get them back,” Halamandaris added. 

As Medicare home health beneficiaries are among the poorest and most vulnerable patients compared to the entire Medicare population as a whole, the proposed rebasing rule stands to threaten their access to home health services, according to Tracey Moorhead, president and CEO of the Visiting Nurses Associations of America. 

Since many small businesses located in medically underserved and rural areas already have some of the lowest operating margins, notes Moorhead, the deepest cuts proposed by CMS would put them and their communities at even greater disadvantages.

“The reality is that these small and independent agencies will have to make a difficult decision to shut their doors if these cuts take effect,” she said.

Looking at the greater home health industry, 47 out of 50 states are projected to have negative Medicare margins by 2017, according to analyses from Dobson DaVanzo & Associates and Avalere Health that utilize Medicare cost reports and Medicare Payment Advisor Commission (MedPAC) data.

“In crafting the proposed rule, CMS appears not to have undertaken a full assessment of the home health sector’s economics for all four years in which rebasing will take place,” said Eric Berger, CEO of the Partnership for Quality Home Healthcare (PQHH). “Congress directed the Secretary to undertake such an analysis, and we are hopeful that it will be completed before this rule is finalized.”

Home health leaders also argued that “it doesn’t have to be this way,” referring to the 3.5% annual cuts through 2017 as the maximum or “deepest” cuts that could have been proposed by CMS. 

“We have heard that some may think there is no option but to rebase payments at the highest percentage, but we respectfully disagree,” said Billy Tauzin of Tauzin Strategic Networks and senior council to PQHH. “The Secretary has full discretionary authority under this provision and should use it to ensure continued access to quality services.”

The analysis from Dobson DaVanzo & Associates and Avalere Health represent startling findings concerning the future of the industry, home health leaders on the teleconference agreed. 

“This analysis signals that negative Medicare margins resulting from the potential cuts may be worse than even we anticipate, which should raise red flags across the Administration and throughout Congress,” said Tauzin. “We strongly urge CMS to complete a thorough assessment of this rule and its impact on Medicare home health so that American seniors don’t pay the price for a flawed policy.”

Written by Jason Oliva