Home Health Agencies Expect Closings, Mergers Under Medicare Cuts

Fears of closing and possible mergers are on the minds of home health agencies as they are expected to operate under proposed Medicare cuts, reports Crain’s Detroit Business.

The resulting impact under the Centers for Medicare & Medicaid Services’ (CMS) proposed rule can lead to many home health agencies either closing their doors or as acquisition opportunities for other providers, notes Crain’s.

The proposed cuts include a 14% reduction in Medicare payments for home health agencies, however, the cuts do not include the 2% cut from sequestration in 2014.

While CMS believes that its proposed cuts will save the Medicare program an estimated $22 billion from 2014 through 2017, the cuts “could cause a reduction in the scope of home health services and charity care, closures of dozens of small agencies, an increase in acquisitions of weaker agencies and the resulting disruption in patient care.”

Fears of impending closures and mergers are not centralized to the state of Michigan, but appear to be nationally widespread concerns for many agencies.

Home health agencies will lose money in 47 of the 50 states, according to a recent study conducted by Avalere Health and Dobson DaVanzo Associates, all by 2017 because of the proposed cuts.

Additionally, the national Medicare home health margin is estimated to drop to -9.77%, with 77% of agencies expected to report losses.

“After 31 years, if Medicare is cutting us, we just decided we can’t afford to provide under- or uncompensated care programs,” said Greg Solecki, vice president of home health at Henry Ford Health System in Detroit, in the Crain’s article. “You will see this with other providers. The only way to withstand the cuts is to close down specialized services, shrink geographic coverage and reduce services.”

Read the Crain’s Detroit Business article.

Written by Jason Oliva

Jason Oliva