White House Budget Calls for Home Health Payment Cuts

The White House on Monday released its proposed 2019 federal budget, which calls for the home health groupings model (HHGM) to be implemented along with a unified post-acute payment system, and allocates more money to crack down on home health fraud.

The budget document provides insight into what policies President Donald Trump’s administration would like to implement, but it is not likely to be enacted. This is true of the White House budget proposal every year, but especially this year, given that Congress recently passed a bill—signed by the president—that lays out federal spending for 2018 and 2019.

Under that bill, spending for both defense and domestic programs is set to increase by about $300 billion. The $4.4 trillion White House budget calls for increases in defense spending but deep cuts to domestic programs, including an $18 billion reduction for the Department of Health and Human Services (HHS) in fiscal year 2019, compared with funding the agency received in fiscal year 2017. Medicare cuts total about $237 billion over a decade, according to Bloomberg’s calculations.


Those cuts would come largely through reductions in payments to providers, not by tightening benefits for seniors.

In terms of home health specifically, the budget calls for the home health groupings model (HHGM) payment system to take effect Jan. 1, 2020, which the administration calculates would lead to $16.7 billion in savings over a 10-year period.

A new payment framework, similar to HHGM, was in fact included in the spending bill that was just signed into law. The new payment model has a 2020 start date and is mandated to be budget-neutral.


In addition, the Trump budget wants to “address excessive payment for post-acute providers” by creating a reimbursement model based on patient needs rather than care setting.

“For FY 2019 to FY 2023, the four primary post-acute care settings, including skilled nursing facilities, home health agencies, inpatient rehabilitation facilities and long-term care hospitals, will receive a lower annual Medicare payment update,” the HHS Budget in Brief states. “Beginning in FY 2024, this proposal implements a unified post-acute care payment system that spans these settings, with payments based on episodes of care and patient characteristics rather than the site of service.”

Such a change would lead to $80.2 billion in savings over a 10-year period, the document states.

There has been a push for this type of payment reform in recent years. The thinking is that if a similar service is provided by, say, a home health agency and a skilled nursing facility, each provider type should receive the same Medicare rate for that service.

The Improving Medicare Post-Acute Care Transformation (IMPACT) Act, passed in 2014, set the stage for such a change by requiring standardized assessment and quality measures across different post-acute care settings. The Medicare Payment Advisory Commission (MedPAC) has also investigated potential routes toward a unified post-acute prospective payment system. This type of payment system should be implemented in 2021 with a three-year transition period, the commission recommended to Congress in June 2017.

In some areas, the budget calls for increased spending, including for the HHS Office of Inspector General (OIG). Home health is name-checked as an area for increased scrutiny.

“OIG will continue its work from FY 2018 to address fraud, waste, and abuse in prescription drugs, including abuse and diversion of opioids, while using additional funding to address fraud, waste and abuse in home health and other non-institutional-based services and to strengthen oversight of Medicare Advantage and Medicaid Program Integrity,” the document states.

More big-picture, the budget renews calls for repealing and replacing the Affordable Care Act. That means transforming Medicaid into a block grant program, as proposed during last year’s political wrangling over Obamacare. That proposal, put forward last fall by Republican Sens. Lindsay Graham of South Carolina and Bill Cassidy of Louisiana, threatened to limit home care access and worsen labor challenges facing providers, industry advocates said at the time.

Written by Tim Mullaney

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