CMS Lifts Moratoria on Home Health After 5 Years

The long-standing moratoria on new Medicare home health agencies is no longer in effect anywhere in the U.S. The Centers for Medicare & Medicaid Services (CMS) allowed the temporary ban to expire on Jan. 30, a move that will likely improve patient access to home-based care in related markets, experts say.

CMS initially implemented a six-month moratoria back in 2013 in Illinois’ Cook County and Florida’s Miami-Dade County. It temporarily froze Medicare provider enrollment as a way to combat widespread fraud, waste and abuse. Over the years, CMS repeatedly renewed and extended the moratoria to Florida, Illinois, Michigan and Texas.

CMS credits new tools that address integrity concerns within home health agencies — such as Review Choice Demonstration (RCD) — as catalysts of the change.

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“CMS’ implementation of additional and new safeguard measures in place of the moratoria, will continue the agency’s commitment and focus on protecting beneficiaries from harm and ensuring taxpayer funding is used appropriately to protect resources from fraud, waste, abuse, and avoid other improper payments in both Medicare and Medicaid,” CMS clarified for the National Association for Home Care and Hospice (NACH), which included the response in its most recent NAHC Report.

While in effect, the moratoria drew mixed reviews.

In Illinois, for example, it led to a decrease in home health agencies operating in the state, according to Sara Ratcliffe, executive director of the Illinois HomeCare & Hospice Council.

“As agencies closed, there was no ability to establish new agencies to replace them,” Ratcliffe told Home Health Care News. “The moratoria also impeded the ability of Medicare-certified agencies from enrolling in the State’s Medicaid program, which presented an access issue for this population, especially coupled with managed care roll-out in the state.”

But now, new agencies have the green light to apply for enrollment in Illinois and other previously targeted states.

Ultimately, this means patients will likely have more options for care, which Mark Kulik, managing director at The Braff Group, says is good for the industry.

“I think competition is what’s been elevating the levels of service in the industry,” Kulik told HHCN. “You’re seeing star ratings rise as agencies see how to compete and distinguish themselves and have a brighter value proposition in the local market place.”

In the past, the moratorium has prompted some home health agencies interested in entering new markets under moratoria to do so through mergers or acquisitions, Barry Cargill, president of Michigan Home Care and Hospice Association, told Crain’s Detroit Business.

But it’s unlikely the change will have much of an effect on 2019 M&A activity, which is expected to boom as the population ages and more health care players embrace the value that home health agencies offer, according to Kulik and other M&A experts.

“These moratoria were in areas that are pretty saturated from a provider standpoint,” Cory Mertz, managing partner of Mertz Taggart, said in an email to HHCN. “The supply [and] demand curve doesn’t really change a whole lot in these markets except for those small providers. And in those markets, because of the competitive dynamics, there just isn’t a lot of demand for small providers.”

Fierce competition isn’t the only challenge new providers entering the market formerly under moratoria will face. The home health care horizon is dotted with regulatory overhauls, policies and sharper oversight.

“All agencies, new and established, are facing a higher level of regulatory scrutiny and a new payment model in 2020,” Ratcliffe said. “The established agencies will likely be better prepared for these challenges than the upstarts.”

One example of the added regulatory pressure agencies face is RCD, an updated version of CMS’s widely opposed Pre-Claim Review Demonstration (PCRD) from 2016. PCRD required home health providers to send in Medicare claims earlier in the care process to avoid improper payments, though RCD offers a handful of additional avenues for claims approval.

RCD was slated to begin in Illinois, Ohio, North Carolina, Texas and Florida before rolling out nationwide. CMS previously told providers that RCD would begin Dec. 10 in Illinois, but that didn’t happen.

It is now unclear when RCD will take effect.

Meanwhile, CMS has no immediate plans to reinstate the moratoria. However, CMS has a pending proposed rule that modifies standards for moratoria, according to NAHC.

NAHC’s assessment is that the near term risk of a new moratorium is remote at most, NAHC President Bill Dombi told the organization’s members in a statement that was shared with HHCN.

“That would mean the door is open for new HHAs in the previously targeted states or any new states,” Dombi said. “However, it would be prudent to move soon to submit an application and to stay attentive to advancing the certification process.”

In the past, he said, some entities have invested in creating a home health agencies, only to later be stopped from Medicare participation because CMS imposed a provider moratorium before the investor fully completed certification requirements.

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