Trump Administration Eyes Unified Post-Acute Payment System, $756 Billion in Medicare Cuts

The Trump administration released its proposed budget for fiscal year 2021 on Monday. In addition to doubling down on the administration’s efforts aimed at reducing Medicare fraud, waste and abuse, the proposal touts savings tied to a potential unified payment system for post-acute care providers.

Overall, the White House budget proposal seeks to curb spending by $4.4 trillion over a decade.

On Saturday, President Donald Trump posted a message on Twitter stating, “We will not be touching your Social Security and Medicare in Fiscal 2021 Budget.” Despite that claim, Monday’s budget proposal seeks to slash Medicare spending by about $24 billion next year.

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From 2021 to 2030, the proposal looks to cut Medicare spending by an estimated $756 billion. For comparison, the Trump administration’s 2020 budget proposal called for $846 billion in Medicare reductions over a decade.

Reducing improper payments in both Medicare and Medicaid is a big part of the savings plan.

“In 2019, $1 out of every $15 spent in Medicare and $1 out of every $7 spent in Medicaid were considered an improper payment,” administration officials wrote in the budget proposal. “Improper payments include intentional fraud and abuse, as well as unintentional payment errors, both of which are harmful to the integrity of the Federal Government and to taxpayers.”

Total Medicare improper payments fell to an estimated $28.9 billion in 2019, the U.S. Centers for Medicare & Medicaid Services (CMS) announced in November. The improper payment rate for home health providers, in particular, has fallen steadily since 2015.

Apart from the Review Choice Demonstration (RCD) and other initiatives, steps taken by CMS to clarify home health payment policies have also helped lower improper payment to providers.

“[Improper payments] wasn’t an issue of overzealous claims submissions,” National Association for Home Care & Hospice (NAHC) President William A. Dombi previously told Home Health Care News. “It was all about paperwork and documentation.”

Included in the president’s fiscal year 2021 budget is a line item related to savings from a unified payment system for all post-acute care providers, which include home health agencies, skilled nursing facilities (SNFs), in-patient rehabilitation facilities (IRFs) and others. Broadly, such a model would eliminate segment-specific payment mechanisms and bring all post-acute care providers under one site-neutral payment method.

Specifically, the administration’s plan to “address excessive payment for post-acute care providers by establishing a unified payment system based on patients’ clinical needs rather than the site of care” would save a projected $101.5 billion from 2021 to 2030, according to the budget proposal.

That total is nearly on par to the administration’s savings estimates tied to changes with Medicare prescription-drug pricing.

CMS is currently gathering input from home health providers and other post-acute care stakeholders on a unified payment system via a technical expert panel (TEP). Early projections suggest that SNFs would gain the most in a unified post-acute care payment mechanism, with IRFs losing the most and home health providers falling somewhere in between.

Monday’s budget proposal also seeks to expand access to telemedicine services by offering increased flexibility to providers who serve predominantly rural or vulnerable patient populations.

When it comes to Medicaid, the Trump administration’s budget plan calls for $4 billion in spending reductions in fiscal year 2021 — and $920 billion from 2021 to 2030.

As a general rule, presidential budget proposals rarely move forward as introduced — and Trump’s 2021 budget proposal is unlikely to make it past a House of Representatives controlled by Democrats. Even so, the proposals do offer insight into executive branch priorities, meaning home health providers should continue to follow the apparent policy momentum building around a unified payment model.