House Passes Bill to Delay Medicare Cuts, PAYGO Reductions

Home health stakeholders that have been on pins and needles about the return of possible Medicare cuts saw the first step toward securing further delay on Tuesday.

By a vote of 222-212, the U.S. House of Representatives passed a bill that delays 6% in Medicare cuts set to go into effect Jan. 1. Specifically, the bill seeks to press pause on the 2% sequestration reduction beginning in January, instead enacting a 1% cut starting in April and a 2% cut starting in July.

On top of that, the bill defers scheduled PAYGO reductions until 2023. PAYGO reductions can mean up to a 4% cut for home health agencies and other Medicare providers.

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Organizations such as the National Association for Home Care & Hospice (NAHC) have applauded the House’s passage of the bill. NAHC is now urging the Senate to do the same.

“NAHC commends the House for coming together to address these backward rate cuts,” Bill Dombi, president of NAHC, said in an email statement. “We now encourage our friends in the Senate to follow suit and swiftly pass this bill so home-based care providers across the country can continue to serve their communities without a major payment reduction imminently looming over their heads.”

The National Hospice and Palliative Care Organization (NHPCO) likewise noted that there were many positive aspects to the House legislation.

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“There are two pieces of good news in this legislation,” Edo Banach, president and CEO of NHPCO, said in a press statement. “First, it eliminates PAYGO cuts in 2022 — a victory for hospices and Medicare patients. Second, the short delay of sequester cuts shows that Congress has heard our concerns that it makes no sense to put the financial squeeze on Medicare service providers in the middle of an ongoing pandemic public health emergency, a challenging economy and a health care workforce shortage.”

Still, NHPCO believes there are some areas left to address.

“The changes do not address the structural challenges providers face,” Banach continued. “The hospice community is cautiously optimistic that this is only a stop-gap measure. We will continue to work with Congress to ensure long-term relief on sequestration.”

The Senate is expected to vote on the bill sometime later this week.

A continued pause on sequestration and PAYGO gives home health providers some financial wiggle room, but it comes with certain macro-level nuances.

Since early 2020, home health acquirers have been waiting for industry consolidation to pick up. Much of the anticipated dealmaking activity has been delayed by the government’s support of health care providers in the form of CARES Act grants, Medicare loans – and the delay of sequestration.

Amedisys Inc. (Nasdaq: AMED) CFO Scott Ginn addressed the topic last week during an investor presentation.

“We believe consolidation is coming,” he said. “Sequestration goes away [Jan. 1], 2022, so we feel it’s out there. We’re having more and more conversations.”

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