4% Home Health Rate Cut Possible If American Rescue Plan’s Costs Aren’t Offset

Home-based care providers have a lot on their minds these days. Home health providers, in particular, are laser-focused on the incoming final payment rule, which will decide whether or not they will face devastating cuts to reimbursement in years to come.

Between that, labor shortages, inflation, pandemic-related struggles and any opportunities they’ve been trying to capitalize on, it’s easy to let a few things through the cracks. One of those under-the-radar subjects is the American Rescue Plan Act of 2021 (ARPA). 

“There are a lot of us in Washington D.C., thinking about one thing that the providers are likely not thinking about. And that is the American Rescue Plan,” National Association for Home Care & Hospice (NAHC) President William A. Dombi told Home Health Care News this week at the association’s annual event.


ARPA was a $1.9 trillion economic recovery package passed in March of 2021

Broadly, there’s a few ways it affected home-based care providers. The first is that it included a 10% increase to Federal Medicaid Assistance Percentage (FMAP) for home- and community-based services. It also included $8.5 billion in Provider Relief Fund money for rural health care providers, including home health and hospice agencies.

Besides those directly home-based-care-related provisions, the plan also included $7.5 billion to track, administer and distribute COVID-19 vaccines; $46 billion for diagnosing and tracing coronavirus infections; and $140 million to support health care providers’ mental health and emotional well-being.


Now that enough time has passed, providers have begun to focus on other things. All the while, operation standards within the Senate – Pay-As-You-Go or PAYGO, as it is sometimes referred to as – require for those funds to be paid back. Legislation cannot result in an increase to the federal budget deficit without an offset from increased revenue in one place or reduced spending in another.

And there comes in Dombi’s concern, which is that home-based care providers will be called on to help offset ARPA’s spending. While PAYGO was waived for other legislation during the pandemic, it has not been waived for ARPA.

Thus, there’s two paths materializing. The first would be to stop kicking the can down the road, and to put a plan in place to offset the costs of ARPA. If that doesn’t happen, the second will come to fruition. And it would be very bad news for providers.

If something is not done to offset these costs, it will trigger a 4% cut to all Medicare providers across different settings – including home health care.

“It’s another sequestration, different than the other sequestration, which is in place,” Dombi said. “Hospitals don’t want to see a 4% cut. Obviously, we don’t want to see that either. Not many providers are aware of this, though we’ve told them. The headline news has been taken up by the 7.69% cut in the proposed rule.”

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