Home Health Industry Groups Slam CMS’ Proposed Payment Rule During Public Comment Period

During the comment period for the 2024 home health proposed payment rule, the U.S. Centers for Medicare & Medicaid Services (CMS) received a host of responses from providers, industry advocates and other home-based care stakeholders.

Chief among their concerns was the impact that the rule – if finalized in its current form – would have on patients’ ability to access care, especially at a time when providers are already facing staffing shortages and rising supply costs.

Many of the organizations leveraged data to illustrate the ways providers already struggle to meet the demand for care seen across the country.

Others detailed specific actions that it urged CMS to take in order to prevent dire circumstances for providers and patients alike.

Home Health Care News highlighted standout statements from six organizations’ comment letters to CMS.

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CMS understands [home health agencies], like all health services providers, will reduce costs in reaction to payment reductions. Cost reductions often can include service reductions involving the admission of patients, the scope of services offered, and the extent of services provided. Correspondingly, the CMS budget neutrality methodology will trigger further payment rate reductions that will eventually destroy the value of the home health services benefit. CMS has the authority and the responsibility to prevent such an outcome under 42 USC 1395fff to determine the “time and manner” of applying any rate adjustments under PDGM. CMS has the full discretionary power to go forward with the 2024 rate setting without the proposed 5.653% rate cut.

— National Association for Home Care & Hospice

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Access to home health is already diminished. If CMS cuts payments further as proposed for 2024, access will be decimated.

CMS already recognizes the clear connection between access to care and payment rate reduction. In a recent proposed rule advanced by the Biden Administration to improve access to Medicaid services, including access to home- and community-based services (HCBS), CMS discusses the need for analysis when states engage in ‘rate reductions or payment restructurings’ in order to avoid hindering access to care.

CMS emphasizes the need for state Medicaid agencies to conduct further analysis regarding the sufficiency of proposed payment rates after reduction or restructuring in order to avoid reducing access to care. Given the tenuous state of access to home health under current levels, CMS should proceed with caution in moving forward with further Medicare payment rate reductions, consistent with its proposed policy regarding Medicaid rate-setting.

— The Partnership for Quality Home Healthcare

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We commend the Biden Administration, from the early days of the campaign, for taking a strong stand on ensuring quality in long-term care services and particularly for promoting services

in home and community settings. However, the articulation of this vision is impeded by the Administration’s proposed 2.2% cut to home health services in this proposed rule. If implemented, CMS will have cut home health payment permanently by nearly 10% in two years (-9.356%). As we detail below, these cuts are coming at times when our members’ costs and demand for services are rising and cannot be met. Continuing to implement these cuts will have a devastating effect on older adults who rely on these services.

Further, it runs counter to the Administration’s stated goals of promoting equity and the use of home- and community-based care. From our vantage point, the combined impact of the proposed payment changes and current workforce and inflationary pressures would lead to waves of closures and the inability of providers that remain to take on new referrals.

The impact of CMS’ proposals stands in stark contrast to the Administration’s stance on the importance of long-term care.

— LeadingAge

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We urge the agency to adequately resource [home health] providers as they are a critical part of the care continuum. We are particularly concerned about the substantial size of the agency’s proposed budget neutrality adjustment, a cut of 5.653%, and again call on CMS to withdraw it.

Instead, we urge the agency to revise its methodology to more accurately account for changes in care delivery and payment dynamics due to the implementation of the PDGM. We also have concerns about the inadequacy of the proposed market basket update given the financial pressures facing [home health] agencies, including critical staffing shortages and rising supply costs. In addition, final data from CYs 2021 and 2022 indicate that the market basket forecasts underpaid [home health] agencies by a combined 5.1% for these years. This, combined with the difficult inflationary environment and the large budget neutrality adjustment proposed in this rule, risks putting [home health] agencies in serious financial peril. As such, we urge CMS to utilize its authority to provide a market basket adjustment to account for these extraordinary circumstances.

— American Hospital Association

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In addition to the impact of the proposed rule on home health providers and, therefore, Medicare beneficiaries, it is important to note the downstream consequences for overall Medicare spending. While there is an increasing demand for home health — a 33% increase in referrals sent to home health — home health acceptance rates have decreased by 15% as [home health agencies] have been forced to turn beneficiaries away due to labor costs and staffing shortages. Additional reductions in reimbursement to home health providers will further exacerbate these pressures and result in fewer home health options, as demand for skilled healthcare in the home grows.

Fewer home health options translate into an increase in unnecessary hospitalizations and referrals to higher cost care settings. We already saw these trends prior to the COVID-19 pandemic when Medicare beneficiaries were often more likely to be referred to other post-acute care settings. In addition, hospital discharge planners are having difficulty finding home health providers for beneficiaries, which is leading to increases in average inpatient hospital lengths of stay. For patients discharged to home health, hospital average length of stay increased 11% from 2019 to 2022. Should the home health provider market constrict further, Medicare costs are at risk of increasing, an unintended consequence of the proposed rule.

— WellSky

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As of July 2023, patient referral conversions — a measure of the number of patients that were referred to home health and subsequently admitted — have now plummeted to 55%. This means that 45% of all patients seeking home health are being turned away from service, which extrapolates to 6.2 million patients being turned away annually.

Access-to-care issues are extremely frustrating for these 6.2 million annual patients denied home health services, and they may ultimately experience worse health outcomes and overall spending in the Medicare program. Home health is a low-cost, high-value service option when compared to alternatives, such as longer acute stays or placement at skilled nursing facilities or other long-term care facilities. A portion of these 6.2 million patients turned away from care end up in those higher cost alternatives, where, in addition to increasing Medicare spending, they also occupy beds and utilize clinical resources that are in short supply.

The decade-long trend around access to home health care is also very alarming. A decade ago, referral conversions, patients accepted into service after being referred to home health, stood at 79%. This number declined to 69% in 2019, which was the last full year before PDGM, and before the public health emergency started due to the COVID pandemic. Since the start of

2020, referral conversions have fallen from 69% to 55%, a staggering drop in less than four years. The timing of this access to care trend correlates with the CMS payment rate adjustments. The cause of this correlation is a shortage of home health clinicians, creating a situation where home health agencies simply do not have the clinical capacity to admit millions of patients needing home health services. A significant factor in this deficit of home health clinicians is the Medicare annual payment updates that have not kept up with inflation.

— Homecare Homebase

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It behooves CMS to provide financial predictability to this sector in order for it to
accept an increased number of patient referrals from high-cost institutions, and
deliver patient-preferred, low-cost, high-quality care in the home.

As a technology company that processes millions of claims, Axxess has witnessed
the home health claims payer mix shift from traditional Medicare to Medicare Advantage (MA). While Medicare margins have historically been favorable for home health, the increase in Medicare Advantage cases to more than 50% has quickly reduced overall home health agency margins due to inadequate MA
reimbursement. [Home health agencies] must subsidize their MA case losses with traditional Medicare margins to remain financially viable, accept referrals and support CMS’ desire to shift more healthcare into the home setting.

Ongoing reimbursement cuts to Medicare [home health agencies] to drive down Medicare margins is shortsighted. [Home health agencies] have no leverage with MA and Medicaid to negotiate better payment rates. CMS must consider the overall [home health agency] payer mix when proposing payment adjustments, particularly inadequate reimbursement by MA and Medicaid. In 2023, [home health agencies] are experiencing a greater percentage of cases with zero or negative margins. The proposed Medicare cuts to address profit margins solely under Medicare without a more wholistic view of the payer landscape that CMS oversees, will topple the provider community. Further, limited financial resources reduce the ability for [home health agencies] to invest in measures that achieve success in CMS’ Home Health Value-Based Purchasing (HHVBP) model.

— Axxess