Untangling The History, Causes Behind The Precipitous Home Health Aide Utilization Drop

In the last home health proposed rule from the Centers for Medicare & Medicaid Services (CMS), the federal agency in charge of reimbursement rates sent out a request for information on home health aide utilization.

Specifically, the agency wondered why Medicare-covered home health aide visits and utilization had fallen off a cliff over the last few decades.

According to the Center for Medicare Advocacy, home health aide visits declined by 90% from 1998 to 2019.

Many people who work in and around home health were surprised by the CMS request, believing the agency itself was one of the main culprits.

“When we saw that go into the proposed rule, we laughed out loud,” National Association for Home Care & Hospice (NAHC) President Bill Dombi told Home Health Care News.

Home health aide history

In 1987, Dombi took part in a class action lawsuit on behalf of NAHC and home care patients against the Medicare program. There were a whole host of issues within the lawsuit, Dombi recalled, but one of them had to do with the accessibility to home health aide services.

The lawsuit was successful, and created a standard that ultimately found itself into the statute itself.

“Congress modified the law to pretty much codify the outcome of the lawsuit,” Dombi said. “It set a standard that an individual could qualify for 28 to 35 hours a week of home health aide services within the definition of part-time or intermittent care — which had been the part of the statute that I litigated around.”

At that point in time, home health aides services were the primary discipline of care that people were receiving for services — more than even nursing care.

Then, two things happened. In the Balanced Budget Act of 1997, Congress eliminated blood draws from the list of benefits that could qualify a person for the home health aide benefit.

That dilution of the benefit was compounded by a major change in the reimbursement model for home health services — the Interim Payment System.

This system aimed to change the way Medicare paid for home health services. Instead of paying providers based on the costs they incurred, Medicare transitioned to a prospective payment system.

Under the IPS, Medicare made fixed payments to home health agencies based on the patient’s condition and the services needed rather than reimbursing them for the actual costs of care. This change was intended to control costs and improve efficiency in the Medicare home health benefit.

“It devastated home health agencies and home health services,” Dombi said. “Forty percent of home health agencies shut down within an 18-month period of time. The volume of patients served in the Medicare program went from 3.5 million to 2.1 million in that same 18-month period of time.”

Prior to the IPS, agencies received more reimbursement for the more services they provided. With IPS, agencies had a cap on what would be payable.

“That really chilled the providers’ willingness to take on patients that had high levels of home health aide services,” Dombi said. “Because it raised the level of payment, but you then hit against the cap. And when you hit the cap, you didn’t get the payment.”

When the Prospective Payment System (PPS) system was implemented in 2000, home health aide services were already dwindling.

The episode of payment for home health services is around $2,000 for 30 days worth of care. Adding 30 days of home health aide services — at an average of about four hours a day — would add between $3,000 to $4,000 to the cost of care, Dombi estimated.

“You can’t expect a home health agency to get paid $2,000 to deliver $5,000 to $6,000 worth of care,” he said. “As an existing care provider, they would last a nanosecond if they started doing that. So at the moment, it’s all reimbursement related.”

That brings the timeline to 2023 when CMS essentially asked, “Why are home health aide services so difficult to get for patients?”

CMS and provider disconnect

CMS received nearly 100 comments that highlighted a number of challenges that all had a similar tone: the decline in utilization is not reflective of the need of home health aide services.

Commenters noted that despite Medicare laws allowing for substantial aide hours, the actual provision is dwindling, affecting patients who require a combination of skilled and aide services for optimal health and safety at home.

One commenter noted that CMS’ episodic reimbursement for home health does not adequately support robust staffing, particularly in rural areas. This creates a situation where agencies may struggle to justify separate visits by home health aides when nurses or therapists can perform similar functions within their scope of practice during skilled or therapy visits.

The biggest detractor, as Dombi pointed out, is payment.

“We’ve always provided home health aide services to clients,” Vince Moffitt, president and CEO of Basin Health Companies, told HHCN. “However, due to a reduction in reimbursement rates over the years, these services have been something that we have had to limit. It boils down to decreased reimbursement rates. Our operational costs continue to increase and our episodic payments can’t support extra services.”

Basin Health’s portfolio includes Basin Home Health & Hospice, a New Mexico-based provider with 700 employees. It serves the rural communities in the Four Corners area.

One of the more disappointing aspects of having to scale back offering those services is the inherent trust that is built between client and home health aide.

“By facilitating activities of daily living multiple times a week, home health aides provide both physical support and emotional comfort during a vulnerable time,” Cleamon Moorer Jr., president and CEO of American Advantage Home Care, told HHCN in an email. “Their regular presence often serves as a lifeline, improving mental health through meaningful companionship.”

American Advantage Home Care provides skilled nursing, rehab and specialty care services in seven counties in the Southeast Michigan area.

There are also insurer and payer hangups when it comes to home health aides. Not all insurers cover home health aide visits, Moorer pointed out, stifling reimbursement for agencies.

“I may speak for many of us in the industry as we strive for a reimbursement increase that fairly aligns with the input from a cross-section of our Medicare cost reports’ data,” Moorer said.

Many commenters writing to CMS highlighted concerns that the PDGM payment model discourages agencies from employing aides and providing necessary services — especially for patients with high functional impairments and multiple comorbidities.

“Home health aides spend a lot of time with the patients due to the type of services they provide,” Moffitt said. “This allows them to help ensure that the patient is safe and following the plan of care. It also helps the clinician with their care due to the extra eyes and time with the patient.”

Which, as Moffitt pointed out, improves outcomes — something CMS has beaten the drum for in recent years.

What now?

When CMS asked for information, agencies weren’t shy about what needs to happen in order for home health aide utilization to get back on track.

Commenters urged CMS to overhaul the current reimbursement compensation to better incentivize the provision of home health aide services. One suggestion included establishing a new payment mechanism specifically designed to ensure fair compensation for home health aides that would reflect the critical nature of their role and their impact on patient care.

Moorer echoed some of those ideas.

“There should be clearer career pathways and support for home health aides who desire to ascend the clinical career ladder,” Moorer said. “More specifically, financial incentives for employers who are agile and flexible enough to support the educational pursuits of their home health aides.”

A lot of times, it comes down to more resources for agencies that will allow more flexibility.

“The solution is complex,” Moffitt said. “We have increased labor costs for all employees and vendor costs have increased. Along with fuel, utilities, supplies… If the episodic rate is increased it would be easy to use those additional resources for those needs.”

Moorer said that mandated reimbursement for authorized home health aide visits, regardless of the insurer, should be considered.

CMS did respond to these comments in the final rule.

“CMS appreciates the valuable feedback received regarding home health aide service utilization, coordination between Medicare and Medicaid, physician care plans, recruitment and retention challenges and wage disparities,” it wrote in the rule. “The comments and suggestions provided by stakeholders will help guide CMS’s efforts to enhance home health policies and optimize access and quality of care for Medicare beneficiaries.”

For Dombi, the response felt insufficient.

“I thought they continued to dodge the real question,” he said. “And if anything, they’re trying to shift the blame away from themselves and Congress. Because it’s not just CMS who is responsible for all of this. Congress took serious cuts to home health care. Back in ‘97, the Congressional Budget Office estimated it was going to be a reduction of $16 billion over five years in terms of spending. It worked out to be almost $70 billion.”