Medicare Cuts Will Cripple Home Health Agencies says Report

The Centers for Medicare and Medicaid Services’ (CMS) proposed changes to the home health prospective payment system (HH PPS) would lead to negative Medicare financial margins for more than half of all home health agencies, according to National Association for Home Care & Hospice’s (NAHC) analysis of data in the proposal.

CMS released its proposed rules for the HH PPS in July 2012, which included a substantial payment reduction that would decrease the base payment rate for home health services by 5.06% for 2012.

Large adjustments to home health payments will have a significant and alarming impact on the financial viability of home health providers, says NAHC, which could threaten access to a system of care that many seniors prefer.


CMS contended in its proposal that the adjustment was warranted because there has been limited change in patient acuity in the past few years, but NAHC countered by saying there is strong evidence showing patients to be sicker than ever and in need of the extensive care that has made care costs rise significantly.

“Federal regulators have made assumptions regarding our patient population and patient acuity that do not accurately reflect the reality of home health care in America. As a result, their proposed payment adjustment is dangerously speculative and risks denying Medicare beneficiaries the care they need,” said Andrea Devoti, NAHC board chairwoman, in a statement.

The proposed payment cuts would severely impact rural providers and hospital-based home heath agencies, the analysis found, as 65.7% of rural providers and nearly 81% of hospital-based agencies will see negative Medicare margins if the CMS-proposed rate adjustments are finalized.


“With CMS putting money ahead of people rather than looking at the operation of the program, the financial stability of home health providers across the country is at serious risk,” said Devoti, who went on to urge the Obama Administration and Congress to examine the analysis and consider the impact the proposed policy would have on those who most need home health care.

A rising number of seniors are opting for home health care, with approximately 3.5 million Medicare beneficiaries annually receiving care at home as they recuperate from serious injury or illness, says NAHC. Compared to other care settings, such as assisted living or nursing home care, home health care can be up to 75% less expensive, depending on the level and amount of care needed.

NAHC’s assessment of the HH PPS impact on home care provider’s Medicare margins can be viewed here.

Written by Alyssa Gerace