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HCA President Responds on MedPAC Recommendations to Cut, Rebase Medicare Home Health Rates

The Medicare Payment Advisory Commission (MedPAC) recently voted unanimously to recommend an additional five-percent Medicare payment cut in the next annual rates for home health agencies. The recommendations also call on the U.S. Centers for Medicare and Medicaid Services (CMS) to implement a two-year rebasing of the home health prospective payment system (HHPPS) beginning in 2019.

MedPAC intends to incorporate these recommendations in its Report to Congress in March.

Yesterday, HCA President Joanne Cunningham sent a letter (see here) to MedPAC’s Executive Director, Dr. Mark E. Miller, raising “grave concerns” about MedPAC’s recommendations and the data assumptions underlying them. In the letter, also cc’d to New York’s Members of Congress, she presented some New York-specific home health agency financial findings that vary substantially from MedPAC’s aggregate national data assumptions.

As noted in the letter, MedPAC based its recommendations on a claim that free-standing home health agencies nationally had an operating margin of 15.6% in 2015, thus warranting payment reductions.

“This national estimate alone is questionable, as it does not consider any of the 1,500-plus agencies in the U.S. that are part of a hospital or skilled nursing facility,” Ms. Cunningham said. “Nationally, facility-based agencies have an average un-weighted Medicare operating margin of -6.19%. In New York (where these facility-based agencies represent more than 20% of all Medicare certified providers), this un-weighted operating margin is -32.53%.”

Ms. Cunningham urged MedPAC to amend its recommendations to urge “CMS to analyze regional differences in home health operating margins to properly substantiate any payment decisions under consideration,” especially considering the toll of past home health rebasing efforts which have failed to properly account for the financial impact on agencies in large regions of the country.

This lack of a regional or state analysis has been a longstanding issue in MedPAC and CMS payment considerations. “MedPAC and CMS need only look at New York’s case for compelling reasons why a regional analysis is justified, especially considering that more than 5% of all Medicare home health patients and visits occur in New York, a significant sample size for analysis,” Ms. Cunningham added. “New York’s home care Medicare margins, as a whole, have remained negative for fourteen years in a row, with an overall un-weighted average margin of -16.36% in 2014 (the most recent year of data available to HCA for analysis). This is a complete inverse of the national figure cited by MedPAC.”

“CMS has yet to consider any of these distinct factors in payment decisions which have major implications for providers and beneficiaries, and it should be compelled to do so,” she added. “MedPAC, an influential voice on payment matters, can help promote a more statistically sound analysis from CMS when it comes to the urgent issue of reimbursements to care for the elderly and persons with disabilities. Absent a regional analysis by CMS, the blunt instrument of across-the-board payment or rebasing cuts fails to address regional inequities, causing New York operating margins to plummet while other regions of the country have continued to report positive margins in some cases.

HCA will use this letter and other outreach to brief Members of Congress on the implications of MedPAC’s recommendations.