Among major changes occurring across health care programs federally is the biggest Medicare payment overhaul to home health services in 20 years. Starting January 1, this new system, called the “Patient Driven Groupings Model” (PDGM), will replace the longstanding model for payment of Medicare home health.
Absent these changes, and now especially due to them, home care rate stabilization is, and has long been, imperative – a message you’ve heard from HCA’s discussions with the Legislature throughout the state budget and legislative process, as well as in this newsletter.
HCA appreciates the actions taken by Senate and Assembly Health Chairs Gustavo Rivera and Richard Gottfried on legislation to set the table for much-needed rate and benchmarking provisions along these lines in the upcoming session and budget; such provisions are all the more important for medically needy New Yorkers as the home health system braces for Medicare changes that could upend services in our state, and nationally.
HCA and our peers are appealing vigorously to New York’s Congressional Delegation and the U.S. Centers for Medicare and Medicaid Services (CMS) on modifications to the upcoming payment changes. These budget-neutral counter-proposals would ensure appropriate payment and coverage for services. Likewise, your support for state-level stability and sustainability in the funding structure is more vital than ever.
What can you do?
- If you are not already a co-sponsor of the state’s home care funding legislation (A.7798/S.5915), we ask that you please consider doing so.
- We are actively working to urge all who support home care to press support from New York’s Congressional representatives on federal legislation (S. 433/H.R. 2573) that would mitigate the federal changes.
More information on the changes and solutions are below.
What the feds are doing
Under the current Medicare home health payment system, services are reimbursed in 60-day increments known as “episodes.” For each 60-day episode, CMS first establishes a base rate deemed necessary to cover all of the care that an agency delivers to a patient during that period. However, an agency’s actual reimbursement for that patient depends on a complex series of adjustments to the base rate. These account for regional wage differences, a patient’s acuity scores, and other factors.
Starting January 1, under PDGM, this 60-day episode system is changing to 30-day increments – along with a whole set of intricate changes in acuity scoring, admission source categories, “comorbidity levels” based on secondary diagnoses, different base payment rates for “early” versus “later” 30-day periods, and other changes.
These changes require new and different clinical approaches, claims-processing, and methods of financial forecasting. All told, an agency’s financial standing is very different today than it will be tomorrow – in ways that can’t be easily forecasted.
While providers navigate this thicket of reimbursement and operational changes, they’ll be handicapped by a sweeping 8% cut from the outset of this new payment model.
When isolating an agency’s finances by payor source, New York’s Medicare margins have been negative for 17 years in a row. But when it comes to the sustainability of agencies serving your community, these impacts can’t be viewed in isolation. In the face of an 8% Medicare cut, providers urgently call for action on payment stabilization, considering that the vast majority of certified home health agencies are operating in the red across all payors (Medicaid, Medicare, commercial insurance, etc.).
The rate update and benchmarking provisions already established in state legislation (A.7798/S.5915) provide a ready basis for action in upcoming state budget preparations, and HCA urges your support for these important stabilization measures, along with communications to Congress in support of S.433/H.R. 2573 on behalf of your constituents.
S.433/H.R. 2573, a bipartisan bill, places reasonable limits on PDGM rate adjustments, so that cost-and-payment reconciliations do not exceed cuts of more than two percent annually. Just as importantly, this bill requires that reimbursement adjustments be made only after there is retrospective evidence (based on claims, utilization and other trends) that a rate change is warranted.