News Feature | July 18, 2013

CMS Eyes Cuts To Medicare Home Health Costs

Source: Health IT Outcomes
Greg Bengel

By Greg Bengel, contributing writer


Providers react to rule that would reduce Medicare payments to home health agencies by 1.5 percent in 2014

CMS recently proposed a new rule that would reduce Medicare payments to home health agencies by 1.5 percent, or $290 million, in 2014. The San Antonio Business Journal explains that under the new rule, the home health payment rate would actually increase by 2.4 percent at an increased cost of $460 million. This increase, however, would be combined with other costs that would decrease payments by a total of $750 million.

Not surprisingly, many home health providers are angered by the new rule. A story on (registration required) reports the reaction of the National Association for Home Care and Hospice. The provider group’s president, Val Halamandaris, suggests that the new rule may cause many providers to conclude that offering the services makes no economic sense. Halamandaris states that the cut “places 3.5 million Medicare beneficiaries at risk of losing access to care as nearly half of the providers of this vital service would be paid less than the cost of care.”

This article in The Washington Post shows a likewise negative reaction, this time from The Partnership for Quality Home Healthcare. The Partnership’s analysis of the rule questions whether CMS thoroughly thought through the long-term consequences of the reductions. It concludes that the proposed rule only projects impacts for 2014, and questions whether CMS utilized the “most reliable available data” during its rulemaking process.

Chairman Billy Tauzin, senior counsel to the Partnership, regards the reductions as particularly alarming because it is not the first time home health agencies have experienced them. “On a proportional basis,” he says, “Medicare home health services have suffered the deepest cuts of any provider sector in the Medicare program.”

The Washington Post article reports that home health leaders have developed an alternate proposal, called the Skilled Home Health and Integrity Program Savings” (SHHIPS) Act. The act is estimated to save nearly $20 billion in Medicare funds by focusing on “integrity reforms” that fight waste, fraud, and abuse.