Congress should keep in place a 15% reduction in Medicare payments for home health agencies that’s scheduled to take effect this fall, but it should add financial risk-sharing to protect agencies from shortfalls and Medicare from continued overpayments, according to a General Accounting Office report released today.
On average, Medicare pays home health agencies 35% more than the agencies’ estimated cost per episode, the GAO said. Agencies received Medicare payments averaging $2,691 per episode of care during a six-month review in 2001, but their average cost was just $1,996 per episode, resulting in an overpayment of about $700 per episode.
Under a risk-sharing plan suggested by the GAO, Medicare would give a home health agency additional payments at the end of each year if average cost exceeded a set payment. Likewise, an agency would return money to the government at the end of each year if its costs were less than the payment In written comments to the GAO, Thomas Scully, administrator of the Centers for Medicare and Medicaid Services, opposed the risk-sharing plan. “These proposals are at odds with the most beneficial features of prospective payment systems--ensuring that all payments occur in a predictable and timely manner,” Scully said.
A spokeswoman for the American Association for Homecare said the GAO report used outdated data that don’t reflect current payments, and lawmakers are unlikely to pay much attention to its conclusions. “Judging from Tom Scully’s reaction, I’m going to bet their opinions are probably going to be the same,” the spokeswoman said.
The GAO report coincides with the final stages of the House Ways and Means Committee's proposed Medicare budget, which is expected to be introduced this week. In a draft proposal obtained by Modern Healthcare’s Daily Dose, the committee would eliminate the 15% reduction.