CMS' $22 billion payment cuts rile home health industry

The home health industry is expressing anger that the CMS is moving forward with $22 billion in payment cuts over the next four years, even though providers will see their fiscal 2014 payments reduced less than the CMS signaled in its draft regulation.

In a final rule issued Friday, the CMS said home health providers will see a 1.05% reduction for 2014, which the agency estimates will amount to a $200 million hit to the sector next year.

The CMS previously proposed a 1.5% cut for 2014. Officials noted the reduction is also “notably” less than the 4.89% reduction in payments to home health providers in fiscal 2011.

The final rule retains, however, a plan to reduce the national standardized 60-day episode rate by 3.5% each year between 2014 and 2017.

“There is no way that CMS can claim they did not know their actions would result in regulatory mandated bankruptcies,” said Val Halamandaris, president of the National Association for Home Care & Hospice. “The regulations issued by CMS are therefore confiscatory, depriving patients of an opportunity to do business with Medicare without due process of law.”

The Patient Protection and Affordable Care Act requires that the CMS adjust the national standardized 60-day episode rate for home health agencies to account for variables such as changes in the number of visits in an episode of care and the average cost of providing care per episode.

The regulation also imposes new quality measures requiring home health providers to report rates of unnecessary hospital readmission and preventable trips to the emergency room.

Home health agencies, though, say the rate cuts will make it harder for healthcare providers to incorporate home care as a significant piece of the care continuum.

“We are extremely disappointed that CMS would so dramatically reduce funding—especially because patients, physicians and hospitals want to increase use of the Medicare home health benefit to avoid institutional care for patients who can have their medical needs met at home," said Tracey Moorhead, president and CEO of Visiting Nurses Associations of America.

Follow Virgil Dickson on Twitter: @MHvdickson