Home health agencies demand CMS halt 8% cut based on perceived misbehavior

Home health senior nurse
Home health agencies say proposed changes to Medicare reimbursement rates will hurt their finances. (KatarzynaBialasiewicz/Getty)

Home health agencies are imploring the Trump administration to hold off on a potential 8% cut to Medicare reimbursement rates, saying the cuts punish an entire industry for a few bad apples.

Companies submitted comments due Monday for a proposed rule released by the Centers for Medicare & Medicaid Services (CMS) in July that outlines 2020 payment rates for home health agencies. The rule implements major changes in how payments to home health companies are calculated.

Home health agencies are livid with a proposed 8.01% reduction to reimbursements to compensate for how the agencies may behave throughout the year. For instance, CMS assumes that home health agencies won't use the appropriate billing code for a diagnosis and instead use another billing code that pays more, a practice called "up-coding." So CMS is planning for an 8.01% reduction to compensate for this assumed behavior.

But home health agencies are balking at the cut.

“An 8.01% reduction is one of the most significant reductions taken in any new or existing Medicare payment system to date and will certainly have far-reaching negative consequences,” according to comments from the Partnership for Quality Home Healthcare, an association that represents home health agencies.

There is also “no authoritative evidence that home health agencies have or will deliberately miscode,” wrote the Franklin County Home Health Agency based in Vermont. “And, if some do, there are ways to combat the problem apart from penalizing the entire industry.”

The agency said that CMS didn’t use a behavioral adjustment for a payment overhaul for skilled nursing facilities rolled out recently.

“CMS is singling out home health and could affect access to patient care in the future,” Franklin County added.

Starting in 2020, CMS will implement a new payment model that shifts the focus on the volume of services a home health agency provides to a model that bases payments on patient characteristics. Any payment would be adjusted via a wage index to compensate for the geographic area, similar to the system used by hospitals.

Currently, a home health agency gets reimbursed for a 60-day care period, but the new rule will change that to a 30-day period. Under the 60-day period, the home health agency will get 60% of the anticipated final claim amount upfront and the rest after the 60 days. But CMS is now proposing for agencies to get 20% upfront during the transition to a 30-day period. Some agencies chided CMS for the change to early payments. 

“The reduction to only paying 20% for the [request for anticipated payment] will cause extreme financial hardships for most agencies,” commented Rebecca Murrell, home health supervisor for the North Kansas City Hospital Home Health agency.

The comments come as CMS is pushing for some key medical services to be moved to the home instead of the hospital. In July CMS announced five new payment models for kidney care, including boosting payments for providers either upward or downward based on home dialysis rates.