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From Health Law Daily, December 23, 2014

ACA reductions in HHA payments will not impact access to care

By Jay Nawrocki, M.A.

The quality of care provided by home health agencies (HHA) seems to be unaffected by increases or decreases in the home health prospective payment system (HH PPS) from fiscal years (FY) 2002 to 2012, according to a report from the Medicare Payment Advisory Committee (MedPAC). Examination of specific quality data on the rate of unexpected admissions to a hospital and the rate of improvement in walking and transferring of HHA patients also was unaffected by increases or decreases in the HH PPS payment rate during the same time period. These findings have led MedPAC to report that there will be no impact on access to or the quality of care for Medicare beneficiaries at HHAs due to reductions in payment from a rebasing of the HH PPS required by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

The ACA required MedPAC to submit a report to Congress by January 1, 2015 reporting on any changes in the access to care at HHAs by Medicare beneficiaries as a result of a rebasing of the HH PPS also required by the ACA. Because quality data for HHAs is not yet available to determine the impact the ACA’s rebasing had on access to care, MedPAC looked at the impact of payment increases and decreases during FYs 2002 to 2012 when HH PPS payments increased and decreased.

Access and quality of care. The number of HHAs participating in Medicare doubled from FYs 2002 to 2012. Four times during that time period HHA payments were decreased from the previous year—FY 2003, FY 2008, FY 2011, and FY 2012. Each time there was no impact on the number of HHAs available to provide care, according to MedPAC. The majority of the increase in HHAs came from for-profit HHAs. From FYs 2002 to 2012 the number of for-profit HHAs grew by 184 percent, or more than 6,200 new HHAs enrolled in Medicare. In addition, the aggregate amount of home health services provided during this time period also doubled; growing to nearly 5.8 million episodes of care per year, reported MedPAC with the majority of this increase occurring with for-profit HHAs.

In addition there was no change in the rate of unexpected admission to a hospital during an episode of care provided by an HHA from FYs 2002 to 2012 when there were both increases and decreases in the rate of HH PPS payment. MedPAC also looked at improvements in beneficiary functionality and saw that the rates of improvement in walking and transferring from a bed to a chair were also unchanged during the FYs 2002 to 2012 period. These two findings suggested to MedPAC that changes in payment rates to HHS would not have any impact on the quality of care.

ACA payment reductions. Section 3131 of the ACA required the HHS Secretary to reduce payments to HHAs by equal increment for four years beginning with payments for FY 2014. The ACA also required that the incremental reduction each year not exceed 3.5 percent, but allowed the HHS Secretary to determine the actual amount taking into account several factors. The HHS Secretary calculated an incremental reduction of 2.8 percent for each year of the four years beginning with FY 2014 and ending with FY 2017.

No impact. MedPAC determined that these reductions would mostly be offset by increases in the market basket used to update the HH PPS on an annual basis, resulting in net annual reductions of 0.6 percent in FYs 2014 and 2015 and 0.4 percent in FYs 2016 and 2017, for a total reduction of less than 2 percent during the four years; this is less than any of the reductions in FY 2003, FY 2011, FY 2008, and FY 2012. Reduction in HH PPS payments for those years ranged from a 2 percent reduction in FY 2012 to 5 percent reductions in FYs 2011 and 2003; in FY 2008 there was a 3 percent reduction. It was this comparison that led MedPAC to conclude that, because there was no effect on access or quality of care from FYs 2002 to 2012 when larger decreases in reimbursement were put in place, that there would be no effect in the access or quality of care provided by HHAs as a result of the ACA’s rebasing and incremental decreases in HHA payments.

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