Home Health Care Agencies Get Slight Medicare Payment Increase, Some Will Experience Payment Reductions

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Caregivers / Homecare
Article Date: 05 Nov 2008 - 5:00 PST

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CMS on Monday announced it will slightly increase Medicare payments on average to home health agencies in 2009 and will "take action to remedy inappropriate" outlier cases in which providers bill Medicare unusually large amounts, CQ HealthBeat reports.

Agencies in 2009 are scheduled to receive a "market basket" update of 2.9%, or an additional $490 million, for changes in the costs of goods and services related to care. Payments also are being adjusted to reflect the second year of a four-year phase in to a new "case mix" method, under which payments are adjusted to reflect variances in the severity of illnesses. The case-mix has the effect of reducing payment rates for the home health care sector by 2.75 percentage points, or $440 million. In addition, payments to the industry will be reduced by an additional $20 million after Medicare switches to an updated "wage index" that adjusts labor cost differences according to geographical regions. U.S. home health agencies on average will experience a rate increase of 0.15% but the rate change for home health will vary by region. CMS officials also warned that agencies must report certain quality data to circumvent a 2% reduction in payments.

Outlier Payments
CMS said that bills for unusually high amounts, referred to as outliers, have increased significantly over the last few years from 4.1% of total Medicare home health payments in 2005 to a projected 10.26% in 2009, more than twice the agency's 5% statutory limit. Unlike previous years, CMS will not adjust the threshold above which a case is eligible for the higher payments but will investigate areas of the country where growth in outlier payments is "excessive."

Mary St. Pierre, vice president for regulatory affairs at the National Association for Home Care and Hospice, said, "We are very disappointed" with the payment updates, noting that such updates were higher for other health care sectors despite home care providers being affected by high fuel prices. However, St. Pierre commended CMS for not changing the threshold for outlier payments (Reichard, CQ HealthBeat, 11/4).

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