Caution: Home Health Episode Payment Caps

Legislation was introduced on October 4th that could lead to a cap on the home health services available to a Medicare beneficiary.  In the midst of a government shutdown, Representatives Matheson (D-Utah) and Guthrie (R-Kentucky) introduced the "Medicare Home Health Fraud Reduction Act" (H.R. 3245).  This bill would establish maximum annual reimbursements to Medicare home health agencies.  Instead of a payment cap for each beneficiary, such as the current annual cap on Medicare-covered outpatient therapy, this bill would impose an aggregate payment cap for each home health agency's caseload. 

While promoted as an anti-fraud measure that would have little impact on beneficiaries, to the contrary, the Matheson-Guthrie proposal is a dangerous policy that would create barriers to care for individuals with long-term, chronic conditions.  Further, it would jeopardize implementation of the Jimmo v. Sebelius settlement.  That settlement reiterates Medicare policy that medical improvement is not the deciding factor in determining the availability of Medicare-covered nursing and therapy services for persons with chronic conditions.

Over the past several years, legislators, think tanks, and other entities have offered policy proposals to reduce Medicare expenditures.  Many of these proposals purport to save federal dollars by shifting additional costs directly to Medicare beneficiaries.  Examples include: raising premiums for middle and higher income people; increasing deductibles and copays; prohibiting or discouraging the purchase of the most generous Medigap plans; and instituting copays (cost-sharing) for home health services. 

Many players potentially affected by proposals to reduce Medicare expenditures – including provider groups – act to thwart proposals that would adversely impact them.  The home health industry opposes requiring copays on home health services, a position with which the Center for Medicare Advocacy strongly agrees.[1] In an effort to ward off home health copays, elements of the home health industry have offered alternative proposals that could potentially save federal dollars by limiting the home health benefit for beneficiaries. 

Background

Medicare pays for home health (HH) services when they are medically reasonable and necessary and when an individual is confined to his or her home (homebound) and needs skilled nursing care on a part-time or intermittent basis, or physical or speech therapy, and in certain circumstances, occupational therapy.[2]  Medicare pays for home health services in 60-day episodes of care. There is no limit on the number of available episodes of care, assuming the individual continues to meet applicable coverage criteria.[3] 

While there is no limit on the number of episodes of care Medicare will cover for an individual, the national average number of covered episodes per user of HH services is 2.0 (approximately 4 months of HH services at a time).[4]  Even so, the Medicare Payment Advisory Commission (MedPAC) has identified a few geographic areas of "high utilization"of HH services (25 counties in 5 states: Florida, Louisiana, Mississippi, Oklahoma, and Texas).[5] In these areas, episodes per user average as high as 4.6[6] (compared to the national average of 2).   According to MedPAC, this concentration of high utilization in a few areas has "raised concerns that some of this utilization may be due to fraud and abuse." These high utilization areas also see a significant increase in the total number of new, primarily for-profit HH agencies, further supporting the suggestion that fraud and abuse are a concern.[7]

The Partnership for Quality Home Healthcare, an industry group that describes itself as a "coalition of home health providers dedicated to improving the program integrity, quality, and efficiency of home healthcare for our nation's seniors,"[8] has promoted various program integrity and payment reforms related to the Medicare HH benefit.  For example, their website includes "Our Proposal to Fight Health Care Fraud – To fight fraud and strengthen program integrity, while protecting seniors who rely on home healthcare services, we propose payment reforms [… including an] Episode Limit: cap payment at a per-­provider average of 2.7 episodes per beneficiary (non-­rural) and 3.3 episodes per beneficiary (rural).[9]

The Matheson-Guthrie Bill, "The Medicare Home Health Fraud Reduction Act" (H.R. 3245), mirrors the Partnership proposal.  It would limit the number of episodes a HH agency can bill Medicare in a fiscal year to a specific multiple of the number of unduplicated beneficiaries for whom a home health agency provides services  in a given year.  This aggregate per provider cap, at 2.7 episodes per beneficiary in urban areas and 3.3 episodes per beneficiary in rural areas, would not be a hard cap on a given individual's services, but rather would be aggregated across a provider's caseload, with the intent of weeding out providers that are significant outliers compared with the national average.  As described in a more detailed proposal offered by a for-profit home health agency (and member of the Partnership):

These limits are applied in the aggregate at the provider number level and are not patient level limits (like the outpatient therapy limit). This is designed to prevent any individual patient in real need of multiple episodes of care from being denied that care. In order to prevent "gaming" our proposal calls for beneficiaries served by more than one provider in one year to be pro-rated across the providers. This will prevent unscrupulous providers from "swapping" patients to get around the limit.[10]

In short, the industry-backed policy proposal outlined in H.R. 3245 purports to fight fraud by capping payment to providers who bill for a level of service higher than the national average but would still provide a margin allowing payment to home health agencies that choose to treat individuals who might need more than the national average number of episodes of care.  While some observers might see this as a "win-win" for both the Medicare program and Medicare beneficiaries, the Center's experience tells us that this policy would harm some of the individuals most in need of home health care.

Why an Episode Cap is Bad for Beneficiaries

The Center for Medicare Advocacy (the Center) has represented Medicare beneficiaries since 1986. As one of the few advocacy organizations in the nation solely serving Medicare beneficiaries, our experience demonstrates that payment caps, such as the current outpatient therapy cap or this proposed home health episode payment cap, create barriers to necessary care for many people.

• Episode Caps Would Effectively Terminate Coverage for Individuals with Long-Term, Chronic Conditions

The Center represents many individuals with long-term, chronic conditions who receive ongoing services provided in the home setting.  Home health episode caps would be harmful to many of our clients and would be disproportionately harmful to people with conditions such as traumatic brain and spinal cord injuries, Alzheimer's and Parkinson's disease, Multiple Sclerosis, and other such illnesses and disabilities. For many medically fragile elders and people with disabilities, ongoing home health care often means the difference between functioning and not functioning.  Without the possibility for ongoing home health services, these individuals may well need more costly nursing home or hospital care. 

One of the Center's clients is an 82 year-old lady who receives skilled physical therapy and home health aide services for her Multiple Sclerosis and related health needs.  She has received home health care for many years.  Without such services she will require nursing home placement.  Her needs far exceed proposed episode caps.

Although the current national average of HH episodes of care is 2 per beneficiary, longer, medically necessary periods of care are not the norm because care is often terminated prematurely.  When the Center appeals Medicare coverage denials and appropriate Medicare coverage guidelines are applied, clients are often eligible for care that far exceeds 3-4 episodes of care per year.

• Episode Caps Would Likely Have a Chilling Effect on Providers' Willingness to Serve Individuals with Long-Term, Chronic Conditions

In our experience, many home health agencies are already reluctant to take on individuals with long-term, chronic conditions, and try to limit caring for those whom they currently serve.  Episode payment caps would create further incentives for providers to deny services to patients who would push them close to or over any aggregate cap.

For example, while representing an 87 year-old client with Multiple Sclerosis in her effort to obtain continued HH services, the Center was informed by her home health agency that she was "costing them $36,000 a year." When we suggested that those costs should be manageable, given their case mix, the agency protested and stated that it had to discharge all such patients.  Consequently, we fear the routine discharge of costly patients.

• Episode Caps Would Undermine Implementation of the Jimmo Improvement Standard Settlement

In January 2013, the Center reached a settlement with the Centers for Medicare & Medicaid Services, the Medicare agency, in Jimmo v. Sebelius.  The case challenged the "improvement standard" myth, whereby Medicare providers and claims processers erroneously believe that Medicare will not cover ongoing therapy or nursing services unless an individual is demonstrating "improvement."[11]  The Jimmo Settlement makes it clear that Medicare coverage is available for home health patients who meet other qualifying criteria and need skilled nursing or therapy services to maintain or slow deterioration of their conditions.  Jimmo holds the promise of continuing care at home for people with long-term conditions who would otherwise often need more intense and expensive institutional care. 

Imposing a home health episode payment cap would undermine Jimmo, complicate agency policy, cause even greater confusion among home health agencies about applicable Medicare policy, and firmly cement a general reduction in the availability of Medicare-covered home health care.

Conclusion

Medicare law is clear that there is no durational limit to the number of episodes of care under the home health benefit.  Indeed, many of our clients qualify for Medicare because they need many episodes of skilled care in order to remain at home – thus avoiding more costly hospitalizations and nursing home placements.  Imposing home health episode payment caps would further reinforce the erroneous refrain that Medicare only covers short periods of home health care, endangering people with long-term, chronic conditions.