Home health providers get reprieve from Medicare cuts

Home health providers will avoid significant Medicare pay cuts next year, after the Biden administration announced a net 0.7% increase in fees.

• But the industry is still pushing Congress to delay future rate cuts.

Why it matters: The $125 million increase announced Monday is a reprieve of sorts after the Centers for Medicare and Medicaid Services proposed an $810 million cut in June. Providers hinted at legal action following the proposal.

• Instead, reductions will be phased in over two years, spreading out the pain for a health sector that's grappled with staffing shortages and rising costs.

Behind the scenes: The adjustment stemmed from a new home health reimbursement system CMS launched in 2020 that pays agencies based on patient characteristics rather than how many hours of therapy were provided.

• The new system isn't supposed to increase Medicare spending, so CMS cut home health agency payments starting in 2020 to account for how it thought agencies would respond to the system change.
• The 2023 payment rule is meant to even things out.
• CMS decided to phase in the cut over two years because of the potential difficulties providers would face with a more than $800 million payment cut in one year.

The finalized method for calculating the rate still goes against Medicare law, home health leaders said Monday.

• Home health companies like AccentCare and LHC have been appealing to Congress for help since June, while also weighing legal action to stop them.
• "We're at an impasse at this point," Bill Dombi, president of the National Association for Home Care & Hospice, told Axios. "Once [CMS] decided that they have to do what they have what they did under the law, nothing else comes into play other than their ability to do it."

• A lawsuit is a last resort, Dombi added. He hopes Congress can step in and change the law faster than the courts would.

Look ahead: Sens. Susan Collins (R-Maine) and Debbie Stabenow (D-Mich.) have introduced a bill to push off the cuts until 2026. But the legislation may not get taken up before the end of the year, and the bill doesn't get at the agency's root cause for the cuts.

• Additionally, CMS still plans to claw back the extra $2 billion it paid to home health providers in 2020 and 2021 as a result of the new payment system. A roadmap for that could come in next year's rule.