“Dead on arrival” once again is the House Republican mantra in response to President Obama’s latest budget, for fiscal 2013.

But that hasn’t reduced industry concerns about the budget’s proposals for cutting post-acute reimbursement and for a $100 home health copayment for episodes not preceded by an inpatient stay.

Both proposals are the same ones the White House suggested last fall to the bipartisan deficit reduction “super committee” (HHL 9/26/11). They were left on the table when the panel failed to reach agreement.

One consequence of a copay requirement is that many VNA patients will elect to skip much-needed home health assistance, “causing them to end up back in the hospital or another institutional setting at a much greater cost to themselves and to the Medicare program,” predicts Andy Carter, president of the Visiting Nurse Associations of America.

Overall, however, hospitals and skilled nursing facilities would bear the brunt of $302 billion in Medicare savings and $56 billion in Medicaid savings over 10 years in the new budget proposal.

As a result, substantial relief on those proposals that affect home health seems unlikely. The best-case scenario for the industry are cuts proportionate to home health’s approximately 4% share of Medicare spending, says Bill Dombi, VP for law with the National Association for Home Care and Hospice.

Details on home health proposals

The budget proposal, if approved by Congress, would have the following impact on home health agencies:

Create a home health copayment for new beneficiaries.Beneficiaries enrolling in Medicare in 2017 and after would be expected to pay $100 per home health episode. But consistent with Medicare Payment Advisory Commission (MedPAC) recommendations, the copay would apply only to episodes with “five or more visits not preceded by a hospital or inpatient post-acute stay.” Estimated to yield $350 million in savings over 10 years, the proposal “aims to encourage appropriate use of home health services while protecting beneficiary access,” the budget summary states.

Adjust annual inflation updates for home health and other post-acute providers. MedPAC has found that Medicare payments generally exceed care costs in post-acute settings, the budget summary notes. This proposal would gradually realign payments with costs through reductions to inflation updates by 1.1 percentage points per year for home health and other categories of providers, from 2014 through 2021. However, updates for affected providers could not drop below zero. The estimated savings are $57 billion over 10 years.

 

Editor’s Note: Find the budget summary at www.whitehouse.gov/omb/budget/Overview.