Medicare Cuts Home Health Pay

Medicare will cut payment rates to home health agencies by 2.3 percent in 2012 — the sixth consecutive annual decrease in fees to the industry. The decision, which will lop off an estimated $430 million from the program next year, follows concerns by a congressional advisory panel that the agencies are overpaid.

Home health advocates decried the cut, saying it would lead some agencies to close. The decreased funding, announced Monday, lowers the average base payment to home health agencies for a 60 days “episode of care” to $2,138 in 2012 from $2,192 in 2011. In 2006, the average reimbursement was $2,337, according to the National Association for Home Care and Hospice.

About half the cut in the payment rate in 2012 and 2011 was the result of a provision in the 2010 health law that lowered the fees.

“We have not seen the closures of agencies, but we are reaching that breaking point,” said Bill Dombi, an association vice president.

Nearly 12,000 home health agencies serve Medicare, and the number has steadily increased in the past decade, mostly as a result of generous payment rates, according to the Medicare Payment Advisory Commission, an oversight group that reports to Congress.

Dombi acknowledges that some home health agencies have profits that exceed 25 percent, but he said averages can be deceiving. “If you walk in a room and it is 50 degrees and walk out when it’s 90, it doesn’t mean it’s been comfortable,” he said.

The final rule on Medicare payment rates also adjusted regulations on another part of the health law that has irked the industry — the requirement implemented in April that doctors have a face-to-face visit with patient before ordering home health services.

The change announced Monday allows physicians who saw a patient in a hospital or other inpatient facility to certify to their doctor in the community about their need for home health services. Dombi said the change should help, because doctors in hospitals have been reluctant to order home health because they don’t follow their patients once they go home.  “It mitigates the problem, but its not a game changer,” he said.