I received an e-mail from NAHC regarding this blog and our efforts to keep pointing out how the proposed Medicare cuts will harm home health. (as well as some of the inaccurate reporting.) The e-mail from NAHC contained a press release NAHC issue last week regarding the proposed cuts. Part of the press release does something I have been clamoring for for months now - points out the flaws in MedPAC's analysis. For those of you who are not members of NAHC, here are NAHC's points regarding how MedPAC incorrectly reached the 15% number:
"The MedPAC data artificially inflates the profit margins of the entire industry, Halamandaris said, distorting the true financial picture of home health providers. “Home health is and has always been a ‘cottage industry,’ made up of small to medium-sized providers. In fact, about 23 percent of free standing providers lose money in providing Medicare services, and about 30 percent of them make less than 5 percent on their Medicare services,” he said.
Halamandaris pointed out several other flaws in MedPAC’s methods:
- MedPAC disregards facility-based home health providers’ margins in its calculations. Roughly 20 percent of Medicare-participating home health agencies are facility-based, and in some states, especially rural ones, hospital-based home health agencies make up a majority of the providers. Those providers have higher costs, resulting in an average negative Medicare profit margin of 7.82 percent, but MedPAC’s failure to include those figures artificially inflates the profits of the entire sector;
- MedPAC aggregates all home health margin calculations so that the home health sector is measured as if it were composed of a single agency, instead of over 9,800 distinct home health agencies;
- MedPAC does not consider that nearly 80 percent of home health agencies’ costs are labor-related, and go directly for salaries of nurses, therapists, home health aides and others who care for the aged and infirm in their homes or support these functions. Agencies have very limited options for finding revenues to make up for substantial payment cuts;
- MedPAC ignores the fact that most Medicare home health agencies also provide services to Medicaid and Medicare Advantage patients. When overall patient population is accounted for, the average free standing home health agency has a margin of approximately 1 percent;
- MedPAC fails to recognize legitimate and appropriate business costs including the cost of telehealth equipment and its related administrative and general costs, increasing costs for labor, emergency and bioterrorism preparedness, and system changes required to adapt to the new 2008 Medicare home health payment changes; and
- MedPAC fails to recognize that, according to the U.S. Bureau of Labor Statistics (BLS), two of the top three fastest-growing occupations (based on need) relate to home-delivered services -- services that could be greatly at risk if substantial cuts are imposed on the home health services industry.
The entire press release can be read here. I think it is important to point out these flaws to your Senators. They need to understand that if these cuts to "phantom" profits are enacted on top of the "adjustment" that has been going on for the past two years, there may not be any providers left to spend the Medicare reimbursement money. (Although that would save them even more, wouldn't it? :) )
On top of this NAHC press release, you might also be interested in the DHHS scoring of the Medicare issues in the Senate. According to the DHHS' own actuaries, the Senate proposal would not only not save money, but it would lead to cuts in services. The report specifically focused on hospitals and nursing homes, which are not subject to the draconian cuts that home health would be subject to under the proposal. According to the report, 20% of these providers would cease to be profitable within a decade/ Which of course raises the question - if hospitals and nursing homes will be hurt, what of home health which is subject to the second largest set of cuts under the proposal? I think this lends even more support to NAHC's scenario in which 60% of Medicare agencies would go under under the proposed cuts.
At a time when more and more people seem to be questioning the Senate's proposal, Medicare home health agencies need to be reminding their Senators that they are subject to (proportionally) the biggest cuts in the Medicare proposal. Cuts that will result in reductions in the number of home health providers which will reduce access to home health care for their constituents as well as increase unemployment as more of the providers go under. (And this does not even consider the potential increased costs to operate a home health agency that flow from employer mandates, etc.)
If you haven't called or written your Senator to object to these cuts, now is a good time to do so.
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