Posted by: Robert Markette
June 05, 2007
Topic: New from CMS

There is a great deal of discussion right now about CMSs proposed changes to the Home Health PPS. CMS has couched its discussion of these changes in terms of more accurate payments to agencies. The more commentary I read about the changes, as consultants and billing experts wade through the details, the more I think CMS is using the phrase more accurate to mean lower amounts of reimbursement.

Depending upon which article you read and which client the consultants use, you see wild swings in Medicare revenue to providers under the proposed new rule. Given the ongoing struggles most agencies have to simply break even, CMSs efforts to disguise a rate cut in terms of more accurate payments is very troubling.

Even looking at CMSs numbers at the end of the proposed rule show wild swings amongst different categories of providers. Again, CMS touts the $140 Million in additional payments it will make under the revised rule, but its statistics foreshadow a decline in reimbursement, especially for proprietary agencies.

CMS seems very concerned about the case mix averages going from 1.0 to 1.23 over the last eight years. CMS spends some time discussing how this increase is due in part to coding practices (meaning agencies gaming the system), as opposed to the actual changes in clinical need of home health patients. But then admits that only 8% of the increase is really a result of changes in coding practices. This leads one to conclude that the other 15% increase is due to changes in patients needs.

Of course, CMS appears intent on taking back the 8% in the form of a 2.75% reduction each year for three years beginning in 2008. This would offset the 2.9% increase that is proposed under the new rule. I have not seen a lot of discussion about this, but if the base payment rates is being reduced by 2.75% at the same time the market basket is being increased 2.9%, the 2.9% increase is mostly offset by the takeback and the net increase is a mere 0.15%.

When you combine the net increase with the suggestion that the new PPS calculation system will reduce payments for many agencies, CMS is using the PPS system not to increase payment accuracy as much as to effect a sweeping rate reduction without calling it a rate reduction. I imagine this reduction will further reduce the number of Medicare certified agencies as the proprietary providers realize that they will lose money trying to care for Medicare beneficiaries and move into the Private Duty realm instead.

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