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Home health providers face millions in Medicare funding cuts

By Trevor Graff | March 21, 2014

Kansas home health providers say they could lose $400 million over the next four years because of spending cuts planned by the Centers for Medicare and Medicaid Services as part of the Affordable Care Act.

“This could be really devastating,” said Jane Kelly, executive director at the Kansas Home Care Association. “We’re seeing agencies really struggling already, before they’re seeing the effects of the rule. It’s going to come down to access of care, and it’s going to be really hard for people in rural areas to gain access to home care.”



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Home health care agencies provide treatments ranging from in-home skilled nursing under the direction of a patient’s doctor to various therapies and hospice care.

Several agencies also provide home health aides for tasks such as housekeeping and meal preparation for seniors so they can remain in their homes instead of in a nursing facility.

According to CMS, there are 126 Medicare-registered home health care agencies serving approximately 24,000 patients in Kansas. The agencies each employ between two and 20 employees.

As part of the changes, CMS is adjusting the 60-day episode rate, a standardized rate Medicare pays home health providers on a per patient basis. The rate factors in the number of visits in a 60-day span and the mix of services provided to the patient and allows for higher payments for patients who need more care.

The agency’s new rules also require home health providers to adopt a new medical coding set, called ICD-10, for the filing of Medicare claims.

The rules add a requirement that the agencies report unnecessary hospitalizations and emergency room visits by their patients. But the new rules also reduce the number of routine quality standards the home health agencies must report.

“CMS is confident that Medicare beneficiaries will continue to receive quality home health services across the country under our final policies,” said CMS Principal Deputy Administrator Jonathan Blum. “We will vigilantly monitor payment claims and other metrics to ensure that access remains strong as we phase-in this new payment adjustment.”

According to the National Association for Home Care and Hospice, 80 percent of Kansas home health providers likely will face money-losing margins for Medicare services as a result of the new rule.

Some of the hardest-hit agencies are in rural areas.

Debbie Tuttle, director of home health at the Kearny County Home Health Agency, said the new rule has her agency exploring alternatives.

“Since we’re hospital-based, the hospital kind of saves us,” Tuttle said. “I’ve been in home health for 17 years, and never once have we made a profit out of home health. That’s not what it’s about. I don’t think our hospital will cut back on our services, but we might have to look at a visiting nurse program rather than maintaining home health.”

Tuttle said that didn’t mean the hospital would discontinue home health services, but that it might no longer dedicate nurses solely to home health care. Currently, there are five nurses who work for the agency, which serves parts of Kearny, Grant, Finney and Hamilton counties and has cared for as many as 28 patients concurrently.

Tuttle said the required move to the updated medical coding set called ICD-10 also would cost money.

“You have to code it correctly or you’re going to lose a bunch of money,” Tuttle said. “You’re going to need a coder that knows what they're doing. All of this costs more money.”

With a reduction in funding, several agencies are concerned about employing home health providers in what are traditionally lower-paying jobs requiring intensive labor.

According to the National Association of Home Care and Hospice, in 2011 there were more than 1.4 million home health jobs nationwide.

Kelly of the Kansas Home Care Association said many older home health employees are retiring in the face of the cuts.

“With new regulations and the cuts that just keep coming, they’re ready to be done,” Kelly said. “It’s a hard fight to keep fighting.”

Several hospitals are turning to local community colleges to recruit help for their home health units or agencies.

“A lot of agencies are trying to be more visible in their community and start relationships with the community colleges that have home health aide courses,” Kelly said. “They try to keep contact so they can recruit good home health aides, because it’s a fairly low-paying job and it’s hard to keep good ones.”

For Tuttle, the reduction in funding is one more hassle in the struggle to serve her patients.

“We have to find ways to manage the system in a way that we’re taking care of the patients,” Tuttle said. “But we might have to do a daily dressing change instead of a twice-daily dressing change so we’re not getting killed by the cost of services.”

Kelly said home health officials at the national level are asking CMS to put the rebasing on hold to allow for further examination of the rule’s effects.

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