Join the Unexplained Mysteries community today! It's free and setting up an account only takes a moment.
- Sign In or Create Account -
Sign in to follow this  
Followers 1
Merc14

HHS Cutting Medicare Home Care

26 posts in this topic

Kathleen Sebelius announcing that she will cut the maximum amount she could, 3.5%, from Medicare's payments for home health-care services each year over the next 3 years. The National Association for Home Care and Hospice estimates that three-quarters of all industry operators will be unable to run profitably by 2017 which means massive lay-offs for this industry. HHS estimates only 40% of these businesses will be unprofitable leading to teh loss of 500K jobs but HHS has been wrong about everything they have predicted so we are looking at the loss of 750K jobs and the loss of valuable services that keep people out of the hospital, thus saving costs, to improve the bottom line.

Why would Sebelius do this and what is the administrations angle? Obama never met an entitlement dollar he didn't want to spend so why attack to the home-health-care industry? No explanation given but one can suspect that the wildly optimistic saving that were predicted which now look so blatantly foolish, need a big time cut, and this is a big one, to keep costs down. Who suffers here? Mostly the elderly but many other depend on this service and there will be a lot of suffering or worse because of this cut, not to mention the job loss.

So much for improving health care here but here is another possible reason she is making these cuts, one that is even more nefarious:

Sean Higgins of the Washington Examiner wrote in with a thought or two on why, as detailed in yesterday’s Jolt, Kathleen Sebelius’s Health and Human Services is slashing Medicare’s payments for home health-care services.

“The Service Employees International Union and the American Federation of State, County and Municipal Employees -- both big Obama backers -- have been trying to organize these home health care workers, mostly by leaning on states to declare people who receive the subsidies state employees,” Higgins writes. “The states then hand over the workers' contact info to unions. That is the basis of the current Supreme Court case, Harris v. Quinn: whether these workers *really* are state employees… A problem the unions have run into is that the rates are set by the feds so there is little to bargain with the states for -- and therefore little reason for the healthcare workers to join a union. It is hard to get somebody to sign a union card if they don't think the union can actually do anything for them.”

From the Morning Jolt by Jim Geraghty www.nationalreview.com

1 person likes this

Share this post


Link to post
Share on other sites
Why would Sebelius do this and what is the administrations angle? Obama never met an entitlement dollar he didn't want to spend so why attack to the home-health-care industry? No explanation given but one can suspect that the wildly optimistic saving that were predicted which now look so blatantly foolish, need a big time cut, and this is a big one, to keep costs down.

Two decades ago, Congress created an independent Congressional agency of experts to study Medicare and advise Congress on policy (the Medicare Payment Advisory Commission,or MedPAC). They produce multiple reports for Congress on various aspects of the program each year that provide pretty much the best deep dive picture of what's happening in Medicare and how the program can be improved.

Here's what they pointed out in their March 2013 Report to Congress:

Medicare has always overpaid for home health services under PPS.

Payments for home health care have substantially exceeded costs since Medicare established the PPS [the lump sum, paid in two installments, health home agencies get for each 60-day episode]. In 2001, the first year of PPS, margins equaled 23 percent. The high margins in the first year suggest that the PPS established a base rate well in excess of costs. The base rate assumed that the average number of visits per episode would decline about 15 percent between 1998 and 2001, while the actual decline was about 32 percent (Table 9-12,p. 206). By providing fewer visits than anticipated, HHAs were able to garner extremely high average payments relative to the services provided.

Margins have stayed high since 2001 because annual increases in payment have exceeded growth in costs. The Commission’s review of the annual change in cost per episode suggests that cost growth has been minimal, typically less than 1 percent. In some years, a decline has been observed. Average payments per episode have generally increased from year to year, driven by market basket increases and increases in the average case-mix index.

This structural mismatch between payment levels and cost growth led to the Commission recommending in March 2010 that Medicare rebase payments to be closer to costs (Medicare Payment Advisory Commission 2010). PPACA has mandated some reductions for home health care that begin to reduce payments, but these reductions would leave HHAs with margins well in excess of cost. Overpaying for home health care has negative financial consequences for the federal government and the beneficiary; implementing the Commission’s prior recommendation for rebasing would better align Medicare’s payments with the actual costs of HHAs.

That's the context of what's happening with home health in Medicare: Medicare has always overpaid for those services, cost growth has been much lower than the rate increases the sector has enjoyed, the ACA gave HHS authority to start rectifying that but even the cuts allowed won't fully fix the problem.

Far from the absurd suggestion that HHS gave no explanation, HHS stated the quantitative rationale right upfront:

1. Rebasing the National, Standardized 60-Day Episode Payment Amount

In the proposed rule, we estimated that the 2013 average cost per episode was $2,559.59. The 2013 estimated average payment per episode was $2,963.65. When comparing the 2013 costs to 2013 payments, we obtained a difference of -13.63 percent, or a reduction of 3.60 percent over four years in equal increments using a compound annual growth rate (CAGR) formula (($2,559.59/$2,963.65) ^1/4 - 1). Since the Affordable Care Act states that the adjustment(s) may be no more than 3.5 percent in a given year, we proposed a reduction to the national, standardized 60-day episode rate of 3.50 percent in each year from CY 2014 through CY 2017.

In other words, 3.6% might have been a more appropriate reduction but the ACA prevented HHS from going above 3.5%.

You may not know this, but when agencies in the federal government suggest regulatory changes like this, there's a public comment period when anyone can weigh in and suggest changes or voice concerns.

Hundreds or even thousands of people or organizations generally do, particularly those affected by the change. The agency then has to go through and address those comments, explaining changes it made to accommodate concerns voiced or explaining why it didn't feel the need to do so. (As an aside, addressing hundreds or thousands of comments can take some space, which is where the huge page counts of regulations come from--those don't actually reflect the actual regulatory changes, they reflect the pages and pages of explanations of why the regulations look the way they do and engaging with critics.)

The industry voiced the very concerns your OP cites and HHS responded, essentially calling BS on their claims (referencing MedPAC's findings, historical context, offsetting payment updates for home health, and other opportunities for cost containment):

Comment: Commenters stated that the rebasing reductions will drive payments below costs in almost every state by 2017, causing access issues and impacting quality of care. Commenters stated that by setting the payment at costs, it guarantees that 50 percent of the HHAs will be paid less than cost by CY 2017 and that a margin is needed to meet normal business operational needs, such as the need for capital funding, keeping staff and attracting new staff, and investment in new technologies and care delivery models. One commenter stated that there is no precedent in payment adjustments that call for the estimation of profit margins regardless of type of entity and the ‘‘elimination of entire average, estimated margins’’ for the industry. The commenter recommended that CMS engage in an in-depth analysis and study of the economics at play in the home health marketplace in determining the level of profit/margin that is reasonable to offer and stated that home health agencies have little other revenue, such as commercial insurance revenue, to help counter reductions in Medicare payment and that agencies have little opportunity for margin outside of Medicare.

Response: The rebasing methodology used to develop the proposed rebasing adjustments is very similar to the methodology used in 2000 where the episode rate and per-visit amounts were equated to the estimated costs per episode or per visit. Notably, in 2000, even though the episode and per-visit amounts were aligned with the expected cost for HH PPS episodes, there were high margins in the first year of the HH PPS, in large part due to HHAs providing fewer visits than anticipated. In addition, MedPAC stated in their March 2013 Report to the Congress, ‘‘Margins have stayed high since 2001 because annual increases in payment have exceeded growth in costs. The Commission’s review of the annual change in cost per episode suggests that cost growth has been minimal, typically less than 1 percent. In some years, a decline has been observed. Average payments per episode have generally increased from year to year, driven by market basket increases and increases in the average case-mix index.’’

While we calculated the proposed adjustments for rebasing by aligning payment to costs, we did not factor in potential opportunities for HHAs to increase efficiencies into the calculation of the rebasing adjustments. We also note that the rebasing adjustments to the national, standardized 60-day episode payment rate for CY 2014 through 2017 will be lower than the proposed adjustments given that we cannot implement a reduction that exceeds 3.5 percent of the CY 2010 national, standardized 60-day episode payment rate of $2,312.94 or a reduction greater than $80.95 in a given year. Similar to 2000, we expect that in the upcoming years HHAs will increase efficiencies in some operating areas and institute mechanisms to better control costs. In their 2013 Report to Congress, MedPAC stated ‘‘low cost growth or no cost growth has been typical for home health care, and in some years we have observed a decline in cost per episode. The ability of HHAs to keep costs low has contributed to the high margins under the Medicare PPS.’’

In addition, the rebasing adjustments over the next four years will be partly offset by the HH PPS payment update percentage and, therefore, the net impact on HHAs will be smaller than payment reductions absorbed by the industry in previous years. We plan to monitor the impact of the rebasing adjustments for any unintended consequences. As noted above, as mandated in section 3131(a) of the Affordable Care Act, MedPAC will conduct a study on the rebasing implementation, which will include impact analysis on access to care, quality outcomes, the number of home health agencies, and rural, urban, for-profit, and non-profit agencies, and submit a Report to Congress no later than January 1, 2015, along with any potential recommendations.

The rationale for preserving inflated, double digit profit margins for home health agencies just isn't there, even if the industry and there advocates are (quite rationally) fighting to preserve them.

Share this post


Link to post
Share on other sites

Sorry, not buying it and the 3.6% is every year for 3 years. 750K will lose their jobs and people will be without home care. I thought the system was supposed to get better, not worse and you are trying to make the case that this is a good thing. This is Chicago politics plain and simple.

You seem to believe that there is no politics involved in anything this administration does which is a laughable position given the last 5 years. ACA is a disaster by any measure yet you always find some little dollop of BS to sprinkle on the giant pile of HS this law has become and seem to be happily satisfied with the taste. WTF?? Do you really believe the ACA is going well or are you some kind of shill? Seriously, I want to know what your motivations are.

1 person likes this

Share this post


Link to post
Share on other sites

I hate to break it to you, but I don't particularly care what you "buy." You copied and pasted someone claiming "no explanation [was] given" for cuts to an industry that's been getting inflated payments for over a decade, seemingly without bothering to look up or learn what the actual rationale is (and yes, one was offered, and not just by HHS).

You've seemingly bought hook, line, and sinker the industry's claim that if they don't retain 13%+ profit margins everyone's fired. Buy whatever you like.

1 person likes this

Share this post


Link to post
Share on other sites

I hate to break it to you, but I don't particularly care what you "buy." You copied and pasted someone claiming "no explanation [was] given" for cuts to an industry that's been getting inflated payments for over a decade, seemingly without bothering to look up or learn what the actual rationale is (and yes, one was offered, and not just by HHS).

You've seemingly bought hook, line, and sinker the industry's claim that if they don't retain 13%+ profit margins everyone's fired. Buy whatever you like.

I hate to break it to you, but I don't particularly care what you "buy." You copied and pasted someone claiming "no explanation [was] given" for cuts to an industry that's been getting inflated payments for over a decade, seemingly without bothering to look up or learn what the actual rationale is (and yes, one was offered, and not just by HHS).

You've seemingly bought hook, line, and sinker the industry's claim that if they don't retain 13%+ profit margins everyone's fired. Buy whatever you like.

13% profit is built into every government contract. As far as copying and pasting are you kidding? You are the king of C&P. How ridiculous to use that insult when this thread is chock full of far more C&P's by you than me and I always give links to the source, as required by this forum's rules, which you are seemingly exempt from.

As far as losing jobs and me swallowing it hook line and sinker, even HHS says that 500K jobs will be lost at minimum so I am waiting for my apology.

Humana just announced that they will be getting $450M, to start, as compensation because no one is signing up and they are losing money. Is that also a sign of success? See, you post rhetoric and I post real life outcomes, that I predicted years ago. Estimates and guesses are fun but results are what counts and the results to date are bad and getting worse. $450M to Humana and the the rest are lining up for bigger compensation packages, all paid for by the taxpayer. If you see that as success we need to discuss what you envision as the ultimate goal. I suspect single payer but let us see if you are man enough to tell us all the truth.

Share this post


Link to post
Share on other sites

I never expected a conservative to argue for more government entitlement spending against a liberal who was arguing for less. The world really is topsy-turvey.

1 person likes this

Share this post


Link to post
Share on other sites
As far as copying and pasting are you kidding? You are the king of C&P. How ridiculous to use that insult when this thread is chock full of far more C&P's by you than me and I always give links to the source, as required by this forum's rules, which you are seemingly exempt from.

The point is that you've (yet again) unthinkingly copied something that's demonstrably false. It apparently never occurred to you there might actually be a good reason to cut home health payments and you took as gospel that none was offered. Without, you know, bothering to look for one. It's just an endless stream of confirmation biases with you, no interest in understanding what an issue is all about. Look at you, you've already jumped to risk adjustment in the exchanges, a completely unrelated issue--you guys are becoming parodies of yourselves.

As far as losing jobs and me swallowing it hook line and sinker, even HHS says that 500K jobs will be lost at minimum so I am waiting for my apology.

I think we've established that you didn't read what HHS says, it's always filtered through somebody else for you. Use primary sources, you'll be happier (and better informed) for it.

I never expected a conservative to argue for more government entitlement spending against a liberal who was arguing for less. The world really is topsy-turvey.

I'm no fan of useless or wasteful spending. If these programs are going to be sustainable and they're going to serve people well, they have to be run smartly. That means the policies guiding them have to continually be improved using evidence and facts.

And that means when the independent experts who advise Congress on payment policy for Medicare say that Medicare has been overpaying for these services for over a decade, and growth in the program's reimbursement rates for those services has continued to outpace cost growth, Congress and HHS ought to listen. They have listened and that's a good thing.

Share this post


Link to post
Share on other sites

I never expected a conservative to argue for more government entitlement spending against a liberal who was arguing for less. The world really is topsy-turvey.

Well, like it or not, we have built ourselves a government run healthcare system via medicare and medicaid and now ACA. I am all for reforming it and have offered ways to do so but the country chose the abomination of ACA which is exactly the wrong choice. Given the circumstances of choosing hospitalization or home health care services, I choose the cheaper of the two, home healthcare services. In a better world private insurance would be handling the costs of this care but I lost that fight long ago. If home health care is the cheaper and better way, why cut it?

The bigger question, which you have avoided addressing and is what this thread is about, is why did she choose to cut this? Why, when everything else is getting increased funding, did she attack home health care services? Do you have an answer or are you just going to play the your liberal card and skirt the issue by hurling insults?

Share this post


Link to post
Share on other sites

The point is that you've (yet again) unthinkingly copied something that's demonstrably false. It apparently never occurred to you there might actually be a good reason to cut home health payments and you took as gospel that none was offered. Without, you know, bothering to look for one. It's just an endless stream of confirmation biases with you, no interest in understanding what an issue is all about. Look at you, you've already jumped to risk adjustment in the exchanges, a completely unrelated issue--you guys are becoming parodies of yourselves.

I think we've established that you didn't read what HHS says, it's always filtered through somebody else for you. Use primary sources, you'll be happier (and better informed) for it.

I'm no fan of useless or wasteful spending. If these programs are going to be sustainable and they're going to serve people well, they have to be run smartly. That means the policies guiding them have to continually be improved using evidence and facts.

And that means when the independent experts who advise Congress on payment policy for Medicare say that Medicare has been overpaying for these services for over a decade, and growth in the program's reimbursement rates for those services has continued to outpace cost growth, Congress and HHS ought to listen. They have listened and that's a good thing.

I don't really care what HHS says and neither should you. HHS has consistently lied about every aspect of ACA since its inception yet you present their demonstrably false numbers out and treat them as gospel truth. If someone or some organization continually lies to you don't you think you should stop listening? You say they overpaid by a certain margin but the government does that on every contract, it is called a profit. I have read what HHS says and it is BS to put it lightly. HHS could save billions just cleaning the $60B-$90B in fraudulent claims (as per Holder) yet recover just a small percentage of that. Why?

There is a motivation here that you fail to see or don't want to see and that is what I am talking about. The SEIU wants to unionize the home health care workers and the workers don't want that so we are getting the Chicago strong arm tactics. I find that disturbing and so should you.

Share this post


Link to post
Share on other sites

Basically there are two different arguments that you are using.

1) The cuts are a result of unions convincing Obama to destroy an industry for pure spite.

2) That the government does create jobs and that a 3.5% cut for 3 years will equal 500,000 jobs lost.

and Startraveler is using one argument.

1) The bean counters say we are overpaying.

Does that pretty much sum it up?

Share this post


Link to post
Share on other sites

Basically there are two different arguments that you are using.

1) The cuts are a result of unions convincing Obama to destroy an industry for pure spite.

2) That the government does create jobs and that a 3.5% cut for 3 years will equal 500,000 jobs lost.

and Startraveler is using one argument.

1) The bean counters say we are overpaying.

Does that pretty much sum it up?

I asked you a question and you refuse to answer. Why?

Share this post


Link to post
Share on other sites

I asked you a question and you refuse to answer. Why?

Wanted to make sure I understood you correctly.

For your first point. Looking around I find no links, incriminating e-mails, or anything to support that other than a conspiracy theory offered up Higgins. A 3.5% cut is not going to get more union membership. It's not going to do anything for the union. If anything it will price union workers out of the market (if there were any).

As for your second point. Perhaps the 3.5% will result in lost jobs or perhaps these companies will streamline. Part of negotiating a price with a payee involves convincing him that your price is justified. No business is going to say, "It's okay we were overcharging you anyways." They are going to say, " I dunno, might not be able to do it at those prices. I might have to let someone go."

So to answer your question of: "The bigger question, which you have avoided addressing and is what this thread is about, is why did she choose to cut this? Why, when everything else is getting increased funding, did she attack home health care services? Do you have an answer or are you just going to play the your liberal card and skirt the issue by hurling insults?"

As far as I can tell it is just one of a bunch of changes that happened to medicare with Obamacare. Reading Startraveler's link (and god was it boring), the ACA specified the amounts so it was somewhat our of her hands.

I think it is probably a good thing. A lot of the complaints of the government was that it just handed out money. This is just putting in the old Walmart price squeeze on them, forcing them to be more streamlined.

Share this post


Link to post
Share on other sites

Posted (edited)

Wanted to make sure I understood you correctly.

For your first point. Looking around I find no links, incriminating e-mails, or anything to support that other than a conspiracy theory offered up Higgins. A 3.5% cut is not going to get more union membership. It's not going to do anything for the union. If anything it will price union workers out of the market (if there were any).

As for your second point. Perhaps the 3.5% will result in lost jobs or perhaps these companies will streamline. Part of negotiating a price with a payee involves convincing him that your price is justified. No business is going to say, "It's okay we were overcharging you anyways." They are going to say, " I dunno, might not be able to do it at those prices. I might have to let someone go."

So to answer your question of: "The bigger question, which you have avoided addressing and is what this thread is about, is why did she choose to cut this? Why, when everything else is getting increased funding, did she attack home health care services? Do you have an answer or are you just going to play the your liberal card and skirt the issue by hurling insults?"

As far as I can tell it is just one of a bunch of changes that happened to medicare with Obamacare. Reading Startraveler's link (and god was it boring), the ACA specified the amounts so it was somewhat our of her hands.

I think it is probably a good thing. A lot of the complaints of the government was that it just handed out money. This is just putting in the old Walmart price squeeze on them, forcing them to be more streamlined.

3.5% per year for three years, the most she is allowed to do. She'll be gone after that. 750K jobs and those people go to hospitals at much greater cost. Start over.

Edited by Merc14

Share this post


Link to post
Share on other sites

3.5% per year for three years, the most she is allowed to do.

Except it's not 3.5%. As MedPAC helpfully points out in this month's Report to Congress (hard to believe it's March again):

PPACA calls for the annual rebasing adjustment to be offset by the payment update for each year in 2014 through 2017. CMS set the rebasing reduction to the maximum amount permitted under the PPACA formula, which was equal to 3.5 percent of the 2010 base rate, or $81 per 60-day episode. However, the base rate has increased since 2010, so this reduction will be less than 3.5 percent and will equal 2.7 percent to 3 percent in 2014 through 2017. In addition, over this period, the payment update will raise payments, resulting in a cumulative net payment reduction of 1.6 percent (Table 9-2, p. 220). This modest reduction will likely leave substantial HHA margins, which have always exceeded 14 percent since the implementation of the PPS.

2eg8vaw.png

They're hardly the victims they make themselves out to be: a cumulative 1.6% reduction over a four-year period for an industry getting double digit margins.

Which is why the Commission remains concerned that the taxpayer is continuing to get bilked by this industry ("The Patient Protection and Affordable Care Act of 2010 (PPACA) includes several reductions intended to address home health care’s high Medicare payments, but these policies may not achieve the Commission’s goal of making payments more consistent with actual costs. The Commission has concerns that the rebasing called for in PPACA will ultimately be too modest and leave agencies with substantial profit opportunities while unduly burdening taxpayers and beneficiaries.")

Spoiler alert: we are.

Share this post


Link to post
Share on other sites

Looking at the past again Star? Read my post. It is what Sebelius is threatening to do, not what she has done.

I want to ask you an aside question Star. Is there any aspect of ACA that you see as a failure? Anything?

Share this post


Link to post
Share on other sites

I never expected a conservative to argue for more government entitlement spending against a liberal who was arguing for less. The world really is topsy-turvey.

Not so much if you think down the road a bit. The home health for disabled and for seniors who have problems that keep them essentially housebound is a true "investment" in the sense that if they are not cared for in that setting then the piper will have to be payed in another setting at a greater cost. I have an 87 year old father in law who is facing this RIGHT NOW. He had been receiving help with a catheter issue but now that has been stopped. The family is unable to keep up with the required maintenance of this cath so most likely he will end up in hospital and medicare will pay through the nose compared to what a nurse one or two hours a week would have cost. It really is about spending dollars to save pennies.

Share this post


Link to post
Share on other sites

Not so much if you think down the road a bit. The home health for disabled and for seniors who have problems that keep them essentially housebound is a true "investment" in the sense that if they are not cared for in that setting then the piper will have to be payed in another setting at a greater cost. I have an 87 year old father in law who is facing this RIGHT NOW. He had been receiving help with a catheter issue but now that has been stopped. The family is unable to keep up with the required maintenance of this cath so most likely he will end up in hospital and medicare will pay through the nose compared to what a nurse one or two hours a week would have cost. It really is about spending dollars to save pennies.

He is incapable of thinking down the road a bit, whence his democrat registration card (See Chicago and Detroit for examples)

1 person likes this

Share this post


Link to post
Share on other sites

Because I disagree with you on some issues, you assume I am a registered democrat? To tell you the truth, on the local level, I voted for many republicans over democrats. I voted for Grassley, but despise Steve King. If learning a little about a candidate and their values and then voting according to the job they are running for is not looking ahead, then I guess I am guilty.

The biggest problem you seem to have merc is that you make assumptions on practically everything and state them as fact.

1 person likes this

Share this post


Link to post
Share on other sites

Because I disagree with you on some issues, you assume I am a registered democrat? To tell you the truth, on the local level, I voted for many republicans over democrats. I voted for Grassley, but despise Steve King. If learning a little about a candidate and their values and then voting according to the job they are running for is not looking ahead, then I guess I am guilty.

The biggest problem you seem to have merc is that you make assumptions on practically everything and state them as fact.

No republican would defend Obamacare.

Share this post


Link to post
Share on other sites

I'm not a republican either.

Share this post


Link to post
Share on other sites

I'm not a republican either.

I can't imagine a libertarian backing ACA either so...

Share this post


Link to post
Share on other sites

Not libertarian either. Not everything is black and white merc. No political party has a monopoly on everything that is "right".

2 people like this

Share this post


Link to post
Share on other sites

Not libertarian either. Not everything is black and white merc. No political party has a monopoly on everything that is "right".

That's enough of teh twenty question game and I never said one party is always right and the other always wrong. The republicans had several opportunities in the last decade and a half to fix things and they moved left instead of right. No matter, ACA is bad law and a government that is out of control.

Share this post


Link to post
Share on other sites

ACA is bad law and a government that is out of control.

you can't have it both ways. You and the rest of the teapublicans claim the ACA is too much government control. The real problem is that republicans don't want to participate in government.

Share this post


Link to post
Share on other sites

you can't have it both ways. You and the rest of the teapublicans claim the ACA is too much government control. The real problem is that republicans don't want to participate in government.

Not in the present government. The present government needs to be voted out and all the damage it has done must be reversed. I just hope some party is up for the challenge

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 1

  • Recently Browsing   0 members

    No registered users viewing this page.