Home Healthcare stakeholders assess industrial “hair spin” following proposed payment rule

The US Centers for Medicare & Medicaid Services (CMS) on Friday released a rather negative proposed payment rule for the home healthcare industry. In particular, the proposal includes a 4.2% reduction in payment rates, which, if finalized, throws cold water on an industry that is just starting to heat up again.

Although the disclosure of the proposed payment rule by CMS is less than a week away, it has already been met with a wave of strong criticism from stakeholders in the home health industry.

“The whole home health community is a bit stagnant given the exemption,” Joan Cunningham, chief executive of the Quality Home Health Partnership, told Home Health Care News. “We continue to analyze the analysis and gain a full understanding of all its components, but it has certainly been a real stimulus for response from urban, rural, large and small home health agencies across the country.

In fact, many industry stakeholders have noted that the proposed payment rule will put pressure on suppliers and hamper their ability to provide quality care in light of the disturbances associated with COVID-19 in recent years.

“The proposed rule will obviously make the outcome of the pandemic pressure the industry has been experiencing over the past few years much more challenging,” said Scott Fidel, an analyst at private investment bank Stephens. HHCN.

There are growing fears across the industry that the CMS will insist on recalibrating the Patient-Managed Grouping (PDGM), but the level of the federal agency’s proposal was much worse than even some of the more pessimistic expectations, according to Fidel.

In addition, many providers believe that this does not reflect the operational and inflationary pressures facing the home health industry.

“It is clear that CMS has analyzed their legal framework for budget neutrality guidelines and conducted the types of analyzes they use to determine the total costs of the PDGM model,” Fidel said. It just didn’t seem that there was any recognition of how much spending inflation accelerated in 2022.

In the United States, annual inflation reached 8.6% in May 2022. This is the largest annual increase since December 1981.

Overall, the CMS updates home health levels with an inflation index each year, but Cunningham said earlier that the updates do not keep pace with increased spending on staff, medical supplies and fuel.

Like Fidel, Cunningham also believes that the conclusion that home health organizations have been overpaid is at the root of the disagreement between CMS and providers.

“We did additional analysis of data on how the system is presented, in particular checking whether the system meets the requirements to be budget neutral from one year to the next, which is a requirement in the statute of home health care,” she said. “Our data show a very different story, which is that home health was actually underpaid in 2020 by 2.5%.”

Cunningham also noted the “inherent conflict” of the proposed rule and its various components.

“On the one hand, CMS offers some significant reductions, not only in 2023, but also in years to come,” she said. “On the other hand, [HHVBP] is expected to expand to all 50 states starting in 2023. CMS predicts that home health will provide [millions] in savings [due to] avoids hospitalizations, readmissions, etc. For me, this is an amazing dichotomy that I find in a huge conflict. ”

In other words, the CMS cannot impose this level of downsizing and limiting the system and then expect providers to have the same capacity to provide care services, according to Cunningham.

In this sense, Fidel says that investors are questioning the message that CMS receives with its proposal.

“I’ve had countless conversations with big investors in the industry since the rule came out,” he said. “The investment community believes that healthcare policymakers, public payers and managed carers are in line with the view that increasing access to home care and home healthcare is a positive attribute for the healthcare system. … There is a real struggle right now with the message that CMS is sending here. ”

Looking ahead, home health stakeholders will be busy trying to educate politicians in Congress and the Biden administration about the impact the proposal may have on access to care services.

“We will also make official comments to the CMS, outlining our concerns and concerns, as well as providing archiving data,” Cunningham said. “We hope that our comments will be heard and that the CMS will take a good look at the consequences that could arise in terms of patient care and access to care.”

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