Home Health & Hospice

President’s 2016 budget calls for home health copays, PAC reimbursement cuts

Homecare Insider, February 9, 2015

Last week, the Obama administration released its proposed budget for fiscal year (FY) 2016, calling for some significant updates that would impact the home health provider community, including co-payments for Medicare beneficiaries and reimbursement cuts throughout post-acute care (PAC) for the next decade.

Neither of these proposals is new, nor advisable, according to the National Association of Home Care & Hospice (NAHC).
“These proposals from the President are essentially repeats from last year’s budget,” says NAHC President Val J. Halamandaris, in a statement. “Congress refused to enact these suggestions last year and we hope for the same response to this year’s budget.”
Prominent among the proposals affecting home health is the addition of a co-payment for new Medicare beneficiaries of $100 per home health episode beginning in 2019. Consistent with recommendations from the Medicare Payment Advisory Committee, the co-payments would apply for episodes with five or more visits not preceded by a hospital or inpatient post-acute stay, amounting to $830 million in Medicare savings between FY 2016 and FY 2025. 
The proposed budget also includes an annual reduction to the market basket updates for PAC providers from 2016 through 2025, including a 1.1% drop each year for home health. In total, the proposal would slash home health reimbursements by more than $15 billion and reduce overall Medicare spending by $102.1 billion in that timeframe.
In addition to these contentious proposals, the U.S. Department of Health & Human Services (HHS) points to a few other notable updates for which the 2016 budget calls:
  • Bundled payments for PAC providers. Beginning in 2020, this proposal would bundle at least half of total payments for PAC providers, establishing rates based on patient characteristics and other factors to produce $9.3 billion in Medicare savings by 2025.
  • Value-based purchasing. This provision would extend budget neutral, value-based purchasing programs—also known as pay-for-performance models—to several additional provider types, including skilled nursing facilities, home health agencies, ambulatory surgical centers, hospital outpatient departments, and community mental health centers beginning in 2017. Under the proposal, at least 2% of payments would be tied to the quality and efficiency of care in the first two years of implementation, and at least 5% beginning in 2019. 
  • Home health surety bonds. The proposal would increase the required surety bond amount for Medicare home health providers to no less than $50,000, commensurate with the volume of payments to an individual agency. 
To view more healthcare highlights from the proposed budget, view the HHS’ Budget in Brief here
To view the full budget, click here.