Proposed Payment Rules for Other Settings Forecast Home Health Trouble

Home health operators are still several weeks away from getting a glimpse at the proposed payment rule for 2023. Even so, they’re beginning to see signs of concern that they’ll not be getting an inflation-adjusted rate.

Because of workforce investments, more expensive supplies and the overall cost increase of goods and services in the U.S., including the price of gasoline, it has gotten more expensive for home health agencies to stay in business.

As a result, the U.S. Centers for Medicare & Medicaid Services (CMS) should factor that into its annual rate update, advocates say.

“Rising gas prices are an issue for home health and hospice providers, and expenses around workforce, supplies, and other goods and services cut across home health providers as well as hospice, nursing homes and other service settings,” Mollie Gurian, vice president of home-based and HCBS policy at LeadingAge, told Home Health Care News in an email. “LeadingAge’s nonprofit and mission-driven home health members tell us they’re concerned about the rising cost of gas and staffing – and they would love to see these price increases recognized in the annual update.”

Gurian is not alone in feeling that way.

While CMS does update the home health rates by an inflation index every year, the updates have failed to keep pace with the rising costs for staffing, medical supplies and fuel, Joanne E. Cunningham, executive director of the Partnership for Quality Home Healthcare, told HHCN.

“The Partnership presented our survey data to CMS last year on the significant cost increases facing providers and has urged CMS to better account for them in Medicare’s payments to home health agencies,” she said in an email. “This year, we continue to advocate for policy changes to help address these higher costs.”

Early signals

Every year, CMS releases its home health proposed payment rule — pertaining to procedure changes, Conditions of Participation (CoPs), payment rates and policies, among other things — for the following year. CMS, typically, releases this ahead of July 1.

Though the home health proposed payment rule has not yet been released, industry stakeholders have already begun to forecast what providers can expect to see in terms of the Medicare payment landscape.

And along with those stakeholder predictions of what to expect, the proposed changes in other sectors may be a sign of what’s to come.

On the hospice side, CMS recently proposed a 2.7% pay increase for 2023. While an increase is, generally, viewed as a positive, some industry stakeholders fear that this doesn’t go far enough considering the impact of the COVID-19 emergency and ongoing inflation.

CMS also proposed a 2.7% Medicare rate for inpatient psychiatric facilities (IPFs).

Meanwhile, skilled nursing facility (SNF) operators saw a proposed downward adjustment to SNF payment rates by 4.6%, partly to balance out the Patient-Driven Payment Model (PDPM). SNF advocates were vocal in their criticism of potential cuts, stressing that this could worsen the financial crisis nursing homes were already experiencing.

If these proposed changes for hospices, SNFs and IPFs are a sign of what’s to come for home health, it could spell trouble for providers.

William A. Dombi, the president of the National Association for Home Care & Hospice (NAHC), also noted that providers could see a massive cut proposed, regulatory-wise, in home health care.

“On the home health front, it is absolutely an important time to watch what’s happening,” NAHC’s Dombi said during a panel discussion last month at HHCN’s Capital+Strategy conference. “We are looking at the likelihood that CMS will undertake its efforts to examine budget neutrality for the shift to PDGM (Patient-Driven Groupings Model).”

Gas prices, inflation hit home health

In the U.S., inflation reached 8.5% last month, the highest it’s been since December 1981, the U.S. Department of Labor said in its monthly report on the Consumer Price Index.

Gasoline prices, in particular, jumped 18.3%.

Most of the U.S. is feeling the impact of inflation and gas prices, including those in the highly remote home health industry.

On average, caregivers see several clients on a daily basis. They travel up to 10 miles and 30 minutes to 45 minutes from each client. This amounts to an additional cost of $1 per hour for workers that typically make $10 to $13 per hour, according to data from NAHC.

In today’s economy, all that travel adds up quickly.

“If you’re making $10 to $13 an hour, and your cost to commute between three to four visits a day, is an hour per 10 miles driven, that takes away a lot of your earning power,” David Totaro, chief government affairs officer at Bayada Home Health Care, told HHCN. “We’re beginning to have quite a few [caregivers] telling us they cannot take referrals or clients that are long distances between home visits. This is particularly affecting the rural areas.”

In addition to his role at Bayada, Totaro also serves as a member of the board of NAHC.

For providers, these conditions put a squeeze on their ability to be able to sustain this business, according to Totaro.

Though there’s been some state and federal action on this front, he believes more needs to be done.

“We do see some effort by both state and federal governments to intervene,” Totaro said. “Many states are looking at suspending the state gas tax. There has been a call by Congressman Donald Norcross to suspend the federal gas tax, but even those solutions are short-term. This is no way to sustain a long-term business. The only way to do that is to increase caregiver wages to a point where they can be competitive with other industries.”