The Covid-19 pandemic challenged the U.S. healthcare system like never before—particularly the segment of the industry that cares for seniors and people with disabilities. Facing a massive disruption to the status quo, providers had to quickly pivot to new models of care, such as hospital-at-home programs, which helped reduce hospitalizations and freed up hospital beds for higher acuity patients.
Accelerated by the pandemic’s quarantines and lockdowns, home-based healthcare emerged as a solution with unlimited potential and rising popularity due to its proven ability to lower costs and reduce hospitalizations. Patients, providers, and payers all support this shift to home-based care. In fact, 94 percent of Medicare beneficiaries say they would prefer to recover at home following a hospital stay and 97 percent of health plan leaders believe that more care should be delivered at home.
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Unfortunately, just as need and demand for home healthcare are at their peak, the Centers for Medicare & Medicaid Services (CMS) is proposing to cut rates for Medicare home health by up to $4 billion, devastating access to these critical services.
CMS’s 2023 Home Health Prospective Payment System Rate Update Proposed Rule includes billions of dollars in Medicare payment cuts to home health agencies. In 2023 alone, Medicare proposes a permanent 7.69% rate reduction, which equates to a $1.33 billion cut from home healthcare.
Proposed payment cuts to home health providers are contrary to increased demand, patients with more complex needs, equitable access to care, and substantial cost increases across the industry. While CMS increased payment reimbursement rates by 20 percent for hospitals and skilled nursing facilities during the pandemic – in addition to provider relief funds – home health agencies received no additional reimbursement and are still facing significant financial challenges attributed to Covid-19. CMS’s unprecedented proposed cuts, coupled with inflationary pressures and increased labor costs, will make it increasingly difficult for home health providers.
Home healthcare providers have unique challenges, including gas expenses which are trending nearly 30% higher compared to June 2021. Based on 7.8 billion miles of travel to and from patients’ homes at 24 miles per gallon, gas prices alone have in the aggregate cost agencies an extra $384 million per year.
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Additionally, we should consider that home health agencies are facing a severe workforce shortage that makes meeting current demand for care extremely difficult. WellSky’s home health clients have stated that their referral volumes are the highest they have ever been—but they have been forced to turn patients away because they simply don’t have the staff or resources in place to care for them. Our own data show that in January of this year referral rejections across the industry reached 58 percent in home health.
Long before Covid-19, home health providers began developing innovative ways to allow patients with advancing need for healthcare services to receive care in their homes and age in place. The needs of this population and the complexities of their conditions have grown. If the proposed rule becomes effective, the cuts will force many of these higher acuity patients into higher cost settings, which will lead to higher costs for CMS. On the other hand, if cuts are not made, more care and higher acuity care will continue to be provided in the home, which is the most cost-effective and desired setting for care advancement.
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The Preserving Access to Home Health Act (S. 4605/H.R. 8581), introduced by Sens. Debbie Stabenow and Susan Collins in the Senate and Reps. Terri Sewell and Vern Buchanan in the House, would require any cuts to home health payment rates to be put on hold until 2026. By delaying the proposed cuts, CMS and the home health industry would have the opportunity to more thoroughly develop a payment model that preserves access to care and refines the approach to determining budget neutrality in home health as required by Congress.
By 2040, the senior population (those 65 and older) will grow to 80 million people. With this “silver tsunami” ahead, our healthcare system must be ready to innovate to create lower cost options that improve quality, access, and outcomes. Healthcare at home is here to stay. That’s why it is so crucial to stop detrimental cuts to Medicare and preserve access to vitally important healthcare at home services.
We stand with the home health industry and will continue to do everything we can to support the Preserving Access to Home Health Act and fight for the success of the home healthcare system.
Photo: Mbve7642, Getty Images
Bill Miller is CEO of healthcare technology company WellSky.
