WASHINGTON, D.C. (August 16, 2022)—Calling the government’s proposed changes to Medicaid home health services “baffling,” the National Association for Home Care & Hospice (NAHC) submitted more than 100 pages of comments and supporting materials today arguing against the proposed rule.

The formal comments on the 2023 Medicare home health services proposed rule from the Centers for Medicare & Medicaid Services (CMS)—which includes a 7.69% rate cut—argue that CMS didn’t follow the legal requirements in calculating its new rates. At heart, NAHC says, the agency didn’t fairly compare the old payment model with the newer Patient Driven Groupings Model (PDGM) because it used the behavioral changes driven by PDGM in its calculations.

“It really from the get-go had a fatal flaw,” NAHC President and CEO Bill Dombi told HomeCare. “When looking at the concept of whether one payment model is now budget neutral compared to the other, you’re supposed to compare with what costs would be in the absence of the new model.”

In its comments on the proposed rule, NAHC argues that if imposed, the rule could send more than half of all home health agencies into financial deficit next year, risking access to care by more than 3 million Medicare patients and 5 million others using Medicaid, the Veterans Affairs health system and Medicare Advantage. It also says:  

  • More than 300,000 Medicare beneficiaries have lost access to home health services in recent years, with over 1,000 agencies closing.
  • The budget neutral payment model Congress instituted for CMS in 2020 underpaid home health agencies by as much as 3.2%—not a 6.9% overpayment as alleged by CMS.
  • CMS’s evaluation as to whether the new payment model was “budget neutral” is fatally flawed in its methodological approach and is inconsistent with comparable evaluations CMS applied in other sectors, including skilled nursing.
  • CMS’s methodology is at odds with the clear mandates established by Congress in 2018.
  • CMS is risking patient care by adding new, unnecessary costs while failing to recognize the significant labor and transportation cost inflation that has hit home health.
  • CMS is pulling resources from home health care at a time it is depending on that care to reduce Medicare spending on hospitalizations and other care.

“We’re honestly baffled by CMS on this one because we’ve said it in every language that it can possibly be said,” Dombi continued. “And it’s not like we’re the only ones with this view.” Those supporting NAHC’s position include former CMS officials, lawyers in the industry and health economists who have worked for the Congressional Budget Office and for CMS’ Office of the Actuary.

Dombi said that roughly 200 comments were submitted regarding the bill, including many from agencies and from manufacturers and service providers in the industry. CMS must release a final rule by Nov. 3 in order for it to go into effect Jan. 1, 2023 as required.

In the meantime, NAHC is also pushing legislation launched in July that would block CMS from instituting its rate freeze.

“We may see something develop between now and issuance of the final rule,” Dombi said. “We will continue to seek support from Congress on the legislation and for Congress to communicate as well with CMS and the White House.”

NAHC also submitted supporting briefs from two Washington law firm and new data from Dobson DaVanzo, a health economics consulting firm, that both recalculates CMS’ rates according to a different model and that updates a 2021 wage survey of home health agencies. The wage study found that inflationary pressures and stiff competition for home health caregivers has resulted not just in higher wage costs but also additional expenses for recruiting and retaining staff. It also said that agencies are turning away referrals because of lack of staffing; 71% of respondents cited this as a factor affecting the number of services they could provide.