Long-term care and home health providers are ramping up pleas for financial relief in a year-end congressional spending deal, testing their influence against a other health interests trying to tuck favorable provisions in the must-pass bill.
Why it matters: The wrangling over health care “extenders” is an annual rite, but there are higher stakes this year due to labor and supply chain issues and the after effects of the pandemic.
- Nursing homes accounted for nearly one-quarter of COVID-19 related deaths in the US and were targeted for reforms in President Biden’s State of the Union address. But the industry is a vital cog in the health care system, caring for more than 1.4 million residents, as well as discharged hospital patients.
- Demand for home and community-based care surged during the pandemic, but a severe shortage of workers is threatening the option, even for people who have the financial means, per the Washington Post. Almost 5 million patients received home health services in 2017, per the Centers for Disease Control.
- Big home health companies like Amedisys, LHC and Aveanna that were poised to benefit from a shift to more in-home care could be hit by a steep proposed Medicare payment cut for 2023.
Where things stand: Congress has punted key funding decisions to the “lame duck” session, and Democrats have resisted repurposing unspent COVID-19 funds from earlier relief packages.
- Nursing homes say there will be closures without reliable government funding as the industry grapples with negative margins and a median occupancy rate around 77%.
- The home health industry is weighing possible legal action to halt the cuts it’s facing while also putting its hopes behind legislation from Sens. Susan Collins (R-Maine) and Debbie Stabenow (D-Mich.) which would delay the reductions until 2026.
What they’re saying: “We’ve seen from past rate reductions, reductions in access to care overall and the care people receive,” Bill Dombi, president of the National Association of Home Care & Hospice, told Axios.
- “Our situation is much more exaggerated than other sectors in the space,” Clif Porter, senior vice president of government relations at the American Health Care Association/National Center for Assisted Living, told Axios. “We’ve lost 14% of our workforce during COVID and we’ve had very marginal and slow recovery in that workforce. It’s some of the lowest levels we’ve seen since the 1990s.”
Yes, goal: Nursing homes and home health agencies were overpaid by the Centers for Medicare and Medicaid Services due to an unintended increase in payments to the industries stemming from the current reimbursement system.
- The agency then delayed adjustments due to the pandemic. Now, some of the adjustments are coming due.
- The Medicare Payment Advisory Commission backs payment reforms, saying the program has long overpaid for home health care. On nursing homes, it notes the combination of federal relief packages and recent changes that account for “case mix,” or resources predicted to care for residents, have improved facilities’ financial performance.
Go deeper: Medicare home health could potentially take a $810 million payment cut next year, which the industry says will force agencies to reduce their coverage areas or the volume of patient visits.
- Raymond James analyst Chris Meekins expects CMS to soften the blow when it issues a final rule, possibly next month. But the cuts could be taken off the table entirely if Collins and Stabenow insert their three-year payment delay in a year-end spending package.
- Nursing homes that would have lost $320 million under updated payment policies won concessions that will see reductions spread out over two years, along with a 2.7% pay bump for 2023.
- CMS said the decision rose to “taking a more cautious approach in order to mitigate the potential negative impacts on the nursing home industry, such as facility closures or disproportionate impacts on rural and small facilities.” Operators say it still doesn’t match the increased costs they’re facing.
What we’re watching: Biden in his State of the Union called for “higher standards” for nursing homes, including minimum staffing requirements and financial incentives based on the quality of care delivered. Proposed rules could come next year.
- The industry is pushing back, saying a shortage of qualified workers and lack of funds to enforce a staffing mandate makes it unworkable. Industry-backed bills in the House and Senate would, among other things, extend pandemic-era staffing flexibilities and address workforce training and retention.
Keep in mind: Medicare only covers care services in nursing home facilities or at home for short-term recovery and discharge care. Long-term care must be paid for out-of-pocket or eventually by Medicaid.
- Experts say change is needed to the long-term payment system, and that at-home health can be more cost-effective than care offered in facilities.
- “We need to grow home and community-based care options while reimagining what a nursing home might look like,” David Grabowski, a Harvard University health care policy professor, told Axios.
- While both home health and long-term care facilities are asking for more funding, Grabowski said the home health sector looks stronger, though he noted widespread nursing home closures haven’t yet materialized.
The bottom line: With a pileup of health spending requests packed into a post-election session, the industries will be vying with doctors, hospitals and other provider groups for year-end gifts. “December is going to be a mess,” said Meekins.