Home health on deck for reimbursement cuts?

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By Emily Micucci

Hospitals have been feeling the heat from the Centers of Medicare and Medicaid Services since 2012, when the federal insurer — the largest single payer in the country — began penalizing hospitals with excessive readmission rates for Medicare patients.

Now, the home health industry is on deck. While CMS has been tracking and publishing data on the quality of care delivered by home health agencies for some time, the industry could begin incurring reimbursement penalties for excessive readmissions also (CMS defines “excessive” as those that exceed the number an organization was expecting in a fiscal year).

The Medicare Payment Advisory Commission recommended last year that CMS implement this reimbursement system as a means to drive down the high cost of delivering care to Medicare population, which is growing as the population ages. The recommendations require Congressional approval and federal lawmakers have yet to take it up, but James Njoroge, CEO of Worcester-based Century Homecare, anticipates that home health agencies such as Century may begin to see reimbursements tied to readmissions next year.

But Njoroge said reimbursement penalties won’t necessarily prompt agencies to make drastic changes in order to reduce readmissions before 2016. That’s because home health agencies that are certified by CMS to provide care for Medicare patients have already had to build strong reputations in order to get business from some of their biggest referral sources: hospitals.

Hospital administrators need only look at the readmissions data provided by CMS on home health agencies, available on CMS’ Home Health Compare website, to determine who’s doing a good job at keeping patients out of the hospital after they’ve been released. Those are the agencies hospitals want to do business with, Njoroge said.

“They’ll say, ‘We don’t want to do business with this company because their numbers are bad’,” Njoroge said.

Century Homecare has among the lowest readmissions rates for area home health agencies, according to CMS data, and Njoroge said agencies like his are in a strong position to maintain an edge as the reimbursement environment gets tougher for home health agencies.

But Njoroge said it’s hard to imagine that reimbursement penalties will “weed out” agencies with higher readmissions rates because there is so much demand for home health services and not enough agencies to deliver them.

Star ratings to begin this fall

However, another quality initiative CMS will soon roll out may help consumers separate high-quality home health agencies from those that are below average. This fall, CMS is planning to add a star-ratings system to the Home Health Compare site, which will provide patients a tool to assess how good a job a given agency does in taking care of patients at home. Right now, the data is available but it’s somewhat difficult to access and understand, Njoroge said. “Right now … many agencies are sort of hiding behind the process,” he said.

Do reimbursement penalties work?

So far, it’s difficult to tell whether reimbursement penalties to hospitals are effective in driving down readmissions; The Kaiser Family Foundation reports that the percentage of penalized hospitals has risen from 64 percent in the first year of the program to 78 percent in fiscal 2015, but Kaiser noted that CMS increased the number of diagnoses for which readmissions were tracked, which explains why the figure has grown. With a maximum reimbursement penalty of 3 percent, the average penalty is less than 1 percent for U.S. hospitals. Essentially, hospitals could be doing worse with readmissions.

James Fuccione, director of legislative and public affairs at the Home Care Alliance of Massachusetts, said tying readmissions to reimbursements is, overall, a good idea, but he said there should be a mechanism to reward agencies that do a good job at keeping patients out of the hospital.

“In concept, I think it’s going to be good to motivate home health agencies,” Fuccione said.

He added that star ratings are “an important tool” for consumers, but he pointed out that they only provide a subset of information delivered by CMS based on data on the Medicare population and should be considered just one component of the vetting process.

For hospitals, driving down readmissions by working with effective home care agencies is important, according to Kathleen Whyte, a project manager who works on quality initiatives at UMass Memorial Health Care in Worcester. But she insists the focus on curbing readmissions isn’t just about the bottom line.

“It’s about the patients and keeping them safe and well at home,” Whyte said.

Image source: Freedigitalphotos.net