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Former US Medicare & Medicaid Services (CMS) administrator Seema Verma didn’t paint a bright outlook for the home health industry this week in Chicago.

In fact, it is unlikely that anything she said caused optimism among the operators in the crowd.

On the economic side, she said she thinks a recession is around the corner, although she acknowledged that it is not her job to predict such things. In regards to legislation passed in Washington, D.C. this year — perhaps even favorable home-care legislation — she said she “didn’t see that happen.” And when it came to the minutiae of home health and last week’s proposed rule, she told providers to expect rebuttal to be an uphill battle.

She offered a perspective on how the rule is defined, pointing to the fact that, for now, operators can direct their anger at the system, but not necessarily at the CMS as a whole or at any of the individuals who currently make up the administration.

“I think in this case – in this case and in all cases – they are looking at it very short-sighted, right?” Verma made the announcement Wednesday at a home care innovation and investment conference hosted by Lincoln Healthcare. “In other words, they look at cost reports or look at what the data says.”

Late Friday, CMS released a proposed FY 2023 home health care payment rule that included a 4.2% reduction in payment rates, or $810 million less, from 2022 rates. The National Association for Home Care and Hospice Care (NAHC) responded by saying that “the sustainability of home health care is at risk.”

The agency knows that there is a coding intensity factor in the patient-driven grouping model (PDGM) that ultimately led to lower rates, Verma said.

“What they actually said was, ‘OK, we recommend an increase, but it’s offset by the new implementation of the model.’ The idea was that there would be behavior that would potentially encourage vendors to increase their coding intensity,” she continued. “Whether that’s true or not, I don’t know.”

Verma also acknowledged that since the emergence of the COVID-19 virus, data has become difficult to evaluate, which is another sign that the proposed CMS rules methodology may be inherently flawed.

However, the obvious caveat is that this is still only a proposed rule and there is room to influence it during the comment period.

But it won’t be easy. Just like CMS came up with the proposed rule by strictly using data, Verma said, they will only depend on the data.

“It has to be data-driven,” she said. “I think if service providers could provide evidence, ‘Here’s the data, that’s why we don’t agree with your analysis. Here is our analysis. – and it depends on the data, they are more likely than just saying, “We don’t agree with this politically.” It won’t work.”

Perhaps even more discouraging, Verma offered peak work behind the scenes, acknowledging the fact that CMS’s rate-setting system is very fragmented and isolated.

For example, home health care agencies have a good argument that their services reduce costs for the entire health care system. In this way, a healthy home health industry will help the entire healthcare ecosystem.

Joan Cunningham, CEO of the Quality Home Health Care Partnership, pointed this out Wednesday at Home Health Care News.

“On the one hand, CMS is proposing significant cuts not only in 2023, but in the years to come,” Cunningham said. “On the other hand, [Home Health Value-Based Purchasing Model] planned to expand to all 50 states starting in 2023. CMS predicts that home healthcare will provide [millions] in savings [due to] avoid hospitalizations, re-hospitalizations, etc. For me, it’s a striking dichotomy that I find in a huge conflict.”

HHVBP is one of the few CMMI models that delivers big savings. Source: Lincoln Healthcare

But Verma reiterated that this nuance is not part of the CMS calculation.

“I don’t think it’s enough to say, ‘The services we provide really have a follow-on impact,’ which is true,” Verma said. “If we do a really good job of home health, we can prevent hospitalizations and keep people out of nursing homes… but they think differently about it. It’s very myopic when they just look at the industry and they don’t have the authority to look at it that way.”

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Home health care operators are now rightly concerned about issues in their own backyard, namely a proposed rule that also did not change HHVBP despite provider resistance.

But they also hoped for some positive legislative momentum. For Medicaid home health care providers, the optimism about the Build Back Better initiative was misplaced.

Medicare home health care providers were still hopeful that the Home Care Choice Act of 2021 could be implemented by the end of the year.

Verma says that’s unlikely given the upcoming election cycles.

“I wish I could say something is about to happen, but I don’t see it,” she said. “We are sitting here in the middle of June. And it’s election season. So usually after August everyone returns to their districts and campaigns. So if anything has to happen, it has to happen relatively quickly, and we just don’t have enough time.”

The issue of telemedicine reimbursement at a fair rate for home healthcare providers is also unlikely to be resolved anytime soon, which Verma says is “disappointing”.

“[CMS] just sees it as an increase in usage,” Verma said. “And you know, frankly, I’m surprised and disappointed that they didn’t work on it. Because we’re talking about expanding dental services. We are talking about expanding vision care and these things are provided in [Medicare Advantage]. But telemedicine, if it didn’t continue, would be a real tragedy.”

And while home care providers generally consider themselves “recession-proof,” a bad economy is generally not a good sign for anyone.

This threat of recession proved to be Verma’s final prediction.

“I am not an economist. I’m just a fan of health policy. But I think that’s where we’re headed,” she said. “This time it’s a very different environment where so much is involved in the supply chain. … So, you know, it seems inevitable.”

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