Hospices Likely to be Affected by the 2023 Home Health Payment Rule

While home health operators prepare for the impact of lower 2023 reimbursement rates, hospices should similarly prepare for a ripple effect.

The US Centers for Medicare and Medicaid Services (CMS) recently established a 0.7% base rate payment increase for home health care through 2023. While that’s an improvement from the 4.2% overall cut the agency first proposed in August, the smaller increase still means domestic health companies will have to buckle down.

Furthermore, the 2023 increase is only a temporary decrease. The agency plans to make additional cuts in the coming years, as Barbara Jacobsmeyer, CEO of EnHabit Home Health & Hospice (NYSE: EHAB), noted in its third-quarter earnings call.

“Temporary adjustments still loom,” Jacobsmeyer said. “CMS has not changed its methodology at all, which is very problematic for the industry. 2023 now has some relief with provisions in its final rule that result in an estimated net increase in home health payments of 0.7%. Industry does not view this as a victory and we will work with our industry partners to determine next steps.”

These payment concerns come at a time when both home health and hospice providers are feeling the effects of COVID-19 headwinds, including disruption of referral streams.

An important consideration is that many companies provide both of those services, and a cut in reimbursement for either will affect their overall financial performance.

“When you look at who provides home health and hospice, you have a lot of providers who do both. Today there are home health agencies that own hospices that keep their heads above water financially. They benefit under hospice,” Bill Dombey, president of the National Association for Home Health and Hospice, told Hospice News. “And there may be others who benefit under home health, furthering the hospice side of it.” . I can’t imagine that one wouldn’t affect the other.

The pressures of the wider workforce have also had a tremendous impact. Throughout 2022, providers continue to slash dollars to boost hiring while adjusting salaries and purchases for skyrocketing inflation. In addition, they still have to purchase more than historical amounts of supplies such as personal protective equipment.

Labor shortages have reduced clinical capacity for both home health and hospice, which has contributed to a decline in patient census and length of stay. According to data from Wellsky company, Careport, referral rejection rates reached an all-time high in 2021, a trend likely to continue through 2022.

In January, the rejection rate reached 41% among hospice providers and 58% for home health agencies, Carereport reported.

Given the small reimbursement increase for home health — with further cuts on the horizon — one likely outcome is that capacity could be even lower. This in turn may mean a decline in the number of hospice referrals coming from home health agencies.

“The lack of payment increases to keep pace with overall inflation and competitive market dynamics is going to in some markets – if not many markets – continue to constrain the ability of home health providers to take all those referrals. keep those that are going. Sent their way,” Welsky chief clinical officer Timothy Ashe told Hospice News. “So if you just follow that logic, if fewer patients are enrolling in home health agencies So I think the downstream effect for palliative and hospice providers could actually be mild referrals coming from those home health organizations.”

In light of workforce shortages and rising costs, both hospice and home health providers have been relying on technology to increase efficiency and streamline processes. This includes systems such as telehealth, predictive analytics, robotic process automation, and remote patient monitoring.

These technologies have shown promise in terms of streamlining administrative work, early identification of changes in patients’ conditions and needs, and reducing travel costs and unnecessary visits to the home.

Some operators have even begun to apply some of these techniques to their recruitment and retention strategies.

But reimbursement concerns may mean that some providers will think twice about making this type of investment.

“We need a margin to be able to reinvest in infrastructure within our own organizations and then within health care delivery in our digital economy,” Ken Albert, president and CEO of Androscoggin Home Healthcare + Hospice, told Hospice News. Is.” “More than the margins being reduced, the infrastructure including the human resource component of what we do is being challenged.”

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