Not to bemoan the the shortcomings of Medicare's Prospective Payment System under current conditions any longer, but CMS' release of the CY 2023 Home Health payment update makes the point in the extreme. The annual update, based on the PPS formula is 2.9%, is not nearly enough to support a YoY ~4.00% increase in the average hourly wage for home health workers. Add to that the behavioral adjustment Congress required in 2018 and other statutory requirements and you have an estimated total payment reduction of over 4% or about $810M.
Home health care is thought by many (present company included) to be a good option to support post-acute care in the absence of fully staffed nursing homes. However, the tsunami of problems - labor shortages, wage pressures and fuel costs - present an extreme set of challenges even before you consider the industry's dependency on the Medicare PPS which does not contemplate such change.
The options are few. The home health industry can beg for Congressional intervention. That possibility is dependent on relief attaching itself to a vehicle such as reconciliation before year end. Unfortunately, the administration has made funding Medicaid Home and Community-based Service a big dollar priority. Also unfortunate, that initiative is being viewed by Republicans and even some conservative Democrats as benefitting unions like the SEIU, making its future a bit less dim than the industry would like.
Another option is the courts. Unfortunately there probably isn't much to work with. The behavioral adjustment was requested by Congress. Implementation may not be what they had in mind but the industry would need to convince the court that CMS strayed far from the statutory direction offered by Congress. Maybe they get lucky with an injunction, who knows? I would not count on it though.
The unbearable fact is that Medicare-centric providers like AMED will need to and probably are limiting access to care. The PPS is so ossified it simply cannot adapt to the rapidly changing situation
Emily Evans
Managing Director – Health Policy
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