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by Tim Rowan, Editor

An elite panel of executives was joined by an outgoing MedPAC commissioner for a high-level discussion of reimbursement at last week's Home Care 100 conference. A polite description of the conversation would include words like "frank" and "explosive."

The gist of the conversation guided by Lincoln Health Leadership VP Tim Craig was that CMS uses a formula to calculate Home Health margins that is demonstrably flawed. When this accusation was offered by LHC Group VP Bruce Greenstein it was seconded by every panelist -- Joanne Cunningham, CEO, Partnership for Quality Home Healthcare; Steve Rodgers, CEO, AccentCare; Andrew Woods, CEO, Liberty Partners Group (a DC-based lobbyist); and John Olajide, CEO, Axxess -- notably including MedPAC Commissioner and Harvard professor of Health Care Policy, David Grabowski.

 

Flawed Calculations

The point every panelist emphasized is that "Medicare margin" is not the same thing as "profit margin." When CMS determines that the average Home Health Medicare margin is 25 percent, and MedPAC commissioners respond by declaring it "obscene," they are ignoring two critical factors, Bruce Greenstein pointed out. The Medicare cost report, used to determine an agency's Medicare margin, does not capture, does not even ask for, every overhead cost.

In addition, all agreed, Medicare Advantage, which is quickly approaching 50 percent penetration into Medicare beneficiaries, insists on reimbursement levels that do not cover an agency's cost of care. Even if these insurance companies did not play clinician and dictate visit frequency and effectively reduce care plans, they would still be a loss center for most providers. Consequently, margins realized when caring for original Medicare beneficiaries subsidize MA losses. (see Wendell Potter's opinion piece in this week's issue)

In his introduction to the panel's topic, NAHC President Bill Dombi clarified the distinction that MedPAC seems not to understand between Medicare margins and profit margins. He asserted that the real average Home Health profit margin is closer to two percent, due to this MA subsidy, with many providers experiencing negative net margins.

Lobbyist Woods underscored the consequences of this misunderstanding, saying it goes beyond MedPAC:

"There is a perception in DC, from both young staffers to the most experienced members of the two relevant committees, that Home Health has too high of a Medicare margin, and that it is paid for services it no longer provides. We are now the target of budget cutters. Joanne and Bill have spoken to everyone, the HHS Secretary, the Speaker of the House, and key committee members.  Their common refrain was that Home Health is paid too much. They persist with the belief that Medicare margins are the same as net profit margins."

 

Recommendation: pen, paper, telephone

It is time to stop fixating on "Medicare margin." It is a bogus benchmark.

"When I speak with elected representatives in the House and the Senate, they tell me 'I haven't heard from any Home Health providers in my district'," reported LHC's Greenstein. "This has to change. We need many more people bringing their story to Capitol Hill. Hospitals and doctors are there in droves, while we send a few representatives. You do not even need to go to DC. Write letters, pick up the phone. They do not know what we are experiencing because we do not tell them."

Greenstein detailed what it is that Congress does not know, using a relatable analogy. "In an era of increasing demand, with a service everyone wants, we cannot raise our prices in response like others can. We are not Taylor Swift, Harvard, or even a French Laundry, who can respond to demand with higher prices. When PDGM was enacted, it required budget neutrality, but CMS is calculating it wrong. They are paying us less than necessary to achieve neutrality."

 

Lobbyists cannot do it alone

Emphasizing the need for widespread provider participation in educating Congress, Joanne Cunningham described her organization's efforts on The Hill. "The battle on rates began last year," she began. "CMS forecast the need for sizeable cuts because of a 2018 mandate that required budget neutrality,  but we pointed out the flaws in their methodology. First, though, we had to win a battle to get a glimpse of that methodology. We got Congress to require CMS to provide transparency to its previously secret calculations. That allowed us to tell CMS, 'You did not do a good job calculating what Home Health needs'."

Cunningham continued, "We convinced lawmakers that the proposed 8 percent cut was overkill, as well as the 'clawback' cuts because of the erroneous claim CMS overpaid HHAs in 2020 and 2021. Their pressure on CMS resulted in cutting the cuts in half, for now. We will continue to lobby this Congress because they plan to impose the other 4 percent in 2024. We think our message got through. We'll see."

Lobbyist Andrew Woods concurred, "We need to bring verifiable, quantifiable evidence. Until then they are not inclined to make those changes."

 

A year later, "just say no" still the solution

AccentCare's Steve Rodgers supports Greenstein's controversial recommendation from last year's HC100. "We turn away 70 percent of Medicare Advantage patients," he declared. "We need to be this aggressive; we are in a different situation now because there is increasing demand and under-capacity for our services. They need us more than we need them. We need to take a harder line with MA, 'Either pay us or we will not take your business'."

 

MedPAC cautiously agrees

Perhaps speaking more freely with his term as a MedPAC commissioner ending in two months, Professor David Grabowski actually said he agrees with everything the other panelists said. "We do have a broken system," he admitted. "For example, we at MedPAC are forced to look only at Medicare margins. We are not permitted to look at your losses from caring for MA enrollees. And yet, they too are all Medicare beneficiaries; why should we focus on only one type of beneficiary and not the other, when one is subsidizing the other? It is broken."

He pointed out that SNF providers experience the same problem but that it is backwards in hospitals, where commercial payers subsidize original Medicare. "We need to step back and see it as a system level problem," he recommended. "We only hammer on one nail."

Having said that, Grabowski did recommend a more tactful strategy. "What you don't do is start a conversation confronting CMS with their calculations being wrong. Your strong tailwind is the growing demand for your services; start with that. Following Covid, SNFs have not bounced back. Consequently, those patients are coming to Home Health. They need to enable you to meet the demand. Your best conversation will be about the broken system in general, about how MedPAC cannot take a wider view, not about their own errors."

 

Risk...Now!

If Home Health wants to be a true partner, providers must be willing to take on risk, Grabowski concluded. "We wrote a paper that showed post-acute has been the 'piggy bank' for savings given to other providers who share risk with payers. If you are not at the table, you are going to be a target for gaining savings for others." (Editor's note: an entire session at HC100 was devoted to risk. We will report on it next issue.)

Bottom line

The panel's summary consensus included several points, led by Greenstein's reminder that lawmakers and their staffs all swear unqualified respect and love for Home Health. "Everyone has a story, from the receptionist to the elected officials and their staff, about a family member or friend who was helped by you."

• we need more HHA CEOs on The Hill
• write to your Congressperson and Senators, tell your own story
• invite them to go on a home visit with you, it opens their mind about avoiding SNF and how much patients love in-home care
• larger voices shout us out, from physician groups to hospitals
• develop relationships with both sides of the aisle
• talk with MA about sharing risk
• if a lawsuit does appear against conveners, join it!

Home Care 100, from Lincoln Healthcare Leadership, will meet again in Scottsdale, AZ, January 21-24, 2024.

 

©2023 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Home Care Technology: The Rowan Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. editor@homecaretechreport.com