Sequestration Clarification: How and When Cuts will Affect Home Health and Hospice
Monday, March 25, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy

Below VNAA has provided additional clarification of how sequestration will specifically affect home health and hospice payments.
Home Health Impact
The 2% sequestration cut, which is set to begin April 1, will be based on the day patients are discharged from home health. Where episodes begin before April 1 and end after that date, the cut will apply to the entire episode.
If a period of home health care starts before April 1 and ends on or after April 1 (i.e. discharged on or after April 1), then payments for the entire period of service are reduced 2%.
The Budget Control Act of 2011 mandates that the sequestration spending cuts be equally divided over nine years (2013-2021). The first year of sequestration lasts for an entire year – April 1, 2013 through March 31, 2014.
The 2% reduction will be applied to the final episode payment. The home health Prospective Payment System rates will not be reduced due to sequestration.
Hospice Impact
Hospices will continue to bill at the FY2013 rates. For services provided on or after April 1, 2013, the MAC will deduct 2% from the reimbursement before paying the claim. Hospices will not bill at the 98% rate.

Medicare Advantage Impact
Medicare Advantage (MA) plans will also be impacted by the 2% sequestration reduction in the payments.
To date, there is no  guidance from the Centers for Medicare and Medicaid Services (CMS) on whether or not MA plans are allowed to pass this 2% on to providers via cutting the payments made to providers. However, the expectation is that most MA plans will cut provider payments to make up this loss – unless their contract with providers prohibit this. With the above said, CMS is expected to put out additional guidance on sequestration in the coming days. This guidance may offer more clarity about what MA plans are allowed to do.
For the time being, the best thing home health and hospice providers can do is talk to the plans directly to see how they intend to handle the 2% reduction.
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