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Home Healthcare Nurse:
doi: 10.1097/NHH.0b013e318246dd76
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Reimbursement for Therapy in Medicare Home Health: Balancing Patient Needs and Program Integrity


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Author Information

Andy Carter is the President and Chief Executive Officer of the Visiting Nurse Associations of America (VNAA) in Washington, DC.

The author declares no conflicts of interest.

Address for correspondence: Andy Carter, Visiting Nurse Associations of America, 900 19th St, NW, Suite 200, Washington, DC 20006.

Last fall, the home health community was rocked by a report from the U.S. Senate Finance Committee that concluded several publicly traded home healthcare agencies were guilty of providing unnecessary therapy services simply to maximize profits (U.S. Senate Committee on Finance, 2011). The nearly 700-page report included detailed evidence showing that senior home care executives were pushing managers and clinicians to be mindful of the big increases in reimbursement that result from reaching specified numbers of therapy visits, known as “therapy thresholds.”

The report noted that such abuse had been a problem from the beginning of the home healthcare prospective payment system because it had always included a major payment increase whenever an episode of care reached the threshold number of therapy visits. In 2008, the original threshold of 10 visits was replaced by a tiered approach, in which big payment hikes kicked in at 6, 14, and 20 visits.

According to the Senate Finance Committee, “home health agencies rapidly altered their treatment patterns to match the new system” (p. 7). The report cited data showing, for example, a 30% increase in episodes with 6–9 visits and a 28% drop in episodes with 10–13 therapy visits—exactly the behavior one would expect if profit considerations were driving care, not clinical needs.

To support its conclusions, the committee quoted internal documents from the companies targeted during the investigation. Two revealing examples bear repeating:

* A senior regional manager urging staff to adapt to the new thresholds put in place in 2008 said: “We need to work immediately to adjust our '10 therapy threshold' mindset. ... At 10, our episode value drops by over $880.00. 14–15 is where we need to be ... and yes, I understand that our visits per episode will go up ... but I would rather be profitable than have a low visits/episode. At 7–9 we have upside, but the overall episode value is less than I would like to see for cases involving therapies. If we continue to drive to meeting 10 therapies ... we will be cooked ...” (p. 491)

* A chief executive officer of one of the publicly traded companies stated: “We need to move episodes out of the 0–5 buckets and up to the 6 and 7–9 buckets on the low end, and look for higher therapy need cases on the high end. ... Sales incentives are driven by admissions × case mix, and the only way to get case mix up is to increase therapy utilization.” (p. 627)

The committee concluded that the practices employed by the targeted companies “at best represent abuses of the Medicare home health program. At worst, they may be examples of for-profit companies defrauding the Medicare home health program at the expense of taxpayers” (p. 2).

The committee was not alone in demanding reforms to eliminate the incentives that the thresholds create to provide more therapy than may be clinically justified. The Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare issues, urged the elimination of therapy utilization levels to set payments.

Is eliminating the therapy thresholds the right thing to do? Is it right for patients, and would it really improve program integrity?

On the one hand, there is no doubt that the thresholds have been subject to abuse by some agencies and, as a result, have led to overpayment for many therapy cases and underpayment for many nontherapy patients, particularly those with complex care needs. As an interim measure, the Centers for Medicare and Medicaid Services did try to reduce the financial incentive to provide too much therapy by reducing payments for high therapy episodes, effective January 1, 2012.

On the other hand, the thresholds play a useful role in recognizing the need for additional resources to cover higher costs for therapy patients. The thresholds were designed to match as closely as possible total payments to the estimated cost of caring for patients with therapy needs.

Alternative approaches are now being studied. MedPAC, with support from the Urban Institute, is examining a model that uses patient characteristics instead of therapy utilization levels to estimate therapy needs and set payment levels. Presumably, this approach seeks to predict the total therapy resources needed on average to provide appropriate care for patients based on their clinical condition, history, and scores of other variables. One challenge with this approach is having confidence in the quality of the data that the statisticians use to develop those estimates—is it detailed and comprehensive enough to anticipate resource needs accurately for all kinds of patients? What clinical evidence are they using to translate a patient's profile into an estimate of needed therapy?

If the alternatives provide too little to cover actual therapy needs, the system will create a different incentive: providing less therapy than patients need. In such a scenario, not only would patient care suffer, but so too would the program's integrity. Future Senate reports would blast the program for encouraging unethical providers to stint on needed care.

In the end, developing a new way to ensure that home healthcare agencies provide the right level of therapy must be based on sound clinical evidence. The new approach must also adopt rigorous quality measures that allow regulators to monitor whether patients are making the kind of progress they should and that they are receiving neither too much nor too little therapy.

As the debate about therapy reimbursement continues, the Visiting Nurse Associations of America will remain actively involved with policymakers so that Medicare's commitment to high-quality therapy services in home healthcare settings remains strong.

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U.S. Senate Committee on Finance. (2011, September). Staff report on home health and the Medicare therapy threshold (S. PRT. 112–24). Washington, DC: U.S. Government Printing Office.

© 2012 Lippincott Williams & Wilkins, Inc.