President Barack Obama rolled out a proposed budget Feb. 13 for the upcoming fiscal year that would slash federal spending on healthcare programs by about $360 billion over the next decade, including $320 billion in Medicare and Medicaid cuts, as well as institute a copayment for home healthcare services.
Under the proposed budget plan, beginning in 2017, beneficiaries would owe a $100 copayment for home-health episodes with five or more visits that are not preceded by a hospitalization.
Home health advocates argue that a copayment policy for home health services would negatively impact seniors by limiting access to home health services and shift costs to nursing homes or hospitals.
“This would create a barrier so that those who really need home health services wouldn’t get them,” Val J. Halamandaris, president of the Washington, D.C.-based National Association for Home Care and Hospice, said in an interview.
Halamandaris said home health services are valuable because they help manage chronic conditions and can prevent costly and avoidable Medicare readmissions.
The federal Medicare program covers home healthcare services, including skilled nursing, physical, occupational and speech therapy for homebound patients. The volume of services provided and the number of home healthcare recipients have both grown since 2002. In 2009, about 3.3 million Medicare beneficiaries received skilled home healthcare services to treat acute illness, long-term health conditions, permanent disability or terminal illness.
As the baby boom generation gets older, Halamandaris said demand for these services will increase. Since Jan. 1, 2011, baby boomers began turning 65 at a rate of 10,000 a day, a trend that will go on for another 19 years, according to the Pew Research Center. This, Halamandaris said, creates a huge need for home health services.
But Halamandaris worries that home health services are at risk. Since 2009, the Medicare home healthcare benefit has been cut by $77 billion over the next decade.
“The view of home healthcare is that it’s an optional service, but it’s much more cost-effective than other institutional options,” Halamandaris said.
On average, home health costs about $145 per visit compared to $1,805 for a one-day hospital stay.
The Partnership for Quality Home Healthcare, which also opposes the copayment, points to a recent report by the Centers for Medicare and Medicaid Services, which found that payment reforms by the home healthcare community in 2009 achieved nearly $1 billion in Medicare savings in 2010.
Last year, members of the Medicare Payment Advisory Commission, known as MedPAC, recommended that Congress set a first-ever copay for home healthcare services, reasoning that the use of copays tends to reduce unnecessary healthcare use.
Obama’s budget proposal also justifies the copay, saying the copay is meant to encourage the appropriate use of home health services that are not preceded by inpatient care.
“Research indicates that beneficiaries with Medigap plans that provide first dollar or near-first dollar coverage have less incentive to consider the costs of healthcare services, thus raising Medicare costs and Part B premiums for all beneficiaries,” the budget document says.
But some lawmakers have expressed concern over the proposed home health copay.
“A copayment requirement would only serve to shift thousands of low-income seniors out of home-based care into much more costly nursing homes and impose billions of dollars in additional Medicaid costs onto the states,” Georgia Gov. Nathan Deal, a Republican, said in a letter to the National Economic Council.
An analysis conducted by Avalere Health found that more than three-fourths of non-dual eligible home health beneficiaries without secondary Medigap coverage would be responsible for the full copayment. For the home health population, this could be a significant financial burden since these patients tend to be poorer than the typical Medicare beneficiary. The analysis also found that mandating copayments on home healthcare could result in unintended consequences, including cost-shifting from Medicare to Medicaid.
The budget proposal still has to make its way through Congress, so it will likely go through numerous changes before a final budget agreement is made.