Home-health agencies are closing their doors at an accelerated pace due to a multi-year ban on new Medicare enrollments in four states—Florida, Illinois, Michigan, and Texas.

Health-care attorneys told Bloomberg Law the moratorium is extinguishing good home health agencies while failing to prevent fraud, as it was designed to do. That in turn is reducing patient access to home care, with patient harm as a possible outcome, home-health association officials from two of the states told Bloomberg Law.

The moratorium prevents new home-health providers from enrolling in Medicare. It was put in place in 2013 because of the high risk of fraud and abuse in those states. The moratorium, which also prevents existing home-health agencies from opening new locations in those states, is up for renewal at the end of January.

Home-health fraud continues to thrive in the four states, despite the moratorium, due to the nature of the business, Judith Waltz, a health-care attorney with Foley & Lardner LLP in San Francisco, told Bloomberg Law. “For home health, not only is it sometimes unclear what or how the service is being provided, but there are also beneficiaries who have been wrongly certified as being eligible for home health,” Waltz said.

Home health agencies’ business outlook is also darkened by new, more stringent conditions of participation, Liz Vogt, director of regulatory and government affairs for the Illinois HomeCare and Hospice Council, told Bloomberg Law.

Another downer: Medicare’s new home-health payment model will cut rates by 6.42 percent starting in 2020, she said.

“Coupled with the moratorium, these drastic changes will most definitely result in more home health providers closing their doors in the months and years ahead, and this could very quickly lead to a situation in which individuals will not be able to access the care they need, especially those individuals in rural parts of our state,” Vogt said.

Home-Health Closures

Illinois home health agency closures accelerated in 2018, and an extension of the moratorium will likely cause more, Vogt said.

678 home-health agencies operate in Illinois, down 60 from January 2018, she said. In 2013, when the moratorium started, they numbered nearly 1,000.

Since 2016, 201 agencies have closed, a significantly faster pace than the early years of the moratorium. Prior to 2013, the Illinois home-health market experienced steady yearly growth.

The Centers for Medicare and Medicaid Services last extended the moratorium for six months on July 29, 2018, and it will decide whether to extend it for another six months after consultations with the HHS Office of Inspector General and local law enforcement.

The CMS didn’t respond to a request for comment on whether it will extend the moratorium.

‘Honest Operators’ Harmed

The four states do see a lot of home-health fraud, but the moratorium isn’t the right answer, Kirk Ogrosky, a health-care attorney with Arnold & Porter Kaye Scholer LLP in Washington, told Bloomberg Law.

Criminals committing fraud are not deterred by banning new entrants into a market, and the moratorium will likely drive them into another health-care sector that has a lower barrier to entry, such as durable medical equipment.

“The moratorium will keep honest operators from entering the market and will negatively impact these four states in the long run,” said Ogrosky, a former head of criminal enforcement for the Department of Justice.

Michigan home health agencies are frustrated they can’t open new branch offices, Barry Cargill, president and chief executive officer of the Michigan HomeCare & Hospice Association, told Bloomberg Law. Members of the Michigan association have identified underserved areas where they would like to locate a branch office but are prohibited from doing so under the moratorium.

Their only option is to purchase an existing agency if one happens to be available, he said. Michigan has seen increased merger activity in the home health sector because that has been the only way an agency can either expand in or enter the market.

William Dombi, president of the Washington, D.C.-based National Association for Home Care & Hospice, predicted the CMS will renew the moratorium without making any changes.

“CMS will likely say that the affected states continue to show incidence of fraud and abuse while volume of participating [home health agencies] remains sufficient to meet Medicare beneficiary needs,” he told Bloomberg Law.