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Nursing Homes Face Revenue Hit From Expanded Home Care Bill

Oct. 21, 2021, 9:36 AM

The nursing home industry, still reeling from Covid-related declines in patients and revenue, could be facing yet another financial hit.

About 1 in 5 beneficiaries in traditional Medicare recuperate in nursing homes after being released from hospitals. But some could recover at home for far less money under bipartisan legislation recently introduced in the House by Reps. Henry Cuellar (D-Texas) and James Comer (R-Ky).

The “Choose Home Recovery Act of 2021” would save Medicare more than $4,600 per beneficiary by allowing home health agencies to provide expanded nursing services in the home for up to 30 days for eligible Medicare patients, according to a study commissioned by the Partnership for Quality Home Healthcare.

If just 11% of nursing home-eligible beneficiaries use the benefit after leaving the hospital, Medicare could save $144 million to $247 million a year on nursing home care, or $1.6 billion to $2.8 billion over 10 years, the study estimated.

Key Revenue Source

But short-term Medicare rehab stays—which averaged 25 days in 2019 with a median cost of nearly $18,600 per stay—are a crucial revenue source for nursing homes because Medicare pays more than Medicaid, which funds the bulk of long-term nursing home care in the U.S.

Reducing the number of Medicare patients who help offset lower-paying Medicaid residents could cause nursing homes to struggle financially—as they did in 2020 when Medicare hospital referrals stopped for several months during the pandemic moratorium on elective procedures and non-emergency surgeries.

“The purpose of `'Choose Home’ was not to look at the health-care financing system, or the profit motives or lucrative patients that exist in the post-acute setting, and say, '`Let’s skim them off and direct them here,’” said partnership Executive Director Joanne Cunningham.

“The idea was simply, ‘Are there patients that if there were a modernization of the home health benefit that included more services wrapped around it, could these Medicare beneficiaries go home?’” she said.

Extra Services

The legislation’s add-on payment to home health agencies would provide extra services, like nursing care, home modifications, physical, occupational and speech therapy, meals, remote patient monitoring, transportation, and respite care with no beneficiary cost sharing. Supporters hope to attach the proposal to a larger spending bill in Congress.

Groups like the National Association for Home Care & Hospice, AARP, and LeadingAge all support the bill and its companion legislation in the Senate.

But the American Health Care Association and National Center for Assisted Living, the nursing home industry’s leading trade group, strongly oppose it—but not because it would cherry pick nursing homes’ most profitable patients, said AHCA/NCAL President and CEO Mark Parkinson. Rehabilitative therapy at home, he said, could be risky for hospital-discharged, nursing home-eligible beneficiaries if providers—already in short supply—don’t show up for appointments.

“These are people that have had major orthopedic surgeries or extreme, acute conditions,” Parkinson said. “Folks that are really concerned about patient care, and patient safety, and good outcomes need to be concerned about the Choose Care Act.”

In 2019, septicemia, joint replacement, heart failure and shock, hip and femur procedures, and kidney and urinary tract infections were the most common conditions for hospital-discharged beneficiaries to be referred to nursing homes, according to the Medicare Payment Advisory Commission.

Benefit Confusion?

Rather than creating a new home-care benefit that adds confusion, Medicare’s current home health benefit should be properly implemented to reach more eligible patients, said Judith Stein, founder and executive director of the Center for Medicare Advocacy, a nonprofit, legal organization that works to improve beneficiary care. Stein said many beneficiaries who now qualify for the home health benefit have trouble accessing the services due to labor shortages and administrative red tape.

“It seems misguided to add another home health benefit that will provide incentives to take care of short-term acute care patients without making sure that the current benefit is both understood, implemented, and that there’s enough workforce to provide the care to the people who need it now,” Stein said.

Parkinson said the legislation takes away Medicare’s nursing home benefit to enhance the home health benefit.

Medicare’s nursing home benefit covers up to 100 days in a facility, with the first 20 days at no cost to beneficiaries. On day 21 and after, beneficiaries must pay 20% of the cost, typically $130- to $140-a-day, Parkinson said.

Under the Choose Home Care Act, if beneficiaries exhaust their 30 days of home-based, skilled nursing care, and then require admission to an actual nursing home due to medical complications, “from day one, they have a co-pay,” Parkinson said. That’s because under the proposed legislation, a patient’s 30 days of at-home skilled nursing care counts against their actual (Medicare) nursing home benefit, Parkinson said.

“So they’re taking away the part of the benefit where the beneficiary can come into a skilled nursing facility at no cost,” Parkinson said. “The clock doesn’t start over. They’ve lost 20 days of their spend benefit.”

Cunningham, of the partnership, said doctors, hospital discharge planners, and family members would evaluate which beneficiaries are most able to thrive under the home care benefit.

If some patients require more than 30 days of in-home nursing care, the legislation allows Medicare to extend the benefit beyond 30 days. “Ideally, you don’t want a patient bouncing from home to a facility,” she said.

To contact the reporter on this story: Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editor responsible for this story: Brent Bierman at bbierman@bloomberglaw.com, Melissa B. Robinson at mrobinson@bloomberglaw.com

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