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  1. Former CMS Administrator Comments on Medicare Advantage Overpayments
  2. Proposed Home Health Rules – Payments Drive Delivery of Care, Harming Beneficiaries
  3. Observation Status Harms Low-Income Medicare Beneficiaries
  4. Poll: Americans Favor Making the ACA Work

Former CMS Administrator Comments on Medicare Advantage Overpayments

In Austin Frakt’s August 7, 2017 The Upshot blog in the New York Times (“Medicare Advantage Spends Less on Care, So Why Is It Costing So Much?”) he states that overpayments to Medicare Advantage plans are partly intentional.  But since passage of the Affordable Care Act, most of the intentional overpayments have been eliminated. Some of the remaining overpayments are the result of fraud (as alleged in the United case).  But perhaps more vexing is that Medicare Advantage plans can get overpaid by the simple act of describing the health status of enrollees differently than similar populations in traditional Medicare.  This makes Medicare Advantage enrollees look sicker than the traditional Medicare population, when they are not.

In the coming years, as Medicare costs grow rapidly with the aging of the baby boomers, Congress and CMS will grapple with many difficult decisions about how to ensure access to high quality care for seniors and the disabled.  Before we make any tough choices, wouldn’t it make sense to stop overpaying Medicare Advantage plans first?

Sean Cavanaugh
Former Deputy Administrator and Director of the Center for Medicare, Centers for Medicare & Medicaid Services
Current Member, Board of Directors, Center for Medicare Advocacy

Proposed Home Health Rules – Payments Drive Delivery of Care, Harming Beneficiaries

CMS has recently published proposed rules affecting Medicare’s home health benefit that would exacerbate current access to care problems faced by many beneficiaries. Comments on the proposed rules are due by September 25, 2017. The Center for Medicare Advocacy is currently reviewing the proposed rules and preparing comments.

The proposed rules acknowledge that payments are driving delivery of care. As of 2019, CMS proposes to pivot away from a payment structure that currently emphasizes/rewards delivery of physical therapy. In addition to the negative impact this will have on beneficiaries who need physical therapy, particularly concerning to the Center for Medicare Advocacy are the following:

  • “Early” episodes of home health care would be redefined to be the first 30 days. Currently “early” episodes include up to 120 days of care. CMS will pay home health agencies more for “early” episodes. For beneficiaries with chronic care needs who meet the benefit criteria, accessing home health care beyond 30 days will be more difficult.
  • “Admission source” will be a new criteria in the payment mix weighting. If a beneficiary is “admitted” to home care from an institution (defined as a hospital, inpatient rehabilitation facility, long term care hospital or skilled nursing facility), CMS will pay more than if a beneficiary is “admitted” from the community (their home, with no institutional stay).

The following is an example of a new Home Health Resource Groupings Model (HHRGs) that will replace the current Prospective Payment System (PPS) under the proposed rules:

Example: Neurological (clinical group), Low (functional level) with a Comorbidity Adjustment (multiple health issues), Timing (early or late)(“early” is first 30 days of care) and Admission Source (community or institution) = Payment Weight

  • Early, Community = 1.3458 (payment weight)
  • Early, Institutional = 1.5167
  • Late, Community = .9555
  • Late, Institutional = 1.3985

This example illustrates the clear incentive to provide home care for up to 30 days to someone coming out of an institutional setting. There is an obvious disincentive to provide care after 30 days to someone who qualifies for home care without an inpatient admission. Beneficiary’s individual coverage needs, which are expected to be considered by the HHRGs, are ignored.

We believe the goal of CMS should be to develop a payment system that results in “neutral margins” for home health agencies so that everyone who needs and qualifies for home care has an equal opportunity to be served. Perhaps CMS believes that people cost more when they come from an institution and in the first 30 days of their care, but that only considers some of the Medicare population and not the many individuals who have chronic conditions. One-size-payment systems do not fit all. Value based purchasing measures and quality reporting measures further encourage home health agencies to only serve those who can and will get better.  

The result is that the most vulnerable patients – those with chronic care needs, who already struggle to access home health care – will be even more likely to be forced to obtain higher-cost institutional care.

The proposed new rules are touted as a more “patient-focused approach.” De-emphasizing therapies does not solve the problem; certainly not those who need the benefit the most – those who are admitted from the community and need benefits longer than 30 days. Building a payment program that pays more for patients coming to home care from the hospital, SNF, IRF, or LTCH, and only in the first 30 days, does a disservice to those individuals who qualify for the benefit but come from the community and will not improve in 30 days.

The Center for Medicare Advocacy will circulate comments to the proposed rule as soon as possible. We ask that other beneficiary advocates join us in commenting, use our comments to assist in your response, or otherwise comment to CMS that home health agencies must have incentives to serve all beneficiaries who meet the coverage criteria in the Medicare law – particularly people with longer-term conditions.

The full proposed rules are available at:

Comments can be submitted at:

Observation Status Harms Low-Income Medicare Beneficiaries

Once again there is bad news about the impact of observation status on Medicare beneficiaries. According to a recent study published by the American Journal of Medicine, low-income Medicare beneficiaries are disproportionately harmed by observation stays.
A patient is classified as being “under observation” when they are not formally admitted to the hospital as an inpatient. Many of these beneficiaries are surprised to learn that they may be charged for services that Medicare would have covered if they were properly admitted as inpatients. Considering the high cost of care and medical services, this practice causes extreme financial difficulty.
The American Journal of Medicine study, based on 2013 Medicare claims data, clearly shows lower income beneficiaries are more likely to be hospitalized and have greater out of pocket costs. The Center has fought for decades against the harm caused by observation classification.  Currently, the Center is working with the John A. Hartford Foundation to not only conduct outreach and education about observation status, but to mitigate the harm it causes so many beneficiaries.
To learn more about our work to end the harm caused by Observation Status, see below:
To read the Reuters article about the American Journal of Medicine study, see below:

Poll: Americans Favor Making the ACA Work

The August 2017 Kaiser Health Tracking Poll finds broad support for the administration making the Affordable Care Act (ACA) work. Some of the poll’s findings:

  • Eight in 10 Americans (78%) say President Trump and his administration should do what they can to make the current health care law work.
  • Most (60%) of the public say that President Trump and Republicans in Congress control the government and are responsible for any problems with the ACA going forward, twice the share (28%) who say President Obama and Democrats in Congress are responsible for such problems.
  • Most (63%) of the public oppose stopping payments that compensate insurers for the Affordable Care Act’s cost-sharing reductions. Three in 10 (31%) support President Trump using whatever tactics are necessary to encourage Democrats to start negotiating. Most Republicans (58%) and Trump supporters (59%) support these hardball negotiating tactics.
  • When asked about the Senate’s failure to pass a repeal-and-replace bill, most Americans (60%) say it is a “good thing”, while about a third (35%) say it is a “bad thing.”

The full Kaiser Health Tracking Poll is available at:

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