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  1. More Doors to Medicare Home Health Closing, More Harm for Observation Status Patients
  2. CMS finalizes Rollback of Pre-Dispute Arbitration Protections
  3. Study Finds Home and Community-Based Services Access Disparities

More Doors to Medicare Home Health Closing, More Harm for Observation Status Patients

Many Medicare hospital patients classified as observation status “outpatients” currently forego necessary skilled nursing facility (SNF) care and head home to continue care through Medicare’s home health care benefit. This is because they lack a 3-day inpatient hospital stay, which is required for Medicare coverage of most beneficiaries’ post-acute care in a SNF.[1] Beginning January 1, 2020, access to Medicare-covered home care will also be more difficult to obtain for post-observation stay patients.

Under the new Medicare home health payment system effective January 2020, the Patient-Driven Groupings Model (PDGM), the Centers for Medicare and Medicaid Services (CMS) will impose an “admission source category” in making home health payment determinations.[2] Admissions to home care will either be right from an “institution” or from the “community.”[3] CMS estimates that home health agencies will be paid approximately 19% more for institutional admissions than community admissions,[4] even if a patient admitted from the community requires greater resources. Based on case mix adjusted weights in PDGM, the Center for Medicare Advocacy calculates the disparity in payment for an institutional admission could be as high as 25% more than for a community admission – for the same diagnosis, the same level of functional impairment, and the same number of comorbidities.[5]

CMS has determined that home health stays after hospital observation stays will be included in the community admission, not the institutional admission category, despite CMS’ determination that average resource use for observation stay patients is almost 35% higher than for community admissions (see chart below).

CMS Data For Each 30-day Period Average Home Health Resource Use by Admission Source[6]:

Institutional: $2,171
Observation Stay: $1,820
Emergency Department: $1,661
Community: $1,351

Given the relatively higher-resource use of post-observation patients, and the decision by CMS to classify them in the lower-paying community admission category, home health agencies will be reluctant to provide care for post-observation stay patients. Recent home health industry marketing articles recommend that agencies develop plans to develop more institutional referrals and change their patient mix to reduce community admissions.[7] In the 2019 proposed rule, CMS noted there were 166,762 thirty-day home health periods for post-observation stay patients in 2017. This number is expected to drop significantly as post-observation-stay beneficiaries find it more difficult to access home care after a hospital observation stay.[8]

CMS’s decision to pay home health agencies more for patients admitted from hospitals but not include hospital observation stays will harm beneficiaries, increase problems facing observation patients, and create new barriers to home care.


[1] Section 1861(i) of the Social Security Act.
[2], page 56468.
[3], page 1.
[4], page 32397.
[5] See, pages 56504-56514.
[6], page 32397.
[7] See, for example, Homecare Direction, Volume 27, Issue. No. 7, July 2019, pages 6-9. “Educate marketers about PDGM, and use data to formulate a strategy.”
[8], page 32397.


CMS finalizes Rollback of Pre-Dispute Arbitration Protections


In 2016, the Obama Administration promulgated regulations prohibiting pre-dispute arbitration agreements between nursing homes residents (or their representative) and facilities. On July 18, 2019, the Trump Administration published a Final Rule rolling back certain features of the 2016 resident protection. Most notably, the Final Rule removes the requirement prohibiting facilities from entering into pre-dispute arbitration agreements with residents, while maintaining the 2016 ban on requiring residents to agree to arbitration as a condition of admission or as a requirement for continued care.

Additionally, the Final Rule includes the following protections:

  • Facilities must explicitly inform residents that signing an arbitration agreement is not a requirement and include that language in the agreement;
  • Arbitration agreements must be in a form and manner that the resident can understand and residents must acknowledge that they understand the agreement;
  • Residents have the right to rescind the arbitration agreement within 30 calendar days of signing the agreement;
  • Arbitration agreements cannot contain language that prohibits or discourages any individual from contacting federal, state, or local officials;
  • Facilities must retain copies of the signed arbitration agreement and the arbitrator’s decision for five years and make them available to the Centers for Medicare & Medicaid Services (CMS) for inspection; and
  • Both parties must agree upon the selection of the neutral arbitrator and the venue.

The CMS decision to roll back the 2016 ban on pre-dispute arbitration agreements is troubling. The Final Rule unnecessarily burdens residents with deciding whether arbitration is the right form of dispute resolution for them before even knowing what the dispute is about or when it might occur.

Our organizations believe that CMS should reverse its decision to allow facilities to enter into pre-dispute arbitration agreements with residents and reinstate the 2016 regulations. At the very least, CMS must promulgate regulations allowing residents and their representatives to also rescind an arbitration agreement within 30 calendar days after the incident giving rise to the dispute occurred. Residents and their families must be fully informed before consenting to arbitration.

To learn more about the rights and protections of nursing home residents, please visit &


Study Finds Home and Community-Based Services Access Disparities

An article in the July 2019 issue of Health Affairs, “A National Examination Of Long-Term Care Setting, Outcomes, And Disparities Among Elderly Dual Eligibles,” relayed findings from a national study on home and community-based services (HCBS) use and outcomes among dual-eligible beneficiaries. The study found that the racial/ethnic disparities in access to high-quality institutional long-term care were also present in HCBS.

One aspect of the study examined hospital admissions by race/ethnicity and dementia, limiting the main analysis of hospitalizations to the groups who used only institutional services or only HCBS, setting aside those who used care in both settings, among other limitations outlined in the article. “When we examined HCBS users more closely, we found that blacks had the highest rates of hospitalizations, including potentially avoidable hospitalizations, followed by non-Hispanic whites and Hispanics, and finally Asians/Pacific Islanders. These patterns held across beneficiaries both with and without dementia. For each racial/ethnic group, not surprisingly, there were higher rates of any hospitalizations and of potentially avoidable hospitalizations among care recipients with dementia, but the presence of dementia exacerbated the differences in hospitalization rates by race/ethnicity. In other words, among those without dementia, blacks had higher rates of hospitalizations than members of other racial/ethnic groups, but among those with dementia, the difference between blacks and others became more pronounced.”

The research and findings could help inform policy initiatives focused on the effects of the shift in resources from nursing facilities to HCBS.

The article is available at:


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