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One of the deficit reduction proposals being discussed to achieve savings from Medicare is to introduce new cost-sharing for home health care. As a means to ward off such potential home health co-payments, some instead suggest capping Medicare payment for episodes of care, effectively limiting the duration of time individuals could access home health services. We believe a payment cap on episodes of care would be even more dangerous for beneficiaries than cost-sharing.

The Center for Medicare Advocacy has represented Medicare beneficiaries since 1986. As one of the few advocacy organizations in the nation solely serving Medicare beneficiaries, we strongly oppose home health episodic payment caps or any other such defined payment limits. Experience with such limits – caps on outpatient therapy – demonstrates that payment caps create barriers to necessary care for people with long-term and chronic conditions. Similarly, home health episode caps would be harmful to some of those in greatest need of home care. By the same token, any set payment limits arbitrarily restrict access to Medicare coverage and necessary care – in essence, they amount to vouchers for care in various care settings that are harmful to beneficiaries.

Home Health

The Center has long opposed Medicare home health co-payments; we still do!  Like caps, co-payments would limit access to in-home care for those most in need of these services.  We are also concerned about proposals to introduce home health payment limits. There is no question that home health payment limits would be disproportionately harmful for people with conditions such as traumatic brain and spinal cord injuries, Alzheimer's, Parkinson's disease, MS, and other such illnesses and disabilities. Without the possibility for ongoing home health care, these individuals may well need costly nursing home or hospital care. 

For example:

  • Our client, Mrs. Berkowitz, who is 81 years old and receives skilled physical therapy and home health aide services for her Multiple Sclerosis and related health needs, will require a nursing home if payment caps are instituted for Medicare home health. 

Outpatient Therapy

For many years outpatient therapy has been subject to an annual payment cap. In 2012 the cap is $1,880 for physical therapy (PT) and speech therapy (ST) combined and $1,880 for occupational therapy (OT). In 2012 this applies to most outpatient settings, including most hospitals; however, an Exceptions process is in place for people who need services above the cap. For therapy costing from $1,880 to $3,700, an Exception can be automatic if the provider attests that continued care is necessary. For therapy above $3,700/year, however, a manual Exceptions process was initiated on October 1st which makes Exceptions harder to obtain and which, inappropriately, requires the patient to show improvement. This is contrary to the recently settled national class action lawsuit, Jimmo vs. Sebelius. No. 5:11-CV-17 (D. VT, October 16, 2012.

The therapy cap presents significant problems for people with long-term illnesses, conditions and disabilities who often cannot obtain the therapy they need. Worrisomely, the Exceptions process, which has at least given people a chance at continued care, is set to expire on December 31, 2012. While the Exceptions process has been extended in many prior years, we are concerned that it will not be extended for 2013 as part of the "Fiscal Cliff" negotiations.  This would create a hard and fast limit for outpatient therapy and would be terribly harmful for the most at-risk older and disabled people.


Payment caps contradict and undermine growing efforts to promote better care, at lower costs, by encouraging and investing in home and community-based services. Payment caps also undermine the settlement just arrived at with the U.S. Department of Health and Human Services in the national class action law suit, Jimmo vs. Sebelius. The Jimmo Settlement makes it clear that Medicare coverage is available for home health and outpatient therapy patients who need skilled nursing or therapy to maintain or slow deterioration of their conditions.  Jimmo holds the promise of continuing care at home for people with long-term conditions who would otherwise often need more intense and expensive institutional care.

Medicare home health and outpatient therapy payment caps – especially if the Exceptions process is eliminated – create barriers to necessary care for particularly vulnerable people.

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