NAHC blasts HCFA’s handling of budget neutrality adjustment
NAHC blasts HCFA’s handling of budget neutrality adjustment
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON The National Association for Home Care (NAHC; Washington) last week sharply criticized the methodology behind the Health Care Financing Administration's (HCFA; Baltimore) budget neutrality factor included in its proposed rule for the new prospective payment system (PPS) for home health.
In its comments submitted to HCFA on Dec. 22, NAHC asserted that the calculations HCFA used to come up with a budget neutrality target projection contain "numerous weaknesses" that must be addressed in the final rule. "Beyond the structure of the PPS," NAHC said, "the most important element in the regulatory proposal is the budget neutrality adjustment.
"There is great difficulty in providing detailed analysis since the proposed rule reveals nothing regarding the facts and assumptions behind the projection that expenditures for [fiscal year] 2001 would be $17.466 billion," NAHC said. "While it is NAHC’s understanding that this figure is the creature of the Office of the Actuary at HCFA, its underlying basis in fact and assumptions should be revealed to allow for appropriate public comment."
NAHC points out that while HCFA projects that the number of episodes in FY01 will be equivalent to the number of episodes in 1997, the exact number of episodes in 1998 and 1999 are unknown. According to NAHC, all evidence indicates a significant decline in utilization of home health services in those years in terms of expenditures, visits, and number of Medicare beneficiaries served. "Early data from the regional home health intermediaries indicates an approximate 25% decline in the number of users in 1998," NAHC asserts. Combined with a 20% decline in the number of visits per user, the reduction in total users is a clear indication that the number of episodes that should be projected into [FY01] is far lower than the 8.95 million experienced in 1997."
The organization also blasted HCFA’s behavioral adjustment relating to low utilization payment (LUPA). The association contends that in its proposed rule, HCFA says its database indicates that 12% to 15% of all episodes of care involve four or fewer visits but that in calculating the budget neutrality adjustment, it assumes that only 5% of all episodes will be low utilization episodes in FY01.
According to NAHC, that assumption is based on the belief that two-thirds of all low utilization episodes will be extended to full episodes through increased visits per patient. NAHC says increased medical review by intermediaries on claims just over the four-visit threshold proposed for the low utilization payment adjustment make that unlikely. Instead, NAHC argued that it is more likely that home health agencies will avoid patients who may lead to a LUPA rather than risk extending services beyond the four-visit threshold. "A presumption of unchecked overutilization should not be included in the budget neutrality calculation," NAHC asserted.
NAHC also contended that HCFA’s assumptions on the level of outlier use inappropriately reduces the budget neutrality target. NAHC says HCFA’s outlier payment proposal guarantees that any home health agency serving patients at a level of utilization sufficient to qualify for outlier payment will suffer a financial loss with each patient. "When a 60% shared loss ratio is imposed in the outlier payment, a more reasonable assumption is that home health agencies will attempt to avoid providing care to high-intensity-need patients."
According to NAHC, the budget neutrality calculation also fails to adequately consider the impact of partial episode payments (PEP). NAHC notes each of the episodes credited to the budget neutrality target are included at a full episode rate of payment. But according to the association, it is appropriate to include an adjustment factor that accounts for episodes paid at a partial rate.
In tabling recommendations, NAHC argued that revised calculations of the budget neutrality adjustment be published prior to publication of the final rule.
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