Vermont Home Health Agencies Face Big Financial Hit Under Proposed Medicare Changes

Seven of Vermont’s 10 home health and hospice agencies will lose significant funding as a result of recent changes to Medicare’s rural add-on payments.

In 2018, rural home health agencies across the country received a 3% rural add-on payment increase. The payment bumps, which providers have been receiving for several years, help in dealing with obstacles inherent to operating in remote and sparsely populated areas.

But in 2019, rural add-on payments will start to change — and decrease — until they go away entirely in 2022.

When the payments stop, Vermont home health agencies will lose about $1.2 million annually as a result, according to a recent Vermont Public Radio interview with Jill Olson, executive director of the VNAs of Vermont, the trade association for home health agencies in the state.

“This is a significant payment cut for rural providers, and we’re very concerned that Congress has allowed this to happen,” Olson told Vermont Public Radio.

Olson’s projections on how Vermont home health agencies will be affected by rural add-on changes are among the first the industry has seen nationally. Loss of rural add-ons isn’t just a concern in Vermont, as other home health stakeholders have echoed similar concerns.

“Without the rural add-on, there would not be any ability to care for rural Americans in their homes, which would force patients into an institutional setting,” Tonya Hopper, vice president of home health operations at Interim HealthCare of Texas & New Mexico, previously told Home Health Care News.

“We do not support the reduction in payment to rural agencies regardless of category,” Sara Ratcliffe, executive director of the Illinois HomeCare & Hospice Council, also previously told HHCN via email.

The new rural add-on plan will use a new payment methodology, varying add-on amounts depending on a rural county’s home health utilization, population density and other factors. Counties will be broken into categories of “high utilization,” “low population density” and “all other,” accordingly receiving varying payments until they go away in 2023.

The Medicare Payment Advisory Commission (MedPAC) has long advocated for such changes. MedPAC has advised Congress several times that rural add-on payments need corrected to better reflect access challenges. Rural add-on payments “are poorly targeted” and don’t benefit areas with low home health utilization, MedPAC officials wrote in a 2017 report.

The loss of the rural add-on follows a decade of incremental reductions in Medicare reimbursement rates for home health agencies in Vermont, Olson told Vermont Public Radio. While reimbursement rates are set to rise by 2.2% in 2019, Medicare rates for the home health providers are overall down by 14% since 2009, she said.

Written by Bailey Bryant