CMS has noted what their calculated rates are going to be for Year 2 of Rebasing as per the Proposed Rule for 2015 HH PPS.

We have issue with the calculated costs for an episode for a number of reasons; applicable to the amounts as calculated per your original rebasing calculations as well as your current episodic cost calculations.

  1. The cost of Medical Supplies was inappropriately excluded in the calculations of episodic costs:
    • per the 2011 Cost Report info which was used to calculate rebasing (per the 2014 Rule), and
    • per the 2012 Cost Report info which was presented in this 2015 Proposed Rule
  2. All facility-based HHA Cost Reports were excluded from the rebasing calculations (therefore, the industry population appears to have been subjectively segmented to achieve a desired result – would not appear to be a statistically valid approach)
  3. This analysis is based on costs as calculated per the Cost Reports which does a poor (not inadequate, but POOR) job of apportioning costs (and has, ever since the advent of the OASIS and PPS has only exacerbated the situation) between payors. There are a significant amount of costs that are solely incurred because of the Medicare and (to a lesser extent) Medicaid Programs and should be solely borne by those programs, but are not and are allocated equally over all visits regardless of payor, including:
    • OASIS
    • non-Chargeable Therapy Reassessment visits
    • Issues/time and inappropriately lost revenues due to the aggressive interpretation of the Face-to-Face (F2F) provision
    • Costs applicable to RACs/ZPICs, etc…
    • Etc…
  4. This has the effect of understating TRUE operating costs for the Medicare Program, thereby overstating Medicare profits for HHAs!

Too much of what is being done regarding rebasing is directly due to this inequity that has been allowed to go on for over 15 years and this needs to be properly addressed to accurately identify what the true Medicare margins are for a home health agency.