It will happen because the Centers for Medicare and Medicaid Services quietly issued a regulation Nov. 22 announcing a 14-percent cut over the next four years in funding for the Home Health Care Prospective Payment program.
The rule cuts Medicare payments to home health care providers by 3.5 percent each year beginning in 2014, for a total cut of 14 percent.
The program puts health care in the homes of seniors suffering from acute or chronic afflictions, or who are in need of rehabilitation therapy.
By CMS’s own calculation, 40 percent or nearly 5,000 home health companies — mainly small businesses — will experience a “net loss” in revenue due to the cuts and go into the red by 2017. That will put many of them out of business.
The National Association for Home Care and Hospice calculates the losses will be much more severe, affecting 75 percent of all home health care companies.
Nearly a half million skilled home care workers are also projected to lose their jobs over the next four years due to the cuts, according to the program’s supporters.
The cuts may also have a disproportionate impact on minorities and those living in underserved rural communities.
A November 2013 study by Avalere Health, a Washington, D.C., health care business analysis firm, found that two out of three home health care recipients fall at or below the federal poverty line.
The study also estimated that one in four seniors getting home health care are age 85 or older.
Federal officials had discretion to keep Medicare home payments at the same level or impose a maximum 3.5 percent cut each year through 2017 to reach the 14-percent reduction.
But CMS opted to impose the maximum reduction, beginning on New Year's Day 2014.
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