CMS proposes 2014 payment cuts to home healthcare

Hospital-based operations face slightly smaller reductions
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The Centers for Medicare & Medicaid Services has issued a proposed rule that would cut payments to home health-based providers starting next year, although hospital-based operators would fare slightly better under the rule, reported AHA News Now.

According to the rule, CMS is proposing a 1.5 percent reduction in payments to home healthcare providers in 2014, saving about $290 million. Hospital-based home healthcare operations would receive a cut of 1.1 percent, according to the article.

The reduction is based on a 2.4 percent annual market basket increase, with offsets for rebasing adjustments and coding changes related to ICD-10 totaling 3.9 percent.

According to Reuters, the proposed rule is part of the CMS plan to reduce reimbursements on home health 3.5 percent annually between 2014 and 2017, the first years of the implementation of the Affordable Care Act.

The news hit home healthcare stocks particularly hard. Amedisys, Gentiva Health Services and LHC Group all posted double-digit losses in share prices after the rule was announced, with little rebound in prices during trading this week.

The proposed rule "looks to be the absolute worst possible outcome for the sector," Baird Equity Research analyst Whit Mayo observed, according to Reuters.

The CMS is soliciting comments on the proposed rule until Aug. 26.

To learn more:
- read the AHA News Now article
- here's the Reuters article
- read the proposed rule (.pdf)

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