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.
The home health care program has been hugely popular, with bipartisan support in Congress and from seniors groups like AARP.
AARP, which claims 37 million members, endorsed the Obamacare health reform law and was among its most vigorous supporters in the nonprofit advocacy community.
In an August letter to CMS head Marilyn Tavenner, AARP said it considers home health care to be “of tremendous importance to Medicare beneficiaries, since these services help beneficiaries stay in their homes and avoid more expensive skilled nursing facility care."
Former U.S. Rep. Billy Tauzin decried the rule, saying “it’s obviously a decision they’ve made to maximize reductions in Medicare spending in order to fund Obamacare."
The Affordable Care Act that President Obama signed into law in 2010 included $716 billion in Medicare cuts to help fund Obamacare.
“They’ve just basically doubled down and said, ‘We’re going to cut seniors' health care again, and we’re going to cut the most vulnerable of all in America in order to fund the ACA,’” Tauzin, a Republican, said.
Tauzin said the cuts did not have to be made: “This was an extra cut. It was a discretionary authority of CMS to review the base funding for home health.”
Tauzin is now a political consultant to the Partnership for Quality Home Healthcare, a trade group that represents 12 home health care companies.
Tracey Moorhead, president and CEO of the Visiting Nurses Associations of America, called the cuts “devastating.”
Moorhead said in a Dec. 2 blog post that “the home health industry was not included in the models envisioned by [Obamacare], other than as a revenue raiser for the legislation.”
Val J. Halamandaris, president of the National Association for Home Care & Hospice, said Congress asked CMS to evaluate the home health care benefit to increase access and efficiency and to reduce costs, not to kill the program.
“Instead, all they did was look to impose the largest possible cut — 3.5 percent a year — on the Medicare home health benefit," he said.
Moorhead said the decision to cut the program was made before completion of a study — for the government — of how the reductions would affect vulnerable patients.
“So it is unclear to us how they have effectively and appropriately considered the impact on vulnerable patients,” she said, “before they have put out this final rule.”
Fifty-one senators appealed in a September letter to Tavenner to reject the proposed cuts to home health care agencies, saying enactment “would raise serious concerns about access to care for vulnerable seniors.”
There were 35 Democratic signers of the letter to Tavenner, 15 Republicans and one independent.
Also in September, 142 members of the House of Representatives wrote Tavenner that “home health is a critical service that allows patients to be treated in a cost effective manner in the environment they prefer — their home.”
Sixty-six House Democrats joined 76 House Republicans in signing that letter.
Twenty-six organizations representing a broad coalition of health care and social service organizations also called upon House and Senate leaders last August to oppose the proposed cuts.
“If finalized in its current form, this rule will put access to care at risk in rural, minority and underserved communities all across the U.S.,” the coalition members said.
Defending the rule, CMS Principal Deputy Administrator Jonathan Blum said, “CMS is confident that Medicare beneficiaries will continue to receive quality home health services across the country under our final policies.”