Health Care

Medicare Home Health Benefits, CMS Cuts to the Program: What Does it Mean for Seniors and Women?

Policy • March 5, 2014

What is the Issue?

Approximately 3.5 million of the oldest, sickest, and poorest Medicare beneficiaries receive care at home. Yet, on November 22, 2013, the Centers for Medicare and Medicaid Services (CMS) announced a regulation that went into effect on January 1, 2014 and is projected to significantly impact this vulnerable population and their access to quality healthcare.  The rule, if left unaddressed, contains a 14 percent cut over the next four years, which translates into a 3.5 percent cut annually.  The cuts, the maximum allowed, are part of the President’s $718 billion cut to Medicare to pay for Obamacare.

What is the Home Health Benefit? Who Receives It? And, Who Provides the care?

Medicare’s home health benefit provides skilled therapeutic and rehabilitative care to the 3.5 million Medicare beneficiaries who need it.[1] Coverage is provided through both Medicare Part A and B, using a prospective payment system.[2] To be eligible for the benefit, an individual must be “(1) homebound; (2) require intermittent, skilled nursing care and/or rehabilitation services; and (3) under the care of a physician who has established that home health visits are medically necessary in a 60-day plan of care.”[3]

A recent analysis conducted by Avalere Health reveals that the Medicare home health population is older, poorer, and sicker than all other Medicare beneficiaries.  Specifically, Medicare home health beneficiaries are twice as likely to be over age 85, three times more likely to suffer from disabling conditions, 40% more likely to be poor, and 50% more likely to have four or more chronic conditions than all other Medicare beneficiaries.[4]  It is also important to note that most home health beneficiaries live in rural communities – most of which have already been designated as a health shortage professional area (HSPA).[5]

Home health services are provided by specialized entities – most of which are freestanding (i.e. not affiliated with a hospital or nursing home).[6]  According to CRS, the number of home health entities grew by more than 62 percent between 2000 and 2011.[7] Today, more than 12,000 small business providers and 1.1 million care givers provide care to this senior population.  According to CRS, total expenditures for home health reached $18.4 billion in 2011.[8]

What Does the Rule Mean for Seniors and Women?

On January 1, 2014, homebound seniors woke up to circumstances in which their care is now in jeopardy.  The payment cuts will leave many providers with no choice but to cut back on their services, lay off healthcare professionals who provide the care, or close their doors. In fact, the Administration itself admitted in its regulation that “approximately 40 percent” of all home health service providers nationwide will be driven into the red as a result of this cut.[9]  This regulation is expected to most severely impact small business providers and those operating in rural communities.

Moreover, the home health care industry is mostly comprised of women. In the same Avalere Health study referenced above, it was revealed that 89 percent of aides, including home health, are women; 93 percent of health care support staff are women; 91 percent of registered nurses are women; and 92 percent of occupational therapists are women.[10] Thus, not only will jobs be cut but the Administration is going after jobs and sectors in which women primarily work.  The cuts are already having a negative effect. According to the Partnership for Quality Home Care, the industry already experienced its largest job loss in a decade in December 2013 alone.[11]

It’s ironic that the President and the Administration purport to be the protectors of seniors and women.  The cuts to the Medicare home health benefit, the cuts to Medicare Advantage, and the limitations imposed on the Medicare Part D prescription drug program all point to the reality that the President and his Administration are willing to jeopardize seniors’ healthcare and women’s jobs in order to pursue broader redistributive policy goals. The President should be held accountable for his real motives.



[2] See id.

[3] See id.

[4] See Avalere Health Analysis March 2014.

[5] See id.

[8] See id.

[9] See HHPPS Final Rule for CY 2014, p. 116.

[10] See Avalere Health Analysis February 2014.

[11] See “Why Is Obama Squeezing the Home Health-Service Industry?” National Review, February 27, 2014.

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