The Decline in Home Health Providers

Expect more audits for this setting.

Hello, and happy birthday, Medicare and Medicaid. You are now 56 years old. In other words, you’ve been qualified to receive Medicare benefits for one year now. Here is an oxymoron: permanent Medicaid. Medicaid was never supposed to be long-lasting, or a primary insurance. President Lyndon Johnson signed both landmark social programs into law on July 30, 1965.

I have two news flashes to discuss today. First, nursing homes will be targeted by audits, because few surveys occurred during COVID. And second, home health, or nursing home-based long-term care in general, is decreasing in prevalence while the need escalates.

First, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Addendum to OEI-01-20-00430, published July 2021, is titled “States’ Backlogs of Standard Surveys of Nursing Homes Grew Substantially during the COVID-19 Pandemic;” this is an audit of a number of nursing homes across the country.

Nationally, 71 percent of nursing homes (10,913 of 15,295) had gone at least 16 months without a standard survey as of May 31, 2021. By state, the backlogs for standard surveys ranged from 22 percent to 96 percent of nursing homes. Expect a surge of audits.

Second, enrollment in fee-for-service (FFS) Medicare and Medicaid has skyrocketed in recent years, especially due to COVID and longer life expectancies. This equates to more consumers. It means a need for more providers willing to accept the low reimbursement rates. More providers and more consumers equals more Recovery Audit Contractor (RAC) and Medicare Administrative Contractor (MAC) audits. Medicare remains the nation’s largest single purchaser of healthcare, with home health services accounting for a decent chunk of spending. Of the $3.2 trillion spent on personal healthcare in 2019, Medicare accounted for 23 percent — or $743 billion.

There were 11,456 home health agencies operating in 2020, according to MedPAC. That total is down slightly, compared to the 11,571 agencies operating in 2019. The number of home health agencies has actually been declining since 2013. Before that, the industry had experienced several years of substantial growth in terms of new agencies opening. The decline in agencies has been most concentrated in Texas and Florida, two states that saw considerable growth after the implementation of the home health Prospective Payment System (PPS) in October 2000. The number of skilled nursing facilities (SNFs) is also decreasing, though not quite as fast.

My humble opinion? The government needs to be more aware of how aggressive and overzealous Medicare and Medicaid auditors are. Congress needs to pass legislation to protect the providers that accept Medicare and Medicaid. Like the military, we should be saying, “thank you for your service.”

Programming Note: Listen to Knicole Emanuel’s RAC Report Mondays on Monitor Mondays at 10 Eastern.