Metrics Matter: Episodes Per Patient Cap – Which Home Health Agencies Will Be Impacted the Most?
As part of the negotiations with the deficit-reduction supercommittee, home health industry members proposed a cap on episodes per patient served as one alternative to co-pays. Although the committee was unable to reach an agreement on how to reduce the federal deficit, the home health industry may still be asked to contribute monies as part of the “doc fix” legislation. If that’s the case, the “cap” proposal may resurface. Which geographic provider communities will be most impacted by the episodes per patient cap? We answer that question in this month’s Metrics Matter.
How Is the Per Episode Cap Calculated?
Conceptually, the per episode cap proposal will be based on the average number of episodes per patient served. Agencies will be penalized if their calculation exceeds the national average by more than 50%. If discharges are used, a patient-served number is the denominator used to limit the opportunity for gamesmanship. Taking into consideration that rural providers tend to have longer lengths of stay because of fewer healthcare resources in their communities, the original proposal employed different caps for rural and urban agencies.
In 2009, the national average number of episodes per patient served was 1.83; therefore, the cap would have been set at 2.74. For the purposes of this analysis, we have ignored the rural and urban distinction to help simplify our calculations. Our goal is to get an idea of which geographic provider communities would be most impacted by this proposal.
Based on our analysis, we can conclude the following:
- Of the 10,218 home health agencies in our Medicare database, 1,970 (19.2%) exceeded the cap. These agencies represented 21.8% of the episodes reimbursed in 2009.
- Although five states (IL, LA, MS, OK, TX) accounted for 77% of the agencies that exceeded this cap, their episodes represented 82% of the episodes provided by agencies that exceeded the cap. The agencies that exceeded this national benchmark ranged between 27% and 69% of the provider communities in these states.
- 270,985 (4.1%) of the episodes provided in 2009 were above the cap.
- 14 states had no agencies that exceeded this cap; nine had only one agency.
Determining the Cause of Excess Episodes
The key question is: Are these excess episodes a result of differences in patient populations and healthcare delivery system organization — or overly aggressive business practices? In a previous Metrics Matter, we noted that seven states had seen an explosion in the number of agencies certified between 2003 and 2009. This rapid growth increases the likelihood that an overabundance of providers exists, which prompts hypercompetitive behavior among agencies. When this happens, providers tend to “hang on” to patients as long as possible because obtaining new patients is more difficult.
As we demonstrated in a previous Metrics Matter, there are variations in the incidence of chronic diseases between states, which could also have an effect on the number of agencies exceeding the cap. Louisiana has the highest incidence of diabetes/nutritional deficiencies, for example, which could contribute to the high numbers of episodes per patient. In fact, 69% of the home care agencies in Louisiana exceeded the national cap. Plus, under the Interim Payment System (IPS) during the late 1990s, Louisiana was the “home of the 90-visit patient.” Louisiana’s home health agencies have always treated a chronic population, and we suspect that Mississippi faces similar issues.
Unfortunately, Medicare often uses a hatchet instead of a scalpel to deal with “aberrant behavior,” causing collateral damage in the process. Patient populations with legitimate health needs may find their access to services inhibited because of this proposed reimbursement change.
Click here or call 215-657-7373 to learn more about this metric, as well as the many ways you can use Healthcare Market Resources’ data to help determine how government regulations and industry trends will impact your specific market.