Since 2010’s passage of the Affordable Care Act, more commonly referred to as Obamacare, the Center for Medicare and Medicaid Services (CMS) has cut Medicaid reimbursements to in-home health care services by 14 percent as a way to save money to pay for this health insurance overhaul.
In many cases the average citizen has not noticed any difference to their lives for these cuts in reimbursement rates to home care agencies and other services, but for the small, independent home care companies, business has been tougher. Many of the smaller, more independent agencies already operated on a razor thin budget and, as a result of these cuts, were forced to cut hours to some clients, seek more privately funded clients, or to close their doors or sell out to larger companies.
Even as the federal and state governments are saving money as people receive long-term care at home rather than in the more costly option of nursing homes, CMS is proposing even more cuts to these reimbursement rates for next year.
According to the Crain’s Chicago Business news blog, Medicare decides a cost-saving strategy costs too much, written by Stephanie Goldberg:
“Impending changes in Medicare’s home health payment system would dramatically alter how agencies are reimbursed for services, cutting payments by 8 percent. Lower rates would squeeze profit margins in what has been a reasonably lucrative business. Companies that can’t make acceptable returns as profitability shrinks will likely get out, leaving patients with fewer choices. Those that remain will look to get bigger, triggering consolidation and putting more pressure on smaller players.
Some local hospital networks, such as Amita Health, aim to grow under the new system. Others are walking away.”
Further cuts to Medicaid reimbursements are going to have a detrimental impact on smaller, private home care agencies. They will certainly impact larger companies, even multi–state operations with thousands of employees, but the larger a company is, the more easily it can offset those cuts, shift services around, and even cut hours provided to some clients in order to continue operating effectively.
Those smaller, more independent agencies simply don’t have that luxury and this may be the beginning of another shift away from independent, homegrown providers supporting elderly men and women in their communities to conglomerates taking over and providing little more than the baseline services elderly and disabled clients may require.
For an industry that is growing to meet the demand of an aging population, it’s unclear just how much these Medicaid reimbursement cuts will affect an elderly or disabled client’s ability to get the support they need in the coming years.
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