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Alabama Estate, Elder and Special Needs Law


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New Medicare Rule May Have Negative Impact on Home Health Care Services

Starting in January 2020, Medicare will reimburse home health agencies at a lower rate when they provide care for patients who have not been admitted to a hospital first. Does this sound familiar? It should because it is a continuation of the observation status problem faced by Medicare patients who are not formally admitted to hospitals for at least three nights. Those patients who only stay at the hospital on an observation status are not eligible for limited skilled care Medicare coverage in long-term care facilities following hospital discharge.

Now the problem extends to people trying to obtain home health care services paid by Medicare. The new rule will require reimbursement for home health care agencies at a significantly lower rate for patients who do no satisfy the hospitalization admission standard. CMS estimates that it will pay home health agencies approximately 19 percent more for a patient who hires the home health agency directly after leaving a hospital than a patient who was never in the hospital or was only an outpatient on observation status.  That estimate may be low. The Center for Medicare Advocacy estimates a 25 percent lower payment for patients who do not satisfy the hospital admission requirement.

This lower reimbursement rate means that home health agencies may be reluctant to provide care for patients who were under observation status or who haven’t been in a hospital at all. 

Hospitals are required to provide notice to patients if they are under observation for more than 24 hours. 

For more information about the new rule from the Center for Medicare Advocacy, click here