Legislative Update 1-24-22
This year’s Budget Adjustment Act (BAA) is more important to home health and hospice agencies than usual. Every year, the Administration brings a proposal to legislators in January to make adjustments to the state budget based on actual spending and any unexpected needs that have come up. January is just after the half-way mark in the state fiscal year.
Last Friday afternoon, the House finalized the BAA for consideration by the Senate this week.
The following items are of interest to home health and hospice agencies:
The proposal leaves intact the Administration’s request to match the Choices for Care moderate needs homemaker services reimbursement rate to the Choices for Care personal care services rate. The services have similar costs, but very different reimbursement rates. While both personal care services and homemaker services will still be paid at well below cost and continue to be subsidized by home health agencies, this increase is a welcome change. As we understand it at this writing, the increase is funded by unspent funds in the moderate needs program.
The proposal includes a rate increase for skilled home health services to bring the Medicaid rate closer to the Medicare Low Utilization Payment Adjustment (LUPA) fee schedule, a project that’s been in the works for several years. Currently, Medicaid services are paid at 78% of Medicare LUPA. The proposal will bring that up to 82% of Medicare LUPA. This new direction is consistent with the approach to Medicaid primary care, which is paid at 100% of Medicare. The Medicare LUPA fee schedule is lower than the Medicare fee schedule on which most home health claims are paid. It’s designed for outlier “episodes” of care, where a patient needs fewer visits than most patients with similar medical needs. Still, the full LUPA payment represents a substantial improvement over the current payment rates.
The Administration’s proposal to fund health care retention bonuses was substantially altered by the House Appropriations Committee. The committee doubled the funding for the program to $60 million and proposed a distribution formula based on full-time equivalents (FTEs). They also made some changes to the providers covered by the program. Home health and hospice agencies were covered under the Administration’s proposal and they are explicitly listed in the budget adjustment bill that passed out of committee. The VNAs of Vermont strongly supports the addition of more funding to the program. More is almost certainly needed, particularly if the Senate adds additional provider categories to the program.
The budget adjustment bill leaves a $25 million program in place for emergent and exigent circumstances following the COVID-19 pandemic. The Administration has referred to the program as “provider stabilization.” Most of those funds have already been spent (or contractually obligated) to expand ICU and sub-acute capacity in the wake of pandemic-driven hospital utilization surges and to provide emergency staff to long-term care facilities experiencing outbreaks. The proposal also included some broader language that could be interpreted to include home health and hospice agencies. The budget adjustment bill is explicitly directing the Administration to use nearly $6 million to support skilled nursing facility traveler nurse expenses. We believe similar language should be inserted to support home health and hospice agencies. Our member agencies play a quiet but crucial role in the pandemic by supporting hospital discharges and by caring for patients with COVID-19 at home, preventing hospital admissions. Home health and hospice agencies are also relying on “traveler” (contract) staff to preserve home health capacity. Contract staff expenses have nearly doubled in the past five years to more than $8 million in fiscal year 2021. The VNAs of Vermont will urge the Senate to explicitly fund nearly $3 million in unbudgeted traveler expenses for home health agencies.
Once it’s through the House, the budget adjustment bill will move onto the Senate where they have already taken extensive testimony. Next up will be the SFY2023 budget. The Governor’s budget address was Tuesday. We are still analyzing that proposal and will provide an analysis in our next update.