Providers are behind in the count as HCFA pitches the IPS curveball

Home care objects, but it's like arguing with the umpire

Maybe the home care industry doesn't need trade associations as much as it needs something like the Major League Baseball Players Association. Could you imagine major league baseball players and their agents agreeing to play when they don't know what they are going to be compensated?

Of course not. That is what player strikes are made of. Too bad home health agencies don't have such a union because that is exactly what the federal government, through the Interim Payment System (IPS), is asking them to do: provide care without knowing what they are going to be reimbursed.

By April 1, 1998, the aggregate per beneficiary limits are supposed to be published by the Health Care Financing Administration - or maybe not, depending on whether Congress listens to all the current protests from the industry. But this much is certain: The IPS is not coming; it's already here, and the aggregate per beneficiary cap is the fly in the ointment or the flaw in Medicare IPS.

"We're operating under the IPS right now," says Fred Griesbach, vice president for government relations with the Home Care Association of New York State in Albany, which is to say, on average 15% lower cost limits. (See related story, above.) "Agencies also are living under the per beneficiary cap without knowing what the per beneficiary cap is. The logic of that escapes me."

He is not alone. Most in the industry, especially providers in states such as New York, New Jersey, and Pennsylvania, who make fewer visits per beneficiary and stay under Medicare cost limits, are crying foul. To them, the aggregate per beneficiary limits will punish the efficient and reward the profligate.

The aggregate per beneficiary cap will be calculated based on 75% of an agency's reasonable costs per beneficiary and 25% on the census division average reasonable costs per patient. These calculations will be made using 98% of reasonable costs for cost-reporting periods ending in fiscal year 1994 (FY 94, Oct. 1, 1993 to Sept. 30, 1994), including non-routine medical supplies, and updated by the home health market-basket index excluding the freeze period.

HCFA will look at your hospital-based agency's Medicare revenue in 1994; then divide that number by your unduplicated patient census figure to arrive at your per-beneficiary dollar cap:

R (reimbursement) ÷ C (census) = PBC (per beneficiary cap)

By including the regional component in the equation, says Griesbach, "Those agencies below the national average in cost per beneficiary (approximately $4,000) in 1993, such as in parts of New York where the regional average was $3,000, will have a lower per beneficiary cap."

This means that in other regions of the state, such as New York City, an aggregate per beneficiary cap could range from $5,000 to $6,000, Griesbach says. But in other regions of the country, there is even more disparity than in New York, where there are 183 Medicare-certified home health agencies. In Louisiana, for instance, "there are agencies who will have a $5,500 per beneficiary cap and some in other areas of the state, who will have $15,000 and $18,000 per beneficiary caps," Griesbach explains.

"So if you were spending more money in 1993, you will continue to spend more money under IPS. If you were not spending more, then you are in trouble."

And if agencies are in trouble, that also means beneficiaries are in trouble, a fact that HCFA seems to overlook in its rush to save money. "If 15% of the funding is lower, how can it not affect clients?" Griesbach asks.

Perhaps not at first, but eventually, less money means fewer visits. At risk are the "medically complex patients who need a lot of visits," Griesbach says. "That's whom patient providers will have to think long and hard about providing care for."

Beneficiaries will feel the pinch

Susan J. Navish, regional director of South Hills Health System Home Health Agency, agrees. "This devastating reimbursement system will result in access problems for Medicare beneficiaries, as providers are forced to critically evaluate patients prior to admission and monitor visits very closely due to the per beneficiary cap."

Griesbach is quick to say that New York does not allow "patient dumping," which HCFA administrator Nancy-Ann Min DeParle has warned the industry against but predicts that under IPS, "the current full array of services will not be available."

Lorraine Waters, RN, C, BSN, MA, director of Southern Home Care at Clark Memorial Hospital in Jeffersonville, IN, sees risk management concerns arising in cases where patients can't be taken into home care. "These are patients who need a high level of care. This becomes a risk management issue. We need to look carefully and ask ourselves, `Are these patients really appropriate for home care?' In the past, home care would take just about anybody. `Sure bring 'em on.' But now we need to look at it and say, does this person need home care? Does he or she fit?

"Is there a good support system [for the patient], a reliable one? Sons, relatives may say, `Oh yes, we're going to take care of grandma.' But where will she live? `At her home. And we'll see her once a week.' That's a liability situation. This goes far beyond IPS," Waters says.

Layoffs, of course, are another threat under IPS, both to staff and patients. Griesbach says, "If I have to make fewer visits, I need fewer aides. I may lay off people, or if I contract for aide services, I will reduce my number of contracts. And way down the road, that medically complex case will not get into the program. There's the potential for that."

One hospital-based agency director in Pennsylvania reports having to lay off 26 employees. The director's supervisor at the hospital also has resigned.

There are other implications. In some areas, providers will go out of business. That much is clear. New York has not lost any agencies yet, Griesbach says, but the National Association for Home Care (NAHC) reports that five freestanding agencies closed in one week in March. So far, there don't seem to be any similarities in the closings. William A. Dombi, vice president for law at NAHC, reports, "It's hard to gauge. Is it geographic, auspice-specific? What are the factors? There's no pattern yet."

NAHC has vowed to file suit in federal court to stop the IPS, if necessary. (See related story, p. 58.)

Agencies that survive the Interim Payment System, however, will not necessarily be winners. Under IPS, "66% are going to be more expensive than what they're being reimbursed," warns Susan Craig Schulmerich, RN, MS, MBA, executive director of Montefiore Medical Center Home Health Agency in Bronx, NY, which serves approximately 3,600 Medicare patients. (See chart, above, and guest column, p. 59.)

"The government says agencies need to be more efficient. OK, but at Montefiore 2.7% is administrative overhead. We don't have bricks and mortar or a fixed mortgage to service. Our assets are people, our employees, Schulmerich says. We can't reduce costs by better efficiency. Eight-two percent of our staff is involved in direct patient care. To be more efficient, one way would be for us to spend millions on a new computer system. How? The government wants to see `zero' on the balance sheet. Where do you get the money to add all that if you can't make a profit?"