HCFA: Don’t scare patients! But who’s scaring whom?

ByElizabeth Hogue, JD

Health Care Attorney

Elizabeth Hogue Chartered

Burtonsville, MD

Home health agencies recently received a letter from Nancy-Ann Min DeParle, the administrator of the Health Care Financing Administration (HCFA), expressing concerns that home health agency staff are "scaring" beneficiaries over the loss of services due to provisions in the Balanced Budget Act of 1997 (BBA).

The letter was written in response to concerns voiced by U.S. Rep. Pete Stark (D-CA) and other members of Congress, the same people who brought us the Balanced Budget Act in the first place.

But who’s scaring whom? HCFA has done a pretty good job in recent years of scaring the entire home health industry. The overall government effort to control home health growth is having its undesirable effects.

Medicare spending for home health beneficiaries was cut by the BBA, not by the home health industry. The new payment caps as mandated in the BBA through the Interim Payment System are forcing agencies to choose which patients they can serve best. This means some patients may be turned away by agencies trying to live within the limits. Under the previous reimbursement system, home health agencies were able to accept all patients. Not now.

In her letter, Min DeParle argues that there are now two types of payment caps: the per visit cap and the aggregate cap.

"The new aggregate cap reflects the typical utilization of home health services for each HHA during the FY 1994 base period established by Congress," she writes. "It allows HHAs to balance the cost of caring for any one patient against the cost of caring for all patients. We believe all Medicare enrollees can be safely and effectively cared for under this payment system by HHAs that deliver quality care efficiently."

Agencies forced to manage patient mix

As a result of the per beneficiary cap of the interim payment system, home care managers must now manage the mix of patients to whom they provide services. Although the value of services provided to some patients may exceed the agency’s per beneficiary cap, these excess costs will presumably be balanced by services to patients who required less care than the amount of the agency’s per beneficiary cap.

Under the previous system of reimbursement, agencies fared better if they increased both the volume of patients served and the number of visits to each patient. As a result, agencies were eager to accept all patients who met the criteria for the Medicare home care benefit, and referral sources became accustomed to calling only one agency in order to arrange for home care services for Medicare patients.

Unfortunately, Min DeParle assumes that managing patient mix is consistent with previous practices of most agencies, which was to accept all Medicare patients who met the eligibility criteria for the benefit. However, managing patient mix is likely to require agencies to choose which Medicare patients they can serve consistent with a patient mix that remains under the agency’s per beneficiary cap.

It’s nothing new to health care

Management of patient mix is a standard concept in health care. Hospitals, for example, have historically devoted considerable effort to management of patient mix. A recent article in theWashington Post, "Nation’s Hospitals the Picture of Health" (Feb. 7, p. H2) reported that hospitals are the "worried well. . . . Their profit margins are higher than they’ve ever been."

The article attributes part of the success of hospitals to case mix improvement, managing the mix of patients served. It appears unlikely that hospitals will turn away Medicare patients. The article states that even after the 9.1% reduction in projected Medicare spending over five years, payments for inpatient care would more than cover expenses.

Further evidence of the importance of this practice can be found in the so-called federal anti-dumping provisions, or COBRA provisions, that require hospitals to stabilize patients in the emergency room before they are transported to another hospital for admission. These requirements were imposed to prevent hospitals from managing their patient mix by transporting patients with no payer source or inadequate payment sources to other hospitals before they were stabilized.

Likewise, the long-term care industry has practiced management of patient mix for many years. For example, it is not unusual for a long-term care facility to refuse admission to Medicare patients who are unlikely to have a skilled need for long and, therefore, will become a Medicaid patient in short order.

The effect of these efforts to regulate patient mix has meant that other providers are able to accommodate such patients because their patient mix at the time will allow them to do so.

Home health agencies must ask why the letter indicates that the rules do not apply to them. Why does Min DeParle say that agencies are not allowed to discriminate against Medicare enrollees by refusing admission to some patients who require a high level of services, while admitting patients with other payer sources who require the same or greater level of services?

To begin with, Min DeParle does not cite any legal basis for her conclusion in the letter. Although home care providers have never been required to regulate patient mix before, the new interim payment system mandates them to do so along with many other types of health care providers.

On what basis can agencies manage patient mix by refusing admission to some Medicare patients?

First of all, I agree with Min DeParle that it is not appropriate to tell patients that their care will not be paid for by the Medicare program. The fact is that it will be paid for, but agencies may owe money to the Medicare program if the per beneficiary cap is exceeded. When patients are told that their care will not be paid for by the Medicare program, they may be unnecessarily discouraged from seeking assistance from other agencies. Medicare patients who are turned away by an agency should seek admission at another agency.

Providers should focus on the part of the Medicare Conditions of Participation (COPs) for home health agencies that indicates that agencies should not admit patients unless they have the resources to meet their needs. When the care of some patients jeopardizes services to other Medicare patients, agencies may decide to rely on this standard to refuse admission.

The same standard may be applied to decisions about whether to continue services to current patients or to future patients whose needs become greater than agencies anticipate. However, when terminating services, providers must be careful to avoid liability for abandonment and to comply with applicable COPs.

The bottom line is that HCFA simply cannot have its cake and eat it too. Benefits cannot be cut without hue and cry from patients and their families and from agency staff who must say good-bye to patients they may have served for many years. Are these the same employees Min DeParle says are scaring patients?

[Editor’s note: For a more in-depth analysis of liability for abandonment, including a comprehensive set of policies, procedures, and forms for use when terminating services, send a check for $105 to Elizabeth E. Hogue, Esq., 15118 Liberty Grove Drive, Burtonsville, MD 20866. Telephone: (301) 421-0143. Fax: (301) 421-1699.]