Ready, aim, fire: Clinton’s budget proposal takes aim at home health

Copayments and reimbursement changes could become a reality

At first glance, it seems President Clinton’s recent budget proposal for 1998 means big change for home infusion. According to the proposed budget, only the first 100 home health nursing visits following a three-day hospitalization would be reimbursed by Part A of Medicare. All other visits would fall under Part B, a switch that has upset many in the industry. While it’s clear many home care professionals are concerned about the move, what’s not clear is how much it will affect home infusion.

"I think it’s too early to get involved in the budget at this point because we’re going to have other proposals coming out before anything is done," notes Tim Redmon, director of regulatory affairs for the National Home Infusion Association in Alexandria, VA. "I think we need to look at the other proposals once they’re out and go from there."

"I’ve spent a lot of time talking to a wide variety of people in HCFA [Health Care Financing Administration] and on Capitol Hill," says Schuyler Hoss, president of Northwest Healthcare Management in Vancouver, WA. "The general reaction is it’s probably too early to tell what is going to happen. It’s kind of the first lob. They’re throwing something out there, and by the time it goes through the process, it could look very different."

But neither Hoss nor Redmon are convinced home infusion agencies should be particularly concerned.

"It will have a fairly minor impact on infusion because so little infusion is covered [by Medicare]," notes Hoss. "The only part that is obviously affected is when there are classic Part A services being infused."

"[The budget] is going to have minimal effect," says Redmon. "It will affect certain segments of the market such as home health agencies but nothing on the Part B side."

If your agency exclusively provides home infusion, you’re probably safe in giving the budget battle an occasional cursory glance. But for the agencies that provide a wider range of services, the budget could be trouble.

"This does not add up to rational policy making," says Ann Howard, executive director of the American Federation of Home Health Agencies in Silver Spring, MD. "It’s making home health the vehicle through which they will try to save the Medicare Trust Fund."

"It’s interesting to note that while every HMO [health maintenance organization] in the U.S. tries to figure out ways not to use hospitals, HCFA has come up with new ways to put patients back in them," says Kevin O’Donnell, president of Healthcare Resources of America in Lewisville, TX.

The results of switching home care to Part B could have several negative repercussions for home care agencies and health care in general:

Looming copays.

By shifting nearly 70% of the home health benefit to Part B, Ron Kolanowski, vice president of membership for the National Association for Home Care (NAHC) in Washington, DC, says there is an increased chance of copayments becoming a reality for beneficiaries.

Bill Dombi, JD, vice president of law for NAHC, says benefit caps are another possible scenario.

Who’s buying?

Depending on whose estimates you listen to, anywhere from $40 billion to $70 billion is being shifted from Plan A to Plan B. But where that additional money in Plan B will come from isn’t addressed in the budget.

Complicated billing.

Depending on how HCFA institutes the budget that emerges, billing could remain unchanged or add plenty of paperwork. Confusion is likely, says Howard, if Part A services are billed to the Medicare intermediary and Part B services are billed to the local carrier for Part B.

Part of the proposal also indicates a move to a prospective payment system. For that reason, some are not so pessimistic toward the proposal. Mike Tortorici, Rph, MS, president of AlternaCare of America in Dayton, OH, says such a system will in the long run promote efficiency.

"If the Medicare people indicate they will pay X amount of dollars per visit, people that do have the Medicare agencies are going to try and do it as cost-effectively as possible and then make a profit, and there’s nothing wrong with that," he says.

Future unknown

It’s too early to tell the likelihood of the budget gaining passage as is. Dombi notes that while Republicans have spoken out directly against the Part A to Part B shift, they also have publicly stated that they would consider the shift if Clinton concedes other areas, such as premium increases for Medicare beneficiaries.

Republicans approving the shift wouldn’t be a major surprise, says Howard. She points out they have made similar proposals in the past.

NAHC is likely to face formidable opposition in its lobbying efforts. It appears Congress is aiming at home health to protect groups such as hospitals, HMOs, and other groups. In fact, "Fiscal Year 1998 Budget," a Department of Health and Human Services document summarizing the budget, says:

The policy avoids the need for excessive reductions in payments to hospitals, physicians, and other health care providers while addressing the solvency of the Part A trust fund.

However, nothing even approaching the massive shift in home care has been suggested for any of the above mentioned groups.

"They’re using home health to protect the hospitals, HMOs etc.," says Howard. "You can be sure many big groups will be advocating the Part B shift to save their own hides."

As HCFA tries to place the emphasis on hospitalization rather than on home care, agencies providing home infusion could be forced to lay off staff, says O’Donnell.

"If an agency does both home infusion and Part A Medicare nursing and you have fewer patients that are going to get home care on the Part A side, those agencies are going to have to lay off some nurses, and the IV nurses could be the first to go," he says.