Forecast for Medicare: Partly cloudy to cloudy, some rain, and a little sun

No matter what Congress does, home care must weather a storm

Fearless forecast: By the time this issue of Hospital Home Health reaches its readers, President Clinton will have signed the 1998 budget reconciliation bill. Or he won’t have signed it.

It’s been that kind of summer, watching House and Senate conference committee members volley Medicare reform and the future of the home care industry back and forth across the aisle. No one was sure what provisions would be excluded or included. Then, with a jolt of urgency before the August recess, the Senate passed the budget bill on July 31, 85-15. The House passed the legislation a day earlier, 346-85.

But the legislative process was not without suspense. First we were told Congress was in a hurry, and the reconciliation bill — with all its unpopular Medicare home care proposals — would sail through to the president’s desk unscathed. Then we learned that objections were voiced over first one proposal, and then another. Means testing was killed, then resuscitated; the $5 beneficiary co-pay was a cinch; later it was tabled.

The final version that awaits the president’s signature will not include co-pays; nor will it contain a provision for competitive bidding for home care services under Part B of Medicare, but experts tell Hospital Home Health these issues will reappear within a year or two.

While the industry cheers the departure of co-pays and competitive bidding, hospital-affiliated agencies received bad news. The Freedom of Choice provision, shoehorned into the fraud and abuse section of the bill by the House Commerce Committee courtesy of Congressman Pete Stark (D-CA), once appeared to be a goner, but now it’s alive and ready to kick hospital-affiliated agencies in the bottom line. (See related story, p. 103.)

This provision, officially titled "nondiscrimination in post-hospital referral to home health agencies," requires that hospitals, as part of their discharge process, provide patients with a list of all home health agencies in a patient’s community. The provision further requires hospitals to disclose information to the Secretary of Health and Human Services on referrals made to entities in which the hospital has financial interests, describing the nature of the financial relationship to a provider; the number of patients who were discharged from the hospital as needing the kind of post-hospital service the provider offered; and the percentage of patients who received services from the provider.

Although the provision will become law, its effect will be less negative than it could have been. Stark had sought fines of up to $10,000 per violation in his original legislation. The current bill does not mention fines.

"It’s a watered-down version of Stark," says Ann Howard, executive director of the American Federation of Home Health Agencies (AFHHA), whose group had campaigned hard for the provision. "But it’s a marginal step in the right direction. It puts Congress on record as saying they support freedom of choice."

AFHHA composed a letter supporting the provision and urged its members to forward it to lawmakers.

Cathy Frasca, RN, BSN, FACHCA, vice president of South Hills Health System in Homestead, PA, disputes AFHHA’s claim that hospitals enjoy the advantage of captive referrals. "AFHHA’s letter typifies how they have always discriminated against any type of hospital home health agency. AFHHA apparently fails to recognize the fact that the payers and physicians control patient referrals, not the hospital."

Provision ‘adds one more step’

Dave Baker, corporate director of home care services for OSF Healthcare System in Peoria, IL, says the provision "will add more burdens to hospital-based providers who today may not be providing a full list of [competitors]. It just adds one more step. The people I talk with are providing patents with a list of providers, so I don’t think it will be a big burden for them.

"However, I don’t think this is a tactic freestanding agencies can use to change the flow of patient care. That measure alone will not ensure business gets done."

In addition to the referral issue, there are, of course, many other provisions that loom large over the home care landscape. (See story on p. 103 for details.) Because the president had not signed the bill as of press time, Hospital Home Health will provide definitive coverage when the bill becomes law. In the meantime, here are some of the key issues of the bill, along with comments from your colleagues:

Copayments. These are gone, but don’t tell yourself they’re forgotten. The Senate bill imposed a $5 copayment on beneficiaries for all home health visits under part B, capped at the annual hospital deductible, which currently is $760. The copayment was to be charged for each visit. This provision was supposed to raise about $4.9 billion.

In talking with providers and other experts, Hospital Home Health found no one who supported co-pays. A study by the Kaiser Family Foundation found that the sickest Medicare beneficiaries would be most adversely affected by copayments, most likely refusing home health services because of the copayment "with uncertain effects on patient outcomes."1

The National Association for Home Care (NAHC) has fought the copayments, as has the AFHHA, and both organizations are cautiously optimistic about victory. Ron Kolonowski, executive director of the Hospital Home Care Association of America at NAHC, says, "Our role has been to mobilize home care agencies aggressively to speak out against co-pays. This generated thousands of calls to the Hill on behalf of beneficiaries."

Kolonowski says NAHC President Val J. Halamandaris, who is a member of the president’s Commission on Consumer Protection and Quality in the Health Care Industry, received a personal letter from President Clinton expressing "strong opposition to co-pays and saying he will urge conferees to drop the co-pay issue. We circulated it to the conferees."

Kolonowski notes that NAHC efforts received support "all across the board, all providers are speaking out on behalf of beneficiaries. It’s been heartening. The industry is quite unified on this issue."

Clinton’s letter read, in part, "There is no doubt that a five dollar co-pay would impose a significant cost burden . . . I cannot support the Senate-passed proposal and have urged Congress to drop it in the Senate-House conference."

Greg Solecki, administrator for Detroit-based Henry Ford Home Health Care, calls co-pays his greatest worry. "It’s just more paper for us to shuffle." Solecki, whose private duty home care business at Henry Ford has co-pays, estimates that "75% of the patients we bill for co-pays don’t pay. Our collection process takes time, energy, and money. I’ve got 14 years of experience with co-pays. We write them off."

Solecki agrees that Medicare co-pays would limit access to home heath care. "When you go out to the homes of elderly patients, many of whom are poor, have low incomes and maybe low literacy, and tell them they have to pay $5 a visit, most will say they don’t want it. So, do you keep them in the hospital another day and then send them home without home care?"

Normative standards for home health claims denials. Applying to home health services furnished on or after Oct. 1, 1997, a normative standard provision authorizes the Secretary of HHS to establish through regulation normative guidelines for the frequency and duration of home health visits. This provision is included in both bills and appears headed into law, despite opposition from most industry insiders. It sounds vague enough to give HCFA plenty of room for interpretation regarding what "normative standards" are, and begs this question from South Hills’ Frasca: "If HCFA has power to put together visit standards, and this sounds like DRGs [diagnosis-related groups] to me, why can’t they work with the industry to design PPS?"

Baker says the provision is a result of fraud and abuse publicity. "It’s really vague, nothing written, so it’s hard to argue against that." Baker adds that he expects the industry to fight it out "tooth and nail with HCFA over the standards, asking for clarifications. It could drag on for years."

Competitive bidding for all Part B services. This provision, which excludes only doctors’ services, was dropped until HCFA can develop a demonstration project for DME companies. "How will competitive bidding work?" Solecki asks. "It’s vague, ambiguous." Solecki fears outcomes will take a back seat to the bottom line with competitive bidding. "Clinton barred HCFA from implementing managed care competitive bidding in Denver with a restraining order. So I’m not sure what that says his perspective is on it. Can we infer that he doesn’t think bidding is good for managed care, but OK for home care?"

[Editor’s note: To obtain a copy of the Kaiser report, contact the Kaiser Family Foundation at (800) 656-4533.]