Congress leaves agencies waiting for real IPS reform

Home health industry vows to continue fight

When Congress approved its $500 billion year-end spending bill in late October, many home health industry lobbyists who fought long and hard for relief from the interim payment system (IPS), were left feeling a little empty, both in spirit and in their agencies’ pocketbooks. The omnibus appropriations bill provided a little relief for the beleaguered home health industry but lacked the hoped-for abolishment of the 15% reduction in reimbursement that was mandated in the Balanced Budget Act (BBA) of 1997.

Congress approved changes in the per-visit and per-beneficiary limits and a year’s delay of the 15% reduction previously scheduled to go into effect Oct. 1, 1999. The bill also delays for one year the elimination of periodic interim payments (PIP), which would have taken effect on the same date.

Per-visit limits were raised from 105% to 106% of the national median. Per-beneficiary caps were a little more complicated: For old agencies falling above the median there would be no change in reimbursement, while those falling below would receive 66.6% plus 33.3% of the national median. Agencies established after Oct. 1, 1994, and before Oct. 1, 1998, are slated to receive 100% of the national median, while agencies that opened after Oct. 1, 1998, will receive 75% of the national median, less 2%.

Bare essentials

While some agencies benefited from these changes, what happened, says Eric Sokol, assistant director for government affairs of the Washington, DC-based National Association for Home Care (NAHC), "is the least Congress could have done and still say they did something."

Ann Howard, executive director of the American Federation of Home Health Agencies (AFHHA) in Silver Spring, MD, agrees and says the bill "could have been a lot worse, but it certainly could have been a lot better. What it boils down to really was a little bit of tinkering." What disturbs Howard the most, she says, is "that there was no restoration of funding to provide access for medically complex patients nor was there the elimination or even proration of per-beneficiary limits."

Funding for the health care provision will come from a $800 million gaming tax in combination with $900 million in savings over five years from reduced future inflation updates to home health agencies. Of this, $250 million will come from reduced payments to Medicare HMOs.

Bronx, NY-based Montefiore Medical Center Home Health Agency s executive director Susan Schulmerich, RN, MS, MBA, is displeased that home health will be paying for its own relief. "It’s unconscionable what the government is doing to home care patients and providers," she says. "The delays and posturing have kept the industry on tenterhooks for months, and at the eleventh hour, legislative language was still being crafted to ostensibly right the wrongs’ of the Balanced Budget Act of 1997. Schulmerich also serves as chair of the Hospital Home Care Association Of America advisory board, an affiliate of NAHC.

"The frustration and fear of so many in the home care community is that the fix’ will be temporary at best," she continues. "[Providers] envision 1999 as a replay of 1998, another year of time and money, both in dwindling supply, trying to obtain meaningful reform of IPS and the BBA."

What is especially troubling to Schulmerich is that the per-beneficiary limit remains the same as determined by the BBA, even though the per-visit limit was raised to 106% — a change that she predicts will mean fewer patient visits.

"If you had a per-visit cost limit of $75, and you had a per-beneficiary cap of $750, that means the most you can give any patient is 10 visits. As soon as the government increases the percent of the per-visit cost limit, but does not have a corresponding increase in the per-beneficiary cap, then the number of visits you will be able to give is reduced. Under the 106% per-visit cost limit, the agency in this example will not be able to give even 10 visits. The number will have to be less to come in under the per-beneficiary cap," she explains.

These measures may appease some in the industry, Schulmerich says, especially now when there is a tendency to sit back and lick one’s wounds. "The thing that makes me especially nervous is that people are breathing a sigh of relief," she says. "I still think [IPS] will haunt us all next year. If they think they will have a respite from trekking to DC, they’re wrong."

As disappointing as this past Congress may have proven, Sokol says it wasn’t a total loss. "Members of Congress are now much better educated on the benefits of home health, and conversely, the home health community is more savvy in its grass-roots campaigning," he explains.

To help with incumbent re-elections, NAHC, Sokol says, sent out a list of "home care champions" prior to November’s elections. These champions, he says, "are people who have made a difference in the fight, and we want to see them back in Congress again next year. We’re trying to pave the path for next year’s Congress. While the issues and challenges will still be there, the learning curve will be a little different because they are already familiar with home health."

Even before Congress adjourned, NAHC was gearing up for next year’s fight. "In the last weeks when we heard how modest the package would be, we encouraged members to make floor statements to the effect that home care should be a priority in the next Congress and that the inequities needed to be addressed," says Sokol.

Howard and the AFHC also have been hard at work. "We’re still trying to interpret for our members just what it was that happened, and we’ve started thinking about regrouping. The problem is that next year’s solutions might be different than the ones we wanted for this past year because, for example, retroactivity looks to be much more of a problem than it did," she says. "It would be nice if we could come up with a single solution that we all could support."

Next year’s home health agenda includes greater relief with respect to the caps and a permanent elimination of the 15% reduction, says Sokol. Moreover, "we want to make sure that the new regulations on surety bonds reflect that they are fraud bonds and not financial guarantees and that the premium are lowered accordingly," he says.

"We want to see an outlier for beneficiaries," he continues. "We have serious concerns with the per-beneficiary limits and the huge inequities in caps that exist between the various regions. Another large concern of ours is what will come out of the bipartisan committee on Medicare. What is going to happen with Medicare and how will the definition of home-bound be settled?"

No one can predict what will happen in the next Congress, but there are home health professionals willing to guess what will happen within the industry. Schulmerich, for example, foresees change in the not too distant future.

"Things will happen sooner rather than later," she says. "Come Dec. 1, when a lot of agencies have closed, you’re going to see a lot of people dropping out of the industry. They can’t make it when per-beneficiary caps are calculated in. When more agencies close, there will be a lot more ammunition."

Howard shares the opinion that serious change is in the air. "There will be some very dramatic stories hitting the press about all the agencies in a community going down, and it will finally become clear that the medically complex have been targeted," says Howard. "You’re going to have a rolling train derailment, which is what we’ve had to date, and in some places, you’ll see a train wreck."

In spite of a rather gloomy view of home health’s immediate future, Schulmerich says she holds out hope that the industry will prevail. "If I didn’t think it would make a difference," she explains, "then why am I in the business? If I honestly didn’t believe that we’ll get a reaction, I’d fold up my tent and go home."


Ann Howard, Executive Director, American Federation of Home Health Agencies, 1320 Fenwick Lane, Suite 100, Silver Spring, MD 20910. Telephone: (301) 588-1454.

Susan Schulmerich, RN, MS, MBA, Executive Director, Montefiore Medical Center Home Health, 1 Fordham Plaza, Suite 100, Bronx, NY 10458. Telephone: (718) 405-4401.

Eric Sokol, Assistant Director for Government Affairs, National Association for Home Care, 228 Seventh St. SE, Washington, DC 20003. Telephone: (202) 547-7424.