HCFA grossly exceeding its charter, say critics

By MATTHEW HAY

HHBR Washington Correspondent

WASHINGTON – The Health Care Financing Administration (HCFA; Baltimore) is increasingly bypassing the federal rulemaking process in a range of areas and interpreting its own authority well beyond Congressional intent. That is the view of home care representatives, many healthcare industry observers, and a growing segment of Congress. In the wake of major changes in the Medicare home health benefit, the home care industry is now increasingly seeking relief in federal courts in addition to its legislative efforts in an attempt to rein in the agency.

The scope of HCFA’s extraordinary end-run around established rulemaking processes includes the surety bond regulations it implemented last year, which were later thrown out by Congress, and the implementation of major provisions of the interim payment system (IPS) mandated by the Balanced Budget Act of 1997 (BBA). It also includes the way in which HCFA has sought to employ its inherent reasonableness authority, which was significantly expanded by the BBA, as well as the process it has pursued in implementing the competitive bidding demonstration project for durable medical equipment, prosthetics, orthotics, and supplies (see story, page 9).

For better or worse, HCFA’s perceived power grab is not confined to the home care industry either. At a House Appropriations Subcommittee on Labor, Health and Human Services, and Education hearing Feb. 10, several subcommittee members told Secretary of Health and Human Services (HHS; Washington) Donna Shalala and HCFA Administrator Nancy-Ann Min DeParle, in so many words, that "HCFA is starting to make the IRS look good."

"I think it’s a natural consequence to perhaps an overly aggressive anti-fraud compliance effort by HCFA," said Bill Dombi, director of the National Association for Home Care’s (NAHC; Washington) Center for Health Care Law (CHCL). The center has several lawsuits against the Medicare program currently underway in areas where it believes HCFA has overstepped its authority (see story, page 1).

"We have pursued a lot of litigation over the years," said Dombi. However, while it is not unusual to have three lawsuits underway at the same time, Dombi said it is unusual to have three simultaneous suits against the Medicare program. "Is this an indication of our dissatisfaction with the way the Medicare program is being administered?" said Dombi. "The answer is yes."

The Center was formed in 1987 because NAHC believed HCFA’s method of operation at the time required legal remedies, Dombi explained. "They were not discussing manners and making decisions in an open and public way through rulemaking," said Dombi.

The need for this type of litigation ebbed in the mid-1990s, he said, as HCFA became more open and responsive. "Now it’s not that the doors are necessarily closed, it’s just that HCFA just doesn’t seem to hear anything we say to them, so we found ourselves required to get into litigation again."

HCFA is "increasingly cutting corners," concurred Jim Pyles, a veteran attorney with Pyles, Power, Sutter & Verville in Washington, who represents the Home Health Staffing & Services Association. But it is not entirely the agency’s fault, he added. "The real problem is that Congress has shifted too much responsibility for developing policy to HCFA," Pyles reasoned. "That has never been HCFA’s role, and they are not very good at it."

As a result, Pyles said, HCFA is under "tremendous pressure" to implement complex legislative proposals and is being granted discretion by Congress that is "far too broad" to accomplish this. For example, he said, "there is no discernible public policy basis for the interim payment system. It just doesn’t exist." But Congress did not spend enough time figuring out what it wanted or how it was to be used, according to Pyles, and instead ceded that role largely to HCFA.

"When you do that, what you wind up with is an arbitrary and inequitable system," said Pyles. "HCFA has proven they are immensely capable of making gross mistakes. Right now we have a home health industry in a total meltdown due to a bill based on inaccurate information from HCFA. It’s a disaster."

Likewise, said Pyles, HCFA has been granted "almost blanket discretion" to implement the prospective payment system. "Then [HCFA] turns around and says they don’t enough time, which is probably true because they are being asked to do way too much," he added.

While not every regulatory excess by HCFA is being challenged in court, there are several other major HCFA initiatives coming under fire:

In the wake of major opposition from Congress, including a resolution joined by half the Senate, HCFA announced last spring that it was indefinitely suspending the effective date for the regulations for its surety bond regulations which had been scheduled to go into effect July 31, 1998. In the meantime, the General Accounting Office (Washington) is performing an independent analysis of the surety bond requirement. Many observers are skeptical that HCFA will yield to many of the outstanding Congressional and industry concerns.

The country’s Part B medical suppliers are waging an aggressive campaign against HCFA’s reimbursement cuts for Category I enteral nutrition formulas, home blood glucose monitors, and five other items under the agency’s expanded inherent reasonableness authority granted by the BBA. Under this expanded authority, HCFA can bypass the notice and comment process if the reduction is 15% or less. The agency has responded in some instances by making payment cuts in successive years that never exceed 15% per year.