Coming year colored by Medicare reform package

Regulatory, staffing, financial issues key for HHAs

[Editor’s note: With passage of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (HR 1) in the last days of November 2003, many of the issues that home health administration managers will be related to this legislation. This article introduces a few of the key issues addressed by this new legislation.]

If you are a fan of roller coasters, then home health is the industry for you. Most experts agree that home health managers have experienced a lot of ups and downs, and unexpected bumps and turns, during the past several years. The good news is that many of these experts expect 2004 to be a little calmer. When asked to pull out their crystal ball and share some of their predictions for the home health industry in 2004, key leaders identified some of the major challenges that home health managers can expect in the coming year.

"I think that we’ll continue to deal with the same issues we faced during the past years, but I also think that the pace of changes will slow down and give us a chance to catch our breath, and refine the processes we’ve put into place," says Greg Solecki, vice president of Henry Ford Health Care in Detroit. "Although we will have to continue to address the regulatory issues we’ve been facing, I don’t anticipate a great number of new regulations, primarily because 2004 is an election year," he explains.

"Congress will be distracted by the elections in 2004, and although refinements will continue to be made to the Medicare bill passed in late November 2003, I don’t anticipate introduction of new legislation that will relate to home health," says Ann B. Howard, director of federal policy for the American Association for Homecare in Alexandria, VA. The most immediate financial repercussion of HR 1 is the reduction of the market basket update by 0.8% for each year for three years beginning in April 2004.

"The reduction of the market basket update does mean that home health agencies will continue to pay rising costs for items such as salaries, liability insurance, and travel expenses without reimbursement that reflects these increasing costs," says Joel Mills, president and chief executive officer of Advanced Home Care in Greensboro, NC, and chairman of the board of directors for American Association for Homecare. "This means that we will have to continue to look for ways to improve efficiency within our agencies," he says.

Not all bad for home health

The good news that comes with HR 1 is a one-year extension of a 5% rural add-on, says Mills. "This is positive news for rural home health agencies that must address greater travel costs than urban agencies," he explains. "Another positive aspect of the legislation is the elimination of the requirement to collect OASIS data on non-Medicare and non-Medicaid patients," he says. "The elimination of this requirement for private-pay and managed care patients will help us by reducing some of the paperwork we have for some of our patients," he explains.

Another positive aspect of HR 1 is the fact that there is no copay for home health patients, points out Seth Johnson, director of public policy for the American Association for Homecare. "The elimination of copayments from the legislation is the result of an amazing grass-roots effort by the home health industry," he says. "The collection of a copayment would have created a tremendous administrative burden on home health agencies and would have placed an unrealistic financial burden on many home health patients," he says. "Because home health receives patients after they’ve already paid copayments on hospital and physician visits, even a small home health copayment might have been too much for some elderly patients," he adds. For this reason, many home health experts believe that a copayment would have reduced the number of patients able to benefit from home health, he explains.

New COPs welcomed

"We were very happy with the draft of the new Conditions of Participation for Medicare that were posted about two years ago, and we hope that the new conditions will come out in Spring of 2004," says Val Dalton, CHCE, vice president of Borgess Visiting Nurse Association and Hospice in Kalamazoo, MI, and president of the Michigan Home Health Association.

Quality and outcomes measurement will continue to be an important issue for home health, but the industry does need to find ways to be more efficient in gathering and reporting information, Dalton says.

While all agencies will be focusing on outcomes, some will also become more selective about the patients for which they market, suggests Johnson. "Rather than the friendly competition we traditionally have seen in home health, I believe we will see agencies becoming more competitive and going after patients who are more profitable to their agency," he says. For this reason, the home health industry may start to see more agencies specializing in care of certain types of patients based upon an expertise the agency possesses, as well as a higher profit margin for that particular disease state, he adds.