HCFA says PPS on track, but Senate drafts back-up plan

By MATTHEW HAY

HHBR Washington Correspondent

WASHINGTON – Health Care Financing Administration (HCFA; Baltimore) Deputy Director Kathy Buto told Sen. Susan Collins (R-VT) last week that the agency is still on track to complete the prospective payment system (PPS) for home health in time for its scheduled implementation. That assurance came in response to a demand Collins made to Buto at a Senate Permanent Subcommittee on Investigations hearing June 10 for recommendations to address problems home health agencies are experiencing as a result of changes made by the Balanced Budget Act of 1997 (BBA). "We are committed to implementing PPS by Oct. 1, 2000, as required by law," Buto told Collins in a July 16 letter. "In fact, we are currently on schedule to publish the proposed rule by the fall for comments."

The rest of Buto’s belated response mainly summarizes the home health provisions included in President Clinton’s recent Medicare proposal, such as increasing the time for repayment of overpayments related to the interim payment system (IPS) and postponing the requirement for surety bonds until Oct. 1, 2000. Buto also noted the administration’s proposal to pump $7.5 billion back into selected areas of Medicare over a 10-year period starting in 2000.

Buto defended the changes in the BBA. "They include strong and defensible policies that will help preserve and protect Medicare," said Buto. But she conceded that some of the 335 BBA policy changes may have "unintended consequences" and said the implications for providers and beneficiaries "are not clear."

But even as Buto was sending Congress its assurance about the home health PPS, Sen. Connie Mack (R-FL) was putting the finishing touches on a bill that includes a simplified PPS in case HCFA fails to meet its deadline or develops an inadequate system. Mack’s bill, the Medicare Home Health Beneficiary Equity and Payment Simplification Act, was formally introduced July 22 and co-sponsored by Sens. John Breaux (D-LA) and Jesse Helms (R-NC). It provides a four-category PPS system based on data from a 1997 study conducted by the Kaiser Family Foundation on characteristics of Medicare patients in need of Medicare covered home health services.

According to Mack’s bill, patients would be placed in one of the following four groups based on their medical condition: post hospital, short-stay beneficiaries; medically stable, long-stay beneficiaries; medically complex, long-stay beneficiaries; or medically unstable and complex, extremely high-use beneficiaries. Patients would be paid a predetermined amount for a year’s services based on those categories. Prepayments would be revised annually and subject to budget guidelines.

Home care representatives soundly endorsed that provision. "This is the only legislative proposal introduced to date that focuses on the final home health payment system," said Mara Benner, executive director of the Health Services and Staffing Association (Washington).

However, industry representatives are hoping to refine Mack’s proposal. "The Mack bill needs some tinkering," said American Federation of Home Care Providers (Washington) Executive Director Ann Howard. "There has to be some way of accounting for changes in a patient’s condition."

For example, if patients enter under Category I, but then develop complications that would put them in Category IV, there has to be a mechanism for switching them to a higher category, Howard explained. "Otherwise, you will have the same problem with home health agencies unable to take care of the sickest patients and not having the clinical resources they require."

Coalition sets strategy

Meanwhile, the five national home care groups met in Washington July 22 and settled on a strategy for the remainder of the 106th Congress. While not explicitly removing their support from any of the numerous home care bills that have already been introduced in the House and Senate, the coalition will push to have Mack’s PPS proposal wrapped into a bill introduced by Sen. Jim Jeffords (R-VT) about a week earlier or another bill introduced by Sens. Kit Bond (R-MO) and Susan Collins (R-VT). Those two bills, while not identical, would both eliminate the 15% across-the-board cut in home health reimbursement and include an outlier provision for high-cost, medically complex patients. The five groups will hold a joint home care rally in Washington Sept. 15 to lobby for these changes.

"Our goal initially was to have just one comprehensive bill," said the National Association for Home Care’s (Washington) Jeff Kincheloe. But he said parochial concerns in Congress made that impossible. "I can understand their perspective," he added. "Many members have different issues that are important to their constituents, and they are also reluctant to have everything included in one bill because of the price tag it might be given."

That remains the major question mark, he added. "We don’t know for certain how eliminating the 15% cut will be scored by the Congressional Budget Office (CBO; Washington)," said Kincheloe. "That is a huge variable." Even though the BBA cut three times the anticipated amount, Kincheloe explained, those reductions are now locked into CBO’s number crunching.

While elimination of the 15% cut is an otherwise straightforward measure, the outlier policy is anything but. In order to be effective, the outlier policy developed by Congress must be "a nearly automatic process," and there has to be payment "outside the per-beneficiary limits," said Howard. "Basically, they have to figure out a way of restoring the services that were going to medically complex patients before the BBA was passed," she said. "Just throwing money at providers indiscriminately is not going to solve the problem, and I sense there is a consensus that that is where the problem lies."

Howard said the outlier provision could target beneficiaries that fall within one of the ten categories included in the House bill sponsored by Reps. Tom Coburn (R-OK), Jim McGovern (D-MA), and Robert Weygand (D-RI). But she argued against any predetermined cap on that provision. The Weygand bill would cap the restoration at $250 million.

One option, according to Howard, would be a certification mechanism that demonstrates that without home health services a patient will have to be institutionalized at a greater cost to taxpayers. Agencies could then be reimbursed outside IPS, possibly on a per-visit rate up to 75% of the cost of taking care of a patient in a nursing home in a particular community. "There are ways of doing it so that it is carefully targeted and the provider would get their payment concurrently instead of six months after filing a cost report," she added.

There are now a plethora of home care bills in both the House and Senate, and exactly how those measures will be combined and what such a bill might be attached to is still an open question. "The situation is a little clearer in the Senate because the Collins/Bond bill has the two most important provisions in common with the Jeffords bill," noted one home care representative. Those two provisions are an outlier policy and elimination of the 15% reduction. "On the Senate side, our message is pretty simple — support both bills," he said. "In the House, the situation is a little murkier." Last week, Reps. Bob Riley (R-AL) and Bob Etheridge (D-NC) attempted to alleviate that problem when they introduced Jeffords’ bill in the House.

According to the representative, the Senate Finance Committee now says it will not include a so-called BBA corrections bill as part of the tax reconciliation package. Instead, that bill would have to be introduced as separate legislation and reported out of the committee. n

The other piece to the puzzle is President Clinton’s Medicare proposal and whether that will be handled in Congress along with the BBA corrections bill. "I don’t know whether that will be handled together or separately, but Finance Committee staffers say they are two separate issues," said the representative. "I suspect they might try to collapse the two, but that would most likely kill it since I don’t think they can reach an agreement on the administration’s Medicare package. President Clinton is insisting on 15% of the surplus being set aside to extend the Trust Fund, and I don’t think the Republicans will go along with that."