Rearranging the deck chairs on the Titanic?
Rearranging the deck chairs on the Titanic?
By Ann B. Howard
Executive Director
American Federation of Home Health Agencies
Silver Spring, MD
The Medicare home health benefit has been devastated by the Balanced Budget Act of 1997 (BBA). The BBA's Interim Payment System (IPS) will deal a mortal blow to numerous home health providers who are not already done in by their inability to obtain a surety bond. This includes home health agencies (HHAs) without a base year cost report ending in Fiscal Year 1994 which now face bankruptcy in higher utilization states.
The Health Care Financing Administration (HCFA) has chosen to apply a national rather than a regional per beneficiary limit. A regional limit would more accurately reflect the costs of providing services. While these agencies are placed at an enormous competitive disadvantage in their communities, newer HHAs in lower utilization states are handed a higher per patient cap and thereby a significant competitive advantage over their longer-established regional peers.
Reimbursement slashed 25% to 40%
The preponderance of evidence from the home health industry indicates that home health reimbursement is being slashed by 25% to 40% from last year as a result of the IPS and the venipuncture exclusion. We have heard from numerous providers in a number of areas of the country who anticipate reductions of 70% to 80% or more from their 1997 level of reimbursement.
HCFA prevailed upon Congress to pass the IPS, saying it represented no more than a reduction in the rate of growth of home health. In fact, HCFA has since admitted that its goal was to cut home care, to reduce the benefit to a narrow short-term post-hospital benefit.
The home health industry is working, albeit imperfectly, to address irrational competitive disparities and ensure continued access to home health care for longer-term and medically complex patients. Unfortunately, the conversation seems to be focused on redistribution of a shrunken little reimbursement pie among providers. This discussion holds the potential of pitting providers against each other - lower vs. higher utilization agencies, the North vs. the South - in a war of attrition over what's left of our reimbursement. This is the wrong discussion. We should not be seeking redistribution of the Medicare home health budget but a solution that raises all boats, provides rational and legitimate reimbursement rates, and, above all, ensures access to care for the sickest Medicare home health patients.
To make the case for shifting money from one type of agency or region to another, HHAs must make the argument that other providers or areas are somehow less worthy, that they are fraudulent, abusive, inefficient, and/or over-utilizing. This is a very dangerous game. Self-disparagement by the home health industry is seen as corroboration of the Government's contention that it is a benefit out of control. Home health did grow at an annual rate of approximately 25% from 1991 to 1995, but growth fell to 10% in 1996 and 4% in 1997. In addition to imposing per beneficiary limits, the IPS cut home health per visit cost limits from 112% of the mean, or average, to 105% of the median, a reduction of about 20%. This change alone has placed home health in negative growth for 1998.
Minimalist approach
A number of bills have been introduced in Congress to address the serious dislocation created by the Interim Payment System. Some legislation takes a more minimalist approach, ranging from delaying implementation of the per patient caps to Oct. 1 of this year to moving the per beneficiary limit base year to 1995. Other bills are somewhat more comprehensive. They would provide for outlier payments, inflation updates from the per beneficiary cap base year, and return per visit cost limits to 112% of the mean. These proposals are all positive and would provide some welcome relief. In addition, the more comprehensive legislation would shift the current 75% to 25% agency-specific/regional-specific blend for the per beneficiary limits to a 75% to 25% national/regional blend.
Currently, there is no industry consensus in support of a single comprehensive approach - what Congress says it wants in order to take action this year.
The per patient cap is clearly broken beyond repair. Tinkering with this limit will simply shift inequities from one financially destabilized group of providers to another. Those who are solvent one day may find themselves effectively bankrupt the next with ex post facto reduction of payments already received. This is not a solution but a recipe for moveable chaos.
Congress should just go ahead and repeal the per beneficiary limits. Let Congress, HCFA, and the home health industry focus on development of a valid case mix adjuster to incorporate into the Prospective Payment System (PPS) that the BBA directs HCFA to impose on the home health benefit on Oct. 1, 1999. If HCFA fails to develop PPS, however, HHAs, not HCFA, will be penalized with a further 15% reduction from the already devastating 1998 reimbursement levels. (PPS, if implemented, must also lead to a 15% reduction in home health revenues.) HCFA's resources would be better spent on getting PPS right than on flailing around trying to implement an irrational Interim Payment System.
If Congress does not repeal the IPS, in particular the per beneficiary limit, we should advocate other changes which bring home health reimbursement levels more into line with what Congress intended, e.g., $20.7 billion for FY 1998 rather than the $14 billion to $15 billion which looks increasingly likely for this fiscal year.
This could be achieved by:
· Moving the Interim Payment System base year to 1996 or 1997.
· Eliminating proration of per beneficiary caps among home health agencies.
· Providing for regional rather than national per beneficiary limits for new home health agencies.
· Developing a viable patient protection policy to ensure access to care for longer term and medically complex patients.
Other viable solutions might include a very basic case mix adjuster, with different payment rates for short-term and longer-term medically complex patients. The IPS is particularly destabilizing for home health agencies that care for high-cost beneficiaries. There are no exceptions to the IPS to allow providers to continue to serve beneficiaries fitting this profile.
As we seek an equitable solution to the IPS, we are just as vulnerable as we were in 1997. The industry should embrace proposals that ensure access to medically necessary home health services for all beneficiaries. Our solutions must be patient centered not provider centered.
We know that in Washington, money talks. The home health industry is not a significant contributor to political candidates. Home care took massive cuts last year to shield the bigger richer health care sectors which do make large contributions. And home health beneficiaries are politically powerless. They are more often than not frail, aged, poor, invisible, and unable to participate in the political process. To the powerful go the spoils.
Last year, the industry was not wise; discussion of the industry-initiated PPS proposal, rejected by Congress, always centered on what providers wanted, not on the welfare of Medicare beneficiaries. Congress did not trust a proposal brought to it by an industry that seemed to be saying it was rife with abuse. Home health providers publicly disparaged their competitors and the utilization patterns of providers in other areas of the country, thus legitimizing charges of a benefit out of control. Contrast this behavior with that of the nursing home and managed care industries, whose serious quality and access problems are well-documented but who remain united in celebrating their "superior" services. Our cuts were their shield.
Let us learn from our defeat in 1997 and not make the same mistakes again.
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