Evidence mounting about interim payment system’s damage

HHBR Washington Correspondent

WASHINGTON – Just days after the General Accounting Office (GAO; Washington) released a report concluding that the interim payment system (IPS) has not significantly damaged patient access to home health services, a key Senate panel heard a far different story. These new data could help the industry demonstrate what it maintains is a far more damaging assessment than the GAO reported.

Barbara Smith, a senior researcher with George Washington University’s Center for Health Services Research & Policy, told the Senate’s Permanent Subcommittee on Investigations June 16 that preliminary evidence suggests that changes imposed by the IPS are forcing agencies to change the case mix of their patients and alter practice patterns to conform to reimbursement constraints. "These constraints appear to be creating substantial tension with meeting the clinical needs of some patients," she said. "As a result, many seriously ill patients, especially diabetics, appear to have been displaced from Medicare home care."

Smith emphasized that the data from her study is only preliminary. But her data stands in sharp contrast to the conclusion of the GAO. According to Smith, there is mounting evidence that the IPS is encouraging agencies to admit some categories of patients and not admit others.

The study, which is being jointly funded by the Home Health Staffing and Services (Washington) and the National Association for Home Care (Washington), is being completed in two parts. The first phase is a detailed examination of the case mix, staffing patterns, and practice patterns of roughly 40 home health agencies in eight states since 1994. The second phase, expected to be completed later this year, will focus on the possible spillover effects of Medicare home health reductions on other parts of the Medicare and Medicaid programs. Here are some of the other preliminary results presented by Smith:

• Most home health agencies appear to be moving fairly aggressively to adjust their case mixes and practice patterns to conform to utilization reimbursement. Some agencies are even using software that continuously modifies treatment for existing patients according to the agency.

• A number of agencies have achieved virtual reversals in their short-stay/long-stay ratios through changes in their patient mix. Other agencies that have been unable to change patient mixes characterized by large amounts of unstable chronic illnesses have significantly reduced visits and clinical staffing levels, even as they have dramatically increased their patient census, raising serious quality concerns.

• The IPS and other fiscal intermediary policies have created a stratification of beneficiary desirability among providers.

• Diabetics appear to have experienced the most displacement from home care with many complex diabetics not even admitted among the agencies surveyed. Similar patterns of aggressively seeking discharge of congestive heart failure and chronic obstructive pulmonary disease have also surfaced.

• Patients who require two or more visits daily or even one visit daily, even over a relatively short period of time, also appear to be experiencing significant home care displacement among the agencies studied.

• In many cases, agencies describe greater fragmentation of care with patients being discharged to home care in much sicker condition from hospitals. After rapid admission from home care, these patients are often readmitted to hospitals and then readmitted to home care.

• Agencies report that some patients are paying 100% out-of-pocket for services that previously were covered by Medicare.

• Most agencies, except those that have experienced large increases in their patient census or increases in patient severity, are reducing clinical and administrative staff.

• Some hospital-based agencies have become loss leaders and their Medicare patients are now subsidized by other parts of the health system in which they operate.

"The preliminary findings strongly suggest that agencies are responding to IPS’ incentives to avoid caring for the sickest and frailest beneficiaries while relatively healthy beneficiaries may be experiencing improved access to care," Smith said.

These conclusions are certain to be weighed by members of Congress and the administration against the GAO’s findings and the relatively inconclusive assessment about beneficiary access reported by the Medicare Payment Advisory Commission earlier this month. But most observers believe this study is the home care industry’s most effective means of demonstrating the impact the IPS and recent regulatory changes are having on home health services.