Keep on fighting the good fight

Stand firm and ride out the IPS storm

By Susan Craig Schulmerich, RN, MS, MBA

Executive Director

Montefiore Medical Center Home Health Agency

Bronx, NY

With last year's Balanced Budget Act knocking hospital-affiliated home care against the ropes with the wicked one-two punch of an interim payment system (IPS) and the virtual elimination of the Medicare cost shift, one wonders whether hospitals will throw in the towel or try to go the distance.

Many of their freestanding counterparts have already given up. According to some reports, hundreds of home care agencies already have closed their doors because of the drastic cuts in Medicare reimbursement and the surety bond regulations. If hospitals find themselves without a way to legitimately shift overhead costs to their home care agencies, what reasons do they have to keep fighting?

Of course, other home care providers criticize hospital-sponsored agencies as having an unfair advantage because hospitals are believed to have deep pockets. Freestanding providers believe hospital-sponsored agencies will weather the storm created by Congress and the Department of Heath and Human Services. The critics seem to forget that ill winds blow equally on all home health providers.

However, it is not deep pockets that will allow hospital-sponsored agencies to survive. The value of home care is not just in the cost allocation benefits. The value of home care includes:

· its critical role as an integral part of the health care delivery system;

· its commitment to the health care delivery system values and mission;

· its ability to meet patient needs and wants outside the traditional institutional setting;

· its ability to utilize the ever-shrinking health care dollars efficiently and effectively.

If hospital-sponsored home care survives, it will be because of enlightened hospital administrators. It was those hospital administrators who first recognized the opportunities for health care delivery systems to capture the lion's share of the shrinking health care dollar if the system could provide services under its own direction. In this new world order of acute care reimbursement, diagnosis related groups (DRGs) took a back seat to partial- and full-risk capitation. Decisions to "grow our own or buy from the outside" became a familiar theme at strategic planning sessions.

The evolution of health care delivery systems was one reason for the growth of hospital- sponsored home health care agencies. In 1967, there were 133 hospital-based agencies, and by 1995, there were more than 2,400, according to the National Association for Home Care in Washington, DC.

There are, of course, other reasons for the growth of hospital-sponsored home care. For instance, the Medicare hospital reimbursement manual permits the pass-through of overhead costs to hospital departments such as home care. When DRGs became the predominate reimbursement vehicle in the early to mid-1980s, hospitals were searching for methods to reallocate costs to other areas of the organization. Because home care was, and still is in one sense, cost-based reimbursed, it is a legitimate area where costs can be allocated.

The reallocation of hospital overhead costs to the home care department is not fraudulent; it is permitted under the Medicare program. However, some providers that may operate under different auspices, such as not-for-profit freestanding agencies, proprietary agencies, and charitable agencies, along with the Office of the Inspector General and theHhealth Care Financing Administration in Baltimore, would have the public believe that hospitals have either twisted, "creatively interpreted," or found loopholes in Medicare regulations. That simply isn't the case.

To health care delivery systems that have evolved and remain viable, the value of home care has become more evident. It is common knowledge that hospital admissions consume the greatest number of health care dollars. To a full-risk capitated health care delivery system, a high percentage of admissions can be financially devastating; home care can reduce length of stay or be the vehicle to avoid an inpatient stay altogether.

Health care delivery systems are like a three-legged stool: hospital, physician, and community care - home care is the community care leg. Without it, the stool will topple or require support in some other fashion.

Now is not the time for hospital administrators to jettison home care departments. The crisis facing home care will be economically painful, administratively burdensome, and frustrating, BUT it will pass. During the current crisis, if the home care agency is, or has been, eliminated from the inventory of the hospital's services, a strategic error may have been made. Trying to recreate a hospital-sponsored home health agency after the chaos will be difficult at best and impossible at worst.

The "body count" for all home health agency closures is growing daily. The New York State Home Care Association publication ASAP in its July 6 issue, reported that nearly 800 agencies have closed in 44 states. This is just the beginning. In St. Louis, where the two largest freestanding agencies closed operations to Medicare patients effective May 31, the local hospital-sponsored agency assumed the care for many of the patients.

Hospital-sponsored home health agencies will find themselves in an unenviable situation in the coming months. To the public they may be the "good guys in the white hats," while to other home health organizations, they will be the enemy. But regardless of where we find ourselves, our commitment to the patients and the mission of our sponsoring organization is what must be kept in visual proximity.