Interim payment system puts brakes on spending
Interim payment system puts brakes on spending
Medicare’s prospective payment system (PPS), a distant relative of hospital DRGs (diagnosis-related groups), has been much discussed, studied, and feared in the home care industry in recent years. A provision of last summer’s Balanced Budget Act (BBA) of 1997 requires the Department of Health and Human Services (DHHS) to establish and implement a prospective payment system for home care by Oct. 1, 1999.
However, the industry faces even more immediate challenges before PPSis implemented. A handful of other provisions of the BBA will collectively strain the financial savvy of home health agency directors coast to coast. PPS represents the future, but more pressing issues could decide whether home care indeed has a future.
"Prospective payment is academic at this point," says Ann Howard, executive director of the American Federation of Home Health Agencies in Silver Spring, MD. "We have to get there first. Home health needs to survive."
While the home health provisions don’t directly affect hospices unless they are also certified as home health agencies home care leaders say: Beware! This kind of treatment by the government is what can happen to any health care provider group when public perceptions of rampant fraud and abuse reach critical mass.
Among other BBA requirements aimed at slowing the growth of the home health benefit and preventing fraud and abuse are the following provisions:
• Venipuncture (drawing blood samples in order to monitor the blood for medical conditions or medications) was eliminated as a qualifying condition for Medicare home health services on Feb. 5, 1998. Patients who have received home health visits for venipuncture, and do not have another qualifying medical condition or skilled need, will no longer qualify for home health care.
• An interim payment system (IPS), effective for cost reporting periods beginning Oct. 1, 1997, puts the brakes on home care spending by imposing per visit cost limits reflecting industry means and norms, per beneficiary annual limits, and roll-backs on home health market basket rates to 1993 levels. The net effect, say providers, is to force home health agencies to ration care and reduce services to seriously ill, homebound elderly clients with serious implications for quality of care.
• Home health agencies are required to obtain surety bonds in order to participate in Medicare and Medicaid, in the amount of $50,000 or 15% of the agency’s previous year Medicare (or Medicaid) reimbursement, whichever is higher. According to the Federal Register,1 a surety bond is "an instrument obtained by an HHA from a [government-authorized] surety company in which the surety company, acting as a Surety, guarantees that it will be responsible for unrecovered debts owed us by an HHA."
These bonds are to be obtained and submitted to the government by Feb. 27, retroactive to Jan. 1, 1998, but home health agencies are reporting difficulty in obtaining them because of what some surety bond firms see as onerous requirements imposed by DHHS. For example, the liability on the surety company is cumulative, leaving it responsible for any overpayments or civil monetary penalties incurred by the home health agency in the year the bond was issued, even if these are identified years later.
The government had estimated that these bonds, which cannot be written off as an allowable expense in the home health cost report, would cost approximately $10 per thousand dollars in coverage. But providers are finding the cost running much higher when a surety company is even willing to underwrite it. "Altogether, it’s a recipe for closing home health agencies, unless the courts step in, or HCFA changes the rule, or Congress steps in," Howard says.
The home health industry is now exploring all of the above, and the national trade organizations representing the industry have come together in an unprecedented display of solidarity to figure out how to tackle the challenge.
For hospices with home health certification, the surety bond requirement looms large. The National Hospice Organization’s Chris Cody reports that the NHO Insurance Agency in St. Helena, CA, is monitoring the surety bond issue, while NHO has not heard a panic outcry from its members, at least some of whom are dually certified.
For other Medicare-certified hospices, it is not a problem at least not now. But home care leaders point out that this kind of legislative onslaught may someday reach the hospice industry.
"At this point in time, hospice is still something of a sacred cow, even though its status has been somewhat diminished" in recent months, observes Diane H. Jones, MSW, ACSW, executive director of the Hospice Association of America in Washington, DC. "But hospices absolutely need to pay attention to what’s happening on the home health side, and be supportive of their colleagues. If we can keep the patient and family as our highest priority, we can work with our home health colleagues to ensure that patients receive the appropriate level of care."
What’s more, Jones says, "We can look at what is happening to home care and say: Let us now examine what it is that we’re doing, and make every attempt to get back on the path if we have strayed and not get into a position where we are the target of this kind of attention from the government.’"
Ted Sleight, CPA, director of finance for Community Home Health in Boise, ID, observes, "If the government can this quickly and easily turn an entire industry upside down, hospices had better keep their eyes and ears open."
Reference
1. 63 Fed Reg 293 (Jan. 5, 1998).
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