Home care groups give HCFA some mixed reviews on PPS

By MATTHEW HAY

HHBR Washington Correspondent

WASHINGTON – Representatives from the five national home care associations met with Health Care Financing Administration (HCFA; Baltimore) officials last week for an update on the development of a prospective payment system (PPS) for home health. The five groups present at the Feb. 11 meeting – the National Association for Home Care (NAHC; Washington), the American Federation of Home Health Agencies (AFHHA; Silver Spring, MD), Home Care Association of America (HCAA, Jacksonville, FL), Home Health Staffing and Services Association (HHSSA; Washington) and Visiting Nurses Association of America (VNAA; Boston) – gave HCFA mixed reviews. The same five groups are currently working together to draft a unified reform proposal for the interim payment system (IPS) for home health.

HCFA’s presentation, which was delivered by Director of Chronic Care Purchasing Policy Group Tom Hoyer, Bob Wardwell, division director of community post acute care, and analyst Ann Meadow, closely tracked the interim report on PPS that it delivered to Congress last month. That report revealed that HCFA is leaning toward a per-episode rather than a per-visit PPS. The report suggested that HCFA’s per-episode PPS demonstration project had reduced the cost per episode by 13% and utilization by 17%, while the per-visit demonstration had actually increased the number of visits. HCFA’s presentation last week included new information in several areas (see summary, p. 3).

"At first glance, it is a system that I think we can work with," said VNAA’s Director of Government Affairs Cathy Thompson, adding that VNAA supports HCFA’s use of national averages to determine PPS rates. "We’re very pleased about that. We think that’s exactly the direction (they) should go in," she said, "but we need to look at the case mix instrument to get a better feel for how that is going to effect reimbursement and identify costs for caring for different types of individuals." Thompson said that VNAA remains concerned about the 15% cut in reimbursement still scheduled for Oct. 1, 2000.

"My first concern is that it is going to be a per-episode model," said HCAA’s Director of Government Affairs Scott Lara. "If you look at what has happened in HMOs and hospitals, I think that method has proven a failure. I believe that you should pay for what you get, and that is why we have always favored a per-visit system." Lara discounted the early results of HCFA’s demonstration project because he said it did not afford providers the proper incentives. "I feel they are locked into a per-episode system," said Lara. In addition, he said regional disparities among beneficiaries do not appear to be properly reflected in the new system.

Lara and the other groups also expressed concern that HCFA will be relying on only one month’s worth of OASIS data to develop the preliminary case mix. "That is just not practical," said Lara. "OASIS is brand new, and even HCFA admits they would prefer to have more data."

"One major issue that we’re concerned about is the way base year cost reports are being audited," said AFHHA’s Executive Director Ann Howard, pointing out that this could have a major impact on PPS reimbursement methodology. Howard said a number of certified public accountants are reporting "irregularities" in the way cost reports are being closed out, as well as "massive disallowances," which she fears will "artificially lower" reimbursement rates 10% to 15% in addition to the across-the-board 15% reduction scheduled for Oct. 1, 2000. The reports indicate that some intermediaries, contrary to their obligations under HCFA rules and federal auditing regulations, are not accepting additional evidence supplied by home health agencies and are not affording providers the opportunity for proper exit conferences. "They are obligated to engage in a dialogue to resolve issues before closing a cost report, and in many cases, they are not doing any of this," said Howard. "Instead, they are just closing the audits and recouping overpayments."

HCAA’s Lara voiced similar concerns. "Agencies are going down left and right because they are receiving demands for thousands of dollars, and they have to pay it back in 15 days or request an overpayment plan," said Lara. "That is what’s killing them."

According to Howard, however, the HCFA officials present at the PPS meeting appeared to express genuine concern over this pattern and urged the CPAs to immediately bring examples of this to the attention of HCFA’s Chuck Booth. HCFA representatives also indicated that if the disallowances on the audited cost reports were successfully appealed that those funds would be factored into the PPS reimbursement methodology. "We asked for an expedited auditing process in light of the crucial nature of this information."

HCFA is scheduled to release another interim report later this month to include data collection procedures, file construction, case mix development process, and case mix performance measures. But most observers expect it to be several weeks late, in part, because the interim report it delivered to Congress last month was several weeks late.

For more information, see summary, page 3