Diversify your business within confines of PPS

By Elizabeth E. Hogue, Esq.
Burtonsville, MD

Under a system of cost-based reimbursement from the Medicare program, it was reasonable for many home health agencies to focus the majority of their attention on the Medicare home care benefit. As a result, many agencies had a very high percentage of patients whose payer source was the Medicare program.

Many consultants and others who help home care agencies plan for the future have advised agencies to diversify their lines of business beyond Medicare in response to implementation of the prospective payment system (PPS). This recommendation is certainly sound.

Agency managers now may be ready to move beyond a general recommendation to specific actions to help them meet this goal. But they may be stymied by uncertainty about how to achieve diversification.

What are some reasonable options? How should agencies go about identifying and following up on opportunities to plan for the future through diversification of programs and sources of payment for services provided?

Certainly the first step is to evaluate needs for additional services in the communities in which agencies operate. Home care providers are professionals at providing community-based services in patients’ homes. The skills necessary to provide these services will stand managers in good stead when they plan to provide other services that are community-based.

Some agencies, for example, have identified needs for both child care and adult day care centers and have successfully provided such services in the same location with structured interaction between the generations.

Agencies may also be wise to look at recent court decisions for guidance about how to diversify their businesses.

When the courts mandate the provision of community-based services, home care providers are prime candidates to step in to offer assistance in meeting these mandates.

The Supreme Court decided two cases in the 1998-99 term that provide opportunities for home health agencies. These two cases are Olmstead v. L.C. and Cedar Rapids School District v. Garret F.

In the Olmstead case, the court decided that states must place certain mentally disabled people in community homes rather than hospitals. The basis of the court’s decision was that it is illegal discrimination to segregate the mentally ill simply because of their disabilities.

What’s the least restrictive’ environment

This decision is consistent with a legal principle commonly known as "least restrictive alternative." This legal principle says disabled individuals must be cared for in the least restrictive environment possible.

Ideally, this means patients will be cared for at home since it is considered to be the least restrictive environment possible. Specifically, home health agencies may have opportunities as states implement this court decision to provide psychiatric and other services to patients in their homes to assist states to meet this mandate.

Home care providers may also wish to develop home settings for patients, such as group homes, to help meet the needs of disabled individuals who cannot live on their own or with family members.

Many state governments are forming task forces to plan for implementation of the Olmstead case. The home health industry should have representation on these task forces. State home care associations may also wish to establish internal task forces to develop strategies for implementation that will assist the industry.

In the Cedar Rapids School District case, the court decided that, under a federal law intended to improve the educational prospects for the disabled, public schools must provide a wide array of medical care for disabled children attending classes.

Federal laws related to education of handicapped children began with passage of P.L. 94-142. Among other requirements, this statute requires schools to provide educational services to children in the least restrictive environment possible based upon an Individualized Educational Plan (IEP) for each child.

According to the court, when patients have medical needs that must be met in order to receive schooling in the least restrictive setting possible, school systems must meet these needs.

A common example of such a medical need is providing staff to suction students who are ventilator dependent so that they can attend regular classes.

In many states, according to state practice acts, only registered nurses (RNs) can suction patients. This means school systems are required to provide RNs on a daily basis to disabled students to make it possible for them to receive education in the least restrictive environment possible. Home health agencies are in a unique position to meet this need.

In addition, many IEPs require the provision of therapy services, including speech therapy, physical therapy, and occupational therapy. Some school systems have a great deal of difficulty meeting the requirements of IEPs that require such therapy services because they are unable to hire and retain enough therapists to meet students’ needs. As such, many school systems contract with home health agencies to provide these therapy services when their own employees have too large a workload to handle.

Home health agencies should, therefore, educate themselves about the requirements of P.L. 94-142 and other mandates for educational services to disabled children. They should begin an active dialogue with local school systems to identify needs that agencies can meet as "pros" at providing community-based services.

A note of caution, however, may be helpful at this point. Surveyors may have difficulty shifting from the requirements of the Medicare program to account for other payer sources. Agencies serving students by providing RNs on a daily basis to accompany them to school to meet their medical needs may face deficiencies based on their failure to meet the requirements of the Medicare program.

We know of an agency that was, for example, cited for providing RN services to a disabled student at school under contract with the local school district because there was no "endpoint" to the student’s care.

Agencies should be aware of the difficulty that some surveyors have in accounting for requirements of other payer sources and work hard to communicate these differences during surveys. The advantages of diversification are likely to clearly outweigh any miscommunication regarding survey criteria.

Now is the time for agencies to get serious about diversification of their businesses in ways that will help to ensure what is obviously a very bright future for home care and other community-based services.

[Elizabeth Hogue lives and works in Burtonsville, MD. A complete list of her publications is available. Call (301) 421-0143 or fax a request to (301) 421-1699.]