Medicare reform sings familiar unhappy tune
Medicare reform sings familiar unhappy tune
HHS wants to control the growth of home care
Reactions to President Clinton’s Medicare reform proposal may vary, but no one disputes the fact that change is coming to the industry, and it could begin as early as Oct. 1, 1998.
That’s the date the administration has set for implementation of an interim prospective payment system as one way to reduce spending to keep Medicare Part A on life support until 2007. Full implementation is expected in 1999.
The proposal, which calls for total Medicare savings of $100 billion over five years and $138 billion over six years, also includes shifting the home health benefit from Part A to Part B, as Medicare policy was before 1980. This provision is similar to a Medicare reform bill the Republican Congress rejected in 1995.
The administration’s plan would cost the home health care industry (both hospital-based and others) $14 billion in reimbursement cuts over five years and $18 billion over six years if it becomes law.
Anti-fraud and -abuse initiatives are expected to account for another $9 billion over five years ($12 billion over six) for the whole Medicare program. The home care portion is predicted to be $1.4 billion over 5 years and $2 billion over six years. Initiatives included a more aggressive Operation Restore Trust (ORT) program. ORT is scheduled to begin in all 50 states in October 1997.
Not in my back yard, buster
As one might expect in an industry as fragmented as home health care, reactions from experts contacted by Hospital Home Health differed widely in tone, ranging from bemused to downright hostile.
"I view this as auspice-neutral," says Greg Solecki, administrator of Henry Ford Home Health Care in Detroit. "Whether you are hospital-based, freestanding, or a VNS, this will impact everyone."
Further reduced funding is expected to result from industrywide changes, such as eliminating periodic interim payments; closing a wage adjustment loophole; and clarifying the definition of a "homebound" patient.
"The real issue is how much belt-tightening the administration and Congress determine is necessary on the Medicare home health benefit to come to grips with potential overutilization and fraud and abuse," says Dan Lerman, president of the Center for Hospital Homecare Management, a consulting firm in Memphis, TN.
"The other administration proposals on cost limit reduction, redefining the Medicare benefit, expanded fraud and abuse focus, and a non-defined PPS recommendation are the real meat and potatoes of home health care reform."
Ann B. Howard, executive director of the American Federation of Home Health Agencies in Silver Spring, MD, was not quite so politic. "It’s really bad news," she says. "It is a collection of all the unproductive, counterproductive, and destructive proposals that this administration has proposed in the past. They’ve pulled them out of the hat for home health."
Kevin O’Donnell, president and CEO of Lewisville, TX-based consulting firm Healthcare Resources of America, says, "I am still perplexed by the venue-based reimbursement philosophy of HCFA [Heath Care Financing Administration]. When you stop and think about it from a consumer and taxpayer point of view, what difference does it make where the patient is being treated? Home care, hospital, hospice benefits, long-term care benefits what does that have to with getting you well?
"There is an underlying distrust of home care in this general reimbursement philosophy; however, if you ask consumers, they are far more comfortable with home care because they have control. Many patients feel they relinquish control in the hospital."
It has to do with growth, or to be precise, the desire to control growth in the home health industry. Testifying before the Senate Finance Committee in February after the announced proposal, Health and Human Services Secretary Donna E. Shalala said, "Home health care is one of the fastest-growing components of Medicare, with a projected average annual growth rate of 10.6% over the period FY 1997-2002. The average number of home health visits per user increased over 40% between FY 1992 and FY 1997. The average payment per visit has also increased, rising from $57 per visit in FY 1992 to an estimated $68 per visit by FY 1997."
We must reduce the rate of growth’
Shalala went on to say, "We know that this growth has its roots in changes in medical practices and technology, in the expansion of the benefit, and in our current reimbursement system, which can contribute to overpayment and abusive practices. And we know that we must reduce the rate of growth in Medicare home health spending and keep it under control. And that’s what our reforms will help us do."
In addition to implementing PPS to reduce incentives for overutilization, the HHS secretary proposed "to establish a set of interim limits that will curb excessive spending and institute a new per-beneficiary payment limit for each home health agency."
Among other reform measures the secretary disclosed was the plan to eliminate periodic interim payments as an incentive for new agencies to serve Medicare patients. "With 100 new agencies joining Medicare each month, this incentive clearly is no longer necessary," Shalala said.
Medicare reform includes closing a loophole that the administration says has been a financial boon to the industry. "We will pay for home health services based on where the service is delivered," the secretary said, arguing that many agencies were taking advantage by locating billing offices in higher-cost urban areas, regardless of where care was delivered.
The shift of the benefit from Part A to Part B, which the American Hospital Association supports, as do consumers and provider groups, is described by Shalala as a proposal "to reassign payment for home health services that are not associated with post-hospital recovery. . . . This allocation is not counted in the overall $100 billion." The idea is to limit Part A coverage to the first 100 visits following a three-day hospital stay, but visits beyond 100 and those not following a three-day hospital stay would be paid under Part B along with other outpatient services. There is no cost-sharing feature with the Part B benefit.
Ron Kolonowski, executive director of Hospital Home Care Association of America in Washington, DC, which is affiliated with the National Association for Home Care (NAHC), agrees that PPS is desirable. "Our solution is the revised unified prospective payment plan, introduced by Congresswoman Nancy Johnson [HR4229, the Medicare Home Health Services Prospective Payment Amendments of 1996]. She will reintroduce the legislation this year, and we believe that a responsible way to a PPS plan. It is endorsed unanimously by every state association and national association. It keeps overutilization in check by providing incentives for providers to operate more efficiently."
Solecki agrees. His hospital-based organization will make more than 250,000 home care visits this year for 21,000 patients. Fifty-six percent (56%) of them are managed care patients. "For those of us who have been immersed in managed care, PPS will level out the playing field. It’s very difficult for us to compete with Medicare-intensive agencies. Let’s have everybody march to the same beat."
But Solecki does not see limiting industry growth as a way to reform. It is one of his "stuck points," a term he takes from quality assurance jargon that means something you have to stop and think about.
"All the buzzing around the budget seems to be about growth not being a good thing. Our policy makers are saying We’ve got to stop growth.’ Why? If we’re spending $5 to save $10, maybe home health isn’t growing fast enough."
Using the Henry Ford Health System as an example, which had to lower costs to compete with managed care, Solecki says his organization has developed pathways, decreased variation, reduced costs, and improved patient satisfaction. "If you demonstrate it is more cost-effective, then clinically that’s a good thing."
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