Home Health & Hospice Week

A battle royale may be brewing between home care and lawmakers eager to make cuts.

Home health agencies are getting more efficient under the prospective payment system - and now you may get punished for it.

In its annual March report to Congress, the Medicare Payment Advisory Commission recommends that Congress eliminate any payment update for HHAs in 2006. "Agencies should be able to accommodate cost increases over the coming year without an increase in base payments," MedPAC says in its latest report.

To agencies, a rate freeze is tantamount to a payment cut, stresses attorney Jim Pyles with Pyles Powers Sutter & Verville in Washington, DC. "No inflation update is a cut because wages and prices keep rising," Pyles points out.

MedPAC singles out only HHAs and skilled nursing facilities for rate freezes, notes the American Association for Homecare.

Justification: MedPAC rattles off a laundry list of signs that agencies are already being paid more than enough: few access problems for beneficiaries, a 9 percent increase in Medicare-certified agencies from 2002 to 2003, a projected Medicare average profit margin of 12 percent in 2005, and agencies' growing efficiencies.

In fact, even though "input" costs such as labor and transportation have increased, agencies reduced episode costs by making fewer visits and furnishing shorter treatment plans. And those plans include more therapy and less aide service and skilled nursing than in previous years, MedPAC adds. Thus, agencies should be able to handle a rate freeze just fine, the influential advisory body to Congress concludes.

More evidence that the current PPS rate is more than ample is the increased proportion of freestanding and proprietary agencies in the pool of about 7,300 Medicare-certified HHAs, MedPAC says. In 2003, 75 percent of agencies were freestanding rather than facility-based, and 55 percent were proprietary rather than "voluntary" or government. "The distribution of agencies ... has returned to that of 1998," the report says. MedPAC Has Congress' Ear "The MedPAC recommendations and the March Report have great influence on Congress every year," notes William Dombi, vice president for law with the National Association for Home Care & Hospice's Center for Health Care Law. "The Congressional committees of jurisdiction start with the MedPAC recommendations when deciding on a course of action," Dombi tells Eli.

And if a Medicare bill comes to fruition, lawmakers will be happy to find cost-cutting measures where they can, warns Bob Wardwell with the Visiting Nurse Associations of America. "Many on the Hill would seize on the MedPAC recommendation of a freeze as a painless way to save a few dollars," Wardwell predicts. "But it would be a serious mistake," he warns.

Argument: There are many flaws with the justifications MedPAC uses for the rate freeze, Dombi argues. For example, its profit [...]