Home Health & Hospice Week

Health care reform legislation is taking shape in Congress, but that shape is looking like bad news for home care providers.

The effort to enact sweeping health care reform this year has been losing steam, political observers say. Republicans are refusing to vote for a plan with a public insurance option and Democrats are fighting amongst themselves over how to pay for reform, among other items.

In the face of the momentum loss, President Barack Obama has put pressure on congressional leaders to produce their health care reform bills before the August recess, which begins Aug. 3 in the House and Aug. 10 in the Senate. On July 14, the three House committees of jurisdiction responded to the president's pressure with their own so-called "tri-committee" bill (H.R. 3200).

Unfortunately for home health agencies, the bill that was circulated in draft form last month (see Eli's HCW, Vol. XVIII, No. 23, p. 180) still contains many punishing provisions for HHAs, including:

• rebasing home health prospective payment system rates starting in 2011, with a 5 percent acrossthe- board cut if rebasing isn't calculated;

• a market basket index freeze for 2010, meaning no inflation increase;

• speeding up case-mix creep adjustments that are already scheduled; and

• so-called "productivity adjustments" that will cut rates.

The cuts will total nearly $57 billion over 10 years, calculates the National Association for Home Care & Hospice. "These deep, indiscriminate, across-the board cuts will not address the perceived problem with Medicare home health margins and will only serve to exacerbate the systemic weaknesses in the current payment model," NAHC insists. The consequences will be "horrific," NAHC's Val Halamandaris warns.

The measures are all suggestions that the Medicare Payment Advisory Commission has made to Congress, NAHC points out.

Health care reform "must not come at the expense of the nation's most vulnerable citizens who suffer from complex medical problems and are so sick they cannot leave home without assistance," Halamandaris insists.

Plus: The bill also includes a "productivity adjustment" cut to hospice payments that would total $9.8 billion over 10 years.

And the legislation includes calls for Health and Human Services to formulate a plan for post acutepayment reform, including bundled payments to hospitals, HHAs, skilled nursing facilities, and other post-acute providers. HHS would pilot its program in 2011, says the bill that clocks in at more than 1,000 pages.

Provider groups including physicians came out strongly against post-acute bundling in a June 25 hearing held by the House Energy and Commerce Committee, NAHC notes.

A post-acute care bundling model could compromise the quality and availability of Medicare home care, cause major disruption to the health care industry, be anti-competitive, and increase the federal regulatory burden, the trade group protests.

Post-acute providers like HHAs and SNFs are especially concerned about the proposal that hospitals administer the bundled payments. "Hospitals have no experience in the management of post acute care and no infrastructure to manage utilization review," Halamandaris points out. "Hospitals are the highest cost sector so this is not the place to locate efficiencies in post acute care. If bundled payments are considered, they should go to community-based providers that have a breadth of experience in providing post acute care and avoiding unnecessary hospitalizations."

Way off base: NAHC affiliate the Home Health Financial Management Association is also fighting against the rebasing provision. MedPAC's rationale for recommending rebasing is that HHAs now deliver fewer visits per episode than before PPS began in 2000.

MedPAC claims PPS was based on an average of 31 visits per episode, compared to the latest figures showing 22 visits. But the Centers for Medicare & Medicaid Services actually adjusted the visit average down to about 25 to calculate the original PPS base rate, HHFMA contends.

"MedPAC also failed to account for a decrease in lower-cost home health aide visits and an increase in higher-cost therapy services over the 1998-to-2007 period," HHFMA maintains. And CMS has made "a series of reductions that have lowered the home health base payment rate subsequently by more than 28 percent," HHFMA says. Today's base is actually less than the 2002 rate.

Bottom line: "MedPAC's argument for rebasing home health payments is without merit," HHFMA concludes.

"Changing home health payment rates in across-the-board fashion is likely to result in agency closures and beneficiary service disruption," NAHC says. That's because HHA profit margins vary widely -- more than 35 percent of agencies have negative margins on their Medicare business and about 25 percent have margins greater than 25 percent.

As anticipated, the tri-committee bill leaves Medicare oxygen payment largely untouched. Industry sources expect the forthcoming Senate Finance Committee bill to tackle the issue of oxygen payments, with decreases likely. (See box, this page, for more home medical equipment budget details.) Trade groups are urging their members to increase their efforts to sway their elected representatives to block harmful cuts. "Providers must get involved now," the National Association of Independent Medical Equipment Suppliers insists.

August recess is the perfect time to reach out to members of Congress who will be back in their home districts.

"If providers do not react strongly, members of the House will feel comfortable enacting these deep cuts," NAHC warns. "If we don't react, our fate is sealed," Halamandaris adds.

What to expect: President Obama originally wanted the House and Senate to agree on a health care reform bill before the recess. But now the administration will be lucky to see Congress pass two very different bills on the topic before that deadline.

If the Senate does pass a health care reform bill by then, the hard work of reconciling the two pieces of legislation will come after recess. The Senate bill is expected to garner more bipartisan support than the House version, which could make its provisions more crucial to the final health care reform bill.