Home Health & Hospice Week

Bush's '09 budget proposal would strip billions from Medicare home care.

The President's latest budget proposal could be paving the way for home health agency payment cuts as early as July.

In fiscal year 2009 budget documents released Feb. 4, President Bush calls for a three-year rate freeze for hospices and a whopping five-year rate freeze for HHAs. After the freezes, the President wants both providers' inflation updates reduced to 0.65 percent, which is down from the usual rate of about 3 percent.

If adopted, the HHA reduction would cut $440 million from HHA payments in 2009 and $11.0 billion over the next five years. For hospices, the cuts would result in $350 million less in 2009 and $5.1 billion less over five years.

Industry representatives were quick to react to the bid for unprecedented cuts. "Under the proposal, 75 percent to 80 percent of home health agencies would be doomed," William Dombi with the National Association for Home Care & Hospice told The New York Times. "They would not be able to meet payroll. They would not be able to operate," said Dombi, vice president for law with NAHC's Center for Health Care Law.

The Visiting Nurse Associations of America calls the cuts "a left-hook for home healthcare" in a statement to members. "The Bush Administration continues to attack the Medicare home health benefit."

The proposal "would weaken the nation's home care infrastructure," charges the American Association for Homecare.

Zeroing out the hospice inflation update is a "worst case scenario," says the National Hospice and Palliative Care Organization.

The budget is "a disaster for home care patients and the providers who serve them," insists Joanne Cunningham with the Home Care Association of New York State. HHAs need those updates because they face "workforce shortages, exploding operational expenses and increasingly complex patient care needs and case loads," Cunningham says in a release.

The budget also calls for Medicare payment cuts to many other provider types, including hospitals, skilled nursing facilities and outpatient rehab facilities.

Hospice surprise: Some observers didn't expect to see hospices freezes in the budget. But "everyone one else [is] in the pot," notes VNAA's Bob Wardwell. With such a broad proposal for Medicare cuts, it would have been unusual for hospice to be left out.

"And it's no secret that hospice costs and profits are rising," Wardwell tells Eli. "But like home health, [that's] mostly due to the behavior of the newer entrants to the field."

Look at the Big Picture

Democratic members of Congress were just as quick to condemn the cuts included in the budget.

The reductions "endanger the health care of America's seniors," says House Ways and Means Health Subcommittee Chair Pete Stark (CA).

The cuts are "draconian," says Senate Finance Committee Chair Max Baucus (MT).

"Health care providers are already having a difficult time making ends meet--this budget will only devastate the system further," says Rep. Chris Carney (PA). "This budget is irresponsible," Carney adds. "Slashing home health care hurts everyone." Reducing access to health care services just drives up emergency services use and health care costs overall, he argues.

Home Care Vulnerable to Cuts

Given the political climate, Congress is likely to ignore many of the health care proposals included in the President's budget, observers predict. But home care providers will remain vulnerable to cuts.

First: HHAs' profit margins make them a juicy target when lawmakers are looking for places to make reductions. While agencies' average Medicare profit margins are dropping every year, the figure is still projected to be 11.8 percent in 2008 (see Eli's HCW, Vol. XVII, No. 3). That figure helped prompt the Medicare Payment Advisory Commission to recommend a FY 2009 rate freeze for HHAs once again.

Second: Home care providers don't have the deep pockets and sheer numbers that institutional providers like hospitals have for lobbying efforts. Influential trade groups for those providers might have more lobbying weight and thus more luck averting cuts.

Lawmakers will be looking for ways to fund the fix to physicians' Medicare payment rates, which will drop 10 percent July 1. Home care providers may prove a very tempting source for the money.

HHAs will have to fight back with a strong grass roots campaign, NAHC advises. Such a campaign helped convince Congress to reject similar proposals last year, the trade group points out.

Take action: "If you haven't yet begun a relationship with your elected representatives, there is no better time," NHPCO says.