Home Health & Hospice Week

Will the budget ax fall on agencies' necks?

An influential member of Congress is looking for places to trim the Medicare budget, and home health agencies are looking like an ever-juicier target.

In a May 15 hearing of the House Ways & Means Health Subcommittee, Chair Pete Stark (D-CA) warned that he is considering across-the-board cuts to Medicare providers if they can't help Congress pinpoint places to cut the budget, reports the American Association for Homecare.

The House and Senate in their joint budget resolution passed May 17 call for $50 billion over five years to reauthorize the State Children's Health Insurance Program (SCHIP). And lawmakers have made clear they want to avert the 10 percent cut to physicians' Medicare payments slated for Jan. 1.

That leaves lawmakers looking for places to make cuts to compensate for those increases. "Home health could be targeted for a freeze or significant cuts," warns the National Association for Home Care & Hospice in its newsletter to members.

President Bush's call for a five-year HHA rate freeze and hospice inflation update reductions (see Eli's HCW, Vol. XVI, No. 6), coupled with the Medicare Payment Advisory Commission's recommendation to freeze HHA payment rates in 2008 (see Eli's HCW, Vol. XVI, No. 6), puts HHA Medicare reimbursement at grave risk, industry veterans warn.

The 2.75 percent "case mix creep" cut included with the prospective payment system final rule (see Eli's HCW, Vol. XVI, No. 16) piles on yet another threat, NAHC notes.

Industry fights back: In hearing testimony, NAHC representative Christine Chesny of the Michigan Home Health Association decried the proposed cuts. "Over the past 10 years, the Medicare home health benefit has been cut nearly every year," Chesny said. "Once comprising 8.7 percent of Medicare spending, today it is 3.2 percent and is projected to drop 2.6 percent by 2015."

Home care is much more cost effective for the Medicare program than other types of institutional care, stressed the Visiting Nurse Associations of America's Andy Carter in a prepared statement submitted to the committee. As the ranks of Medicare beneficiaries swell, home care should be considered as an efficient way to care for them.

NAHC urged the committee to hold off on any cuts or freezes until after PPS refinements have taken effect. With one-third of HHAs seeing negative Medicare margins, the payment system flaws must be fixed first, the trade group argued.

Threat looms: But home care will have to do some fast talking to evade cuts this year, considering MedPAC's report of 16 percent average profit margins, observers note. • You may see fewer Medicare Advantage headaches, if Congress gets its way. The Senate Special Committee on Aging looked into illegal and unethical sales practices by MA sales agents in a May 16 [...]