Home Health & Hospice Week

3.3% pay increase for HHAs remains intact for 2007.

Congress gave home care providers a nice Christmas present before adjourning for the year--un-touched Medicare payment rates that take effect Jan. 1.

A repeal of the 5.1 percent cut to Medicare payment rates for physicians threatened home care funding as the 109th Congress wound down to its final hours. Lawmakers had to find funding for the physician fix, and as in previous years, home care was a likely target.

Rate freezes for home health agencies and hospices were up for consideration, notes the Connecticut Association for Home Care.

But legislators decided to reduce the Medicare managed care stabilization fund instead of using home care funding. The managed care fund went from $10 billion to $3.5 billion.

The House passed the provision as part of a tax extenders bill (H.R. 6111) on Dec. 8 and the Senate followed suit on Dec. 9. The President is expected to sign the bill into law soon.

"This is an important victory for home care and hospice providers," National Association for Home Care & Hospice President Val Halamandaris says in a message to members. "Members of Congress struggled long and hard to come up with some way to finance the physician payment cut."

Lawmakers helped home care's cause when they decided to keep physicians' payment levels even instead of tacking on an increase, William Dombi, vice president for law with NAHC's Center for Health Care Law, tells Eli. "The need to look for additional funding sources ... was diminished." The bill does call for a small increase for physicians who report quality data.

Besides leaving the 3.3 percent HHA increase and the 3.4 percent hospice increase untouched, the bill also left alone oxygen, notes the American Association for Homecare. Industry observers feared Con-gress would reduce the amount of time for capped rental oxygen.

No takeback: Providers can feel confident that unlike last year, the increase will stay intact as the year progresses, predicts Kathy Thompson with the Visiting Nurse Associations of America. That's because Congress has dealt with the physician issue for all of 2007.

"Congress will not need to look for offsets at the beginning of next year to pay for" physician issues, VNAA says in a message to members.

Rural add-on lost: A casualty of the bill, however, was the 5 percent increase for HHAs serving patients in rural areas. Legislators considered the provision, but cut it in the final bill.

"Had the rural add-on been included in the bill, the [inflation update] would undoubtedly have been cut ...quot; an outcome far worse for both rural and urban HHAs in the long term," VNAA says.

Back Into The Fray

Home care providers won't have much time to celebrate this victory. "There is no time to rest," AAHomecare insists. In 2007, lawmakers will be looking to do some serious cost containment on entitlement programs including Medicare, the trade group warns.

"We expect provisions such as reducing the rental period for home oxygen equipment and freezing the home health payment update to once again be considered as part of a broader entitlement reform effort," AAHomecare forecasts.

And providers' efforts to combat cuts will once again be hampered by the Medicare Payment Advisory Commission's recommendation for an HHA rate freeze, industry veterans anticipate.

Agencies' Medicare profit margin figures in the high double-digits will plague their efforts most, Dombi predicts. Many lawmakers don't look beyond the average profit margin to see what's really going on in the industry, he protests. 

Note: Details about the bill are at www.waysandmeans.house.gov/ResourceKits.asp?section=2544.