Home Health & Hospice Week

Lawmakers got a jump on Medicare legislation by unexpectedly adding Medicare provisions to a tax bill in the Senate, but the results could help some home care providers while crushing others.

Senate Finance Committee Chair Charles Grassley (R-IA) proposed an amendment that would furnish an extra $25 billion to rural Medicare providers over 10 years. The amendment, tacked onto a larger $350 billion tax cut bill passed 51-49 May 15, proposes reinstating the 10 percent add-on for home health agency services furnished in rural areas from Oct. 1, 2003 to Oct. 1, 2005.

However, the amendment also calls for a 10-year freeze on inflation updates (consumer price index) for durable medical equipment, orthot-ics and prosthetics until 2013. And the bill would cut payment rates for Medicare-covered drugs from 95 percent of average wholesale price to 85 percent of AWP starting Jan. 1, 2004.

The amendment also would provide increased reimbursement to hospitals and physicians in rural areas.

Grassley's rural provision "came out of nowhere," a House aide tells Eli. Grassley has acknowledged that he originally planned to include the rural legislation in a later comprehensive Medicare package planned for the summer.

While introduction of the HHA add-on is heartening, observers aren't giving it high chances for survival. The provision must stay alive through the compromise process that will work out the differences between the Senate and House versions of the tax bill. The House version doesn't contain the Medicare provisions.

In fact, House leadership seems significantly opposed to the idea of mixing up tax and Medicare legislation. Many legislators want the provisions to wait until the larger Medicare bill comes along later in the session, notes Ann Howard with the American Association for Home Care.

On the positive side for the add-on, the Senate has shown its overwhelming support for the legislation with its 86-12 vote approving Grassley's amendment.

Sen. Grassley also is heading up the conference committee that will work out the House-Senate differences in the legislation. That puts him in a position to defend the provisions from attack and stand up to House leadership's opposition, if he chooses, notes Kathy Thompson with the Visiting Nurse Associations of America.

And while House leaders may not like the legislation, it is seeing support from rank-and-file House members, a House staffer notes. Reps. John Peterson (R-PA) and Jim McGovern (D-MA), co-chairs of the Home Health Working Group, are circulating a "Dear Colleague" letter that urges the House Ways and Means and Energy and Commerce committees to support the 10 percent add-on, preserve full inflation updates for HHAs and resist home health copays. The letter mirrors a letter circulated by Sen. Susan Collins (R-ME) in the Senate.

The Balanced Budget Act of 1997 cut home care expenditures by $72 billion from 1998 to 2002, rather than the $16 billion originally intended, the letters note. And the number of home health users has fallen one-third, by 1.3 million, since 1997. Finally, 3,400 HHAs have closed their doors or stopped serving Medicare beneficiaries since then, the letters stress.

While HHAs are hoping for the rural add-on to survive the conference, DME suppliers and pharmacies are crossing their fingers that the inflation freeze and drug rate reduction will fall by the wayside. There is a chance that legislators could pick up the add-on while rejecting the DME and drug provisions, believes Thompson.

"We certainly hope so and will work like crazy for that outcome," adds Howard. The rural add-on for HHAs is "so low-cost that the DME freeze and AWP provision are not paying for the rural home health add-on, but for all the hospital relief," Howard claims.

Opposition from oncologists and other cancer-related groups will boost providers' efforts to oppose the drug payment reduction.

The rural add-on's chance of success may be increased by its inclusion in the tax bill rather than the comprehensive Medicare bill planned for after the Memorial Day recess. In the forthcoming Medicare bill, "there will be many provider types clamoring for relief," Howard predicts, and HHAs' cries for help could get drowned out in the din.

And the likelihood of a Medicare bill, which could include major Medicare reform and a prescription drug benefit, passing both the House and Senate is fairly small, adds Thompson. That means any provisions hitching a ride on the bill would have to find another vehicle to survive.

The larger tax bill also included an amendment proposed by Sen. Collins that would grant an extra $10 billion to state Medicaid programs until Oct. 1, 2004. Support for that amendment, which passed on a 95-3 vote, seems higher than for Grassley's Medicare amendment.

Meanwhile, Medicare Payment Advisory Commission Chair Glenn Hackbarth advocated the imposition of home health copayments in testimony before Congress May 1. Lack of a Medicare copay for home health and lab services encourages overutilization by both patients and providers of those services, MedPAC's Hackbarth said in prepared testimony for the House Ways and Means Health Subcommittee in a hearing on Medicare cost-sharing and Medigap.

Along with DME and drug reductions, lab copays are another way Grassley proposes to pay for Medicare pay increases for rural providers.