Home Health & Hospice Week

The data that was so instrumental in killing off any chance of improving home health Medicare reimbursement this year officially has been issued to Congress.

"Medicare payments for home health services are more than adequate relative to costs," even after considering the 15 percent cut that took place last October, the Medicare Payment Advisory Commission says in its March 3 report to Congress. The advisory body estimates 2003 Medicare profit margins for home health agencies will be 23.3 percent.

MedPAC characterizes patients' access to home care as "generally good" and says since the startling plummet in the number of Medicare home health users has slowed merely to a steady decline, it must mean payments are fine. From a high of 3.5 million users in 1996, about 2.2 million Medicare beneficiaries now use home health, the report says.

HHAs had a Medicare profit margin of 21.9 percent in 2001, MedPAC says. However, it bases that figure on 2001 cost report data from only 10 percent of Medicare agencies. The 23 percent figure for 2003 is "estimated," the report says.

Industry representatives have blasted those numbers, which proved so damning to HHAs' legislative efforts this year, as being based on assumptions that have little basis in reality.

The MedPAC data "is inaccurate and misleading at best," protested Jim Jaruzewicz, president and CEO of the VNA of Erie County, in a prepared statement for a March 6 Ways and Means Health Subcommittee Hearing on the MedPAC report. The 10 percent sample wasn't random or geographically representative, pointed out Jaruzewicz, testifying on behalf of the Visiting Nurse Associations of America. And hospital-based HHAs were excluded, he added.

MedPAC also says rural HHAs are enjoying even greater profit margins than urban agencies. "For most rural agencies, payments will more than adequately cover costs in 2003," the report insists.

The VNAA says its members were seeing a Medicare profit margin of about 8 percent before last October's cut, and that margin is more like 3 percent now. After costs such as HIPAA compliance and staffing take place, that margin will be closer to zero, Jaruzewicz said in his testimony.

As it voted in January, the commission recommends to Congress to eliminate the 2004 inflation update for home health payments and to extend a 5 percent add-on for rural home health patients. But perhaps since that recommendation contrasted with MedPAC's assurance that rural HHAs' payments are more than generous, Congress failed to pass the rural add-on in recent legislation for the 2003 budget (see Eli's HCW, Vol. XII, No. 7, p. 51).

MedPAC also recommends ongoing studies on Medicare beneficiaries' access to home health services.

And the commission notes that agencies have an incentive to skimp on visits under the prospective payment system, and points to a forthcoming database from the Centers for Medicare & Medicaid Services that will link utilization with patient outcomes. CMS also plans to implement a medical review tool aimed at detecting "stinting."

The MedPAC report's recommendations and the underlying analyses will continue to dog the home health industry as it beseeches Congress to improve Medicare payments for 2004, forecasts Kathy Thompson with the VNAA. "It's an uphill battle," she says.