Home Health & Hospice Week

Industry growth alarming, congressional advisors imply.

If you're like most home health agencies, outlier patients are a huge drain on your finances. But the Medicare Payment Advisory Commission is worried they could become a cash cow.

"The outlier provision could be manipulated by some agencies," MedPAC staffer Sharon Cheng said in the Nov. 16 meeting of the influential advisory body to Congress. "The fact that agencies max out the number of visits in an outlier episode could suggest that there is an incentive to maximize the number of visits."

 If an HHA's cost to furnish a visit is below the outlier per-visit rate, "agencies could have an incentive to provide the maximum number of visits once they've qualified for an outlier episode," Cheng continued.

 There's one problem with that scenario, home care experts say - the per-visit payment rate for outliers is way below agencies' costs for furnishing the visits.

Suggesting agencies want to manipulate outlier visits "is so absurd as to be ridiculous," scoffs consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. Not a single one of Boyd's clients has a per-visit cost under the outlier payment rate, which is based on the low utilization payment adjustment (LUPA) rate, he says (see 2005 LUPA rates at Eli's HCW, Vol. XIII, No. 38, p. 299).

Outlier per-visit rates "are absolutely nowhere close" to agencies' costs, agrees consultant Pat Laff with Laff Associates in Hilton Head, SC. "Our VNAs have been taking a financial bath on outlier cases," adds Bob Wardwell with the Visiting Nurse Associations of America.

HHAs see no advantage by running up outlier visits, notes consultant M. Aaron Little with BKD in Springfield, MO. "Our typical clients' costs per visit are higher than the LUPA rates, so adding visits for those agencies would mean losing money on the episode," Little notes.

"Every visit [agencies] make would cost them money," Laff stresses. In light of that fact, MedPAC's concern is "paranoia," he contends.

No agency wants outliers, Boyd says. In fact, they go to great lengths to avoid them when clinically appropriate. And agencies lose money on every PPS payment method except the straight-up episode, Boyd notes - LUPAs, outliers, PEPs and SCICs are all losers.

MedPAC is concerned about outliers in part because proprietary agencies record a higher incidence of the cases - 3.3 percent - than other types of agencies, Cheng pointed out in the meeting.

There is so little money tied up in home health outliers that it hardly seems worth MedPAC's time to look at the issue, Little notes. Since outliers make up only 2.6 percent of episodes according to the commission, "it seems like a rather small population of episodes to be 'concerned' about," he says.

"It's a tempest in a teapot," Laff charges. Even with the outlier changes that start Jan. 1, the episodes still will make up a only tiny sliver of the Medicare pie, he notes.

Living Down the Past

One reason this issue has seen the light of day is because HHAs are still trying to shake the reputation for fraud and abuse they earned in mid-1990s, Laff believes.

The newest entrance figures aren't helping matters any. In the past year, 500 new agencies have entered the Medicare program and 100 have left, Cheng reported. The 400 net gain represents a 9 percent increase in the number of agencies. Some of those may be branches that were already in existence, she admitted.

Most of the new entrants are in metropolitan areas like Detroit, Las Vegas and Dallas that already have fierce competition, Boyd notes. Many of these new agencies may be unfamiliar with Medicare marketing rules and are more likely to engage in unethical or illegal marketing activities, which could reflect badly on the whole industry, he worries.

Boyd and Laff both call for states with skyrocketing HHA numbers to adopt certificate of need rules. But more agencies mean more revenues for state survey agencies, Boyd notes. That means states have no incentive to institute CON restrictions.

In the long term, lax gatekeeping on the front end means the home care industry is bound to have a fraud crack-down on the back end, Boyd forecasts.