Home Health & Hospice Week

Knowing your costs is half the battle Home health agencies are bracing for a tougher year ahead, thanks to the relatively flat Med-icare reimbursement rates announced for 2009. The Centers for Medicare & Medicaid Services is increasing HHA rates by a tiny 0.15 percent next year, due to the case mix creep cut virtually wiping out the inflation update (see Eli's HCW, Vol. XVII, No. 39, p. 306). Agencies that are clients of reimbursement consultant Bobby Dusek in Abilene, Texas will see their gross profits decrease about 5 to 6 percent in 2009, he estimates. "Once again many HHAs will have to find means to cut costs," warns consultant Tom Boyd with Rohnert Park, Calif.-based Boyd & Nicholas. Use this advice from financial experts to survive and thrive in the slimmer reimbursement climate ahead: 1. Employee compensation. Worker compensation is most agencies' largest direct cost. Changing employee benefit packages may be one opportunity for reducing expenses, suggests financial consultant Mark Sharp with BKD in Spring-field, Mo. It's not just the compensation amount you should be worried about, adds consultant Pat Laff with Hilton Head Island, S.C.-based Laff Associ-ates. Look carefully at the method of compensation and what it encourages your staff to do. Make sure the financial incentives for clinical personnel as well as supervisors are in line with the payment realities, Laff advises. For example, offering hourly or salaried pay with no bonuses for certain milestones will not encourage staff to change  their ways when it comes to practices that are hurting your bottom line without helping patients. 2. Transportation reimbursement. Lower gas prices, if they continue, will help offset some of the rate cut, Dusek notes. But mileage costs are still a major commitment. How you pay for transportation is another opportunity to reduce costs, Sharp advises. Using geographic scheduling and other tools can help control mileage costs, Laff adds. 3. Staffing and productivity. Unfortun-ately, cutting staff is going to be one way providers have to deal with reduced reimbursement, predicts Bob Wardwell with the Visiting Nurse Associa-tions of America. "Many of our members already have to turn away patients for lack of staff, which really troubles a mission-based organization," says Wardwell, a former top CMS official. "This freeze means more of that." Staff who are retained will have to contribute to the agency's financial health to the best of their ability. Take a hard look at case capacity for clinical personnel, Laff counsels. That will include using productivity standards. 4. Service areas. Along with staff reductions will come service area reductions, Wardwell predicts. Rural agencies, especially non-profits and provider-based ones, will wrestle most with this issue, Boyd expects. 5. Care management. Agencies that have not done so [...]