Home Health & Hospice Week

Rural HHAs have decreased service areas, research finds.

The Medicare Payment Advisory Commission's advice to Congress to freeze Medicare payment rates for home health agencies is short-sighted and actually could cost the government money.
 
So say industry representatives in response to MedPAC's Jan. 12 vote to recommend a freeze on HHA payments in 2006 (see Eli's HCW, Vol. XIV, No. 2, p. 10). The rate freeze would strip $200 million to $600 million out of HHAs' coffers in 2006, and up to $5 billion over five years, MedPAC staffer Sharon Cheng noted in the meeting.
 
HHAs' wide ranging profit margins point to an unstable payment system - and thus one that money shouldn't be taken out of, argues William Dombi with the National Association for Home Care & Hospice. MedPAC itself noted that 20 percent of HHAs have Medicare profit margins below zero.
 
Visiting nurse associations "provide approximately $223 million in uncompensated care each year, which completely erases their Medicare margins," says Kathy Thompson of the Visiting Nurse Associations of America.
 
"Medicare profits disappear" after taking Medicaid and managed care patients into account, Dombi agrees.
 
"If the Medicare home health benefit is cut, many Medicaid beneficiaries and uninsured patients may not have access to medically necessary home health care," Thompson warns in a release. That "will create a far greater cost to the federal and state governments when they end up in expensive, institutionalized settings."
 
Law- and policy-makers should just look at home health history to see what will happen, suggests attorney Jim Pyles with Powers Pyles Sutter & Verville in Washington, DC. When the feds cut home care spending to the bone under the interim and prospective payment systems, Medicare's spending to other providers shot up to historic highs.
 
"Those patients simply went into the hospital," Pyles insists. Cutting home care rates "caused a major growth in spending," he claims.

Rural Add-On Revisited

While MedPAC didn't come out in favor of extending the 5 percent rural add-on, the commission also didn't specify that it wanted the add-on eliminated, Dombi points out. NAHC views MedPAC's silence on the add-on, along with planned language in its report to Congress on rural difficulties, as a "neutral position," he notes.
 
MedPAC researchers found that rural HHAs are decreasing their service areas - presumably leaving some areas with no home care coverage. "Rural agencies reported serving fewer ZIP code areas on average in 2003," Cheng said in the meeting.
 
"VNAs in the rural areas really depended on the rural add-on to allow them to reach the more distant and costly patients," notes VNAA's Bob Wardwell.
 
Yet rural beneficiaries report better access to care than their urban counterparts, Cheng added. And rural HHAs' costs fell 13 percent, indicating they're trimming expenses to operate under lower payments.
 
But MedPAC's rural agency cost data is hopelessly skewed, Dombi insists. In its calculations of Medicare costs and profits, MedPAC excludes all hospital-based HHA data, he notes.
 
In rural areas, freestanding home care providers are in the minority. "Rural hospital-based agencies are often the only game in town," Dombi points out. "You can't ignore them."
Preparing for Battle

HHAs will have a battle on their hands to fend off rate freezes, rate cuts and/or a copayment in this legislative session, Dombi acknowledges. But due to these problems with MedPAC's information and other issues, it's a battle the industry can win, Dombi declares.
 
HHAs will have to show legislators why use of low-cost home care services is better and smarter than sidelining the home care benefit, Pyles suggests.
 
Meanwhile: MedPAC commissioners expressed their displeasure with the accuracy of the home health PPS case mix system. The advisory body plans a report solely on that subject later this year.