Home Health & Hospice Week

Bigger is generally better when it comes to profit margins.  Would you like your home care business to be swallowed up by a Wal-Mart-like corporation in order to make policy-makers happy? That's what could happen if Medicare favors the providers characterized as "strong" in the General Accounting Office's latest report. In a Feb. 27 report conducted for the House Ways & Means Committee, the GAO says home care providers' inefficiencies -- namely high overhead costs -- have led to home health agency losses under the prospective payment system. In its study of 2001 and 2002 cost report data, the GAO found an average profit margin of 17.2 percent for 2002 for Medicare HHAs. About 20 percent of HHAs had negative margins, two-thirds had margins of more than 10 percent, and 20 percent of HHAs had margins of more than 30 percent, according to the report, "Payments To Most Freestanding Home Health Agencies More Than Covered Their Costs" (GAO-04-359). Those figures are fairly close to profit margin data issued by the Medicare Payment Advisory Commission in its annual report to Congress March 1. MedPAC reported an average profit margin of 16.2 percent in 2001, with a projected 16.8 percent profit margin in 2004. The GAO found both profitable and unprofitable HHAs in all category types it investigated, including rural versus urban and large versus small providers, the report claims. But small providers are hit hard in this type of analysis, protests Bob Wardwell with the Visiting Nurse Associations of America. They must meet "the high costs of achieving a full level of regulatory compliance" with fewer resources and fewer visits to spread the cost over, Wardwell tells Eli. Those burdens include OASIS training and software, coding training, HIPAA privacy and billing measures, and many other duties. Larger HHAs tend to have higher profit margins, MedPAC found in its analysis. It is "particularly distorting" for the GAO to suggest it is agencies' "own fault they are 'weak' because of high overhead costs" that are imposed by the Medicare program, fumes Wardwell, a former high-ranking Centers for Medicare & Medicaid Services official. The report paints HHAs with losses under PPS as inefficient "losers," says William Dombi, vice president for law with the National Association for Home Care and Hospice's Center for Health Care Law. The GAO's analysis implies "we should close up all the small and medium size home health agencies in favor of a few 'big box,' highly efficient, bottom-line oriented, mega agencies that will minimize their overhead by spending the absolute minimum on regulatory compliance, staff training, etc.," Wardwell continues. HHAs that spend money on items that help patients but aren't covered by Medicare, such as home monitoring equipment and care [...]