Home Health & Hospice Week

Cut could push rural providers out of business, reps predict.

The financial picture is bleak for rural home health agencies, and it's only going to get worse now that the 5 percent rural add-on expired March 31.

So say industry representatives from around the nation on the eve of the add-on's sunset. Many states have quite large percentages of their HHAs in rural areas. Even more patients reside in rural areas, notes Melanie Golson with the Home Care Association of Alabama - so if an HHA is in a Metropolitan Statistical Area, it still has to bill the rural rate based on the patient's location.

Many HHAs in rural areas are hospital-based, points out Kimberle Hall with the Nebraska Association of Home and Community Health Agencies. And many agencies in Kansas are based in health departments, notes Linda Lubensky with the Kansas Home Care Association.

Rural agencies' costs are higher than their urban counterparts for a number of reasons, reps note. For one, they tend to be small with no economies of scale. "We all know that a patient census has to achieve a certain, consistent number to cover costs, and that is just not realistic for many of our communities," stresses Casey Blumenthal with the MHA - An Association of Montana Health Care Providers.

Profit margins for rural HHAs are very low or often negative, reps say. For example, Montana's average HHA margin, based on cost report figures calculated by the National Association for Home Care & Hospice, is about negative 11 percent, Blumenthal reports.

"Our rural agencies are already operating in the negative, so the loss of the rural add-on will only impact them more," Hall laments.

And overhead for rural agencies is also high because they have to travel long distances to see patients, says Harvey Zuckerberg with the Michigan Home Health Association. That translates to fewer visits furnished and lower staff productivity.

Many rural HHAs' financial health suffers because they aren't discriminating in accepting patients. They "generally do not turn any patients away, no matter the drain on agency resources," Lubensky observes.

In New York, HHAs are often the sole source of health care in certain communities, says Pat Conole with the Home Care Association of New York State.

Other factors: Wage index decreases in Ken-tucky have compounded rural agencies' financial problems, reports Karen Hinkle with the Kentucky Home Health Association. Rural Kentucky HHAs' index is nearly 3 percent lower in 2005 than 2004, Hinkle tells Eli.

Low Medicaid rates also exacerbate agencies' financial difficulties. For example, Medicaid home care rates in Kentucky have been frozen for four years, Hinkle says. "Right now a number of agencies are considering limiting, if not dropping, some of their Medicaid business just to cut their losses."

And the escalating price of [...]