Home Health & Hospice Week

CMS drops regulation requiring public disclosure of hospitals' HHA referral stats.

The bitter argument over hospitals steering patients to their own home health agencies looks like it will continue unabated.

The Centers for Medicare & Medicaid Services has dropped the regulation that would require collection and public disclosure of hospitals' referrals to their own HHAs. CMS originally proposed the rule in November 2002, but decided it isn't "in the public interest" to pursue it as a final rule, a CMS official said in the November Open Door Forum for home care providers.

CMS made the decision after commenters said Medicare's current hospital discharge data "doesn't necessarily represent actual referral information from discharge plans." Commenters also protested that outdated data and a lack of context for it would lead to "inaccurate perceptions of patient steering."

The cost of developing additional, presumably more relevant, referral data was "higher than expected," the CMS staffer said in the forum.

CMS says it plans to work with Congress on "reconsideration" of the requirement originally included in the Balanced Budget Act of 1997. And "we will also consider an alternate means of preventing patient steering such as a more forceful complaint process with more stringent penalties," the official said.

One of Home Care's Most Divisive Issues

On one hand: Congress originally passed the provision in response to freestanding HHAs' longstanding concern that hospitals keep all the best patients for themselves by illegally steering them to their own agencies. "We have seen hospitals referring the 'losers' to other agencies while keeping the 'winners,'" criticizes consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, CA.

Many freestanding agencies "believe that every referral not nailed down is going to the hospital's program," observes Gene Tischer with Associated Home Health Industries of Florida, a state trade group.

On the other hand: Hospital-based agencies, however, argue that they are often obligated to take all patients, even unprofitable ones, while freestanding agencies can pick and choose whom to admit.

"Hospital-related agencies believe that so long as they follow the letter of the law by giving patients a list of competing agencies, it is perfectly legal to let convenience and proximity result in most patients being referred to their own [HHA]," explains Bob Wardwell with the Visiting Nurse Associations of America.

Powerful Hospital Lobby Holds Sway

CMS dropping the often-delayed regulation is no surprise, says consultant Rick Ingber with Vanta-Health Consulting in Jenkintown, PA. The powerful hospital industry lobbying against the measure played a major role.

CMS' budgetary limitations was another big reason, notes Wardwell, a former CMS top official.

"CMS, despite their public belief in Home Health Compare and P4P, think that there are no differences between HHAs," Boyd claims. "As it is not seen as a patient endangerment issue, they do not care about it."

The withdrawal of the reg is disappointing because "this data would set to rest the controversy between hospital-based programs and freestanding home health agencies," Tischer says. "The transparency this data report would provide would be very beneficial to all certified HHAs."

Dropping the reg will prove detrimental to freestanding agencies, insists Pam Warmack, consultant with Ruston, LA-based Clinic Connections. "The public reporting by hospitals would have enabled freestanding agencies to monitor referral practices and engage in conversations when referral practices were unbalanced and unfair," Warmack predicts.

CMS really should care more about patient steering because it does impact patient care, Boyd maintains. Hospital-based agencies that dominate a market may force the closure of freestanding HHAs that have wider service areas and cater to different types of patients, he cautions.

And tacitly allowing patient steering can lead to fraud and abuse violations, Boyd argues. "With the hospital keeping the referrals to themselves or only giving them to their favorite HHA, some of the HHAs find themselves resorting to paying for referrals, doing free discharge planning for the hospitals ... and engaging in other illegal practices," he contends. "The number of HHAs is increasing and if the pool of possible referral sources is restricted ... it causes competitive tension and breeds unfair and illegal practices."

Use Other Tools To Combat Patient Steering

The public release of hospital referral data probably wouldn't make much of a different in referral practices anyway, maintains Richard Block, the CEO of Woodinville, WA-based Assured Home Health & Hospice. In 2004, Assured successfully settled a lawsuit with a referring hospital over patient steering (see Eli's HCW, Vol. XIII, No).

Block urges HHAs to stand up to hospitals that break the law. "Protecting our patients from losing their freedom to choose any healthcare provider is something we should all do as a matter of course," he tells Eli.

Block lauds recent CMS and HHS Office of Inspector General guidance prohibiting patient steering (see Eli's HCW, Vol. XIV, No. 7, p. 52) and notes that state surveyors have gotten better at enforcing referral rules as well.

Stay tuned: Wardwell expects agencies to pursue this issue legislatively, and CMS may have to answer to the provision's original sponsor, Rep. Fortney Pete Stark (D-CA), for "walk[ing] away from this legislative mandate" eight years after it was passed.