Home Health & Hospice Week

Home health agencies are gearing up to mobilize against a familiar threat to payment rates.

The Medicare Payment Commission is considering a recommendation to freeze HHA Medicare payment rates in 2008, according to the Commission's Dec. 7 meeting.

"Congress should eliminate the update to payments for home health care services for calendar year 2008," said MedPAC staffer Evan Christman. "This would decrease spending relative to current law."

"For beneficiary and provider implications, we don't think there would be a major impact," Christ-man added.

Commissioners will vote on the final recommendation in January. MedPAC then will include the recommendation in its March report to Congress.

Another recommendation for no rate update would be no surprise, notes William Dombi, vice president for law with the National Association for Home Care & Hospice's Center for Health Care Law. MedPAC has recommended a freeze the previous four years. "MedPAC is up to its normal approach," Dombi says.

Commission staffers trotted out the same tired analysis, says Bob Wardwell with the Visiting Nurse Associations of America. "They just took last year's report and updated the statistics," Wardwell tells Eli.

MedPAC Has Congress' Ear

"At the very moment we dodged a bullet for 2007, MedPAC is recommending a freeze for 2008," observes Wardwell, a former top Centers for Medicare & Medicaid Services official.

MedPAC has a significant influence on Con-gress, especially when lawmakers are looking to make cuts in Medicare spending. That's likely to happen again in 2008 as congressional activity could range from restructuring the entire Medicare program to simply eliminating another scheduled physician payment cut.

To justify the freeze, MedPAC looked at data on beneficiary access to home care services, care quality and agency profit margins.

Beneficiary access remains good, staffers maintained. Most zip codes are served by at least one HHA and beneficiaries report relatively few problems accessing care, Christman said in the meeting.

Hospital discharge planners said they were less able to place home care patients--79 percent in 2004 versus 89 percent in 2003. The figure is "still pretty high at 79 percent," Christman noted.

Geographic concentration: More than 1,700 HHAs have entered the program since 2002, but 70 percent of those are in Texas and Florida, MedPAC noted. Forty-one states saw either decreases or increases of less than 10 providers since 2002. Ninety percent of the new agencies are for-profits.

Bottom line: There were 8,385 agencies in 2005, compared to about 10,900 in 1997.

Quality of care appears to be improving, with most quality indicators either increasing or holding steady, MedPAC reported.

Profit Margin Projection Back Up

Medicare profit margins--agencies' main stumbling block to fighting MedPAC's freeze recommendation in Congress--remain a problem. The Commission projected a 16.8 percent average Medicare profit margin for agencies in 2007. That's up from 2005's 16.7 percent and 2006's 12 percent projection.

Agencies' profit margins vary widely, Med-PAC allowed. The top 25 percent of HHAs have margins higher than 27 percent while the bottom 25 percent have margins below 2.3 percent. And hospital-based agencies, which aren't included in the profit margin projects, saw an average margin of -1 percent.

That variation points out a problem with the prospective payment system and the way it distributes reimbursement, Dombi maintains. That argument is one reason HHAs were successful in fighting the freeze to 2007 rates.

"Don't cut rates across the board" to get at those high profit-margin providers, Wardwell exhorts. Fix the flawed payment system instead.

PPS changes ahead: Providers hope the imminent proposed rule refining PPS will take care of some of those inequalities. MedPAC will examine the rule when CMS issues it, Christman noted.

Commissioners don't seem to realize that HHAs rely on their Medicare profit margins to operate, Wardwell laments. That's unlike hospitals and other providers, who can make up Medicare shortfalls with profits on other business lines like commercial insurers.

The HHA patient population is mainly Medi-care-eligible, so providers are stuck with Medicare as a main payor, Wardwell maintains.