Home Health & Hospice Week

Findings for one state's rural home health agencies point to a problem the whole nation's rural providers are experiencing, and the result may be reduced access to home health care. Rural HHAs are financially challenged under the prospective payment system, say two new studies from the Pennsylvania Office of Rural Health and the University of Pittsburgh Center for Rural Health Practice. And those findings probably can "be generalized to rural agencies throughout the United States," says a report on the studies. Rural agencies across the nation are subject to the same Medicare rules and so suffer the same financial constraints, says Michael Meit, director of the Center for Rural Health Practice. At first, rural agencies in Pennsylvania fared well under PPS, found the studies, which examined financial data from 10 rural HHAs and surveyed agencies statewide. From October 2000 to June 2002, rural agencies in the state saw Medicare margins of about 23 percent. But after the reimbursement cut in October 2002 those margins shrank to 16.6 percent, and after the elimination of the 10 percent rural add-on in April 2003, the margins decreased to only 6.6 percent, says the report. Rural agencies "were hit by a double whammy" with those two reimbursement cuts, notes consultant Rick Ingber with ZA Consulting in Jenkintown, PA. And agencies in other rural areas might have even received a third hit, with decreased wage indices for 2003. Pennsylvania's index increased slightly in 2003. The two successive cuts are hurting rural agencies' bottom lines, Meit warns. Such financial burdens threaten to tear apart the continuum of care available to rural beneficiaries. Before the cuts, Medicare reimbursement didn't fully cover costs for two out of the 10 most frequent home health resource groups (HHRGs), the report notes. But after the two cuts, seven of the 10 most frequent HHRGs are under-reimbursed for rural HHAs, it claims. Rural providers have major costs tied into the time it takes visiting staff to reach patients' homes, notes consultant Barb Gingerich with York, PA-based HCMR Advantage HCMR Consultants. And in rural Pennsylvania, road conditions in the winter create even longer travel times for visits, resulting in further decreased productivity for staff, Gingerich points out. Rural agencies also suffer from a lack of volume over which to spread their overhead costs, Ingber says. "A smaller agency means a smaller population base."

Under cost-based reimbursement, rural providers could pass those higher overhead costs onto the Medicare program, Ingber recalls. But under PPS, HHAs have to wrestle with high overhead under PPS payment limits. And rural HHAs don't have the luxury of hiring staff at rock-bottom prices, Meit insists. They often have to pay competitive salaries to keep staff from making the commute [...]