Home Health & Hospice Week

The effort to win more Medicare reimbursement for home health agencies has received a strong shot in the arm from new study findings. The average profit margin for Medicare-certified agencies under PPS (from October 2000 to June 2002) has been 7.12 percent, say results from a study of 6,424 HHA cost reports under the prospective payment system. That's compared to the staggering 21.9 percent profit margin the Medicare Payment Advisory Commission claimed for 2001 in its March report to Congress this year. The National Association for Home Care & Hospice conducted the study and had it verified by Muse and Associates. NAHC's study replicates the MedPAC study but uses a much larger sample size, says Muse, a Washington, DC health policy firm that provides cost estimates and analysis. More than 30 percent of HHAs had a Medicare profit margin of zero or a Medicare loss in the 2001-2002 fiscal year, NAHC discovered in its cost report analysis. Taking the 15 percent cut and the elimination of the 10 percent rural add-on into account, NAHC expects 37 percent of providers to break even or see a loss on Medicare in 2003. Average Profit Margins - A 10 Percent Loss

The average margin for rural agencies in 2003 will be a loss, at negative 10.36 percent, NAHC says. For all HHAs, the margin will be a slight 0.25 percent. HHAs averaged a 5.15 percent profit margin overall on their most recent single cost reports, NAHC says. NAHC's findings vary drastically from MedPAC's findings for a number of reasons, the trade association explains. For one, NAHC's sample size was significantly greater - more than 6,000 versus more than 600. And MedPAC excluded hospital-based agencies' reports and many New England-based providers' reports from its analysis. NAHC's cost report data also was more recent than MedPAC's. However, the more recent cost reports the association used also were unaudited and lacked partial episode payment (PEP) adjustments. The industry hopes once legislators see HHAs' true profit numbers, they'll quit eyeing agencies as fat cats deserving of reimbursement reductions to fund a prescription drug plan this year. The negative 10 percent margin "provides agencies with a strong case for restoration of the rural add-on at 10 percent, not just the 5 percent level," insists Susan Young with the Home Care Association of New Hampshire. The findings are causing a stir among congressional leadership, says NAHC's William Dombi. And they're "recharging some of our supporters," he tells Eli. But how it will affect home care-related legislation in the long run remains to be seen (see "Legislation:  See Your Future in Current Legislation"). "We are still in the middle of the game and it's too early to gauge the outcome," Dombi [...]