Medicare Compliance & Reimbursement

Agencies risk losing staff to eroding compensation, hope for IRS to step in.

The return of high gas prices is hitting home health agencies where it hurts--square in the wallet.

At press time, the average U.S. gas price was $2.92 per gallon, reports Web site gasbuddy.com. The previous month, the average price was $2.57 and a year ago it was $2.20.

Experts predict high gas prices will persist throughout the summer, despite President Bush's recent attempts to address the problem.

As they did last summer and fall after Hurricane Katrina, home care providers are feeling the budgetary pinch due to soaring gas prices, notes Gayla Sasser with the Tennessee Association for Home Care.

"Agencies in Virginia are going to begin to hear from unhappy employees each time they visit the pump," warns Marcia Tetterton with the Virginia Association for Home Care.

While fuel costs are increasing for HHAs and their employees, payers are not increasing payment levels accordingly, points out Karen Hinkle with the Kentucky Home Health Association.

Providers are already suffering because of this year's Medicare payment rate freeze enacted in the Deficit Reduction Act, notes consultant Jim Hamilton with David-James in Baltimore. 

"Any added costs are greatly imposing on the bottom line," Hamilton says.

Beware Staff Exodus

While the financial hardships are difficult, the worst result home care providers may see from increasing gas prices is staffing difficulties, warns Melanie Golson with the Home Care Association of Alabama.

Staff will leave home health to return to inpatient settings "that do not require so much wear and tear on their automobiles or stops at the gas pump," Golson predicts. That could create "a huge staffing problem, which will obviously turn into a big access problem" for patients, she worries.

HHAs hit hardest by the soaring gas prices are those with large service areas and low patient volume--in other words, rural agencies, notes consultant Betty Gordon with Simione Consultants in Westborough, MA.

In rural areas like Alabama, "there is sometimes nothing you can do about how long it takes to get to some patients," Golson laments.

Higher fuel costs are eating up any gains made with the 5-percent rural add-on, says Dan Hull with the Utah Association for Home Care. Gas prices tend to be higher in rural areas as compared to metro ones, compounding the problem, Hull tells Eli.

In Colorado, "many of our rural agencies had actual decreases in reimbursement since [the] Deficit Reduction Act," adds Ellen Caruso with the Home Care Association of Colorado. "When you apply the new regional fee schedule and the market basket freeze ... many agencies come out with lower reimbursement than last year."

Providers Watch IRS Rate

With gas prices skyrocketing once more, the Internal Revenue Service might raise its mileage reimbursement allowance again, Tetterton notes. The IRS temporarily raised its rate to 48.5 cents per mile last September when gas topped $3 per gallon. The IRS brought the rate back down to 44.5 cents per mile in January.

But changing the IRS-allowable rate might not make much difference in how much HHAs pay. Many agencies already don't reimburse up to the IRS limit.

Some agencies in Montana and Ohio reimburse as low as 30 cents per mile, reports Casey Blumenthal with MHA...An Association of Montana Healthcare Providers and Kathleen Anderson with the Ohio Council for Home Care.

Kentucky agencies often reimburse around 40 to 41 cents per mile, Hinkle notes. And Hamilton's clients range from reimbursing 37 cents up to the IRS limit, he says. Some providers don't reimburse for mileage at all, Hamilton adds.

"No matter what the reimbursement level is, staff are complaining," Anderson says. "No one is happy."

Many HHAs think the current IRS rate already is sufficient, points out consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. That's because agencies long paid below the IRS rate and received few complaints, Boyd says.

Also, employees can itemize car expenses on their tax returns and claim any costs in excess of the employer reimbursement, Boyd reminds. Finally, employees who drive older, cheaper cars "actually seem to make money on the reimbursement rate" in employers' eyes, he notes.

When the IRS raises the mileage rate but payers don't increase their rates, "where are we going to get the money to pay for it?" Gordon asks.