Medicare Compliance & Reimbursement

How the elections may determine the fate of home care.

Home health agencies (HHAs) shouldn't count on the 2007 increase to their reimbursement from Medicare just yet.

Rates are slated to jump 3.3 percent starting Jan. 1, 2007, the Centers for Medicare & Medicaid Services (CMS) announced Nov. 1. But legislation could take away that increase--and then some.

Physicians are facing a 5-percent Medicare cut this year if Congress doesn't pass legislation to stave off the reduction. That means that like last year, legislators could raid home care funding to pay for a physician fix.

But this year's federal elections may mix up that scenario. Here's what you may expect depending on the elections' outcomes:

If Republicans keep the majority in the House and Senate: Right now lawmakers are in recess for elections and will come back to finish up appropriations bills for fiscal year 2007 in a lame duck session afterward. If Republicans stay in power, home care providers can expect to see Medicare provisions wrapped up in a budget bill during that session, experts predict.

Because legislators are likely to pass a six-month or one-year fix for the physician cuts, home care funding is a prime target for cuts, notes one industry lobbyist who requested anonymity.

"Home health is once again at risk as an offsetting cut, as happened with the Deficit Reduction Act of 2005," warns the American Association for Homecare (AAH) in a message to members. If that happens, the freeze is likely to occur over multiple years, AAH's Ann Howard tells Eli.

If Democrats win the majority in the House or Senate: If Democrats gain control of one or both houses of Congress, lawmakers are likely merely to fund the government at current levels through next spring and let the incoming elected officials work out the harder details, experts predict.

That would mean HHAs would keep their Medicare reimbursement increase for now. "Personally, I'm hoping for gridlock," one insider says.

But larger Medicare restructuring could come at the beginning of the session next year. Big Medicare program changes could mean "drastic cuts" for HHAs and other providers, warns attorney and lobbyist Jim Pyles with Powers Pyles Sutter & Verville in Washington, DC. That's especially true with a Medicare trust fund solvency warning expected from the Medicare Trustees this year. "It's one of the most serious threats that we have facing home care providers today," Pyles warns.

On the other hand, a new power structure in Congress may take a fresh look at the Medicare big picture and fund the most cost-saving provider setting, which is home care that keeps patients out of costly institutions, Pyles points out. "We definitely need a change in the way health policy is approached."

And Democrats may be more likely to pay for the physician fix from Medicare's managed care Part C benefit rather than home care, Howard says.

When Congress reconvenes for the lame duck session, Rep. Sue Kelly (R-NY), who has lost her seat in the House, planned to introduce a House resolution saying HHAs should receive their full market basket inflation update in 2007 and subsequent years. But now that legislation is up in the air.

Oxygen, Bidding At Stake

Congressional inaction wouldn't bode well for legislative issues pursued by home medical equipment suppliers, however. Suppliers are looking for improvements on oxygen reimbursement and competitive bidding, Howard points out.

But the oxygen capped rental period may get slashed from 36 months to 13 months if Medicare provisions do get included in a budget bill in the lame duck session, she acknowledges.

With many races hotly contested, election results may be disputed and the outcomes--and therefore the Congressional majority--not known for weeks, Howard cautions.