Advanced Search

Medicare Compliance & Reimbursement

Home Health:

HHA PAYMENT CUT SLATED FOR APRIL

Published on Thu Dec 11, 2003

Medicare bill a mixed bag for HHAs. 

It will take experts months to suss out the recently passed Medicare bill's overall impact on home health agencies, thanks to its 1,000+ pages and hundreds of provisions. But at first blush, the massive piece of legislation has both good and bad news for HHAs.

The Good News:

  • No copay. The industry continues to celebrate its victory over the home health copayment that was proposed this session, and at one point looked inevitable. The bill, which President Bush signed into law Dec. 8, contains no mention of the much-hated proposal.

  • Rural add-on. Although not as much as first proposed by the Senate, the one-year, 5-percent add-on for patients served in rural areas will add to agencies' bottom lines starting in April. Senate Finance Committee Chair Charles Grassley (R-IA) referred to payment increases to rural providers including HHAs as "dramatic improvements."

  • Private-pay OASIS suspension. On the heels of Centers for Medicare & Medicaid Services Administrator Tom Scully's announcement that collection of OASIS data for non-Medicare, non-Medicaid patients was off, Congress passed a provision saying the same thing. The measure will chiefly help those agencies that serve many private-pay patients in addition to Medicare and Medicaid patients.

    The Bad News:

  • Inflation update reduction. As expected, Congress passed a reduction of 0.8 percent to the home health market basket index, the factor used to update rates for inflation. The -0.8 percent factor will take effect in April, when HHAs will see their payment rates cut accordingly, and will continue through 2006. Inflation updates also will be moved from a federal fiscal year basis (starting in October) to a calendar year basis, trade associations report.

    Pennsylvania HHAs told the Wilkes-Barre Times Leader that the cuts in the legislation, estimated at $6.5 billion over 10 years, could force them to restrict services. "They're killing home health," said Debra Popovich, director of Personal Care Home Health Services in Kingston. "It's going to be very difficult."

  • Background checks. "The most onerous components of the Senate-passed criminal background check legislation were eliminated or softened in the final Medicare bill," the Visiting Nurse Associations of America cheers in its summary of the legislation. But the remaining provisions still could cause HHAs headaches.

    Congress approved a three-year demonstration project that will take place in 10 states, requiring home health agencies, hospices, personal care providers, skilled nursing facilities and others to conduct beefed-up background checks on direct care employees. However, the legislation doesn't require HHAs to conduct or pay for the pricey FBI 10-fingerprint check; instead, it "permits" providers to conduct the checks, the VNAA notes.

    It does require providers to reference currently available registries for disqualifying information, however, points out the American Association for Homecare in its legislation summary. The background check wouldn't apply to workers hired by the patients through self-directed care programs.

    Many Demos, Studies Will Impact HHAs 

    The impact of some of the bill's provisions will take years to determine, as demonstration projects play out, studies are conducted and regulations based on the legislation are written. One demonstration that holds promise is an expansion of the homebound criteria for home care patients.

    A two-year demonstration project will begin next year in three states, and could include up to 15,000 beneficiaries with severe and chronic illnesses and disabilities. Patients who meet a list of requirements would be exempt from the homebound requirement to see if utilization and cost of the home care benefit would increase under such changes.

    One of the studies most critical to HHAs may be the Medical Payment Advisory Commission's inquiry into agencies' payment margins under the prospective payment system. MedPAC's assertion in January that agencies' Medicare payments on average were 22 percent higher than their costs was damaging to the industry's credibility when it lobbied for home care-favorable provisions this legislative session.

    Regulatory reforms, including not penalizing providers for following faulty intermediary advice, could help HHAs. But moving the administrative law judges out of the Social Security Administration and into the Department of Health and Human Services could close down that historically favorable avenue of appeals. Language in the bill does require ALJs to remain independent of CMS, however. v

    Editor's Note: A summary of the bill's home care, hospice, infusion and durable medical equipment provisions is available from the VNAA at www.vnaa.org.

    • Other Articles in this issue of

    Medicare Compliance & Reimbursement

    View All