Medicare Compliance & Reimbursement

Home care providers' efforts to secure reimbursement relief from Congress may have taken a hit when the Medicare trustees released 2002 spending figures for the industry.

Home health agency spending grew 24 percent, durable medical equipment spending shot up 20 percent and, more specifically, motorized wheelchair spending jumped 28 percent over 2001 figures, Centers for Medicare & Medicaid Services chief Tom Scully said at a March 17 Open Door Forum for home health. Scully cited the 2003 Medicare trustees' report, released that day, which analyzes the solvency of the program's trust funds.

The implication was that the dramatic growth justified the Bush Administration's opposition to legislation granting HHAs relief from the 15 percent cut implemented last October and the expiration of the 10 percent rural add-on set for April 1. And the data guarantees even more scrutiny to suppliers' claims, especially for power wheelchairs.

Members of Congress listening only to Scully's comments and claims from the Medicare Payment Advisory Commission that agencies saw 21.9 percent profit margins in 2001 are bound to agree with House Ways and Means Committee Chairman Bill Thomas (R-CA) that HHAs don't need reimbursement help, worries Bob Wardwell with the Visiting Nurse Associations of America. However, neither of those numbers "square with reality," Wardwell insists.

In fact, the 24 percent HHA growth figure Scully cited for this year is only part of the story, argues William Dombi, vice president for law with the National Association for Home Care and Hospice's Center for Healthcare Law. That spending increase is for Medicare's Part B trust fund, and is counteracted by a similar decrease in Part A spending as the Medicare program shifts its home health outlays between the two trust funds. The Balanced Budget Act of 1997 required the shift over six years.

In other words, home health spending growth is probably negligible, and must be figured by considering both the home health Part A decreases and the Part B increases, Dombi explains.

The trustees' report notes that they expect only a slight increase in HHA payments in 2003 and merely "modest" increases in the years after that. And the report cites the Part A-to-Part B switch numerous times.

With the confusion cleared up, NAHC hopes Scully will issue a statement clarifying the growth numbers and minimizing the damage to the industry's legislative efforts.

DME suppliers have little hope for any absolution from Scully, who chastised the industry for the wheelchair growth during the forum. However, Scully stopped short of promising rate cuts using CMS' inherent reasonableness authority.

IR works better as a deterrent than a rate-setting tool, he said. People likely to charge inherently unreasonable prices won't do it for fear of IR cuts. Besides, the excessive spending growth results more from volume of services than rates set for those services, he added.

Although Scully called himself "a fan" of IR, nothing currently is in the pipeline for IR cuts, he promised.

Even if Scully backtracks on the HHA spending stats, MedPAC's profit margin numbers are still the most damaging to agencies' efforts to win reimbursement increases, observers say. And those numbers just don't add up to VNAA members' experiences, insists Wardwell. A VNAA rep testified before Congress earlier this month that VNAAs' Medicare profit margins were at about 8 percent before the rate cut in October, and are now 3 percent or lower.

To combat the damage and set the record straight, NAHC has undertaken a mammoth project to see if it can prove MedPAC's stats wrong. The association is obtaining cost report data from the four regional home health intermediaries and plans to analyze the data far more specifically than Med-PAC did, Dombi says. Also, the study will include more up-to-date data and won't give more weight to larger HHAs, which often have higher profit margins, as MedPAC's analysis did.

NAHC hopes to generate a much more comprehensive picture of agencies' profit margins, showing the wide ranges and geographic specifics, says Dombi.