HCFA releases regional per beneficiary caps
It's not a pretty picture for home health agencies
As expected, the Health Care Financing Administration (HCFA) published in the March 31, 1998, Federal Register (vol. 63, pp. 15,717-15,738) the regional component of the per patient cap as part of the Interim Payment System imposed by the Balanced Budget Act (BBA) of 1997.
Starting with cost reports beginning on or after Oct. 1, 1997, home health agencies will be paid the lower of actual costs, per visit cost caps set at 105% of the median, or an agency specific per beneficiary cap. The per beneficiary cap is based 75% on 98% of an agency's cost per patient in its cost reporting period ending in fiscal year 1994, and 25% on 98% of the census region average cost. (See box at left for regional caps.)
HCFA also issued the per beneficiary caps for newer agencies, i.e., those without a 12-month cost reporting period ending in federal fiscal year 1994. Newer agencies will have a per patient cap of $3,357 that has no regional or agency-specific component.
HCFA estimates that 35% of home health agencies will be paid using the cost limit method, while 8% will get paid actual costs. That leaves about 57% to be paid according to the per beneficiary limits.
And as experts have been saying for months, home health agencies are expected to exceed the limits. For example, HCFA projects the per beneficiary limits will force 66% of freestanding agencies and 42% of hospital-based providers over the limits.
The regional projects are even worse. In New England, for instance, HCFA predicts that 85% of old agencies will exceed the limits, as will 71% of agencies in the Mid-Atlantic region. The average percentage of costs above the limits range from 4.4% to 16.6%. (See chart, p. 76.)
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