Stabbed in the back? The AHA supports Medicare home health benefit shift
Part A solvency is at risk; so are hospital-affiliated agencies
Just because your home health agency happens to be hospital-based, don’t assume the American Hospital Association is watching your back at least when it comes to President Clinton’s proposal to save the Medicare Part A Trust Fund. On that issue, you’re being tossed right in there with the rest of the home care industry, which the AHA is asking to endorse the administration’s proposal to shift $55 billion in home health benefits from Medicare Part A to Part B.
In addition to home health, Medicare Part A covers hospital inpatient and skilled-nursing facility charges, while Part B covers outpatient charges, including doctors’ fees.
Part A is funded by a 2.9% payroll tax shared equally by workers and employers. Part B receives 75% of its funding from general tax revenue and 25% from beneficiary premiums. The proposal, now part of the budget accord Congress and the president reached in May, also reduces Part A home health coverage to 100 visits after a three-day hospitalization. All other home health services would be shifted to Part B.
The AHA not only endorses the proposal as a means to extend the solvency of Part A through the year 2001, the date the Congressional Budget Office and the administration say the Trust Fund will go broke; it also has warned its membership that unless home health payments are moved to Part B, hospitals could lose upward of $80 billion in Medicare payments if provider cuts are the only means used to bring program spending under control.
In a letter to its constituency urging support for the president’s proposal, the AHA defends its position, saying, "Recent data from the Urban Institute and HCFA (Health Care Financing Administration) show that the percentage of beneficiaries receiving more than 100 home health visits increased from 12% in 1988 to 19.3% in 1994. By 1994, two-thirds of all visits were provided to beneficiaries who received more than 100 visits. This has dramatically increased spending for these services. Over the last decade, annual Medicare expenditures for home care on average have grown more than twice as fast as overall program growth 22.8% vs. 9.8%."
The growth in home health has been borne almost entirely by the Part A Trust Fund, without any adjustments to reflect these greatly increased costs, the AHA says.
"If you don’t shift the home health benefit to ease the pressure on Part A, clearly there are going to be Draconian cuts on hospitals," says Scott E. Malan, federal lobbyist for the Hospital and Healthsystem Association of Pennsylvania, which supports the AHA. "Home health agencies must share responsibility for long-term solvency. I don’t want it to all fall only on doctors, or home health care, or hospitals."
Hospital Home Health tried to reach Carmela Coyle, vice president for policy development at the AHA, but voice mail messages were not returned by press time.
Along with the home health shift, the administration is recommending Medicare reductions of about $100 billion in spending over 5 years, with the bulk coming from provider cuts. If the shift isn’t made, the administration and the AHA say, an additional $55 billion in reductions would be needed to extend the life of Medicare Part A.
But opponents, like the National Association for Home Care, say the shift will increase the tax burden on middle-income families and raise costs to Medicare beneficiaries. The size of the tax burden would continue to rise over the years, the industry trade group predicts, adding that if Medicare beneficiaries were required to contribute to the costs of home care transferred to Part B, premiums could rise by nearly 20%. That equals an increase of $8.50 per month in 1998, rising to $11 a month by 2002. The Part B monthly premium in 1997 is already $43.80.
Proposal called accounting shenanigans’
NAHC says home care already is subject to a level of cuts disproportionate to its share of Medicare. Home health, NAHC says, accounts for 9.6% of total Medicare outlays, but would sustain 13% of the cuts requested by the President in his fiscal 1998 budget submitted to Congress in February. In contrast, skilled nursing now accounts for 6% of total Medicare outlays, but would sustain 7% of the cuts.
Other foes, like Charles L. Schultze, former chairman of the Council of Economic Advisors, say the home health care proposal is "accounting shenanigans."
"It doesn’t save the government any money. It doesn’t save any money for the Medicare program," Schultze told The New York Times in January.
Another fear is that should the plan win approval, it will force copayments on home care beneficiaries.
"If the shift to Part B is made, there will be co-pays within a year," says Susan Navish, the regional director of home health at South Hills Health System in Homestead, PA. "Most people cannot afford 20% of a visit cost. Obviously, it’s the sicker patients who need home health, and they will have to co-pay for each visit. If you have two weeks of visits, 14, 16, 18 visits, they won’t pay and won’t use Part B."
Navish predicts those patients will only get sicker and end up back in the hospital, where care is more costly.
Ann B. Howard, executive director of the American Federation of Home Health Agencies in Silver Spring, MD, says the shift from Part A to Part B makes some sense for hospitals, that is. "I don’t think it’s in the best interest of patients, it’s not good public policy, and it doesn’t make sense for the Medicare program. It will enable hospitals and nursing homes to take less of a cut, but if you shift patients out [of Part A] who haven’t had prior hospitalization, you make home health a sitting duck for co-pays."
Yet, no one argues that Medicare isn’t in dire financial straits. According to the U.S. House of Representatives Ways and Means Committee, in 1995 Medicare Part A paid more out to beneficiaries than it received in taxes. Income was reported at $114.8 billion, while outlays reached $114.9 billion. Medicare trustees project the fund’s shortfall to hit $53 billion by the end of 2001. If left unchecked, the shortfall would rise to $407.8 billion by the end of calendar year 2005. The program, arguably the most popular legacy of the Great Society, is running out of money, and Congress is running out of time to come up with a solution.
Shift intended to buy time
The AHA and the administration concede that shifting home health payments to Part B won’t balance the budget, nor can it alone save Medicare. But it will buy time for long-term changes to be considered by delaying the Fund’s depletion, according to Medicare Trustee Marilyn Moon. In an article she wrote for The Washington Post in February, Moon stated, "Opponents to the shift point out that it does not help balance the federal budget. But that is not why it is being proposed. Indeed, if the only allowable solutions to the trust-fund problem that Medicare faces are cuts in spending, then we are in danger of having the cure of saving’ the trust fund kill the patient."
But Moon also warns that the shift does not contribute to overall savings for Medicare. She says the home care shift must accompany other changes, such as adopting a Prospective Payment System, reducing the level of payments for hospital care to levels in line with discounts negotiated by private insurers, and improving the managed care option by reforming how Medicare establishes premiums while encouraging further enrollment.
Like it or not, Malan says, "there are going to be significant changes to both hospital-based and independent home care providers in the form of reductions in cost limits, elimination of the period interim payments, requirements that reimbursement be on where the service is delivered and not where the business office is based, and PPS."
And if the administration and the AHA get their way in the end, a shift in the home health benefit will head the list of changes.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content