SBA gives home care industry reason to hope IPS won't be eternal torment
Office of Advocacy speaks out against surety bond regulations
If hope springs eternal, then about the brightest hope the home health industry has had this spring has been provided by the U.S. Small Business Administration (SBA), which has demonstrated a willingness to help providers in their fight against HCFA.
The SBA's Office of Advocacy in April petitioned the Health Care Financing Administration (HCFA) on behalf of the home health industry, challenging the fairness of the surety bond regulations. Then in early May, representatives from three home care trade groups - the National Association for Home Care (NAHC), the American Federation of Home Health Agencies (AFHHA), and the Home Care Association of America (HCAA) - met with the SBA to enlist the Office of Advocacy's help in blocking the Interim Payment System (IPS).
"My belief is that home health has a great friend in the SBA," says Ann Howard, executive director of the AFHHA. Howard, NAHC vice president for law William Dombi, and HCAA governmental affairs director Scott Lara were the representatives who met with the SBA in Washington.
The trio presented their case against the IPS to a group of SBA officials that included Chief Counsel for Advocacy Jere W. Glover and Assistant Chief Counsel Shawne Carter McGibbon, the authors of the SBA's 11-page letter questioning the legality of HCFA's interpolation of the surety bond requirement of the Balanced Budget Act (BBA) of 1997.
(See Hospital Home Health fax bulletin, May 1998. Also see fax bulletin insert in this issue.)
"They told us they would make comments on the Interim Payment System," Howard reports, "and do what they could do within their authority to address this serious problem."
The SBA could not give Howard and her colleagues details of its approach to HCFA on the issue of IPS, but Howard says, "They will comment on those areas where HCFA had the discretion to go one way and instead took the draconian approach."
For example, Howard explains, HCFA is requiring "a per-patient cap for home health agencies that don't have a base year [new agencies]. This is a national cap, not a regional cap."
The cap will mean less Medicare money for many agencies, depending on location. "This cap will have the effect of destabilizing 75% of the home health agencies in Texas," Howard says. That's because agencies in Texas and other parts of the Southwest and Southeast have spent more per patient per visit than some agencies in other areas of the country.
In their petition to change the surety bond regulations, the SBA counsels argued that HCFA had violated portions of the Regulatory Fairness Act and exceeded the intent of Congress and the Balanced Budget Act by requiring home health agencies to cough up 15% of their yearly revenues as the amount of their surety bonds. Many simply cannot afford that much. So far, HCFA has not responded to the SBA petition, the Office of Advocacy says.
Is Congress willing to act now?
Other actions to fight IPS and the surety bond regulations are afoot and home health providers are getting in step. Lawsuits are being filed across the country by providers and trade associations, like NAHC, which has two suits pending, and HCAA, which is seeking an injunction to block the BBA regulation. In Texas, a federal judge set a date for June 8 to hear arguments by home health providers who seek a temporary injunction against implementation of IPS. Similar suits have been filed in Vermont and Oklahoma.
There also have been some bills introduced in Congress that could help home health, such as the Home Health Integrity Preservation Act of 1998 (SB 2031) introduced May 5 by Senators Charles Grassley (R-IA) and John Breaux (D-LA). A provision in the bill would change the home health surety bond requirement to a one-year bond of $25,000 for new home health agencies, as a way to guard against fraud and abuse.
In late April, Sen. Susan Collins (R-ME) introduced the Medicare Home Health Equity Act (SB 1993) in an effort to change the IPS formula for calculating home health agencies per beneficiary caps. Instead of basing the formula on 1994 per beneficiary costs, the bill bases the formula on a blend of national and regional average costs from 1994 and 1995. The calculation would apply to services furnished for cost reporting periods on or after Oct. 1, 1997.
Yet despite the flurry of legislative promise, the fact is that only about two months remain in this session of Congress. This is an election year besides, so legislators are eager to finish early to return to their districts and campaign.
Not only that, in May, Medicare trustees reported that spending reductions of the BBA have extended Medicare's solvency. The Medicare trust fund, from which Medicare Part A payments are made, is now projected to go broke in 2008, seven years later that the estimate made last year.
"This clearly reduces the heat to act," one official with the Medicare Payment Advisory Commission (MedPac) says. So if politicians aren't eager to legislate more Medicare reform, neither are they inclined to change provisions of the BBA they voted for.
An aide to Rep. Pete Stark (D-CA) explains, "There's all sorts of pressure to undo the home care provisions Balanced Budget Act, but that would cost billions. And nobody in home care is volunteering to replace that money. So who's going to pay for it? Medicare?"
But the SBA does not turn with the political winds and thus becomes even more appealing to desperate providers fighting for survival.
Along with the Office of Advocacy, the SBA provides a National Ombudsman, whose Chicago office solicits complaints from small businesses who feel bullied by government agencies. The Ombudsman's office has been holding public hearings across the country to allow small business owners a forum for stating their grievances. (See HHH, May 1998, p. 69.) Hearings comprise a panel of SBA officials, such as National Ombudsman Peter W. Barca and local small business owners. (For a list of Ombudsman meetings and events, see box, above left.)
Home health providers increasingly have been turning out for the hearings. Where only a handful attended hearings earlier this year, at the recent hearing in Tulsa, OK, 14 providers testified, reports Howard. "This is so refreshing. And it's very important that people continue," she says.
"Participants tell us that panel members, mostly area business people, have been amazed and appalled at the problems of the home care agencies. They also report that the panels do not grasp the concept of cost reimbursement," Howard adds.
The home health plight drew the attention of the Tulsa, OK, media. The Tulsa World reported that surety bond and IPS regulations "will ruin as many as 9,450 small businesses; oust as many as 900,000 American workers; and jeopardize the health and lives of the country's elderly people, home health care professionals told the Small Business Regulatory Fairness board at a [May. 1] meeting in Tulsa."
Howard believes as many as 7,000 home health agencies are "in serious jeopardy because of surety bonds and reimbursement cuts. I'm hearing that providers expect a 72.5% reduction in reimbursement [because of IPS], and some expect over 80% reduction. I talked with one provider last week who received $1.5 million from Medicare in 1997, and they anticipate $250,000 this year. I'm hearing that all over the place. It's a disaster, as it was intended to be."
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