Between a rock and a hard place: Congress pins home care with cutbacks
Shift from Part A to Part B seems certain as bill winds its way to president
As Congress hammered out details of the current federal spending plan, which will radically change the Medicare home health benefit, House Budget Committee Chairman John Kasich (R-OH) boasted, "The Berlin Wall of big government is going to fall. It’s no longer rhetoric; it’s reality."
However, the Congressman failed to mention that big chunks of the wall are going to fall on the home health care industry, affecting both hospital-affiliated and freestanding providers alike.
As this issue of Hospital Home Health went to press, the House of Representatives and the Senate had approved separate versions of the landmark budget legislation, intended to balance the federal budget in five years. According to news reports, the budget proposal would reduce the federal deficit by $204 billion over the next five years, including $115 billion in Medicare cuts.
The vote in the House was 270-162. The Senate passed the bill 73-27. The bills included provisions from three proposals that passed through two House committees Ways and Means and Commerce and the Senate Finance Committee.
"All represent an unprecedented assault on home care providers and beneficiaries," says Ann Howard, executive director of the American Federation of Home Health Agencies. "Congress has rejected a home health industry-initiated Prospective Payment System [HR 4229] in favor of the administration’s punitive approach."
Howard explains that the Health Care Financing Administration "claims it cannot implement this PPS proposal, and therefore the Congressional Budget Office could not score it for savings. Without a score, Congress would not include it." (See related story, p. 91.)
The next stop in the legislation’s journey through Congress will be a conference committee, where differences in the House and Senate proposals will be resolved before a final vote. Washington sources tell HHH that conference committee members had not been selected at press time, and it is anybody’s guess when a bill will reach the president’s desk.
"It appears that Congress is in a hurry-up mode," observes Robert Raible, spokesman for the American Federation of Home Health Agencies in Silver Spring, MD, who says the package likely will remain largely intact. According to Raible, some pieces of the legislation could change, but "the home care industry shouldn’t be too hopeful" that any substantive changes will take place, he warns.
Home health cuts sharply disproportionate’
The Senate Finance Committee approved $20 billion in cuts to the Medicare home health program, which is $5 billion more than the House authorized. The House packages contain approximately $15 billion in cuts, or 13% of total Medicare savings ($115 billion). The Senate package equals 17% of the total savings proposal. According to the National Association for Home Care (NAHC), the figures are "sharply disproportionate" to home health’s 9.7% share of Medicare payments.
The Senate also proposed a $5 co-pay for Part B home services, which would be payable on a monthly basis, capped at an amount equal to the annual hospital deductible ($760). This would account for nearly $5 billion of the total $20 billion home health cuts, the Senate proposal says. The House proposals had no such provision, and it is uncertain if co-pays will be included in any final bill.
Sen. Ted Kennedy (D-MA) has voiced opposition to the $5 co-pay, but his proposal to strike it from the bill was tabled.
The House and Senate committees voted to set Part B premiums permanently at 25% of program costs, including the costs of home health visits transferred from Part A to Part B. However, unlike the House committees, Finance would impose higher premiums under Part B for people whose annual incomes exceed $50,000 and for couples with incomes exceeding $75,000. The Senate voted to increase the eligibility age for Medicare from age 65 to 67.
HCFA to study definition of homebound
About the only silver in the congressional cloud now descending on the home health industry is that industry advocates were able to get the new definition of "homebound" dropped from the final House Ways and Means and Senate proposals. The administration had wanted to redefine the requirement, but instead agreed to direct HCFA to study the criteria and methods used in determining homebound status.
Following is a capsule report of the major home health provisions included in all versions of the Medicare proposal:
• Shift of home health benefit from Part A of Medicare to Part B. The first 100 visits after a three-day hospital stay would be covered under Part A. All other visits would be transferred to Part B. The Senate Finance Committee proposal would phase in the shift over a period of seven years.
NAHC says it was successful in persuading both the House and Senate committees to allow Part A fiscal intermediaries to continue processing claims for all home care visits under both Parts A and B. The committees also provided that Part A appeal rights would apply in all home care visits.
• Changes in reimbursement, including a Prospective Payment System (PPS). Like the House, the Senate voted to implement an interim payment plan for home health services for fiscal years 1998-99 that combines reduced cost limits for visits with an agency-specific annual limit per beneficiary, calculated from the agency’s cost reporting period starting in 1994. Beginning Oct. 1, 1997, hospital-affiliated and other home care providers would be paid the lesser of the following three amounts: their actual, allowable per visit cost; 105% of the national median; or the agency-specific per beneficiary annual limit calculated from 1994 reasonable costs, including non-routine medical supplies, updated by the home health market basket index.
Cost limits will reflect no increase in cost of providing home health services for cost reporting periods beginning on or after July 1, 1994, and before July 1, 1996.
A PPS would be implemented by Oct. 1, 1999. This is the system developed by the Department of Health and Human Services. The proposal does not define a reimbursement system, other than to say it must consider an appropriate unit of service and number of visits with potential changes in the mix of services provided. It would result in a 15% reduction in cost limits and per beneficiary limits that would have been made if the PPS were not imposed. Periodic interim payments would be eliminated Oct. 1, 1999, with the implementation of PPS.
• Payments would be based on the location where the home health service is furnished, rather than where the billing office is located.
• Part-time/intermittent proposal dropped. The administration’s proposal to clarify the intermittent standards for the home care benefit was deleted by the House committees and rewritten to conform to current regulation. The Senate’s version also conformed to current regulatory practice.
• Venipuncture. The House Ways and Means Committee’s proposal denied home health benefits to patients needing only venipuncture, but the Senate Finance Committee did not include it in its budget package.
• Normative standards. The House and Senate included provisions to allow HCFA to establish "normative standards" for home care visits.
• Hospice benefit changes. All proposals would allow hospices to contract for physician services; 90-day hospice periods, followed by unlimited 60-day periods with doctor certification; greater flexibility for the time of physician certification; greater flexibility in services; and would establish waiver of liability for people are not terminally ill.
• Home health, DME, and other providers would be required to post surety bonds of at least $50,000 and disclose ownership interests. By requiring surety bonds, the government hopes to prevent fly-by-night operators from getting into home health care.
No matter what details are included in the final bill the president will likely sign later this summer, it is clear home health providers will have to make major adjustments in the future. Hospital Home Health will keep you informed as changes develop. In the meantime, watch out for falling rock.
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