Home health advocates react to MedPAC’s PPS recommendations
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON In its semi-annual report to Congress last week, the Medicare Payment Advisory Commission (MedPAC) said it generally supports the Health Care Financing Administration’s (HCFA; Baltimore) approach to developing a prospective payment system (PPS) for home health. But the commission also made a series of recommendations intended to improve that system over the long term.
"Although the proposed PPS needs refinement, it represents a substantial improvement over the interim payment system by accounting for case mix," the commission argued in its report delivered to Congress March 1. Home health agencies will be paid a higher rate for patients needing more care, and eligible long term care patients may have unlimited episodes, MedPAC noted.
MedPAC urged HCFA to vigorously monitor behavior under the new system and establish a system that blends fixed-episode payments and per-visit payments. The commission also urged the agency to improve the home health agency wage index and coordinate quality indicators across various post acute care settings.
"There are some positive items in the report, as well as some things I think they left out in their recommendations," said the National Association for Home Care’s (NAHC; Washington) Yvonne Santa Anna. She said one of those positive recommendations was the commission’s suggestion to vigorously monitor home health agency behavior under PPS.
According to MedPAC, prospective payment for home healthcare raises two related problems. The first is how to assure that home health agencies accurately assess beneficiaries’ needs and report case-mix classification assignments. The second is how to monitor services to ensure that beneficiaries are receiving appropriate care, MedPAC said.
The commission argued that because the OASIS assessment will largely determine the episode payment, HCFA must develop a comprehensive plan to ensure the accuracy of reporting. That plan should also include mechanisms to audit providers, according to MedPAC. "Given expected large shifts in payments, some home health agencies will face strong financial incentives to shift Medicare beneficiaries to high-weighted groups to maintain payment levels," the commission asserted.
According to MedPAC, home health agencies will also have the incentives to stint on services in order to reduce costs. "At the same time," the commission added, "the low-episode threshold creates an incentive for home health agencies to provide a few visits more than the threshold to generate payment for an entire episode."
The commission urged HCFA to, in the short term, direct regional home health intermediaries to focus medical reviews on those providers who have many episodes in which the number of visits slightly exceeds the low-use threshold (five or six visits) and also to randomly review selected episodes with visits barely exceeding the threshold to achieve a sentinel effect.
In the future, MedPAC asserted, a blended payment system could address the issue of home health agencies inappropriately maximizing payments or minimizing costs. "Such a system, using a combination of per-visit and fixed-episode payments, could neutralize the financial incentives of both types of payments," the commission concluded.
According to MedPAC, home health agencies have responded strongly to payment incentives in the past and can reasonably be expected to do so under an episode-based PPS as well. To counteract incentives that may negatively affect beneficiary access to care, the commission recommended that HCFA establish a prospective payment that blends fixed-episode payments with per-visit payments, using a standardized rate per visit.
"Although home health agencies would have a greater incentive to add services to increase payment than under a fixed-episode payment, a carefully designed payment system would lessen incentives created by a cost-based system," MedPAC argued.
AFHCP says blending not likely
"We would like to see some kind of blending that would include some historical data," said Ann Howard, executive director of the American Federation of Home Care Providers (AFHCP; Washington). But she said that HCFA is probably not inclined to move in that direction absent congressional pressure. The commission’s report agrees that a blended payment system would likely require a statutory change.
NAHC’s Santa Anna said she was also encouraged that MedPAC pointed out the need to have some normative standards included in the new system. "I think it is important that they recognize that we need clear definitions of eligibility and coverage guidelines." That need has been pointed out in the past, she noted, "but it is important that that message is heard."
She also pointed to MedPAC’s recommendation that the Department of Health and Human Services (Washington) use routinely collected data to refine case-mix weights over time. The commission said case-mix weights should evolve in response to changes in practice patterns and technology that affect the level of resources required to furnish home health services to different types of patients to ensure that those payments are appropriate.
According to the commission, two approaches could be adopted to change the home health resource group (HHRG) weights over time, both relying on standard administrative data to recalibrate the weights. The first would use information home health agencies are required to provide about time spent in providing services in 15-minute increments.
Under this approach, MedPAC said, proxy costs for each visit would be developed by multiplying each increment by the estimated national cost of the discipline providing the services. The costs for an episode would be determined by summing the proxy costs for all visits associated with that episode, the commission added. At that point, HCFA would follow a process similar to that used to recalibrate the diagnosis related groups payment rates.
MedPAC said the second approach would use the charge information on the bill. Under both systems, the weights will automatically account for any shift in admission practice or coding behavior, said the commission.
According to Santa Anna, what MedPAC fails to mention in its report is consideration of the time spent outside the home. "They only talk about the in-home time," she said. "That jumped out at me because that was an issue last year under the (Balanced Budget Refinement Act) that we tried to get the 15-minute increment deleted."
According to Santa Anna, just as a growing number in Congress wanted that provision eliminated, MedPAC recommended that it be retained. "Now we are reading that the reason they wanted to leave it in is that they think it is a good approach to look at the change in the HHRG weights over time," she said. "They are only looking at in-home time and not looking at anything outside the home and comparing the agencies for potential differences in resource utilization."
However, MedPAC did note in its report that differences in wages among geographic areas account for much of the variation in provider’s costs for home health services. The commission notes HCFA’s estimate that 78% of the home health episode payment is labor-related and, therefore, affected by local variation in wages. As a result, MedPAC said, errors in the wage index used to adjust payment can have substantial effects on the appropriateness of payments.
MedPAC points out that the wage adjustment for the proposed home health PPS is based on wage and hour data from hospitals. But while using the hospital wage index to adjust payment rates for geographic differences is expedient, there are two problems associated with that approach, warns MedPAC.
First, the occupational mix is presumably different in the two settings. Second, the hospital wage index in and of itself does not control for occupational mix, which varies substantially among hospitals according to size and teaching status, MedPAC said.
To remedy that, HCFA should develop an agency-specific wage index, even though that will be no easy task, said MedPAC. Much will depend on the quality of wage and hour data that agencies submit, according to the commission. "If home health agencies supply accurate data, the wage index could be updated for FY02. If not, HCFA must quickly resolve reporting problems to eliminate this source of inaccuracy."
Santa Anna was also encouraged that MedPAC pointed out the need to link the different post acute care settings in terms of quality indicators. "Although HCFA is developing quality monitoring systems for evaluating care provided by skilled nursing facilities and home health agencies," noted MedPAC, "both the Medicare program specifically and the health system in general are ill-equipped to compare the care provided in different post acute care settings and to evaluate the care patients receive when it involves more than one type of provider."
"That would mean similar types of data should be collected, and I think everyone would agree that is important," said Santa Anna. "But at the same time, MedPAC talks about making sure the collection of quality of care indicators is not a burden on providers, and I don’t know how they are going to do that."
Finally, Santa Anna noted that where central question of beneficiary access to home health is concerned, MedPAC takes an ambiguous posture. "On the one hand, MedPAC concludes there is not a problem currently," she said. "On the other hand, they say there are some vulnerable populations and say they will look at it annually."
Meanwhile, there has been a 47% decline in home care expenditures between 1997 and 1998, and one in every four agencies has closed, she said.
What impact MedPAC’s recommendations will have is far from certain. "Until home health PPS is underway and data is gathered, it is hard to determine," concluded Santa Anna. "A year from October, the impact of the report will be a little more telling because there will be more data."
Scott Lara, director of government relations at the Home Care Association of America (HCAA; Jack sonville, FL) was not as sanguine. "I think MedPAC itself is becoming irrelevant," he asserted. "They issue reports and testify before Congress, but it does not amount to much.
"Nine times out of 10, Congress doesn’t even take their recommendations," he added. In the case of PPS, he said, it appears HCFA might budge on the 50/50, split-payment and physician-certification requirements, "but I don’t think they are going to budge on much else."
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