ENSURE APPROPRIATE PAY FOR HEALTH SERVICES

ENSURE ADEQUATE AND APPROPRIATE PAYMENT
FOR MEDICARE HOME HEALTH SERVICES

ISSUE: The Centers for Medicare & Medicaid Services (CMS) administratively has promulgated a 2.75 percent across-the-board rate reduction for home health services for 2008, 2009, and 2010, as well as a 2.71 percent cut for 2011. The 2.75 percent cuts scheduled for 2008 and 2009 have been implemented. Over the next five years (2009- 2013) these cuts will reduce outlays for home health by $7.59 billion unless Congress blocks them. These reductions are based on an unfounded allegation by CMS that case mix weights have increased without attendant changes in patient characteristics, referred to by CMS as “case mix creep” or “upcoding.”

In its 2009 report to Congress, the Medicare Payment Advisory Commission(MedPAC) recommended that Congress eliminate the home health market basket update for 2010 and accelerate the application of the 2011 coding creep adjustment proposed for 2011 (2.71 percent) to 2010—reducing current rates in 2010 by 5.46 percent. MedPAC also recommended that Congress direct CMS to rebase home health payments in 2011, using 2007 costs as a base.

A 5 percent rural payment differential or “rural add-on” for home health services delivered in rural areas expired on December 31, 2006. This has resulted in rural home health agency closures and threatened access to home health care for beneficiaries living in rural areas.

In February 2009, the Obama Administration included MedPAC’s 2009 recommendations for deep cuts to home health as part of its proposed FY 2010 budget. Over five years these harmful cuts would take more than $13 billion from the Medicare home health program. The administration’s budget also calls for the bundling of hospital and post acute care payments beginning in 2013.

RECOMMENDATION: Congress should: 1) Reform the Medicare home health payment model to achieve a more reliable payment distribution that reflects varying resource uses and costs incurred in providing care to individual patients; 2) Reject any proposals to cut the home health market basket inflation update or impose additional rate reductions for home health agencies; 3) Reinstate the 5 percent add-on payment for home health services in rural areas; 4) Block the home health case mix rate reductions and reform the regulatory process for evaluating case mix changes; and 5) Reject proposals to bundle home health payments into hospital or other provider payments.

RATIONALE:
• MedPAC’s proposed freeze in home health payments, coupled with the CMS regulatory payment reductions and rebased payment rates, would reduce home health payments by $550 million in 2010, by 2.5 billion in 2011, and by $13 billion from 2010 through 2014. These cuts would come from a benefit that is about $15.5 billion per year ($2 billion less than in 1997) and under control in terms of expenditure growth.

• Currently, about one third of Medicare home health agencies (HHAs) have negative Medicare profit margins. The National Association for Home Care & Hospice (NAHC)as calculated that by 2011, nearly two-thirds of home health agencies will have negative Medicare profit margins if MedPAC’s proposed freeze, accelerated CMS regulatory cuts,and rebasing of payment rates are implemented.

• MedPAC fails to evaluate the impact on care access that occurs with the current wide ranging financial situation of HHAs. Regardless of average margins, there is a wide range in agency margins and thus a wide range in impact that the proposed across-the board cuts in payments would have. There is no evaluation to date of the completely reformed home health payment model put in place in 2008. In the event that the wide range in margins continues, a more sophisticated payment model connecting payments to resource use should be developed.

• MedPAC’s proposal to reduce home health payments is based on claims that home health agencies are making excessive profit margins on Medicare services. MedPAC’s financial analysis of Medicare HHAs, projecting a 12.2 percent margin for 2009, is unreliable. First, it does not include any consideration of the 1,626 agencies (21 percent)that are part of a hospital or skilled nursing facility. In some states, hospital-based HHAs make up the majority of the providers (ND 85.0 percent; SD 76.5 percent; MT 66.7 percent; OR 63.0 percent). Facility-based HHAs have an average Medicare profit margin of negative 6.19 percent. Second, the MedPAC analysis uses a weighted average,combining all HHAs into a single unit, rather than recognizing the individual existence and local nature of each provider. It sees a single national profit margin for freestanding agencies as representative of over 9,700 very diverse HHAs. When all agencies’ margins are included and given equal weight, the true Medicare margin would be closer to 5 percent. About one third of home health agencies currently have negative margins. Third, MedPAC margin data fails to recognize many agency costs, including the cost of telehealth equipment, increasing costs for labor, emergency and bioterrorism preparedness, and system changes to adapt to the new home health payment changes.

• Home health agencies are already in financial jeopardy as a result of Medicaid cuts and inadequate Medicare Advantage and private pay rates. Ongoing study of home health cost reports by the National Association for Home Care & Hospice indicates that the overall financial strength of Medicare home health agencies is weak. The average allpayor profit margin for freestanding HHAs is reduced to 4 percent when taking into account losses from non Medicare payors.

• Recent cost reports reveal that the average Medicare margin for rural agencies is negative 3.52 percent. The loss of the 5 percent rural add-on payment for home health services in rural areas has resulted in reductions in service areas, agency closures, and reports that some agencies had to turn away high resource use patients who are more expensive for agencies to serve. In many rural areas home health agencies can be the primary caregivers for homebound beneficiaries with limited access to transportation.

• The “case mix creep” adjustment ignores increases in patient acuity, particularly a significant increase in orthopedic and neurologically impaired patients requiring restorative therapy. These changes in patient characteristics are documented in a report from the Lewin Group and directly correlate with changes in case mix weights.

• CMS alleges that the entire change in the average case mix weights between 1999 and 2005 is the result of provider upcoding or factors unrelated to changes in patient characteristics. If this had occurred one would expect to see a big increase in Medicare home health expenditures. In fact, as the chart below indicates, Medicare home health expenditures are far lower than the Congressional Budget Office (CBO) had expected under the new Home Health Prospective Payment System and are $2 billion less than in 1997.

• Bundling home care payments into hospital or other provider payments would severely compromise both the quality and availability of home health care for Medicare beneficiaries. It would cause major disruption to the health care industry, be anticompetitive, increase the federal regulatory burden and erect a new and unnecessary barrier to beneficiaries’ access to quality care. Hospitals have no experience in the management of post acute care and no infrastructure to manage utilization review. Hospitals are the highest cost sector so this is not the place to locate efficiencies in post acute care. If bundled payments are considered, they should go to community-based providers that have a breadth of experience in providing post acute care and avoiding unnecessary hospitalizations.

TAKE ACTION NOW:

http://www.congressweb.com/cweb4/index.cfm?orgcode=nahc

President Obama Makes Health Care Reform a Top Priority

March 03, 2009 - by Lynn Shapiro, Writer

The Senate is pitched for battle, having heard the details of President Obama's plans for health care reform, laid out in the speech he delivered to Americans last week.

It is a certainty that every vested interest will lobby against it, especially pharmaceutical companies, which stand to lose huge sums of money now that the Obama administration plans to spend $1.1 billion for new reviews of generic drugs. The move is based on several recent studies showing that generics sometimes work as well or better than newer, more expensive medicines. The budget also calls for negotiations with drug makers to lower their prices, as Canada and Western European countries now do.

This initiative is a radical departure from President George W. Bush's Prescription Drug Plan of 2003 for Medicare beneficiaries (Medicare Part D), which refused to require drug makers to negotiate their prices downward.

Unlike Bush, Obama appears unafraid of impinging on the fortunes of industry. Neither is he averse to taxing Americans in the highest income bracket. The President said that most workers are unduly constrained by health care costs and that to ease this burden, he would derive $318 billion by raising the taxes on the top 20 percent of tax filers who earn more than $250,000 a year. These individuals would pay 90 percent of all taxes.

Obama's proposal would also eliminate subsidies now given to the private plans that provide care to more than 10 million of the 44 million Medicare beneficiaries. By forcing these plans, known as Medicare Advantage, into a competitive bidding process, the administration says it can save $175 billion over the next 10 years.

The President is counting on the economy to be thriving by 2011. Then, his plan for hiking taxes on high-income payers would make it possible for him to keep his promise to halve the deficit by 2013.

Deficits of almost $1.8 trillion in 2009 and $1.2 trillion in 2010 are frightening. But while Obama wants to extend tax cuts for the middle class, much of the health care package is intended to save the economy and create jobs. So, the massive amount of red ink Americans face should be temporary, the budget assumes.

Deciding when to go from stimulus spending to deficit reduction is the trickiest part of the equation, but doing it is essential, analysts say.

Other Provisions

Another avenue for health care savings would come from slashing Medicare's home health care programs, said to be excessive. What's more, ending rebates from drug companies for medicines sold to Medicaid patients would save the U.S. healthcare system almost $20 billion.

The budget also includes more than $1 billion to help the FDA fortify its food safety program because of the salmonella outcry; $6 billion for cancer research and a program to send nurses to new mothers' homes to check on babies. Another $76.8 billion would go to the Health and Human Services Department to fund electronic medical records to end costly duplication of diagnostic tests and allow doctors to share patient histories. This provision is not only cost-effective but potentially beneficial to the patient, experts say. Obama promises to preserve patients' privacy, even while doctors share patients' records.

White House budget director Peter Orszag projected in commentary over the weekend that the proposed spending would save $1.8 billion in 2010, $16.2 billion in 2011 and increasing amounts annually to create a $633.8 billion fund to pay for health care reform by 2018. Congress has already provided $25 billion to help laid-off workers pay for COBRA.

What's more, Obama says that spending to get coverage for more of America's 46 million uninsured will save money, if preventive care helps patients avoid expensive and chronic diseases.

Money will be also be saved, Obama said, by finding and eliminating overpayments in Medicare. "The Government Accountability Office has labeled Medicare as 'high-risk' due to billions of dollars lost to overpayments and fraud each year," the budget reads.

Better Care, Not More

In conclusion, the budget says "about $26 billion can be saved over 10 years by using a combination of incentives and penalties to prevent avoidable expensive readmission when patients go back into the hospital within a month after treatment. Reforming the way doctors are paid will also reduce costs, by paying them to provide better care rather than more expensive care, such as imaging scans and surgery that may not be necessary." For example, since Obama took office, Medicare has announced it will stop covering virtual colonoscopies, deciding they're too expensive.

None of this will be easy but one thing is for sure. President Obama has made health care reform a top priority.

Brought to you by Indura Systems.

Obama releases $15 billion in Medicaid funding to states

President Obama, meeting with the nation's governors in Washington, D.C., this morning, announced a quick release to the states of $15 billion of federal Medicaid relief funding to help them cope with the rising health care costs brought on by the economic crisis. According to a White House press release, the money will be available in 48 hours--on Wednesday--in special Treasury accounts set up for the states to access.

"That means that by the time most of you get home," said President Obama, "money will be waiting to help 20 million vulnerable Americans in your states keep their health coverage. Children with asthma will be able to breathe easier, seniors won’t need to fear losing their doctors, and pregnant women with limited means won’t need to worry about the health of their babies.”

The funding is part of the designated moneys from the American Recovery and Reinvestment Act, and the temporary increase will be administered by the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS). The federal agency will coordinate with states to ensure they are properly meeting regulations and requirements about Medicaid.

The announcement of the funding release was made as President Obama and Vice President Biden hosted members of the National Governors Association at the White House.

A state-by-state grant award summary for the program can be found here.

SusanG@dailykos.com

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Bailout Plan for Medicaid

The plan offers $87 billion to help states administer Medicaid. That could slow or reverse some of the steps states have taken to cut the program.

Now is the time to ensure that your home health care agency is fully compliant and able to handle the volume of work required for timely reimbursements...

Brought to you by Indura Systems.

Home health care benefits both taxpayers and patients

As Gov. David Paterson tries to make New York State's budget ends meet, he is met with cry after cry -- ''You can't cut my program!''

We've all seen the heart-rending ads on TV. There's one proposed cut, however, that doesn't make sense even for the people it least affects directly: home health care.

The governor wants to cut Medicaid reimbursement rates between 1.5 percent and 3.5 percent for certified home health agencies and long term home health care programs; he's also proposing an additional, across-the-board cut of 1 percent in all Medicaid rates, the elimination of an inflation-based increase in payments to home health providers for 2008 and 2009, and a 0.7 percent tax on revenues.

The Home Care Association of New York State says these actions likely will force many home care providers to drastically reduce services or go out of business. And without the option of home care, people who have depended on it are likely to end up back in hospitals and nursing homes, where taxpayers will pick up a much larger Medicaid bill.

The governor figures his proposal will save the state $184 million in Medicaid costs in 2009-10; since the federal government contributes toward Medicaid, it means a cut of about $347 million in federal home health funding. Does Gov. Paterson think the people who no longer can get home health care are just going to disappear? Too many will need to be moved into more expensive hospitals and nursing homes. Home health care is less expensive, and provides better care, most experts agree. Why would we want to end a program that does that?

New York State's Medicaid program has been described as the ''Cadillac'' of programs, offering more coverage than most other states do. It is better coverage than many people can afford from private insurers, and better than the coverage offered by many employers. Shouldn't this be an area that could be looked at for cuts before threatening programs that actually save taxpayers money while providing better care for patients?

Neither the taxpayers nor the patients will be better off under these proposed budget cuts. We urge Gov. Patterson to reconsider.

Brought to you by Indura Systems.

Sobering results for cost-cutting Medicare project

By LINDSEY TANNER AP Medical Writer © 2009 The Associated Press
Feb. 10, 2009, 5:24PM

CHICAGO — An ambitious effort to cut costs and keep aging, sick Medicare patients out of the hospital mostly didn't work, a government-contracted study found. The disappointing results show how tough it is to manage older patients with chronic diseases, who often take multiple prescriptions, see many different doctors and sometimes get conflicting medical advice.
The study showed just how hard it is to change the habits of older patients and their sometimes inflexible doctors. And it points up the challenges the Obama administration will face in trying to reform health care for an aging nation.

Most of the patients had serious, but common, age-related illnesses including diabetes, heart disease and lung disease. Programs were set up at 15 centers around the country. Only two cut the number of times these patients were hospitalized, and those are still in operation. None saved Medicare any money.

The authors of the study called the results "underwhelming." An editorial in the Journal of the American Medical Association, where the study appears Wednesday, used the term "sobering."
"The only way you can really do it is by changing patients' behavior and by changing physicians' behavior, and both things are really hard to do," said study author Randall Brown, a researcher at Mathematica Policy Research Inc., in Princeton, N.J., which was hired to evaluate the programs.

Often, these patients need to stop smoking, or lose weight, exercise more, eat healthier foods — a challenge even for generally healthy people. Those changes are especially tough for sick, older patients who often are set in their ways.

"The same thing with physicians," Brown said. "A lot of them feel like they know how to take care of patients, so why do they need a nurse calling up and asking them why the patient isn't on some certain medication?"

Many patients in the study had more than one chronic disease, a common Medicare scenario. In 2002 alone, half of Medicare patients had been treated for five or more ailments, and they accounted for 75 percent of Medicare spending, the study authors noted.

Seeking ways to reduce those costs and improve care, the Centers for Medicare & Medicaid Services selected 15 proposals for test-site programs in 2002. The sites developed their own programs, enrolling a total of 18,309 fee-for-service Medicare patients through 2006.

About half got the patients got the usual care. The others got more intensive, coordinated care. That often involved nurses who acted as go-betweens, helping doctors give patients clear, appropriate advice; counseling patients on changing bad habits and recognizing worrisome symptoms. The nurses were available on a regular basis by phone or in person to answer patients' questions.

Jim Reid, a 74-year-old retired Pennsylvania welder, was among study patients who got coordinated care.

When he enrolled in 2002 in a test program run by Health Quality Partners, a nonprofit group in Doylestown, Pa., he was obese, had high blood pressure, high cholesterol and pre-diabetes.
But Reid was a rare success story.

He actually took the advice offered in group sessions run by nurses. He learned how to read food labels and avoid salty, calorie-laden foods. He also started exercising, walking with a pedometer and building up to a few miles daily.

Now, he breakfasts on oatmeal or vegetable omelets instead of coffee and doughnuts He's lost almost 60 pounds. His blood pressure and cholesterol have greatly improved and his pre-diabetes is gone.

Sticking with the program "is hard," he acknowledged. "As you get older, you don't want to do it." But he said it has "put an extra 10 years in my life."

Reid credits his success to the personal attention of a nurse coordinator.
"I have to have somebody to own up to," he said.

That close, in-person contact with nurses was also a feature of the project's other more successful, still-operating program, at Mercy Medical Center-North Iowa in Mason City, Iowa.
In both programs, each patient had face-to-face contact an average of about once a month with a nurse. That was far more frequent personal contact than in other programs. Both reduced hospitalizations — 17 percent yearly compared with usual-care patients at Mercy, and by about 20 percent in the Pennsylvania program, but only among its sicker patients. That program worked with Doylestown Hospital and recruited patients from area physicians' offices.

Targeting sicker patients and providing frequent in-person contact show the approach has some benefits and that success with future reform efforts "is possible, but it's not easy," Brown said.

Peter Ashkenaz, a spokesman for the Centers for Medicare & Medicaid Services, said the agency is evaluating the Iowa and Pennsylvania programs to see if their positive results persist.

He said there are other approaches being tested, some that offer incentives to doctors who meet quality benchmarks, or who use electronic health records to improve quality.

But so far, Ashkenaz said, "as the study shows, we have not yet found broad success."

Brought to you by Indura Systems.

Governor's plan would "dismantle" home health care system

North County Public Radio: Friday January 23, 2009

Advocates for home health care are fanning out across the state to head off a proposal from Gov. Paterson to re-structure the way home health aides are paid. Rebecca Leahy, ex. dir. of a private not-for-profit that serves clients from northern Warren County to the Canadian border, in Franklin County, says the governor's plans would dismantle a system that's provided care to thousands of elderly and disabled people across the North Country for 25 years.

Licensed, private not-for-profits provide in-home care under contract to counties. Leahy’s organization, North Country Home Services, serves over 900 clients a day. County public health nurses evaluate clients to determine what care each needs. The private agencies provide the aides that do the day-to-day in-home work. They’re paid by Medicare money, passed through the counties.

The governor wants to eliminate the private contracts. In order for Medicare to pay, his budget would require home health aides to be county employees. Leahy has talked with all the counties she has contracts with. She told Martha Foley it won’t work.

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Introduction to Indura Systems

Home health care is one of the most regulated industries in the United States. Any organization that is associated with the health care industry is also open to aggressive litigation.

Any health care organization could spend considerable time understanding, and keeping track of, all the rules and regulations that apply, and are regularly being amended. With a fluctuating economy and shifts in age demographics, agencies are increasingly being expected to perform better with fewer resources.

Indura Systems understands the home health care industry from the agency perspective. Igea HHC, from Indura Systems, gives our customers the essential tools to achieve three things:

1. To focus on running their business effectively, and with lower overheads
2. To adhere to constantly changing regulatory controls including data security measures
3. To minimize time to reimbursement of payments from Medicare, Medicaid and/or Private Duty.

Igea HHC can deliver these benefits because the system has been built on a rugged, tested, and proven workflow model. The system is not only simple to use and easy to tailor to individual agency needs, but also helps maximize profit and shield agency staff from much of the complexity of home health care administrative tasks.

Contact us at Indura Systems to learn more about how we partner with home health care agencies to support and optimize their business success.