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.

House Call Physicians Ineligible for e-Prescribing Incentives

AAFP Efforts Fail to Reverse CMS Decision
By Sheri Porter 2/24/2009

The AAFP's efforts, in tandem with those of the American Academy of Home Care Physicians, or AAHCP, to correct an oversight in CMS' recently launched electronic-prescribing incentive program, recently resulted in a denial from the agency.

Rick Kellerman, M.D., of Wichita, Kan., an AAFP past president, is shown here checking on a nursing home patient.

In a Feb. 9 letter to CMS Acting Administrator Charlene Frizzera, AAFP Board Chair Jim King, M.D., of Selmer, Tenn., pointed out that, as currently implemented by CMS, Section 132 of the Medicare Improvements for Patients and Providers Act of 2008 "precludes physicians who practice predominantly, if not exclusively, as house call physicians from participation in the e-prescribing incentive program." On Feb. 23, however, AAFP News Now learned from AAHCP Executive Director Constance Row that CMS had declined to make the changes recommended by the two organizations.

Relevant CPT Codes Overlooked

The issue lies with the agency's choice of CPT codes that appear in the denominator of the e-prescribing legislation. As King pointed out in his letter to CMS, those CPT codes include services provided in the areas of psychotherapy, general ophthalmological services, health and behavior assessment and intervention, office and outpatient visits, and office consultations. However, CMS failed to include codes typically used by physicians who focus their practices on house call services, said King.

Those codes also include care provided to patients living in nursing homes. King argued that many house call physicians were early adopters of health information technology and e-prescribing. He said patients served by home care physicians usually have multiple comorbidities that call for an array of prescriptions that would be more efficiently handled electronically.According to Row, however, "CMS has decided definitively not to add these codes to the 2009 electronic-prescribing incentive program." She added that the letter from CMS indicated the agency may "consider changes for 2010 or beyond."

Statistics Reinforce Call for Inclusion

Row said that statistics provided by CMS only reinforce the argument that home health care physicians and other eligible providers should have the opportunity to benefit financially from the e-prescribing bonus program. She cited figures from CMS' Physician Supplier Procedure Summary Master Record that details Part B claims paid by Medicare carriers in 2007.According to those data, all Medicare providers combined logged 2,194,083 total house calls and 1,696,411 total domiciliary visits (i.e., house calls to patients residing in assisted living facilities) in 2007.

Family physicians alone logged 410,582 house call visits and 286,521 domiciliary visits in 2007. In his letter, King called on CMS to add home services CPT codes 99341 to 99350 and domiciliary/rest home visit CPT codes 99324 to 99337 to the denominator for eligibility in the e-prescribing incentive program.Row said that in light of CMS' rejection of that suggestion, her organization would continue to work closely with the AAFP for possible resolution of the issue in 2010.

Brought to you by Indura Systems.

Kaiser Daily Health Policy Report

Health Care Marketplace Health Care Spending Will Account for One-Fifth of GDP in 2018; Federal Government Will Pay More Than 50% of Those Costs, According to CMS Report [Feb 24, 2009]

Overall U.S. health care spending will reach $2.5 trillion in 2009, a 5.5% increase from 2008, when health care spending increased by 6.1%, according to a CMS report published Tuesday in the journal Health Affairs, the Wall Street Journal reports (Zhang, Wall Street Journal, 2/24).

Total health care spending will account for 17.6% of the gross domestic product in 2009, a full percentage point higher than 2008, marking the largest one-year increase since CMS began tracking health care spending in 1960 (Dunham, Reuters/Boston Globe, 2/24). The rate of health care spending growth is expected to decline over the next five years in part because people will lose their jobs and health coverage as the recession continues, and they will forgo medical treatment; however, the economy will be shrinking and growing at a slower rate, which will increase health care spending's share of GDP (Young, The Hill, 2/24).

The study found that in 2009, government health care spending is expected to increase by 7.4% to $1.19 trillion, while private health spending is expected to increase by 3.9% to $1.32 trillion (Wall Street Journal, 2/24). CMS projects that in 2018 overall U.S. health care spending will reach $4.35 trillion, accounting for 20.3% of the GDP (The Hill, 2/24). The study estimates that health care costs will average $8,160 per U.S. resident in 2009, up $356 from 2008, and will reach $13,100 per U.S. resident by 2018 (Alonso-Zaldivar, AP/Boston Globe, 2/24).

The report forecasts that the government will pay for more than 50% of total health care spending by 2016 and 51.3% by 2018, as Medicaid enrollment increases and baby boomers start enrolling in Medicare (Pugh, McClatchy/St. Paul Pioneer Press, 2/24). According to the study, Medicaid spending will increase from $352 billion in 2008 to $801 billion by 2018. The report estimates that Medicare enrollment increases will drive up the spending growth rate in the program from 6.2% in 2011 to 8.6% in 2018.

CMS predicts that final Medicare figures will show spending of $466 billion for 2008, 8.1% higher than in 2007 (Reichard, CQ HealthBeat, 2/24). According to the report, Medicare's hospital trust fund could become insolvent by 2016 -- three years earlier than previous estimates -- because of lower tax revenue caused by the recession (AP/Boston Globe, 2/24).

Additional Findings The study predicts that private health insurance enrollment will drop from 195.5 million in 2008 to 189.5 million in 2010 (CQ HealthBeat, 2/24). Private health spending is expected to increase as the economy improves, growing to 4.2% in 2010 and reaching 6.1% by 2018 (Reuters/Boston Globe, 2/24). The report also estimates spending growth rates for overall health spending in 2008 of 7.2% for hospitals, 6.2% for physician and clinical services, 9.1% for home health care, and 4.6% for nursing homes (CQ HealthBeat, 2/24). The rate of prescription drug spending increased by 3.5% in 2008, down from 4.9% in 2007, which study co-author Andrea Sisko attributes to U.S. residents' being more willing to use generics and less inclined to fill prescriptions as the economy declines.

The report projects that the recession would begin to improve in 2010 and health spending growth would surge again in 2011 (Reuters/Boston Globe, 2/24). The study did not examine the impact of the recently enacted stimulus package, which includes $87 billion in increased Medicaid aid, nor did the report take into account the expansion of CHIP (Wall Street Journal, 2/24). The estimate includes a scheduled 21% cut to Medicare physician payment rates, but Congress and President Obama are expected to block the cuts. The Congressional Budget Office has estimated that blocking the cut will cost at least $100 billion over 10 years (The Hill, 2/24).

The study is available online.

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

Brought to you by Indura Systems.

Care Givers on Bikes!

Brought to you by Indura Systems.

Gentiva to divest six home healthcare branches to Loving Care Agency

By Datamonitor staff writer

Gentiva Health Services, a provider of comprehensive home health services, has entered into an asset purchase agreement with Andventure, doing business as Loving Care Agency and Links2Care, for the sale of six Gentiva branch offices in four cities that specialize in pediatric home healthcare and also provide adult home health aide services.

These offices comprise more than 80% of Gentiva's current pediatric care operations. Terms have not been disclosed. According to Gentiva, the transaction fits with its stated objective of increasing its focus on skilled home health services for geriatric patients.
Under the terms of the transaction that Gentiva has announced, Loving Care Agency will acquire existing Gentiva branches in Phoenix, Arizona; Springfield, Massachusetts; Pittsburgh and State College, Pennsylvania. The transaction is expected to close in the first quarter, subject to all customary approvals.

Tony Strange, CEO of Gentiva, said: "This agreement with Loving Care, a leader in pediatric homecare services, will build on the high quality of care that these branches have provided. Our decision to migrate away from pediatric home healthcare is in keeping with the company's strategy of focusing on geriatric specialties.

"We believe our emphasis on providing value-added services to this population will translate into higher margins and returns that we can leverage to continue to grow our core home health business."


Brought to you by Indura Systems.

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.

California is Ready for Obama HIE Stimulus

White Paper Describes “Shovel-Ready” Project

President Obama's economic stimulus package is an opportunity to accelerate health information exchange in California through a “shovel-ready” statewide HIE. As a result of the planning and activities accomplished by CalRHIO and its stakeholders, California has completed key requirements called for in the legislation and is ready to deploy and implement HIE across the state.

A new White Paper discusses achievements that demonstrate California's readiness:

1. A proven statewide HIE solution, selected through a rigorous competitive process, is ready to deploy; implementation plans are fully developed.

2. A statewide public-private HIE organization is already established, with fully operational governance and management, and support from a broad range of stakeholders.

3. The statewide HIE solution, embraced by many local RHIOs, offers an efficient, affordable way for providers and communities all over California to collaborate and participate in an interoperable HIE.

4. Privacy and security standards and policies, which either meet or exceed national recommendations, are tested and in place.

5. Clinical use cases have been defined and support the strategy for launching the statewide HIE in hospital emergency departments and then expanding into physician offices.

6. A sustainable business model has been created that ensures a statewide HIE network can be deployed, maintained, and continually improved over the long-term.

To view the full White Paper, click here.

Brought to you by Indura Systems.