[Congressional Record Volume 144, Number 36 (Thursday, March 26, 1998)]
[Extensions of Remarks]
[Pages E494-E495]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


              THE MEDICARE HOME HEALTH EQUITY ACT OF 1997

                                 ______
                                 

                          HON. MICHAEL PAPPAS

                             of new jersey

                    in the house of representatives

                        Thursday, March 26, 1998

  Mr. PAPPAS. Mr. Speaker, it is my privilege to introduce today The 
Medicare Home Health Equity Act of 1997. This legislation will return 
equity to the Medicare system of reimbursing home health agencies for 
the valuable care they provide throughout our country.
  The Balanced Budget Act of 1997 had the unintended effect of creating 
an inequity in the way Home Health Agencies are reimbursed for services 
provided to America's seniors and the chronically ill through Medicare. 
My legislation will correct this inequity and accomplish the following:
  The Medicare Home Health Equity Act removes the IPS penalty on cost-
efficiency and levels the playing field. The Interim Payment System 
(IPS) inadvertently penalizes cost-efficient home health agencies (HHA) 
by basing 75% of agencies' per patient payment limits in fiscal years 
(FY's) 1998-99 on their FY 1994 average cost per patient. Because an 
agency's average cost per patient in FY 1994 is based on the number of 
visits the agency provided per patient that year, agencies that 
provided the most visits to patients--regardless of whether the care 
was medically necessary or not--now have the highest per patient cost 
limits. As a result, high-cost agencies continue to receive a 
disproportionate share of Medicare home health dollars. This outcome is 
the opposite of what Congress sought last year.
  The Medicare Home Health Equity Act is budget neutral according to 
Price Waterhouse. It does not bust the balanced budget agreement 
reached last year. It also does not jettison the many good steps taken 
in the Balanced Budget Act to address the very real problems of fraud 
and abuse in the Medicare home health benefit. However, it does address 
the one provision that rewards high cost agencies and penalizes low 
cost agencies.
  The Medicare Home Health Equity Act moves Medicare home health 
reimbursement more quickly to prospective payment by basing payments on 
national and regional cost data rather than on agency-specific data. 
Prospective payment will bring Medicare home health expenditures under 
control by reversing the incentive under cost-reimbursement to maximize 
patient costs. The incentive for HHAs under prospective payment will be 
to manage costs efficiently over an episode of care. Prospective 
payment in hospitals has demonstrated that this can be done while 
maintaining high quality of health services.
  The Medicare Home Health Equity Act recognizes that Medicare home 
health costs have been managed effectively in 34 states. The average 
cost per patient in these states is below the national average cost per 
patient. Agencies in these states should not be penalized by the higher 
than national average costs experienced in 16 states.
  The Medicare Home Health Equity Act will not harm patient care by 
lowering the per beneficiary cost limit for home health agencies with 
costs above the 75% national--25% regional cost limit. HCFA data shows 
little difference among types of home health agencies (e.g. non-profit, 
for-profit, hospital-based, government-affiliated) in regard to their 
level of

[[Page E495]]

patient ``case-mix''--or level of patients with similar conditions 
(from minor to severe). Therefore, it is hard to believe that high 
costs must be protected by the current IPS agency-specific formula when 
VNAs and other cost-efficient agencies provide high quality care to 
diverse populations at less than national average costs.
  Mr. Speaker, I urge my colleagues to join me in restoring home health 
care equity by cosponsoring this important legislation.

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