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




         RESTORE FAIRNESS TO MEDICARE'S HOME HEALTH CARE SYSTEM

                                 ______
                                 

                       HON. CHRISTOPHER H. SMITH

                             of new jersey

                    in the house of representatives

                        Thursday, March 26, 1998

  Mr. SMITH of New Jersey. Mr. Speaker, today I am joining with my good 
friend and colleague, Rep. Mike Pappas, in introducing legislation to 
restore fairness and equity to the Health Care Finance Administration's 
(HCFA's) new Medicare reimbursement program for home health care.
  This new Medicare reimbursement program, known as the ``Interim 
Payment System'' (IPS), is based on an incomplete and inequitable 
funding formula which directly jeopardizes home health care agencies 
and the elderly they serve in my state.
  The value of home health care is obvious. All of us intuitively know 
that enabling our seniors to receive quality, skilled nursing care in 
their own homes is preferable to other, more costly, sometimes 
isolated, settings. Senior citizens receive the peace of mind from 
familiar settings and their loved ones close at hand. And the cost 
savings to Medicare from proper use of home health care are 
considerable.
  The legislation we have introduced today corrects several flaws 
contained in the IPS formula and assures fair and reasonable Medicare 
reimbursement for quality home health care. This bill is a good 
complement to another legislative effort (H.R. 3108) I am supporting 
with fellow New Jersey Representative Jim Saxton. The Pappas-Smith bill 
is more targeted and limited in scope, focusing on equity issues 
between home health care agencies, while H.R. 3108 is broader in 
application and primarily deals with providing more resources to all 
home health agencies.
  One thing that both bills address, however, is the need to reform the 
IPS. If left unchanged, the IPS will cut Medicare reimbursement for 
home health care in New Jersey by $25 million in fiscal year 1998 
alone. Several agencies in New Jersey could lose $2 million or more in 
anticipated reimbursement for homebound Medicare patients.
  One of the most unfair aspects of the IPS is that it seeks to treat 
efficient and inefficient home health agencies alike, despite the fact 
that average utilization rates in New Jersey's agencies--43 visits per 
beneficiary served in 1996--are far lower than the national average of 
74 visits that year.
  Because the IPS reimbursement rates for each home health care agency 
are linked to earlier utilization rates and costs, agencies that were 
efficient and honest all along still find themselves struggling to 
squeeze another 12 to 15 percent reduction in aggregate reimbursement 
rates from already lean operations--a very tall order indeed. 
Meanwhile, agencies in other parts of the country with abnormally high 
home health costs and utilization rates are permitted to use base year 
utilization rates that were badly inflated in the first place. Thus, 
they will continue to receive high reimbursement rates because they had 
inflated costs in the past. The IPS, therefore, effectively punishes 
efficient operations and does not comprehensively address the problem 
in areas with inordinately high home health utilization statistics.

  For example, home health agencies serving senior citizens in NJ will 
only receive enough funding to provide as few as 30 to 35 visits per 
patient. Meanwhile, agencies in other parts of the country--such as 
Tennessee and Louisiana--may continue providing their patients with 
almost triple that number of visits at twice the cost per visit. 
Disparities of this magnitude are inherently unreasonable and unfair, 
and must be corrected.
  There is no reason whatsoever why the senior citizens of New Jersey 
should receive less quality care than senior citizens of any other 
state. While I understand that special circumstances in other states 
and counties will always generate some variation in home health car 
usage, the disparities that are enshrined in the IPS are simply absurd. 
Are Louisianans and Tennesseans that much sicker or that much more 
frail that they need to receive 100 or more visits per person? And how 
can the costs of treating these patients in other states be 
significantly higher than New Jersey? The wage rates and cost of living 
indexes in many of these high utilization states are among the lowest 
in the entire nation. Senator John Breaux stated that in Louisiana, 
there are more home health car agencies than there are McDonalds 
restaurants. Clearly, something is amiss.
  In response, our bill--which we have strived to craft in a budget 
neutral manner--restores fairness and equity to the Interim Payment 
System in the following ways:
  First, our bill will protect efficient home health agencies from 
drastic cuts in Medicare home health reimbursement through the IPS. 
Under our legislation, we provide relief from the Interim Payment 
System for those home health care agencies whose average cost per 
patient served, as swell as their average number of visits per patient, 
are below the national average. In this manner, agencies that have been 
doing a good job in keeping their cost structures under control will 
not be punished for their own best efforts.
  The second provision contained in our bill restores the per visit 
cost limits for home health agencies to their September 1997 levels. 
The reason for this change is based on an assessment that unless this 
change is made, it will be virtually impossible for home health 
agencies to reduce their average number of visits per patient, and 
still live within their cost limits.
  The provision is a matter of basic math: if an agency is to reduce 
its average number of visits per patient--as HCFA demands--it must do 
more with each visit. However, if an agency fits more activities and 
services into each visit, then by definition its costs per visit are 
going to rise significantly. So while the number of visits per patient 
will fall, its costs per patient will rise to some extent, because more 
services are being performed in an attempt to make the most out of each 
home health visit.

  Under our bill, home health agencies will reduce their visits per 
patient and still operate within realistic per visit cost limits. 
HCFA's per visit cost targets, upon close examination, are unrealistic 
and will not allow home health agencies to accomplish the goal of more 
efficient home care.
  Lastly, our legislation will give the Secretary of Health and Human 
Services the flexibility to make special exceptions for home health 
agencies treating unusually expensive patients. Among the problems with 
the IPS is that as initially implemented, the IPS gives providers a 
perverse incentive to avoid treating critically ill, chronic, or more 
expensive patients. Unlike a fully implemented prospective payment 
system (PPS), the Interim Payment System (IPS) makes no attempt to 
distinguish between agencies that are simply inefficient and agencies 
that are treating a disproportionately sicker patient population. Our 
legislation creates a mechanism for financially pressed home health 
care agencies to address and care for unusually expensive patients.
  Mr. Speaker, this legislation is balanced and carefully crafted to 
make improvements to the Medicare Interim Payment System. It is 
designed to be budget neutral. It will enable our senior citizens to 
continue to receive high quality, medically necessary home health care 
services. It also will appropriately target federal efforts to reduce 
waste and fraud in the Medicare program. I urge all of my colleagues to 
consider this legislation and support our efforts to protect the 
homebound Medicare patients who are now at risk.

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