[Congressional Record Volume 144, Number 75 (Thursday, June 11, 1998)]
[Senate]
[Page S6261]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        SUPPORT OF S.J. RES. 50

 Mr. FRIST. Mr. President, I rise today in support of S.J. Res. 
50, which I joined the Senator from Missouri, Mr. Bond, in introducing. 
This resolution expresses the Senate's disapproval of the rule 
submitted by the Health Care Financing Administration (HCFA) on June 1, 
1998, which requires the acquisition of surety bonds for home health 
agencies under the Medicare and Medicaid programs. HCFA's rule 
endangers the existence of small and non-hospital based home health 
agencies because of the excessive expenses and requirements that are 
created by this rule. I am concerned that patients will lose access to 
agencies where they can attain home health services and that many 
employees will lose jobs because of the financial stress that is 
created by this rule.
  Even the two Congressional leaders, Pete Stark and Karen Thurman, who 
introduced the surety bond regulations, realize that the requirements 
have gone beyond the original intent of Congress. The initial 
requirement system was based on the successful Medicaid program in 
Florida, yet the new requirements proposed by HCFA do not only penalize 
potentially harmful providers but also many of the health care agencies 
that deliver essential high-quality care. HCFA's proposal differs from 
the successful Florida model in many ways. In Florida, bond 
requirements were required to be capped at $50,000, yet agencies under 
the HCFA proposal must purchase 15 percent of its Medicare 
reimbursement the previous year or $50,000 worth of bonds, whichever is 
greater.
  A report done by the United States Small Business Administration in 
its April 15, 1998 letter asking HCFA to remove the 15 percent 
provision in the surety bond regulation recognizes that HCFA failed to 
comply with the Regulatory Flexibility Act, which requires agencies to 
account for the impact of a proposal on all small entities and to 
consider alternatives to reduce the burden on those agencies. This 
report states that HCFA did not conduct regulatory flexibility analysis 
of the proposal's impact on small entities. HCFA was not monitoring the 
impact of this regulation on all small home health providers but only 
those with ``aberrant billing practices.'' Therefore, many of the high-
quality small home health care agencies are being pushed out of the 
health care sector because of the outrageous bond requirements.
  HCFA also requires all home health care agencies to buy surety bonds 
regardless of their credit history, whereas in Florida those agencies 
with at least one year in the Medicare program and no payment history 
problems were exempted. HCFA also requires these companies to secure 
bonds every year regardless of performance. These excessive 
requirements and costs will push many smaller, freestanding home health 
agencies out of business. If these companies are forced to shut down, 
the elderly and disabled will lose these essential services. For, this 
rule should prevent fraud, yet it should not penalize the law-abiding 
companies for the abuses of less than 1% of the agencies.
  Since this rule submitted by HCFA seems to impose conditions that go 
beyond those bonding companies bear in the course of their normal 
business, many surety companies are not offering bonds to Medicare home 
health agencies. Even those offering bonds are creating a prohibitive 
cost or demanding collateral equal to the face value of the bond or 
personal guarantees that exceed the face value of the bond. Because of 
the effects of this rule, small and non-hospital based agencies now 
risk loss of their Medicare provider number, and their employees and 
Medicare patients can also be adversely effected.
  The capitalization requirement in HCFA's proposal creates a barrier 
to market entry because entry is based on factors such as overhead 
costs, location, profit margins, and competition in the area.
  With all of these expenses and requirements, one would assume that 
only health care agencies that have abused the system would be required 
to abide by this rule. Yet, this system penalizes small home health 
care agencies that have been serving the elderly and disabled with 
high-quality for years. This rule should prevent fraud, not limit the 
access to care for those serviced by the Medicare and Medicaid 
programs. Because this rule will hurt many small home health care 
agencies with these exorbitant expenses and requirements, and therefore 
cause many elderly and disabled people to lose access to health care, I 
strongly suggest that this rule submitted by HCFA be reworked with 
consideration given to these responsible, small health care providers 
that provide essential services for thousands of U.S. citizens.

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