[Congressional Record Volume 144, Number 95 (Thursday, July 16, 1998)]
[Senate]
[Pages S8383-S8386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Breaux, Mr. 
        Rockefeller, Mr. Jeffords, Mr. Mack, Mr. Kerrey, Mr. Murkowski, 
        Ms. Landrieu, Mr. Faircloth, Mr. Hollings, Mr. Burns, Mr. 
        Hagel, Mrs. Hutchison, Mr. Leahy, Mr. Hatch, Mr. Graham, Mr. 
        Bingaman, Mr. Domenici, Mr. Robb, and Mr. Santorum):
  S. 2323. A bill to amend title XVIII of the Social Security Act to 
preserve access to home health services under the Medicare Program; to 
the Committee on Finance.


              home health access preservation act of 1998

  Mr. GRASSLEY. Mr. President, I rise today in support of the Home 
Health Access Preservation Act of 1998, which I am introducing today. I 
have been deeply involved in home care issues throughout my career, and 
that involvement has deepened in the past year. It was 1 year ago that 
the Special Committee on Aging, which I chair held a hearing on fraud 
and abuse of the Medicare home health benefit. That led to a 
roundtable, where we brainstormed on solutions to that problem. That 
discussion led to turn to a bill, the Home Health Integrity 
Preservation Act of 1998, which I was proud to cosponsor with Senator 
Breaux.
  In March of this year, the Aging Committee held another hearing on 
home health. This hearing focused on the Balanced Budget Act provisions 
affecting seniors' access to home care. At this hearing, we learned of 
the serious problems being caused by the Health Care Financing 
Administration's surety bond regulations, as well as by the Interim 
Payment System for home health. Like the earlier hearing, this hearing 
led to two pieces of legislation. The first was Senate Joint Resolution 
50, which would have vetoed the surety bond regulation. I was pleased 
that this effort brought the administration to the bargaining table, 
and I believe that the surety bond problem will be solved as we work 
together.
  The second piece of legislation to come out of that hearing is the 
bill I am introducing today. It addresses a major piece of unfinished 
business in the home health area, and that is the Interim Payment 
System. What's wrong with that system? In short, it bases payment on an 
individual home health agency's historical costs from Fiscal Year 1994. 
That means that if the agency had high cost per patient in that year, 
it can receive relatively high payment this year. However, if the 
agency had low costs in that year, its payments this year is severely 
limited.
  This approach would be fine if the Health Care Financing 
Administration knew that the higher-cost agency had sicker patients 
this year, but the sad truth is that HCFA has no idea. So the interim 
system has been a windfall for

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some agencies, but crushing for agencies with low historical costs. In 
Iowa, we are blessed with many efficient providers, but this system 
seems to prove the old adage that ``No good deed goes unpunished.'' In 
many cases, the providers who are suffering--and more importantly, 
whose patients are suffering--are those who most want to keep in the 
Medicare program.
  Another feature of the system is that it treats older and newer home 
health providers in completely different ways. In some areas of the 
country, new agencies simply cannot compete with older agencies, while 
in other areas (such as Iowa), it is the older agencies that are at the 
disadvantage. This kind of arbitrary distinction just doesn't make 
sense.
  For months, I have worked with a bipartisan group of Finance 
Committee members on fixing the Interim Payment System. This bill is 
the product of those efforts. Believe me, if this were an easy issue to 
tackle, I would have introduced this bill months ago. Instead, we have 
gone to great lengths to get input from home health providers, as well 
as from a broad range of Senate colleagues. Those efforts have paid 
off, and I am gratified to be introducing the bill with seventeen 
original cosponsors, and maybe more by the end of the day.

  The bill has a number of features, but its basic approach is to 
abandon our reliance on individual agencies' historical costs. Instead, 
it would pay all agencies--old or new--based on a 50/50 blend of 
national and regional average rates from the 1994 base year. This 50/50 
blend is the only approach that can win support from all parts of the 
country. In addition, the bill seeks to provide supplemental payments 
for patients with long stays as home care recipients. We think it is 
essential that agencies be compensated for taking these neediest 
patients.
  The bill is budget-neutral, which in my opinion it has to be in order 
to have a chance of passage. There is a great deal of concern, which I 
share, about the automatic 15 percent cut in all home health payment 
that will occur in October 1999. We did consider an attempt to address 
that cut in this bill, but the cosponsors have learned from the 
Congressional Budget Office that, under its methodology, such language 
would send the bill's costs skyrocketing. We think that this would doom 
the bill's chances of enactment this year. We do believe that there is 
a crisis that needs to be addressed this year, and thus we have not 
included the 15 percent provision in the bill. I will urge the Senate 
to revisit that issue next year, when we'll have more information on 
home health cost growth or decline, but for now it cannot be addressed.
  If there was any doubt about the need for action to rectify the 
Interim Payment System, I believe that it has vanished with the 
administration's recent indications that prospective payment will not 
be ready in October 1999, as mandated by Congress. Just this morning, 
at a hearing of the House Ways and Means Subcommittee on Health, the 
administrator of HCFA confirmed that the Year 2000 computer problem has 
made meeting the deadline totally impossible. In fact, at HCFA's 
suggestion, we have written the per-beneficiary limit numbers into the 
bill itself, so that HCFA will not need to issue a regulation in order 
to implement the bill. HCFA just doesn't think it could issue a 
regulation doing so, in light of its Year 2000 problems. The fact is 
that we do not know when prospective payment will be ready. We had 
better do what we can now, to make sure our agencies can hang on until 
that day.
  Let me make a comment about political realities. Our focus was on 
creating something that could actually pass this year, and so the bill 
is a product of compromise. In talking with home health providers, I 
find that many of them understand the need to be realists. I wish that 
the big national associations were equally reasonable. It is already 
the middle of July. This bill's moderate approach is the only one that 
has any chance of moving this year. If there really is an emergency in 
home health, which I believe, then everyone needs to get serious right 
now. Let me be more explicit: I call on the home health industry to 
recognize that this approach is as good as it's gong to get, and to 
support it. I call on HCFA to make fixing this system a top, near-term 
priority. And I call on my colleagues here in Congress to unite around 
a moderate, feasible formula. Our Nation's seniors and disabled are 
waiting for us.
  Mr. BAUCUS. Mr. President, today I am introducing a bill, along with 
Senator Grassley, Senator Rockefeller and Senator Breaux, the Home 
Health Access Preservation Act of 1998. Essentially, our legislation is 
geared at reforming the home health interim payment system.
  Several years ago, because home health care costs were rising at such 
a rapid, alarming rate, Congress, in the Balanced Budget Act of 1997, 
decided to do something about it. What did we do? We passed a provision 
called the interim payment system as a transition interim system for 
home health care agencies to live under until we move to a prospective 
payment system.
  What does all that mean? It is this: In the first 15 years of 
Medicare, home health care constituted about 2 percent of the total 
Medicare budget. Medicare, as we know, is the program that is financed 
almost entirely out of payroll taxes. Those dollars go to Uncle Sam, 
and Uncle Sam then pays hospitals and doctors for health care for 
senior citizens. Part A is hospital care; Part B is doctor's care for 
senior citizens. Again, only 2 percent of Part A of Medicare--that is 
the hospital part--was for home health care.
  In 1997, however, the total amount of Medicare Part A dollars--that 
is, the hospital dollars that go out to senior citizens--was about 15 
percent. That is a rise from 2 percent up to 15 percent, a staggering 
increase in home health care.
  Why did that happen? Basically, because hospitals were moving 
patients out of hospitals. They were moving some of the patients into 
home health care settings. In addition to that, it was a lot cheaper to 
provide some services out of the hospitals. And, on top of that, 
seniors prefer to have care at home rather than sometimes in the 
hospital or perhaps in a nursing home. Home health care has risen 
dramatically.
  Well, as a consequence, there has been extra pressure on the Medicare 
trust fund. And that is why Congress, in 1997, decided to pass this 
provision, changing the way we reimburse home health care and moving to 
a system to try to get a handle on all this rising cost.
  The old way that Medicare paid home health care was called cost-based 
reimbursement. Essentially, a home health care agency would get 
reimbursed, get paid, for the costs that that home health care agency 
incurred in treating patients--basically cost-plus; that is, the agency 
would get whatever it cost and was able to add on just a little bit to 
stay in business.
  As a consequence, several phenomena developed.
  In some States, there was a proliferation of home health care 
agencies. They just sprung up all over because they are cost based. In 
addition to getting more patients to get reimbursed more, they provide 
more services to the public.
  In some other States, home health care agencies were very efficient; 
that is, they did their work, and they did not try to provide extra 
services, nor did they get extra reimbursement.
  We are in a position now where the interim system that Congress 
passed in 1997 is causing problems, and significant problems, for all 
home health care agencies, in particularly those rural areas. Why is 
that? It is because the provision we passed, the interim payment 
system, provided that home health care agencies would be paid on 
whatever their costs were in 1994.
  Well, that means that those home health care agencies that were very 
efficient in 1994, compared with those who were very inefficient in 
1994, are adversely affected. Why is that? That is because, if the 
payment is based upon 1994 levels, and it is locked in at 1994 levels, 
and you are a very efficient home health care agency--you are cutting 
costs--then you are paid less.
  On the other hand, if you were a very inefficient home health care 
agency in 1994, and you are locked into whatever Uncle Sam was paying 
you in 1994, you can continue to be inefficient. Well, that is 
obviously not fair. It is not fair to those home health care agencies 
who were doing a pretty good job.

[[Page S8385]]

  In addition, there is another problem. The movement from cost-based 
reimbursement over to what is called a prospective payment 
reimbursement--that is, paying home health care agencies a certain 
payment for a given procedure regardless of what else is going on with 
the agency--is based on the assumption that the efficient home health 
care agencies, the efficient providers--hospitals are also paid on a 
prospective payment system--that is, the efficient ones will survive, 
they will do well; the inefficient, those that are getting the same 
dollars but are inefficiently run, poorly run, will fail, they will not 
be able to make it.
  That is good--the theory is--because the efficient survive and the 
inefficient don't. The theory goes on to hold that, well, that is OK 
for patients, for people, because when the inefficient fails, there is 
a nearby efficient hospital, or nearby efficient home health care 
agency in this case. So patients are still well served. They just go to 
the other, nearby, efficient home health care agency.
  That is a false assumption, Mr. President, for rural areas, because 
in rural areas of America, when an inefficient fails--or for some other 
reason that home health care agency cannot make ends meet--when it 
fails, there is no other nearby home health care agency, there is no 
nearby alternative provider because they are just too many miles apart.
  We, Mr. President, are introducing legislation designed to fix this 
problem until we finally move to a more permanent compensation system 
for rural health care agencies. Essentially, what it does is, we say to 
a State, we are going to have a single rate per State, not differential 
among States, but per State. We also get rid of the cap on agency-
specific costs, because we move to a 50-50 blend of regional as well as 
national averages.
  That is, I think, a fair compromise between those who want fixed 
costs based on a national rate and those who want the rate to be based 
upon the particular characteristics of the region.
  I think this helps. I think it goes a long way to solving the problem 
that many home health care agencies have. This, by the way, is in 
addition to the surety bond problem facing home health care agencies, 
another matter which we are addressing separately.
  But I hope this interim measure that we are now reforming will be 
reformed along the way to provide for, in the bill, making sure that a 
lot of people get health care who otherwise would not have it 
available.
  Mr. ROCKEFELLER. Mr. President, I rise today to join a number of my 
colleagues, and most especially Senators Grassley, Baucus, and Breaux, 
in introducing the ``Home Health Care Access Preservation Act of 
1998.'' This legislation seeks to prevent many reputable home health 
agencies from going out of business and it will ensure that patients 
continue to have access to quality home care in the future.
  I would like to talk about the importance of health care in the lives 
of our Nation's seniors and why we must take action to protect their 
access to home care. Some people question why we need to make these 
changes. I think they ask because when we talk about providing care, 
sometimes we forget that it is about taking care of someone. Home care 
is not just about giving people their pills and checking their blood 
pressure. It's about giving people who need a little help the ability 
to stay at home, surrounded by their family and friends. It's about 
preserving the dignity of people who've worked hard their entire lives 
to provide for their families and serve the community they live in.
  Mr. President, our seniors should not lose their right to live life 
in the way they want because of their age. They want to stay at home. 
They can get the care they need at home. We can provide it for them. 
And if we can do it, I think we should.
  There are also financial reasons to provide home health care. When 
managed properly, home health care can save the health system money. 
Homes care can often be substituted for more expensive care provided in 
hospitals and nursing homes.
  Last year, the Congress made needed reforms to the Medicare Program 
through the Balanced Budget Act, including moving to a prospective 
payment system (PPS) for home care. Everyone, including the home health 
industry, agrees that the Medicare Program should move away from a 
retrospective payment system and PPS to encourage all providers to be 
more cost-effective.
  The move toward PPS was included among many other reforms to 
Medicare. We, however, knew that we couldn't move directly into PPS--we 
needed time and more information to create a workable system. 
Therefore, the Interim Payment System (IPS) was also established in the 
BBA to transition home care from fee-for-service to prospective 
payment. But, in making these changes, the future viability of home 
health care has been threatened.
  Already, at least four home health agencies have gone out of business 
in my home State of West Virginia. In rural states like West Virginia, 
sometimes there is only one agency to provide these services in the 
area. We cannot afford to lose providers without endangering the well-
being of our citizens.
  Therefore, it is imperative that we again take action to make sure 
that the home health care problems we're facing today do not become a 
crisis that we'll have to face in the near future. This legislation 
will help do just that.
  This bill attempts to accomplish three critical goals:
  1. Keep agencies viable by providing a badly needed bridge between 
the old home health payment system and the new system due to be 
implemented in the next several years.
  2. Level the playing field in the home care industry, ensuring that 
efficient, low cost providers are able to continue providing services 
as Medicare transitions to a new payment system.
  3. Make certain that patients with chronic health needs have 
continued access to quality care.
  Many members of the home health industry are particularly concerned 
about this issue of providing quality health care to patients with 
chronic conditions. Under current law, caring for the chronically ill 
pushes home health agencies closer to the brink of bankruptcy. We share 
that concern and realize that IPS does not address this issue. As a 
result, our bill creates supplemental payments to compensate home 
health agencies for the added costs they incur caring for the 
chronically ill.
  While this bill would address the immediate concerns faced by the 
home health care industry, and is an important step toward protecting 
access--there is still more that needs to be done. While the BBA 
intended for IPS to be a temporary system, it now looks like it may be 
in place longer than we expected. I have recently learned that HCFA may 
have to postpone the implementation of the prospective payment system. 
They will have their hands full restructuring their computer systems to 
prepare for the year 2000. I remain concerned that if we do not move to 
PPS quickly, all agencies will face an additional 15 percent across the 
board cut. Certainly, this will place an undue financial burden on the 
agencies and force many to close their doors.
  Mr. President, I am not advocating going back in time and undo the 
BBA. However, we must address the inequities that resulted from its 
enactment, particularly when it comes to making certain our seniors get 
the care they need. To do this, we must level the playing field so that 
all reputable home health care agencies can remain competitive. Our 
legislation will accomplish this by providing a bridge between the old 
Medicare payment system and the new one.
  We have to remain watchful of the situation to make sure that home 
health care continues to be a viable option for so many in need. We 
have a commitment to those who came before us and sacrificed so much to 
make this Nation what it is today. I believe that we have to honor that 
commitment, and I urge my colleagues to do so by supporting the Home 
Health Care Access Preservation Act.
  Mr. JEFFORDS. Mr. President, I rise to once again express my concern 
over the plight of Medicare beneficiaries who are in need of home 
health care services. I am pleased to cosponsor the Home Health Access 
Preservation Act of 1998, with my colleagues on the Senate Finance 
Committee, as an attempt to address these concerns. The Interim Payment 
System which was enacted by this Congress for the reimbursement of home 
health care services is not

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achieving the policy goals that Congress wants nor is it not serving 
the best interest of American citizens.
  The act is appropriately titled because, without a correction, access 
to home health services for Medicare's most vulnerable beneficiaries 
will be seriously damaged. Since the new reimbursement system has been 
implemented, no fewer than 1,200 agencies have left Medicare program 
and most of these 1,200 have been forced to cease operations. Although 
many of our health policy actions are based upon allowing the market to 
determine the optimum efficiency of our health care system, we must 
recognize that not all areas and all sectors are prepared for a rapid 
change in how these forces operate. The problem of access to home care 
is particularly troublesome in rural areas and inner cities where these 
services are sorely needed.
  My home State of Vermont is a case in point. Home health agencies and 
their patients are facing a true crisis. There are only 13 agencies in 
the State, all not-for-profit, each serving a distinct and separate 
area. The system was developed to meet the needs of our largely rural 
State, and all of these agencies have a long tradition of providing 
quality care to our citizens. We cannot accept the loss of a single 
agency without serious consequences for patients and other sectors of 
care.
  I want to emphasize that today we are proposing a revision to the 
home health reimbursement system because of our deep concern for the 
welfare of those frail elders and disabled individuals who have come to 
depend upon home care for their very existence. Yes, we are concerned 
about fiscal responsibility. We remain determined to eliminate fraud 
and abuse within the Medicare program. Of course, we must find a way to 
preserve the Medicare Trust Fund for future generations. But it is not 
acceptable to seek these goals by any mechanism that will impose an 
even greater burden on those who are most in need of our help.
  The Home Health Access Preservation Act of 1998 is budget neutral. It 
does not change the fact that home health agencies will have to work 
hard to remain financially viable and allocate their resources 
carefully. The Act does, however, level the playing field for home 
health agencies. Under the present IPS system, agencies in close 
proximity to one another are expected to operate competitively under 
highly divergent payment limits. Furthermore, under the current IPS 
system, the most efficient agencies and those that care for the most 
difficult cases, are hit hardest by the reduction in reimbursement. 
Thus the Act does provide some relief for agencies in the worst 
predicament.
  Finally, it is important to recognize that the Home Health Access 
Preservation Act represents an interim resolution to our most pressing 
concerns. The implementation of a prospective payment system as 
directed by Congress represents the preferred solution. Thus, the bill 
requires the Secretary to provide regular quarterly updates to Congress 
on progress toward the development of the prospective payment system 
for home health care. But for now, Congress must pass legislation to 
ensure that home care remains an option for Medicare beneficiaries. We 
also must pledge to work with the Health Care Financing Administration 
and the home health industry to replace the interim payment system with 
a permanent system which better meets the needs of patients and is fair 
to health care providers.
  This Congress struggles with many challenges, but I doubt that there 
are many that are of greater significance than home health care. Access 
to home care affects a significant number of persons, has a serious 
influence on their mental and physical health, and its financial impact 
is measured in billions of dollars. We must act. We must act quickly to 
curtail the negative consequences of the payment system as it exists 
today.
                                 ______