[Congressional Record Volume 144, Number 142 (Saturday, October 10, 1998)]
[Senate]
[Pages S12284-S12286]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             MEDICARE HOME HEALTH FAIR PAYMENT ACT OF 1998

  Mr. HATCH. Mr. President, as we begin to wrap-up the 105th Congress,

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there remains one essential item of business which I strongly believe 
warrants Senate action before we adjourn for the year.
  Over the past year, numerous concerns have been raised by home health 
care agency officials and Medicare beneficiaries over the new Medicare 
payment system established in the Balanced Budget Act of 1997.
  As a strong home health care advocate in the Senate for virtually my 
entire career, I am well aware of the importance home health care is 
for Medicare beneficiaries with acute needs such as recovering from 
joint replacements and chronic conditions such as heart failure.
  Utahns have consistently told me they prefer to receive care in their 
homes rather than in institutional settings such as hospitals and 
nursing homes.
  In fact, patients actually do better in their recovery while at home 
than in a nursing home or hospital. And, clearly, the costs associated 
with home care are far less than what is charged in an institutional 
setting.
  As a member of the Finance Committee, which has jurisdiction over the 
Medicare program, I am also well aware of the impending financial 
crisis Medicare was facing last year. Home health care was the fastest 
growing component in Medicare.
  Between 1989 and 1996, Medicare spending for home health services 
rose from $2.5 billion to $16.8 billion. Concurrently, according to the 
GAO, the number of home health agencies grew from 5,700 in 1989 to more 
than 10,000 in 1997.
  Indeed, home health care spending threatened to consume more and more 
of the limited Medicare dollars.
  Last year, Congress was faced with an extraordinary and daunting 
task--namely, the financial survival of the Medicare program.
  No less than President Clinton's own advisors who serve as his 
appointed Trustees for the Medicare Trust Fund warned Congress that 
absent immediate action Medicare Part A would be insolvent by the year 
2001.
  Clearly something had to be done. The status quo was unacceptable.
  To control the rapid cost growth in all components of Medicare, 
Congress passed the Balanced Budget Act of 1997, or the BBA, which 
required the Health Care Financing Administration (HCFA), the agency 
responsible for administering the Medicare program, to implement a 
Prospective Payment System that sets fixed, predetermined payments for 
home health services.
  Until that system could be developed and implemented, agencies would 
be paid through an Interim Payment System, or IPS, which imposes limits 
on agencies' cost-based payments. These limits were designed to provide 
incentives to control per visit costs and the number and mix of visits 
for each user.
  Since the implementation of the IPS on October 1, 1997, numerous 
concerns have been raised about severe equity issues in the payment 
limit levels.
  For instance, wide disparities exist in reimbursement levels ranging 
from $760 to $53,000 on average per beneficiary. The payment limits are 
further exacerbated by a major distinction in the payment rules between 
the so-called ``new'' verses ``old" agencies.
  The impact of the IPS has caused comparable home health agencies 
providing comparable home health services to receive very different 
reimbursement payments. The payment limit issues are further 
exacerbated by the imposition of a 15% across the board cut in payment 
rates which is scheduled to take effect in October 1999.
  According to a September 1998 report from the General Accounting 
Office, at least 12 home health agencies in my state of Utah have been 
forced to close their doors since the implementation of the IPS.
  This leaves just 75 agencies to serve the entire estimated home 
health care population of 22,000 home health beneficiaries throughout 
my state.
  And, I note for my colleagues who have not had the pleasure of 
visiting Utah, with its spectacular vistas and magnificent mountains, 
essentially is a rural state with population centers far apart.
  So if you live in Panguitch or Vernal, and your home health agency 
closes its doors, you will be very lucky if there is any other service 
option available.
  Home health care is particularly vital in improving efforts to 
deliver health care in rural areas where quality, long term care has 
been deficient for too long.
  As my colleagues recall last year, there was no disagreement on the 
need to move to the PPS. The home health care industry was supportive 
of the new system--and remains supportive to this day.
  The problem is with moving to the PPS from the current cost-based 
payment system. Data which was not available to accurately develop the 
PPS would be needed before such a system could be put into place.
  Accordingly, the IPS was proposed as a mechanism to provide HCFA was 
the necessary baseline information to develop the PPS.
  As we now know, the IPS has resulted in new cost limits causing many 
home health agencies to close and resulted in beneficiaries, 
particularly those with high-cost needs, to have difficulty in 
obtaining care.
  I am especially mindful of the situation in my state of Utah where 
many of my constituents have talked to me about the problem.
  I have met with officials from Utah's home health agencies from 
around the state as well as with beneficiaries who depend on the 
services performed by these agencies.
  Moreover, the Senate Small Business Committee held a hearing on July 
15, 1998 on the impact of the IPS on small home health businesses. One 
of my constituents, Mr. Marty Hoelscher, CEO of Superior Home Care in 
Salt Lake City testified at the hearing. He stated:

       The IPS provides a flat payment to agencies for each 
     patient, regardless of the amount of care the patient 
     medically requires. What happens to the really sick patients? 
     What happens to the agencies who don't turn their backs on 
     them? In Utah, the patients of the 18 free standing agencies 
     which have recently ceased operations are filling our 
     emergency rooms, intensive care units, nursing homes or 
     morgues.

  I have been working concertedly with my Senate colleagues to resolve 
these problems. For example, in July, I joined with 20 of my colleagues 
in the Senate on July 16, 1998 to cosponsor S. 2323, the ``Home Health 
Access Preservation Act of 1998.''
  This legislation was designed to alleviate the problems created by 
the IPS, and specifically, to address the problems associated with the 
high costs of caring for the sickest patients and those who need care 
on a long term basis.
  After Senator Grassley introduced S. 2323, it became evident that the 
budget neutrality provision--which necessitated that S. 2323 incur no 
new spending--was requiring us to reallocate resources in a way that 
disadvantaged some home health providers in order to assist others.
  Many members expressed concerns that because of the problems inherent 
in such a reallocation, we should just repeal the IPS totally. I was 
extremely sympathetic to those concerns, but unfortunately, the 
Congressional Budget Office advised us that such a repeal was very 
costly; in fact, it was so costly that a total repeal was clearly out 
of question if we are to maintain the balanced budget which is so 
important to our country.
  I am pleased that as a result of several months work by the Chairman 
and ranking minority member of the Finance Committee, Senator Roth and 
Senator Moynihan along with those of us on the committee have developed 
this bipartisan proposal which is supported by the home health 
industry.
  The legislation we are introducing today, while not a perfect 
measure, is a responsible bill that will improve problems inherent in 
the current law and which will work to the benefit of thousands of 
Americans who rely on very valuable home health care services.
  Under this legislation, several steps will be taken to improve the 
IPS.
  First, the bill will reduce the extreme variations in payment limits 
applicable to old agencies within states and across state lines.
  The bill also provides for a reduction in the payment level 
differences between ``old'' and ``new'' agencies. Such provider 
distinctions exist nowhere else in the Medicare system and contribute 
to the arbitrary nature of the payment system for health care services.
  Moreover, the bill delays for one year the 15% across the board cut 
in payment limits for all agencies that was to

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take effect in October 1999. Home health agencies in my state tell me 
this is perhaps the most significant and important feature of the bill.
  The bill further directs the Health Care Financing Administration to 
take all feasible steps necessary to minimize the delay in the 
implementation of the PPS. Specifically, HCFA will be required to 
accelerate data collection efforts necessary to develop the case-mix 
system which is at the heart of the PPS model.
  Mr. President, I am pleased to add my name as an original cosponsor 
to this vitally needed legislation.
  As we are all too painfully aware, our budget rules require that any 
legislation such as this which proposes ``new'' Medicare spending be 
accompanied by a reduction in spending to offset the costs.
  While I understand the need to maintain budget neutrality, I am 
concerned about the offsets in the Roth bill, but I am pleased Senator 
Roth has agreed to consider other offsets in order to address my 
concerns. We cannot move forward without an offset since the 
Congressional Budget Office has scored the bill at a cost of $1 
billion.
  With the assurance that I now have received from the Chairman of the 
Finance Committee, I am lending my support to this important bill.
  Our overriding objective at this late time with only hours left in 
the 105th Congress is to get this bill passed by the Senate and into 
conference with the House.
  I am pleased that the House approved its version of the legislation 
just moments ago, and while the House legislation is not the measure I 
would want, its passage does move us substantially closer toward 
enactment of a final bill prior to adjournment.
  I can assure my constituents in Utah who depend on home health care 
services that I will continue to pursue legislative resolution of these 
financing issues to preserve the home health care benefit for all 
Medicare beneficiaries.
  And finally, let me also assure the dedicated and hard working people 
of Utah who provide home health care services that I will continue to 
work with them to bring some logic to the new Medicare payment system.
  I especially want to thank Marty Hoelscher, Steve Hansen, Grant 
Howarth, Vaughn McDonald, Dee Bangerter and the many others in Utah, 
especially the Utah Association of Home Health Agencies, for their 
counsel and leadership over the past year in working on this very 
complex issue.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KERRY. Mr. President, I ask unanimous consent that I be permitted 
to proceed in morning business for such time as I may consume.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.

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