[Congressional Record Volume 144, Number 142 (Saturday, October 10, 1998)]
[Senate]
[Pages S12343-S12348]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE HOME HEALTH FAIR PAYMENT ACT OF 1998--S. 2616
Statements on the bill, S. 2616, introduced on October 9, 1998, did
not appear in the Record. The material follows:
By Mr. ROTH (for himself, Mr. Moynihan, Mr. Chafee, Mr. Breaux,
Mr. Jeffords, Mr. Domenici, Ms. Collins, Mr. Baucus, Mr.
D'Amato, Mr. Bryan, Mr. Hatch, Mr. Kerrey, Mr. Rockefeller, Mr.
Nickles, Mr. Grassley, Ms. Moseley-Braun, and Mr. Murkowski):
S. 2616. A bill to amend title XVIII of the Social Security Act to
make revisions in the per beneficiary and per visit payment limits on
payment for health services under the medicare program; to the
Committee on Finance.
medicare home health fair payment act of 1998
Mr. ROTH. Mr. President, I rise to introduce the Medicare Home Health
Fair Payment Act of 1998.
This legislation is the product of a great deal of hard work and
analysis. It has bipartisan, bicameral, support. Currently, the bill
has 15 cosponsors, and similar legislation was introduced in the House
of Representatives.
Staff worked to make sure that the technical aspects of this bill
could be implemented. After technical review from the Health Care
Financing Administration, it is our understanding that the changes in
home health payments could be implemented as intended.
I would like to thank the many Senators who were very helpful and
contributed to the debate of addressing the home health interim payment
system. In particular, I commend Senator Collins, Senator Grassley,
Senator Breaux, Senator Cochran, and Senator Bond. All put forward
legislative proposals which we examined closely, and which helped us in
our development of the legislation now before us.
With this budget neutral proposal, about 82% of all home health
agencies in the nation will benefit from improved Medicare payments.
Although I have heard concerns that we do not go far enough to help
some of the lowest cost agencies, it is an important step in the right
direction. In fact, we have received letters of support from the
Visiting Nurse Associations of America and the National Association for
Homecare.
Let's remember where we were before the Balanced Budget Act of 1997.
Home health spending was growing by leaps and bounds, cases of fraud
and abuse were common, and the Medicare program was headed towards
bankruptcy in 2003.
Last year, Medicare spent $17 billion for 270 million home health
care visits so that one out of every ten beneficiaries received care at
home from a nurse, a physical or occupational therapist, and/or a nurse
aide.
Unlike any other Medicare benefit, the home health benefit has no
limits on the number of visits or days of care a beneficiary can
receive, beneficiaries pay no deductible, nor do they pay any co-
payments.
Prior to BBA, home health agencies were reimbursed on a cost basis
for all their costs, as long as they maintained average costs below
certain limits. This payment system gave immense incentives for home
health agencies to increase the volume of services delivered to
patients, and it attracted many new agencies to the program.
From 1989 to 1996, Medicare home health payments grew with an average
annual increase of 33 percent, while the number of home health agencies
swelled from about 5,700 in 1989 to more than 10,000 in 1997.
In response to this rapid cost growth and concerns about program
abuses, the BBA included a number of changes to home health care.
Congress and the Administration supported moving toward a Prospective
Payment System (PPS). In order for HCFA to move to a PPS, however, a
number of computer system changes were necessary with respect to their
home health operations. The interim payment system (IPS) was developed
to manage reimbursement until the PPS could be implemented.
Significant Medicare payment issues for home health care have emerged
from our analysis from the impact of the IPS. There are severe equity
issues in payment limit levels both across states and within states.
These wide disparities are exacerbated by a major distinction drawn in
payment rules between so-called ``new'' versus ``old'' agencies.
``Old'' agencies being those that were in existence prior to 1993, and
``New'' agencies those in existence since then.
The effects of the current home health payment methodology are that
similar agencies providing similar services in the same community face
very different reimbursement limits, leading to highly arbitrary
payment differences.
The payment limit issues will deepen significantly more in 1999 due
to a scheduled 15% cut in already tight and severely skewed payment
limit levels. Further, the prospective payment system scheduled to go
on-line in October, 1999, will be delayed by several months to one
year, because of year 2000 computer programming problems, according to
the Health Care Financing Administration.
This legislation takes several steps to improve the Medicare home
health care IPS and addresses the 15% cut.
First, it increases equity by reducing the extreme variations in
payment limits applicable to old agencies within states and across
states. This is achieved through a budget-neutral blend for ``old''
agencies.
Second, it increases fairness by reducing the artificial payment
limit differences between ``old'' and ``new'' agencies. Such
distinctions are contributing to the perception of arbitrariness in the
home health care system. And, our proposal does not create additional
classes of home health agencies, such as ``new-new'' agencies subject
to even deeper, arbitrary payment limits in the future. Restricting new
entrants to home health care is an inappropriate barrier to entry in
underserved areas--both in rural and inner city areas. In the
legislation, greater fairness is achieved by eliminating the 2 percent
discount applicable to new agencies, and raising the per visit limits
for all agencies from 105 percent to 110 percent of the national
median.
Third, the proposal lengthens the transition period for payment
changes by providing all agencies a longer transition period in which
to adjust to changed payment limits. It creates a sustainable fiscal
base for the statutorily mandated prospective payment system (PPS) by
delaying the scheduled 15 percent cut and the PPS for one year.
The following is a summary of the Medicare Home Health Fair Payment
Act of 1998:
per beneficiary limits
1. ``Old'' agency: payment is a blended formula equal to 50
percent BBA policy + 50 percent (50 percent national mean +
50 percent regional mean); and
2. ``New'' agency: payment is increased by 2 percent to
equal 100 percent of the national median, (which continues to
be regionally adjusted for wages).
per visit limits
3. Increase the per visit limits from 105 percent to 110
percent of the median.
delay both the 15 percent across-the-board cuts and the pps
4. Delay of the 15 percent across-the-board cuts in payment
limits and the implementation of the prospective payments
system now scheduled to take effect on October 1, 1999.
description of offset policies
1. Reduce the home health care annual market basket (MB) in
the following manner: for fiscal year 2000 it is MB minus 0.5
percentage point; for FY 2001 it is MB minus 0.5 percentage
point; for FY 2002 and FY 2003 it is full MB; and in FY 2004
it is MB plus 1.0 percentage point. Savings of $300 million
over 5 years.
2. Non-Controversial Revenue Raisers--Revenues of $406
million over 5 years.
a. Math Error Procedures--This provision would clarify the
math error procedures that the IRS uses.
[[Page S12344]]
b. Rotavirus Vaccine--This provision will add an excise tax
of 75 cents on a vaccine against rotavirus gastroenteritis, a
highly contagious disease among young children.
c. Modify Net Operating Loss Carryback Rules--Certain
liability losses can be carried back over ten years. This
provision would clarify the types of losses that qualify for
the 10-year carryback.
d. Non-Accrual Based Method--This provision would limit the
use of the non-accrual experience method of accounting to
amounts received for the performance of certain professional
services.
e. Information Reporting--This provision requires reporting
on the cancellation of indebtedness by non-bank institutions.
3. Budget Pay-Go surplus for remaining offset.
At the beginning of my statement, I recognized my colleagues for
their leadership on this issue. Now, I would like to especially thank
the staff involved for their hard work and dedication to the completion
of this bill. This represented a herculean task on their behalf. In
particular, I would like to recognize the principal staff involved who
spent many long hours putting the details of this package together,
they are Gioia Brophy and Kathy Means of my staff; Katie Horton and
David Podoff from Finance Minority staff; Louisa Buatti and Scott
Harrison of the Medicare Payment Advisory Commission; Tom Bradley and
Cyndi Dudzinski of the Congressional Budget Office; Jennifer Boulinger
and Ira Bernie of the Health Care Financing Administration; John
Goetchus of Senate Legislative Counsel; and Richard Price of the
Congressional Research Service.
Mr. President, I ask unanimous consent that letters of support from
the Visiting Nurse Association of America and the National Association
of Homecare be printed in the Record.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
Visiting Nurse Associations
of America,
Boston, MA, October 10, 1998.
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Chairman Roth: The Visiting Nurse Associations of
America (VNAA) deeply appreciates your efforts to craft a
solution to the problems caused by the Medicare home health
interim payment system for our members and other cost
effective home health agencies. Urgent action is needed
before Congress adjourns to provide relief to these agencies
to assure that they can continue to care for their Medicare
patients.
We understand that one barrier to action has been the
difficulty in finding acceptable funding offsets to the
modest Medicare spending required to achieve a workable
package. We have been advised that the Finance Committee is
currently considering an adjustment to future home health
market baskets that would generate approximately $300 million
in new Medicare savings to offset in part the cost of the one
year delay in the automatic 15% reduction in home health
payments now scheduled for October 1, 1999. Specifically,
VNAA understands that this proposal would reduce the market
basket index in 2000 and 2001 by 0.5 percentage point. In
2002 and 2003 the full market basket index would be used, and
in 2004 the market basket would be increased by one
percentage point.
VNAA strongly supports the delay in the 15% cut and
supports the adjustment to future home health market baskets
as a needed partial offset to the cost of that important
action.
VNAA hopes that its support for this offset will facilitate
quick action by the Senate. If there are any questions about
our position, please contact our Washington Representative,
Randy Fenninger, at 202-833-0007, Ext. 111.
Thank you for your continued efforts on behalf of cost
effective home health agencies and their patients.
Sincerely,
Carolyn Markey,
President and CEO.
____
National Association
For Home Care,
Washington, DC, October 7, 1998.
Hon. William V. Roth, Jr.,
Chair, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Senator Roth: The National Association for Home Care
(NAHC) is the largest home care organization in the nation,
representing all types of home health agencies and the
patients they serve. We have had continuing concerns over the
past year regarding the effects of the home health provisions
of the Balanced Budget Act of 1997, particularly by the
interim payment system (IPS).
We are pleased that you and other members of the Senate
Finance Committee have shown the leadership to develop a
package of IPS refinements that will help to ease some of the
most pressing problems of the new payment system. We are
particularly grateful for your inclusion of a one-year delay
of the 15 percent reduction that is currently scheduled for
October 1, 1999. While there remain a number of important
issues relating to the IPS that we believe must be addressed
in the 106th Congress, your proposal will make a meaningful
difference in helping agencies to remain open and to serve
Medicare beneficiaries throughout the nation.
Many thanks for all of your efforts. We look forward to
working with you, members of the House of Representatives,
and others in developing additional relief legislation early
next year.
Sincerely,
Val J. Halamandaris,
President.
____
Mr. MOYNIHAN. Mr. President, I am pleased to join my distinguished
Chairman, Senator Roth, and other colleagues in introducing a bill to
improve the home health interim payment system.
Prior to the Balanced Budget Act of 1997 (BBA), home health agencies
were reimbursed on a cost basis for all their costs, as long as they
maintained average costs below certain limits. That payment system
provided incentives for home health agencies to increase the volume of
services delivered to patients, and it attracted many new agencies to
the program. From 1989 to 1996, Medicare home health payments grew at
an average annual rate of 33 percent, while the number of home health
agencies increased from about 5,700 in 1989 to more than 10,000 in
1997.
In order to constrain the growth in costs and usage of home care, the
BBA included provisions that would establish a Prospective Payment
System (PPS) for home health care, a method of paying health care
providers whereby rates are established in advance. An interim payment
system (IPS) was also established while the Health Care Financing
Administration works to develop the PPS for home health care agencies.
The home health care industry is dissatisfied with the IPS. The
resulting concern expressed by many Members of Congress prompted us to
ask the General Accounting Office (GAO) to examine the question of
beneficiary access to home care. While the GAO found that neither
agency closures nor the interim payment system significantly affected
beneficiary access to care, I remain concerned that the potential
closure of many more home health agencies might ultimately affect the
care that beneficiaries receive, particularly beneficiaries with
chronic illness.
The bill we are introducing today adjusts the interim payment system
to achieve equity and fairness in payments to home health agencies. It
would reduce extreme variations in payment limits applicable to old
agencies within states and across states and would reduce artificial
payment level differences between ``old'' and ``new'' agencies. The
bill would provide all agencies a longer transition period in which to
adjust to changed payment limits.
Clearly, since the bill may not address all the concerns raised by
Medicare beneficiaries and by home health agencies, we should revisit
this issue next year. A thorough review is needed to determine whether
the funding mechanism for home health is sufficient, fair and
appropriate, and whether the benefit is meeting the needs of Medicare
beneficiaries.
America's home health agencies provide invaluable services that have
given many Medicare beneficiaries the ability to stay home while
receiving medical care. An adjustment to the interim payment system and
delay in further payment reductions will enable home health agencies to
survive the transition into the prospective payment system while
continuing to provide essential care for beneficiaries.
Mr. GRASSLEY. Mr. President, I am pleased to cosponsor the Medicare
Home Health Fair Payment Act of 1998, which is a first step toward
addressing the crisis in Medicare home health care. This is not a
perfect bill, but it's a good bill, and it is the best we can do at
this moment in time. And it's a good example of the Senate listening to
the American people. Let's pass it right now.
The Senate Special Committee on Aging, which I chair, highlighted the
problems with the home health Interim Payment System (IPS) in a hearing
on March 31st of this year. For more than six months since that day, I
have been working to find a solution to these problems, because I
believe that it's Congress' responsibility. It's true that the IPS
legislation was primarily HCFA's product. And HCFA's implementation of
the IPS has been questionable in many respects. But even if
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HCFA proposed it, there's no denying that Congress passed the IPS. So I
have argued all year that it is incumbent on Congress to fix what's
wrong with it, this year.
What's wrong with the IPS? 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 costs per patient in that year,
it can receive relatively high payment this year. That would be fine if
HCFA knew that the agency had sicker patients this year, but the sad
truth is that HCFA has no idea. So IPS has been a windfall for some
agencies, but crushing for agencies with low historical costs. We have
a lot of those in Iowa, where we still know the value of a dollar. Many
of those hit hardest are the ``little guys,'' the small businesses that
are the lifeblood of the program in rural areas.
For months, I have worked with a bipartisan group of Finance
committee members, including especially Senators Breaux, Baucus, and
Rockefeller, on fixing IPS. In July we introduced the product of those
efforts, the Home Health Access Preservation Act, and that bill clearly
influenced the new Finance bill. I thank Chairman Roth and his fine
staff for their willingness to work with us to find a viable approach.
In the final months of this session, they have really gone the extra
mile.
Now, this bill doesn't give anyone everything that they want.
Senators Roth and Moynihan rightly focused on creating something that
could actually pass this year, and so the bill is a product of
compromise. One of the key features is that the bill is paid for, so
that it will not add another burden onto the already-burdened Medicare
Part A trust fund. The offsets used are fair ones, and should not be
controversial.
I am familiar with the bill the House is voting on today. Should both
bills be passed, with all due respect to my House colleagues, I urge
them to recede to the Senate bill in conference. I have worked on this
issue a long time, and I don't believe this bill can be improved upon.
Mr. President, this bill will not satisfy everyone. It's a
compromise, and in fact, it likely will not fully satisfy anyone. But
it's the right thing to do, because it will help to keep some of our
good home health providers around for another year, so they can make
sure our seniors get home care when they need it.
Mr. BREAUX. Mr. President, I rise today in support of the Medicare
Home Health Fair Payment Act of 1998. This is an issue that I have
worked on for several months with Senator Grassley and other Members of
the Senate and I am pleased that the Senate has addressed this issue
before adjourning.
I am the first to admit that there is too much fraud, waste, and
abuse in Medicare's home health benefit and there is probably no other
state where the problem is more pronounced than Louisiana. Every graph
I see on home health shows Louisiana off the charts--Louisiana has the
highest per beneficiary spending in the country; we have more visits
per patient than any other state in the country; Louisiana represents
5.2% of all Medicare home health visits even though only 2.3% of
Medicare beneficiaries live in the state. There are 466 home health
agencies in Louisiana--we have more home health agencies than McDonalds
in the state. So I know firsthand that there are problems with home
health and that states like Louisiana could afford a reduction in the
number of agencies. The problem is that the interim payment system
crafted by Congress and the Administration last year is causing the
wrong agencies to go out of business.
It is clear that the IPS has had serious unintended consequences. In
Louisiana and other states, the interim payment system has for the most
part rewarded inefficient providers and forced many low-cost, efficient
agencies out of the program. For example, you could have one agency
with a per beneficiary limit of $12,000 competing with another agency
down the street with a per beneficiary limit of $4,000. What we did
with IPS is essentially put that $4,000 agency at such a competitive
disadvantage that there is no way it can stay in business.
When we finally move home health to prospective payment, it is
critical that some low-cost providers be in business to treat patients
who need home care. The Grassley-Breaux bill that we introduced several
months ago tried to level the playing field by bringing the very high
cost providers down while raising the reimbursement for low cost
providers. This reflects what will happen under prospective payment
when all providers will essentially be paid the same amount for
treating the same kind of patient. We also eliminated the distinction
between old and new providers in an attempt to further level the
playing field. To ensure that high cost patients would still have
access to home health, the Grassley-Breaux bill included an outlier
policy so that home health agencies would not turn high cost patients
away.
The interim payment reform proposal put forward by Senators Roth and
Moynihan is an important first step towards fixing IPS and I applaud
the bipartisan approach the Senate used in arriving at this proposal. I
think most members would argue that much more needs to be done and I
would agree. I am hearing from many home health agencies in Louisiana
that this bill will only be of marginal help to the state but that it
is important that something get done this year. As is the case with
most things we do around here, particularly in the waning hours of this
Congress, getting something is better than getting nothing. I am
pleased that there is a bipartisan commitment by the Senate Finance
Committee to revisit this issue next year and take a much more
comprehensive look at the home health benefit. It is imperative that
the Congress address this issue again next year since this proposal
represents only a temporary fix. But it is an important one. The Senate
bill:
(1) Institutes a new blend for old agencies to increase
reimbursements to low-cost agencies and reduce payments to very high-
cost agencies. This will begin to level the playing field and prepare
all providers for prospective payment. While the Senate proposal
narrows the discrepancy between old and new agencies, I think much more
needs to be done to restore equity to the program.
(2) Slightly increases payments to so-called ``new'' agencies, those
in business since 1994. While in Louisiana this will only mean about an
extra $52 per patient per year, it is important to recognize that new
agencies need some relief.
(3) Increases the per visit cost limits from 105% of the national
median to 110% of the national median.
(4) Most importantly, the Senate proposal delays the across-the-board
15% reduction that is currently scheduled for October 1, 1999. HCFA was
originally required to institute a prospective payment system for home
health agencies by October 1 of next year. Because of the Y2K problem,
HCFA is now anticipating that it will not have PPS in place until April
1, 2000. Delaying the automatic 15% reduction in payments to home
health agencies will ensure that the agencies aren't punished for
HCFA's inability to implement PPS in a timely manner.
The goal of this bill is to fix some of the problems created in the
BBA. Again, it is certainly only a first step--there is still much more
that needs to be done and I am hopeful that the 106th Congress will
revisit this issue to ensure that Medicare beneficiaries continue to
have access to this very important benefit.
I urge my colleagues to support this bipartisan measure. It may not
be everything everyone wants, but it certainly is better than doing
nothing this year and it provides much-needed temporary relief to home
health agencies across the country.
Mr. JEFFORD. Mr. President, today, I am very pleased to join in
introducing the Medicare Home Health Fair Payment Act, legislation that
significantly improves the interim payment system to home health
agencies established under the Balanced Budget Act of 1997. Over the
past eight months, I have been working as hard as I know how to find a
solution for the crisis faced by our home health care agencies in
Vermont. Our 13 home health agencies are model agencies that provide
high-quality, comprehensive home health care with a low price tag.
However, under Medicare's new interim payment system the payments to
the agencies are so low that Vermont's seniors may be denied access to
needed home health services.
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Under the legislation, the reimbursement from Medicare to home health
agencies will be increased, and the 15% across-the-board cut scheduled
for next year will be delayed by one year. Adoption of this bill will
give the Vermont home health agencies needed financial relief until a
new prospective payment system is in place.
For the past seven years, the average Medicare expenditure for home
health care in Vermont has been the lowest in the nation. However,
rather than being rewarded for this cost-effective program, Vermont has
been penalized by the implementation of the current interim payment
system. In June, 1998, Vermont's home health agencies projected that
the statewide impact of the current interim payment system was a loss
of over $4.5 million in Medicare revenues for the first year. This
represents a loss of over 11% on an annual base of $40 million
statewide.
Vermont is a good example of how the health care system can work to
provide for high quality care for Medicare beneficiaries. Home health
agencies are a critical link in the kind of health system that extends
care over a continuum of options and settings. New technology and
advances in medical practice hospitals to discharge patients earlier.
They give persons suffering with acute or chronic illness the
opportunity to receive care and live their lives in familiar
surroundings. Time and time again, Vermont's home health agencies have
proven their value by providing quality, cost-effective services to
these patients. Yet time and again, federal policy seems to ensure that
their good deeds should go punished.
The Medicare Home Health Fair Payment Act is the product of a great
deal of hard work by the Finance Committee and is carefully designed to
ease the burden of home health care agencies in the transitional years
prior to the introduction of a new prospective payment system in 2000.
The bill includes several strong policy components, which promote
equity and fairness among the agencies nationwide. Under the new
prospective payment system, Vermont and other cost-effective agencies
can look forward to being rewarded rather than penalized for their
high-quality, low-cost comprehensive medical care to beneficiaries.
It is my strong hope, that this bill will be adopted by the Senate,
supported by the House, and signed into law. I have worked closely with
Vermont's 13 home health agencies, Senator Leahy and the Governor's
Office in developing a solution to the payment crisis. The signing of
this bill will mark a victory for our State, and it will also reflect a
strong nationwide commitment to high-quality, cost-effective home
health agencies such as those in Vermont.
Ms. COLLINS. Mr. President, I rise in support of the legislation
introduced by the distinguished chairman of the Finance Committee. I
would have preferred the approach taken in my own home health bill,
which I introduced last April and which has 29 Senate cosponsors,
because it would have done more to level the playing field and provide
more relief to historically cost-effective agencies. However, I
understand that the chairman faced a difficult task of balancing a
number of competing issues, and the bill we are considering today is an
important first step that will move the process forward and provide a
measure of relief to those cost-effective agencies in every State that
are currently being penalized by the formula used to calculate the per-
beneficiary limit.
America's home health agencies provide invaluable services that have
enabled a growing number of our most frail and vulnerable Medicare
beneficiaries to avoid hospitals and nursing homes and stay just where
they want to be--in their own homes. However, critics have long pointed
out that Medicare's historic cost-based payment for home health care
has inherent incentives for home care agencies to provide more
services, which has driven up costs.
Therefore, there was widespread support for the Balanced Budget Act
provision calling for the implementation of a prospective payment
system for home care. Until then, home health agencies are being paid
according to a new ``interim payment system,'' which unfortunately is
critically flawed.
As we are all aware, the Health Care Financing Administration has
diverted considerable resources to solving its Y2K problem so that
there will be no slowdown of Medicare payments in 2000. As a result,
implementation of the prospective payment system for home health
agencies will be delayed, and home health agencies will remain on IPS
far longer than Congress envisioned when it enacted the Balanced Budget
Act. This makes it all the more imperative that we act now to address
the problems with a system that effectively rewards the agencies the
have provided the most visits and spent the most Medicare dollars,
while it penalizes low-cost, more efficient providers.
Home health agencies in the Northeast are among those that have been
particularly hard-hit by the formula change. As the Wall Street Journal
recently observed, ``If New England had been just a little greedier,
its home health industry would be a lot better off now . . .
Ironically, . . . [the region] is getting clobbered by the system
because of its tradition of nonprofit community service and efficiency.
Moreover, there are wide disparities in payments and no logic to the
variance in payment levels. The average patient cap in the East South
Central region is almost $2,500 higher than New England's without any
evidence that patients in the southern States are sicker or that nurses
and other home health personnel in this region cost more.
Moreover, the current per-beneficiary limits range from a low of $760
for one agency to a high of $53,000 at another. As such, the system
gives a competitive advantage to high-cost agencies over their lower
costs neighbors, since agencies in a particular region may have
dramatically different reimbursement levels regardless of any
differences among their patient populations. And finally, this system
may force low-cost agencies to stop accepting patients with more
serious health care needs.
Mr. President, I realize that we cannot address every home health
issue that has been raised this year. Some matters will have to carry
over to the next Congress, and I fully intend to work with my
colleagues next year on these items. Nonetheless, there are things we
can do this year, and I believe that it is imperative that Congress act
now to begin to address these problems. At least one agency in Maine
has closed because the reimbursement levels under this system fell so
short of its actual operating costs. Other cost-efficient agencies in
my State are laying off staff or declining to accept new patients with
more serious health conditions.
Which brings us back to the central and most critical issue--the real
losers in this situation are our seniors, since cuts of this magnitude
simply cannot be sustained without ultimately affecting patient care.
Mr. President, once again, I commend the chairman of the Finance
Committee for his efforts on this difficult issue and urge my
colleagues to join me in supporting this legislation.
Mr. BOND. Mr. President, I thank the Senator from Delaware, Mr. Roth,
for attempting to bring some resolution to the home health crisis
before the end of this session and making much needed revisions to the
Medicare home health interim payment system (IPS). I fully support
delaying the automatic 15 percent reduction for one year, raising the
cost limits to 110 percent of the median, and raising payments for new
agencies. However, I still have serious reservations about a blend
approach which reshuffles the deck chairs on the Titanic. It is
imperative that we restore access to home health care for medically
complex patients, and I look forward to working with my colleagues to
address this issue in conference.
At this time my distinguished colleague from Mississippi, Mr.
Cochran, and I would like to engage the able Chair of the Senate
Finance Committee, Mr. Roth, in a discussion about the problems that
have resulted from IPS, and further action that the Senate must take to
complete the work begun this year in this important area.
Mr. President, there is not a single Member of the Senate or House of
Representatives who has not become painfully aware of the serious
problems that have arisen within the home health program over the last
year. These problems stem from enactment
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of a temporary payment system that was recommended to us by the Health
Care Financing Administration. The fact is that the so-called interim
payment system (IPS) was untested, and, as we have found, made such
swift and deep cuts in reimbursements, thereby hampering the ability of
home care providers to serve needy patients and affecting access to
care for some of the most frail, oldest, and poorest of our seniors and
disabled.
The IPS is the worse case of false economy that I've ever seen. If
the elderly and disabled cannot get care at home, it's clear where they
will go for care. Emergency room costs will rise, patients will go into
more expensive institutionalized care, or patients simply won't get any
care at all. In addition to increasing Medicare costs, there will be an
explosion in Federal and State Medicaid budgets. I believe the Senator
from Mississippi would agree that the problems brought about by IPS are
significant.
Mr. COCHRAN. Mr. President, the statements made by the Senator from
Missouri are, I'm sad to say, quite true. Most recent official figures
from 29 state health departments indicate that close to 800 agencies
have closed in those states. This number represents parent agencies;
other data from the states indicate that the number of agencies and
branches that have closed is much higher. We also know that there are
many more agencies on the brink of closing if some relief from IPS is
not provided soon. If the current rate of closures continues, we could
easily see a loss of 2,000 more home health agencies by October 1,
1999.
Agency closing are resulting in significant beneficiary care access
problems. In fact, a recent GAO study found that two-thirds of
discharge planners and more than a third of the aging organizations
surveyed reported having had difficulty obtaining home health care for
Medicare patients in the last year, especially those who need multiple
weekly visits over an extended period of time. Matters will only get
worse as agencies become more and more limited in their ability to
provide needed services. In fact, in testimony before the Ways and
Means Committee in August, Ms. Gail Wilensky, former head of the Health
Care Financing Administration, warned that, if the Congress waits for
proof that a crisis is occurring in home care before it acts, it will
be too late. She also indicated that more money was taken out of home
care than the Congress had expected when IPS was designed and then
implemented by HCFA.
Mr. BOND. Mr. President, I might add at this time that despite the
fact that HCFA is responsible for this draconian system, HCFA has only
offered technical assistance to address this crisis. HCFA must beheld
accountable for this insane and inequitable system and face up to the
fact that its system is wreaking havoc throughout our country.
Clearly the program cannot continue under this scenario and continue
to provide quality services to eligible individuals. Some of my
colleagues may wonder how this all came about. Perhaps the Senator from
Mississippi can provide some insight into this.
Mr. Cochran. Mr. President, I thank my colleague. In addition to HCFA
imposing an untested payment system with the home health IPS, the
scoring mechanism used by CBO to estimate savings resulting from IPS
included a \2/3\ behavioral offset. What this means is that CBO
presumed that for every $3 saved under IPS, agencies would find some
way, through expanding the number of beneficiaries they serve, to make
up $2 of every $3 lost under IPS. What has become clear, as was
indicated by the Senator from Missouri, CBO's behavioral assumptions
about agencies increasing the number of beneficiaries served have not
come to pass. Instead, we are seeing a near dismantling of the home
care program as the result of IPS.
We have already seen the devastating effects of the interim payment
system in my state of Mississippi. While I applaud the Senate for its
efforts to reform the interim payment system, we must commit ourselves
to continuing this work as soon as the Senate reconvenes. I am
particularly concerned that we must address the problems that will be
created by the automatic 15% reduction in payment limits which we have
agreed to delay one year. It took this distinguished body that long to
reach the temporary solutions which we have before us today and we
cannot put off deliberations on this additional cut until the last
moment. Prudence dictates that we find ways to insure that any
additional cuts in reimbursement not adversely affect efficient
providers nor burden patients in their access to necessary home care
services.
Mr. Bond. Thank you for those insights Senator cochran. I fully agree
that this must be a priority of the Senate to address as soon as
possible. There are additional issues which also need to be addressed
at that time, particularly how to reimburse those agencies which serve
our nation's most medically complex patients. We have a moral
obligation to ensure that our nation's seniors and disabled are
provided the quality and comfortable care they deserve. In addition, we
must look at provisions which require that the payment limits are
prorated where a patient is served by more than one agency. It is my
understanding that the Health Care Financing Administration is not
capable of administering this provision, yet it is having impact on
patient's access to care. The problem centers around the inability of a
home health agency to properly manage its business when it does not
know the ultimate payment limitation which it must budget. The home
health agency has no way of knowing whether a patient has received
services from another home health agency during the year and cannot
possibly figure out whether its breaking even or going broke. While we
do not want home health agencies to abuse the system through schemes
that allow them to circumvent the limits by transferring patients, we
also do not want to penalize patients and providers from the
appropriate management of home care services. Another issue is the
elimination of the periodic interim payment methodology scheduled for
October, 1999. That termination date was chosen to coincide with
implementation of prospective payment system, which we now know, will
not be in operation at that stage. This Congress should recognize the
need to continue that system until such time as a Prospective Payment
System is in place.
Mr. Cochran. Mr. President, I too am very concerned about the delay
in the development and implementation of a PPS system. It is the only
clear solution to deal with those complex patients who are having
increasing difficulty in gaining access to home care services. If we
cannot have PPS soon, we must find a way to better reimburse agencies
which care for these high cost patients. Home health agencies in
Mississippi report to me that this is one of the most important
problems that must be addressed. At the same time, putting together a
PPS program will do no good if we destroy the foundation of our home
health services delivery system. As the result of IPS, I am told that
home health agencies across the country will find some time in the
middle of next year that they have likely been over paid by the
Medicare program even though they delivered appropriate services to
patients at a reasonable cost. This Congress must find a way to deal
with that pending crisis in order to protect those home health agencies
that met patient's needs yet still incurred costs beyond the arbitrary
limits which were developed under IPS.
Mr. Roth. Senator Bond and Senator Cochran, I thank you for your
leadership within the Senate of these crucial issues affecting Medicare
beneficiaries across the country. Through your assistance we hope to
ensure that home health care is readily available where the needs
arise. We will continue to explore fully those issues which you have
raised. We will also draw on the resources of Medpac, HCFA, the GAO,
and representatives from home care patients and providers to determine
whether more work is required. Home health care is a crucial part of
our health care system and the elderly and disabled protected by the
Medicare program deserve the attention of this Congress to insure that
we not disrupt this important benefit without a full and accurate
understanding of the consequences. Once again, I thank Senator Bond and
Senator Cochran for the guidance that they have offered to this body in
addressing these important issues.
[[Page S12348]]
Mr. CONRAD. Mr. President, I want to comment on the home health
proposal that is before us and ask the Chairman of the Finance
Committee to clarify his intentions with regard to addressing this
issue in the next Congress.
The current home health interim payment system isn't working. Under
the current system, those agencies that abused the system and milked
Medicare for every possible reimbursement dollar are rewarded with
generous cost limits. However, North Dakota agencies that did not abuse
the system, that worked hard to keep their costs down, are penalized
with unrealistically low limits. Not only is this terribly unfair, it
creates a terrible incentive for efficient, low-cost agencies to go out
of business and transfer their employees and their customers to
agencies that have ripped off the system.
This system clearly penalizes North Dakota home health agencies and
the beneficiaries who rely on their services. The median per
beneficiary cost limit for North Dakota home health agencies is the
second lowest in the country--a mere $2150 per year. In fact, the
agency in North Dakota with the highest limit has a cap that is below
the lowest limit in the state of Mississippi. There is no rational
basis for this sort of inequity.
Unfortunately, the proposal before us today takes only the smallest
of steps toward correcting this inequity and leaves in place too many
of the current incentives that favor high cost, wasteful home health
agencies. I do not see how I can, in good conscience, go back to North
Dakota home health agencies and tell them that we can only lift their
payments rates 2 or 3 percent when agencies in other parts of the
country will continue to have payment limits 3 and 4 times as high as
theirs. It is not fair. It is not good policy. It is not good enough.
For that reason, I will feel constrained to object to this legislation
unless I can be assured by the Chairman of the Finance Committee that
there will be an opportunity to do better next year.
Mr. ROTH. Mr. President, I thank the gentleman from North Dakota for
his comments. He is right; this change is only a small step. It does
not ``fix'' the interim payment system. However, in the time remaining
this year, this is the best we can do. It takes an important step
toward making the system more fair, and it reduces the perverse
incentives in the current system. In addition, it recognizes that the
Prospective Payment System for home health will be delayed, so it
delays for one year the 15% cut in payments that is currently scheduled
to go into effect on October 1, 1999.
I want to assure my colleague from North Dakota, however, that I
fully intend to revisit the home health issue next year. At that time,
I pledge to work with him and other members of the Finance Committee to
see if we can come up with a system that better addresses the needs of
North Dakota home health agencies.
Mr. CONRAD. I thank the Chairman. With that assurance, I will drop my
objection and let this legislation move forward.
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