[Congressional Record Volume 144, Number 151 (Wednesday, October 21, 1998)]
[Extensions of Remarks]
[Pages E2293-E2294]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


              MEDICARE HOME HEALTH BENEFIT PAYMENT SYSTEM

                                 ______
                                 

                          HON. J.C. WATTS, JR.

                              of oklahoma

                    in the house of representatives

                      Wednesday, October 21, 1998

  Mr. WATTS of Oklahoma. Mr. Speaker, I wish to commend the staff 
members and administrators who provide home health care services in my 
home state of Oklahoma and across the country. During the past year I 
have had the opportunity to work with hundreds of dedicated home health 
care providers, and they should all be very proud of and we should all 
be very thankful for their outstanding service to the nation's elderly 
and disabled.
  I have been working with these constituents to make reforms in the 
Interim Payment System (IPS) that was part of the Balanced Budget Act. 
An unintended consequence of that Act has been an unfair payment system 
that has caused a 15 percent drop in Medicare certified home care 
agencies in Oklahoma. Regretfully, the complexities of the IPS have 
resulted in misunderstandings in Congress as we search for a solution.
  This week I received a letter from former Senator Frank Moss who 
sponsored the original Medicare home care benefit. His perspective on 
and explanation of this benefit is enlightening, and I would like to 
submit his letter for the Record. As we continue to work on this issue 
in the next Congress, Senator Moss's letter will help us move forward 
in finding a solution.

                                           Salt Lake City, UT,

                                               September 30, 1998.
     Hon. Julius Caesar Watts,
     U.S. House of Representatives, Washington, DC.
       Dear Congressman Watts: Your assistance, in a matter of 
     great importance to the nation's disabled and older 
     Americans, would be very much appreciated. I am appealing to 
     you to help save the Medicare home care benefit, which is in 
     grave jeopardy at the very time when we need it the most.
       You may remember that I was the sponsor of the Medicare 
     home care benefit. This came in 1965 after I had spent 
     several years investigating nursing home abuses. We were 
     looking for the best way to care for the growing numbers of 
     disabled seniors. Home care keeps families together; it keeps 
     seniors independent in their own homes where they want to be; 
     and home care is cost-effective in comparison to 
     institutional care. I still believe in home care so much that 
     I volunteer my time to serve on the Board of the local 
     Visiting Nurses here in Salt Lake City, as well as on the 
     Board of our national organization.
       You may remember that I devoted a substantial part of my 
     career to policing Medicare and Medicaid programs. I am 
     sending you a few clippings that capture this history. I 
     conducted more hearings and investigations and authored more 
     investigative reports on the subject of fraud and abuse than 
     anyone. Among the legislation that I authored were provisions 
     that: (1) made Medicare and Medicaid fraud a felony, (2) 
     created the Office of the Inspector General and the 
     Department of Health and Human Services, and (3) created 
     State Medicare Fraud Units. Our committee put every part of 
     Medicare and Medicaid under the magnifying glass. Home health 
     care was unique. It was one part of the many programs that 
     had the least amount of fraud and abuse. One reason for this 
     is that the reimbursement formula that I wrote into the 
     Medicare home health law is a veritable fiscal straight 
     jacket. My most recent review of Medicare and Medicaid 
     convictions indicate that while there have been a few highly 
     publicized cases, the relative incidence of fraud in home 
     health is miniscule when compared with the record of the 
     doctors, nursing homes, hospitals and other providers. I 
     still insist, however, that we continue with our policy of 
     zero tolerance for fraud. I commend all Members of Congress 
     who have continued the oversight work that was so important 
     to me.
       There is no doubt that we are on the verge of a national 
     crisis with respect to home health care. To assist you in 
     understanding what is happening, I include herewith, a list 
     of questions & answers, which I have described as myths and 
     realities. There is no way to get around the fact that 1200 
     home health agencies (1/8 of the total) have either dropped 
     out of Medicare or closed their doors over the past ten 
     months. The home health problem has many parts. The root, 
     however, is an element within the interim payment system 
     (IPS) called the aggregate per beneficiary limit (ABL). 
     Agencies already had their per visit costs limited. However, 
     this new limit also spells out how much home health agencies 
     can spend per patient based on their historical reimbursement 
     numbers. Agencies that have been cost-efficient in the past 
     are now being penalized. They may now have a per beneficiary 
     limit of $2,000 or less. Other agencies who have been less 
     careful with Medicare monies may have $15,000 or more to 
     spend per patient for patients with identical needs, in the 
     same locality. It is easy to see why the aggregate per 
     beneficiary limits are fundamentally flawed and unfair.
       If our intention was to reduce the incidence of fraud and 
     abuse, this new aggregate per beneficiary limit does exactly 
     the opposite. We are losing many of our best home health 
     agencies because they are at a competitive disadvantage. To 
     make matters worse, home health agencies were asked to comply 
     without knowing, with certainty, what these limits will be. 
     Nearly a full year into the program, many agencies still do 
     not know the exact dollar amount of their limits. Moreover, 
     when agencies do know their ABL, as computed by the 
     intermediary insurance companies who administer Medicare for 
     the government, they find that the per beneficiary limit 
     works at cross-purposes with the existing agency per visit 
     limitation. Making matters even worse, HCFA has said that 
     they cannot comply with the October 1, 1999, deadline for 
     putting in place a prospective payment system (PPS) for 
     home health care under Medicare. This means the IPS, with 
     its lethal and unfair per beneficiary limits, will be in 
     place indefinitely. If all this is not bad enough, another 
     15 percent across the board cut in the Medicare home 
     health benefit is scheduled to take effect on October 1, 
     1999.
       There are only three ways to fix the problem with the 
     aggregate per beneficiary limit. Option one is to abandon the 
     idea of using agency specific costs as the basis for it and 
     use instead a blend of national and regional costs. The 
     second option is to delete the per beneficiary limit. Option 
     three is to replace the per beneficiary limit with another 
     cost control limit. Following are comments on each.
       A. Develop a blended rate. The idea is to set a limit based 
     not on a home care agency's historical costs, but upon some 
     formula of national and regional averages. My analysis is 
     that this simply will not work. No matter what percentages 
     are used, some people will be helped and others will be hurt. 
     You simply create different winners and losers. The idea, by 
     definition, is divisive. It divides not only providers and 
     patients, but also members of Congress, the latter who can be 
     expected to endorse a blend that most helps their part of the 
     country. Under this approach there can be no national 
     consensus--to help New England is to hurt the Southeast, or 
     vice-versa. Medicare is a Federal program that should offer 
     patients and provides alike a level playing field.
       B. Repeal the per beneficiary limit. This is probably the 
     best option overall. There is no parallel limit in Medicare 
     for hospitals, nursing homes or physician services. In my 
     view, we should recognize the fact that we have cut the home 
     care benefit by twice what Congress has intended, projected 
     by HCFA at $37 billion instead of $16.2 billion from FY 98-
     02. Total spending for home health in FY 98-02 is down from 
     $127 billion to $89 billion. I do not know how we can be 
     thinking of tax cuts when the burden of this gift will be on 
     the backs of the sickest of the sick--patients who need home 
     care. I would argue that we should restore some of the cuts 
     in home care by canceling the per beneficiary limit, since 
     the Medicare home care

[[Page E2294]]

     benefit, to date--according to CBO (January 1998) estimates--
     has already been cut by $9.9 billion more than the Congress 
     intended when the Congress passed the Balanced Budget Act. It 
     seems only fair to give some of this money back by repealing 
     the per beneficiary limit. It is this limit which works 
     against patients who do not understand why there is a limit 
     in the first place and why it could possibly be in hugely 
     differing amounts depending on the agency that they visit. 
     Undoubtedly, the behavior the patients will exhibit is to try 
     to shop for the home care agency that has the highest per 
     beneficiary limit. This, in turn, will have an effect of 
     raising overall costs to the Medicare program.
       C. Replace it with another limit. A final option, which has 
     great merit, is to replace the aggregate per beneficiary 
     limit with another limit. One example might be a global 
     budget for Medicare home care expenditures, which sets 
     ceilings for spending each year that cannot be exceeded under 
     any circumstances. This concept could be coupled with a 
     Gramm-Rudman-Hollings-like trigger, which could be applied 
     prospectively. This mechanism would automatically initiate 
     cuts if the Secretary of Health and Human Services finds that 
     there is any danger that the fiscal ceiling could potentially 
     be breached in any year. The advantage of this approval is 
     obvious. By substituting one financial limit for another, the 
     proposal should be budget-neutral. One suggestion that has 
     been made is to incorporate the CBO 98 baseline as the 
     ceiling. The essence of this proposal is included in H.R. 
     4404, the Homebound Elderly Relief Opportunity Act of 1998 
     (HERO), sponsored by Congressman Van Hilleary (TN). Senator 
     Thad Cochran (MS) has introduced a companion bill in the 
     Senate, S. 2508.
       As I noted above, the repeal of the aggregate per 
     beneficiary limit is probably the best way to go. This is a 
     world apart from a moratorium, or total repeal of all home 
     health provisions in the Balanced Budget Act, or even a 
     repeal of the entire IPS. It is a more limited and rifle 
     specific application. I believe Congress should be content to 
     save $16.2 billion from the Medicare home health benefit, as 
     planned, when the Balanced Budget Act was passed. We should 
     return the rest to the home health patients, the sickest of 
     the sick, who need it. This approach would also allow 
     Congress to cancel the forthcoming October 1, 1999, 
     additional 15 percent cut.
       For those who insist on the strict definition of budget 
     neutrality (and that home health should be cut by more than 
     $16.2 billion), the notion of replacing the per beneficiary 
     limit with another financial ceiling makes great sense. 
     Because it incorporates and makes an absolute ceiling of the 
     Medicare FY 98-02 CBO baseline, the HERO proposal should be 
     budget neutral. HERO will also blunt the effect of the 
     pending 15 percent cut. To be more precise, it makes the 15 
     percent cut contingent. Any portion of it that is needed will 
     be employed to make sure that the Medicare home care benefit 
     does not exceed the ceiling established in the 1998 CBO 
     baseline. I helped create the Senate Budget Committee, and 
     was one of its charter members. I hope CBO will agree with my 
     judgments.
       The HERO legislation gives providers the breathing room 
     they need until Prospective Payment is ready. Because it sets 
     overall spending limits and includes a Gramm-Rudman-Hollings-
     like trigger, it is clear to providers that this is not a 
     signal to return to business as usual. To do so means a swift 
     crackdown from HCFA. Because payments to home health are 
     capped, there is no way that expenditures can exceed budget 
     limits and therefore, no way that home health spending can 
     trigger increased out-of-pocket costs, such as increases in 
     the Part B premium. Finally, HCFA should be able to 
     administer this legislation easily. It will require little or 
     nothing in terms of computer capacity. This will free up 
     resources to help solve their Y2K problem and point them in 
     the direction of developing a PPS plan for home health care. 
     What is best of all--this proposal does not involve new 
     spending. I urge you to consider the HERO approach.
       With best wishes,
           Sincerely,
                                     Senator Frank E. Moss (ret.).

     

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