[Congressional Record Volume 145, Number 72 (Tuesday, May 18, 1999)]
[Senate]
[Pages S5484-S5485]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS:
  S. 1063. A bill to amend title XVIII of the Social Security Act to 
provide for a special rule for long existing home health agencies with 
partial fiscal year 1994 cost reports in calculating the per 
beneficiary limits under the interim payment system for such agencies; 
to the Committee on Finance.


         medicare home health technical corrections legislation

  Ms. COLLINS. Mr. President, I rise today to introduce legislation 
that would make a technical correction to a provision of the Balanced 
Budget Act of 1997 that is causing great unfairness to long-established 
home health agencies and their patients. It would provide for a special 
rule for long-existing home health agencies that have been classified 
as ``new'' home health agencies for purposes of the Interim Payment 
System (IPS) simply because they happened to change the ending date of 
their fiscal year, and, as a consequence, do not have a full 12-month 
cost reporting period in federal fiscal year 1994.
  Under the complicated formula for the Medicare Interim Payment System 
for home health agencies, Medicare determines a limit for most 
established agencies using a formula that recognizes the agency's 
historical costs and blends them, in a proportion of 75 percent to 25 
percent, with regional norms. For new home health agencies without a 
historic record of cost reports, the per-beneficiary limit is set at 
the national median.
  In defining the difference between new and existing agencies, the 
Administration focused on fiscal year 1994 and established a general 
rule that the national median per-beneficiary limit would apply to 
``new providers and providers without a 12-month reporting period 
ending in fiscal year 1994.'' Congress did, however, specifically 
exclude from the ``new'' category any home health agency that had 
changed its name or corporate structure.
  Nevertheless, one of the home health agencies in my State --Hancock 
County HomeCare--has been classified as a ``new'' home health agency, 
even though it has been serving the people of rural Down East Maine for 
more than 60 years. I am sure that there are other long-standing home 
health agencies across the country that have found themselves in a 
similar situation as a consequence of this provision.
  Hancock County HomeCare is a division of Blue Hill Memorial Hospital, 
a charitable, tax-exempt hospital. Hancock County HomeCare emerged as a 
result of a merger of the hospital with the Four Town Nursing Service 
and Bar Harbor Public Health Nursing, both non-profit home health 
agencies that have provided uninterrupted service to residents of 
Hancock County, Maine for more than 60 years. The unified agency, which 
provides skilled home nursing and therapies to residents of 36 towns, 
has been part of Blue Hill Memorial Hospital since 1981.
  Despite its 60-year history of service to the community, Hancock 
County HomeCare has been classified as a ``new'' agency simply because 
it happened to change the ending date of its fiscal year during 1994, 
when Blue Hill Memorial and its affiliate changed theirs. Solely 
because it changed its fiscal year from a period ending June 30 to a 
period ending March 31, this 60-year old agency is being treated as a 
new agency by HCFA. Given the care taken by Congress to exclude name 
changes and corporate structure changes from the definition of a 
``new'' agency, I simply do not believe that it was our intent to visit 
radically different treatment upon an agency that simply changed its 
financial reporting practices, but otherwise has a continuous history 
of operation and is fully able to provide 12 months of reliable data in 
accordance with Medicare cost reporting requirements.
  I believe that the statute gives the Health Care Financing 
Administration sufficient discretion to deal with this situation 
administratively. Unfortunately, however, HCFA does not agree with that 
interpretation and insists that further legislative action is necessary 
if Hancock County HomeCare is to be considered an ``old'' agency for 
purposes of the Interim Payment System.
  The legislation that I am introducing today to clarify the law was 
prepared with technical assistance from HCFA. Essentially, the bill 
would provide for a special rule for home care agencies that were in 
existence and had an active Medicare provider number prior to fiscal 
year 1980, but which had less than a 12-month cost reporting period in 
fiscal year 1994 because the agency changed the end date of its cost 
reporting period in that year. For these agencies, Medicare could, upon 
the request of the agency, use the agency's partial-year cost report 
from fiscal year 1994 to

[[Page S5485]]

determine the agency-specific portion of the per beneficiary limit. As 
a consequence, the agency could then be treated as an ``old'' agency 
for purposes of the Interim Payment System.
  Mr. President, this legislation is simply a technical correction to 
address a specific problem that Congress clearly did not intend to 
create when it enacted the Balanced Budget Act of 1997. The legislation 
is narrowly drafted and, in all likelihood, will not affect more than a 
few home health agencies, but it will make a critical difference in the 
ability of those agencies to continue to serve their elderly clients.
  Home health agencies across the country, however, are experiencing 
acute financial problems due to other problems with a critically-flawed 
payment system that effectively penalizes our most cost-efficient 
agencies. These agencies are finding it increasingly difficult to cope 
with cash-flow problems, which inhibit their ability to deliver much-
needed care. As many as twenty organizations in Maine have either 
closed or are no longer providing home care services because their 
reimbursement levels under Medicare fell so far short of their actual 
operating costs. Other agencies are laying off staff or are declining 
to accept new patients with more serious health problems. The real 
losers in this situation are our seniors, since cuts of this magnitude 
cannot be sustained without ultimately affecting patient care.
  Moreover, these payment problems have been exacerbated by a number of 
new regulatory requirements imposed by HCFA, including the 
implementation of OASIS, sequential billing, medical review, and IPS 
overpayment recoupment. I will soon be introducing legislation to 
provide some relief for these beleaguered home health agencies and also 
plan to hold a hearing next month in the Permanent Subcommittee on 
Investigations to examine the combined effect that these payment 
reductions coupled with the multiple new regulatory requirements have 
had on home health agencies' ability to meet their patients' needs.
  Mr. President, I ask unanimous consent that the text of this 
legislation providing a special rule for long-existing home health 
agencies with partial fiscal year 1994 cost reports be included in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1063

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SPECIAL RULE FOR LONG EXISTING HOME HEALTH 
                   AGENCIES WITH PARTIAL FISCAL YEAR 1994 COST 
                   REPORTS.

       (a) In General.--Section 1861(v)(1)(L) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)(L)) is amended by adding 
     at the end the following:
       ``(x)(I) If requested by an applicable agency, the 
     limitation under clause (v) shall be determined for such 
     agency by substituting in subclause (I) of that clause `the 
     reasonable costs (including nonroutine medical supplies) for 
     the agency's cost report for the most recent partial cost 
     reporting period ending in fiscal year 1994' for `the 
     reasonable costs (including nonroutine medical supplies) for 
     the agency's 12-month cost reporting period ending during 
     fiscal year 1994'.
       ``(II) In this clause, the term `applicable agency' means 
     an agency that--
       ``(aa) was in existence prior to fiscal year 1980;
       ``(bb) had an active medicare provider number prior to such 
     date; and
       ``(cc) had less than a 12-month cost reporting period 
     ending in fiscal year 1994 because such agency changed the 
     end date of its cost reporting period during fiscal year 
     1994.
       ``(III) The limitation determined for an applicable agency 
     pursuant to this clause shall be excluded from any 
     calculation under this subparagraph of--
       ``(aa) a standardized regional average of costs; or
       ``(bb) a national median of limits.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of the 
     Balanced Budget Act of 1997.
                                 ______