[Congressional Record Volume 145, Number 95 (Wednesday, June 30, 1999)]
[Senate]
[Pages S7938-S7941]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. Bond, Mr. Levin, Mr. Bennett, 
        Mr. Santorum, Mrs. Hutchison, Mr. Torricelli, Mr. Lugar, Mr. 
        Allard, Mr. Specter, Mr. Edwards, Mr. Brownback, Mr. 
        Lautenberg, Mr. Cochran, Mr. Enzi, Mr. Frist, Mr. Helms, and 
        Mr. Abraham):
  S. 1310. A bill to amend title XVIII of the Social Security Act to 
modify the interim payment system for home health services, and for 
other purposes; to the Committee on Finance.
  Ms. COLLINS. Mr. President, I rise today to introduce the Medicare 
Home

[[Page S7939]]

Health Equity Act of 1999, which is designed to provide a measure of 
financial and regulatory relief for cost-efficient home health agencies 
across the country. These agencies are experiencing severe financial 
problems that are inhibiting their ability to deliver much-needed care, 
particularly to chronically ill seniors with complex needs.
  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 the comfort and security of their own homes.
  In 1996, home health was the fastest growing component of Medicare 
spending, consuming one out of every eleven Medicare dollars, compared 
with one in every forty in 1989. The program grew at an average annual 
rate of more than 25 percent from 1990 to 1997. As a consequence, the 
number of home health beneficiaries more than doubled, and Medicare 
home health spending soared from $2.5 billion in 1989 to $18.1 billion 
in 1996.
  This rapid growth in home health spending understandably prompted 
Congress and the Administration, as part of the Balanced Budget Act of 
1997, to initiate changes that were intended to make the program more 
cost-effective and efficient. Therefore, there was widespread support 
for the provision in the Balanced Budget Act of 1997 which called for 
the implementation of a prospective payment system for home care. Until 
this system can be implemented, home health agencies are being paid 
according to an ``interim payment system,'' or IPS.
  In trying to get a handle on costs, however, Congress and the 
Administration created a system that penalizes efficient agencies and 
that may be restricting access for the very Medicare beneficiaries who 
need care the most--the sicker seniors with complex, chronic care needs 
like diabetic, wound care patients or IV therapy patients who require 
multiple visits.
  Unfortunately, the ``interim payment system'' is critically flawed in 
that it effectively rewards the agencies that provided the most visits 
and spent the most Medicare dollars in 1994, the base year, while it 
penalizes low-cost, more efficient providers--and their patients. None 
of us should tolerate wasteful expenditures, but neither should we 
impede the delivery of necessary services by low-cost providers.
  Home health agencies in the Northeast and the mid-West have been 
among those particularly hard-hit by the interim payment system. As the 
Wall Street Journal observed last year, ``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 non-profit community service and efficiency.''
  Even more troubling, this flawed system may force our most cost-
efficient providers to stop accepting Medicare patients with more 
serious health care needs. According to a recent survey by the Medicare 
Payment Advisory Commission, almost 40 percent of the home health 
agencies surveyed indicated that there were patients whom they 
previously would have accepted whom they no longer accept due to the 
IPS. Thirty-one percent of the agencies admitted that they had 
discharged patients due to the IPS. These discharged patients tended to 
be those with chronic care needs who required a large number of visits 
and were expensive to serve. As a consequence, these patients caused 
the agencies to exceed their aggregate per-beneficiary caps.

  I simply do not believe that Congress and the Administration intended 
to construct a payment system that inevitably discourages home health 
agencies from caring for those seniors who need care the most. Last 
year's Omnibus Appropriations bill did provide a small measure of 
relief for home health agencies. This proposal did not, however, go far 
enough to relieve the financial distress that cost-effective agencies 
are experiencing.
  These problems are all the more pressing given the fact that the 
Health Care Financing Administration was unable to meet its original 
deadline for implementing a prospective payment system. As a result, 
home health agencies will be struggling under the IPS far longer than 
Congress envisioned when it enacted the Balanced Budget Act.
  Moreover, it now appears that Congress greatly underestimated the 
savings stemming from the BBA. Medicare spending for home health fell 
by nearly 15 percent last year, and the CBO now projects that post-BBA 
reductions in home care spending will exceed $47 billion in FY 1998-
2002. This is a whopping three times greater than the $16 billion CBO 
originally estimated for that time period.
  I recently chaired a Permanent Subcommittee on Investigations (PSI) 
hearing where we heard about the financial distress and cash-flow 
problems cost-efficient agencies across the country are experiencing. 
Witnesses expressed concern that these problems are inhibiting their 
ability to deliver much-needed care, particularly to chronically ill 
patients with complex needs. More than a thousand agencies have closed 
in the past year because the reimbursement levels under Medicare fell 
so far short of their actual operating costs. Others are laying off 
staff or declining to accept new patients with more serious health 
problems.
  This points to the most central and critical issue--cuts of this 
magnitude cannot be sustained without ultimately affecting care for our 
most vulnerable seniors. At the PSI hearing, Barbara Smith, a senior 
research staff scientist with the Center for Health Services Research 
and Policy at George Washington University, testified that the 
preliminary findings of her studies suggest significant potential 
effects on beneficiaries, particularly those with unstable chronic care 
needs. Her research shows that these patients are being displaced from 
home care or are experiencing significant changes in services that 
appear to be driven by reimbursement policies rather than by clinical 
considerations. In her testimony, she stated:

       ``My main concern is that we are carving out a wedge of 
     people who are chronically ill and have intensive needs for 
     services who are not going to have a reliable source of care 
     in any sector. They are becoming the health care system's 
     untouchables.''

  Moreover, the financial problems that home health agencies have been 
experiencing have been exacerbated by a number of new regulatory 
requirements imposed by HCFA, including the implementation of OASIS, 
the new outcome and assessment information data set; new requirements 
for surety bonds; sequential billing; IPS overpayment recoupment; and a 
new 15-minute increment home health reporting requirement. Witnesses at 
the PSI hearing expressed particular frustration about what Maryanna 
Arsenault, the CEO of the Visiting Nurse Service in Saco, Maine, termed 
HCFA's regulatory policy of ``implement and suspend.'' They pointed to 
examples such as the hastily enacted requirements for surety bonds and 
sequential billing where no sooner had a mandate been put into an 
effect, than it was suspended but only after agencies had invested 
significant time and resources in compliance.
  The legislation that my colleague from Missouri and I are introducing 
today, along with a bipartisan group of 16 of our colleagues, responds 
to these concerns. It makes needed adjustments to the Balanced Budget 
Act of 1997 and related federal regulations to ensure that Medicare 
beneficiaries have access to medically-necessary home health services.
  Among other provisions, the bill eliminates the automatic 15 percent 
reduction in Medicare home health payments now scheduled for October 1, 
2000, whether or not a prospective payment system is enacted. When the 
Balanced Budget Act was enacted, CBO reported that the effect of the 
BBA would be to reduce home health expenditures by $16.1 billion 
between fiscal years 1998 and 2002. CBO's March 1999 revised analysis 
estimates those reductions to exceed $47 billion--three times the 
anticipated budgetary impact. A further 15 percent cut would be 
devastating to cost-efficient providers and would further reduce 
seniors' access to care. Moreover, it is unnecessary since the budget 
target for home health outlays will be achieved, if not exceeded, 
without it.
  The legislation will also provide supplemental ``outlier'' payments 
to home health agencies on a patient-by-patient

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basis, if the cost of care for an individual is considered to be 
significantly higher than average due to the patient's particular 
health and functional condition. This provision would remove the 
existing financial disincentive for agencies to care for patients with 
intensive medical needs who, according to recent reports issued by both 
the General Accounting Office (GAO) and the Medicare Payment Advisory 
Commission (MedPAC), are the individuals most at risk of losing access 
to home health care under the IPS.
  The current IPS unfairly penalizes historically cost-efficient home 
health agencies that have been most prudent with their Medicare 
resources. Our legislation builds on reforms in last year's Omnibus 
Appropriations Act by gradually raising low-cost agencies' per-
beneficiary limits up to the national average over three years, or 
until the new home health prospective payment system is implemented and 
IPS is terminated.
  To decrease total costs in order to remain under their per-
beneficiary limits, agencies have had to significantly reduce the 
number of visits to patients, which has, in turn, increased the cost of 
each visit. Implementation of OASIS has also significantly increased 
agencies' per-visit costs. Therefore, the legislation will increase the 
IPS per-visit cost limit from 106 to 108 percent of the national 
median.
  Other provisions of the legislation will:
  Extend the current IPS overpayment recoupment period from one to 
three years without interest;
  Revise the surety bond requirement for home health agencies to more 
appropriately target fraud;
  Eliminate the 15-minute incremental reporting requirement; and
  Maintain the Periodic Interim Payment (PIP) program through the first 
year of implementation of the prospective payment system to ensure that 
such a dramatic change in payment systems does not create new cash-flow 
problems for agencies. I ask unanimous consent that a section-by-
section summary further detailing these provisions be included in the 
Record at the conclusion of my remarks.
  Mr. President, the Medicare Home Health Equity Act of 1999 will 
provide a measure of financial and regulatory relief to beleaguered 
home health agencies in order to ensure that Medicare beneficiaries 
have access to medically-necessary home health services, and I 
encourage all of my colleagues to join us as cosponsors.
  Mr. President, I ask unanimous consent that a summary of the bill be 
printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

              The Home Health Equity Act of 1999--Summary

       The Home Health Equity Act of 1999 is intended to make 
     needed adjustments to the Balanced Budget Act of 1997 and 
     related federal regulations to ensure that Medicare 
     beneficiaries have access to medically-necessary home health 
     care services.


                            Major Provisions

       Eliminates the automatic 15 percent reduction in Medicare 
     home health payments now scheduled for October 1, 2000.
       Under the Balanced Budget Act of 1997 (as amended by the 
     Omnibus Consolidated and Emergency Supplemental 
     Appropriations Act), expenditures for Medicare home health 
     care are to be reduced by 15 percent, whether or not a 
     Medicare home health prospective payment system is 
     implemented on October 1, 2000. This provision would 
     eliminate that proposed reduction. When it was enacted, the 
     Congressional Budget Office (CBO) reported that the effect of 
     the BBA would be to reduce home health expenditures by $16.1 
     billion between fiscal years 1998 and 2002. CBO's March 1999 
     revised analysis now estimates those reductions to exceed $47 
     billion--three times the anticipated budgetary impact. A 
     further 15 percent cut to home health cost limits would be 
     devastating to cost-efficient providers and would reduce 
     seniors' access to care. Moreover, it is unnecessary since 
     the budget target for home health outlays will be achieved, 
     if not exceeded, without it.
       Provides supplemental ``outlier'' payments to home health 
     agencies on a patient-by-patient basis if the cost of care 
     for an individual is considered by the Secretary to be 
     significantly higher than average due to the patient's 
     particular health and functional condition.
       Recent reports issued by both the General Accounting Office 
     (GAO) and the Medicare Payment Advisory Commission (MedPAC) 
     conclude that patients with intensive medical needs are the 
     individuals most at risk of losing access to home health care 
     under the Interim Payment System (IPS). This provision would 
     remove the existing financial disincentive under the IPS for 
     agencies to care for these patients.
       Increases the per-beneficiary cost limit for agencies with 
     limits below the national average to the national average 
     cost per patient over a three-year period or until the 
     Medicare home health prospective payment system is 
     implemented.
       The Balanced Budget Act of 1997's Interim Payment System 
     (IPS) bases an agency's average per-patient reimbursement on 
     that agency's average cost per patient in 1993 or 1994. As a 
     consequences, the system unfairly penalizes historically 
     cost-efficient home health agencies that have been most 
     prudent with their Medicare resources. This provision builds 
     on reforms made by the Omnibus Consolidated and Emergency 
     Supplemental Appropriations Act (OCESSA) by gradually raising 
     low-cost agencies' per-beneficiary limits up to the national 
     average over three years or until the new home health 
     prospective payment system is implemented and IPS is 
     terminated.
       Increases the IPS per-visit cost limit to 108 percent of 
     the national median.
       The Balanced Budget Act reduced the per-visit cost limit 
     from 112 percent of the mean to 105 percent of the median. 
     The OCESSA increased the limit to 106 percent of the median. 
     This provision would further increase it to 108 percent of 
     the national median. Most analysts agree that the growth in 
     Medicare home health expenditures in the early 1990s was due 
     to the high number of visits provided to patients, not to the 
     cost per visit. CBO confirms that controlling use, not price, 
     is the key to Medicare home health cost containment. To 
     decrease total costs in order to remain under their per-
     beneficiary limits, agencies have had to significantly reduce 
     the number of visits to patients, which has, in turn, 
     increased the cost of each visit. Implementation of OASIS has 
     also significantly increased agencies' per-visit costs.
       Revises the surety bond requirements for home health 
     agencies to more appropriately target fraud.
       This provision would clarify that the surety bond 
     requirement is only to be used to protect against 
     overpayments based on fraudulent claims or behavior. Perhaps 
     the main problem with the surety bond proposal that HCFA 
     developed last year (and which is currently in regulatory 
     limbo) was that it went beyond Congressional intent. Congress 
     enacted the original surety bond provision as a way to use 
     private sector monitors to help keep fraudulent providers out 
     of the market. HCFA tried, through the regulations it 
     developed, to use surety bonds as a means to recover any 
     overpayments they made to home health agencies. This 
     unnecessarily increased both the costs and difficulties 
     agencies encountered in trying to obtain a surety bond.
       Extends the IPS overpayment recoupment period to three 
     years without interest.
       The BBA did not require HCFA to publish information on 
     calculating the IPS per-visit limits until January 1, 1998, 
     even though the limits were effective beginning October 1, 
     1997. Similarly, HCFA was not required to publish information 
     related to the calculation of the agencies' annual aggregate 
     per-beneficiary limit until April 1, 1998, despite an October 
     1 start date. More than a year after the implementation of 
     the IPS, HCFA's fiscal intermediaries still had not notified 
     many agencies of the visit and per-beneficiary limits under 
     which they were expected to operate. Moreover, throughout 
     this period, fiscal intermediaries continued to pay agencies 
     in accordance with the previous years' limits, resulting in 
     significant overpayments to many home health agencies 
     throughout the country.
       Fiscal intermediaries have begun to issue notices of 
     overpayments to these agencies and are demanding repayment. 
     This has posed a significant problem, particularly for 
     smaller agencies that do not have large cash reserves. To 
     ease these repayment problems, HCFA has directed the fiscal 
     intermediaries to allow home health agencies to extend their 
     repayments over 12 months. Many agencies, however, say that 
     this is insufficient. This provision would extend the 
     overpayment recoupment period to three years without 
     interest.
       Eliminates the 15-minute incremental reporting period.
       The BBA mandates that home health agencies record the 
     length of time of home health visits in 15-minute increments, 
     which the HCFA will implement on July 1, 1999. Unfortunately, 
     HCFA's instructions implementing the 15-minute reporting 
     requirement are excessively labor-intensive. As proposed by 
     HCFA, the only time that can be counted is time spent 
     actively treating the beneficiary. Time for travel or for 
     administrative duties that are essential to patient care, 
     such as charting or coordinating work with the physician, may 
     not be counted. Implementation of the 15-minute reporting 
     requirement will not only be difficult for staff, but will 
     also be disruptive to patient care. This provision would 
     eliminate the current 15-minute reporting requirement. An 
     alternative to the 15-minute reporting requirement that 
     better measures time of direct patient care and its 
     relationship to outcomes should be developed within the 
     context of the Medicare home health PPS.
       Temporarily maintains the Periodic Interim Payment (PIP) 
     program
       PIP is a program that is available to many home health 
     agencies that permits HCFA to make payments to the agencies--
     based on

[[Page S7941]]

     historical payment levels--prior to the final settlement of 
     claims and cost-reports. This program, which is scheduled to 
     terminate on October 1, 2000, has been invaluable to 
     participating agencies and has helped them to avoid cash-flow 
     difficulties. This provision would continue PIP through the 
     first year of implementation of the prospective payment 
     system to ensure that such a dramatic change in payment 
     systems does not create new cash-flow problems.

  Mr. BOND. In the last couple days, a lot of people have been talking 
about the Medicare program and what we want it to look like as we think 
far ahead into the future. I'm glad this is happening, because this is 
an important debate. We do need to discuss things like a prescription 
drug benefit, comprehensive Medicare reform, the long-term solvency of 
the program, and other related issues.
  But as we focus on the future of Medicare, we also need to do our 
best to make sure that the existing program is working as well as it 
can. That's why we're here today. Part of the existing program-- the 
home health care benefit--is completely broken, and we've come together 
to try to fix it.
  Why do we care? Well, home health care is the key to fulfilling what 
is virtually a universal desire among seniors and those with 
disabilities--to remain independent and within the comfort of their own 
homes despite their health problems. For people who have difficulty 
leaving their home and who have health conditions that require low- to 
mid-level medical attention, home health care is a tremendous help. 
Home health care keeps these people out of more expensive and less 
comfortable settings such as nursing homes and hospitals. And home care 
is often the only source of care for many disabled individuals and 
frail elderly, especially those living in underserved rural and urban 
areas of our country. Simply put, home health is crucial to millions of 
Americans' comfort and health, and we must make sure they continue to 
have access to it.
  The problem is that more and more Americans do not have access to 
needed home health services--they simply cannot find a home health 
agency that will care for them. This means they will either not receive 
the care they need, or that they will get this care, they'll just get 
it at more expensive and intimidating facilities like hospitals or 
nursing homes. This is the crisis we are facing.
  I would like to take a moment to describe several different ways this 
home health crisis is rearing its ugly head across the country.
  First, we have seen literally thousands of home health agencies close 
their doors in the last two years. Perhaps as many as 2,000 of the 
10,000 agencies that existed in 1997 have either been driven out of 
business or out of Medicare. In Missouri alone, about 75 out of 300 
home health agencies have closed since 1997, including the well-
respected and well-established Visiting Nurse Association of Greater 
St. Louis. A few of the agencies that have closed have no doubt been 
shady characters we should be glad to see go. But many--and perhaps 
most--of the agencies that have closed are legitimate providers with 
real patients.
  Second, those agencies that have survived have had to change 
drastically the way they operate. Many have been forced into layoffs 
and cutbacks in other areas that directly or indirectly impact patient 
care. Many face chronic cash flow problems and may be forced to refund 
large amounts of cash to the Health Care Financing Administration--
perhaps in the hundreds of thousands of dollars--that they accidentally 
received because they had not yet been informed of the new ground rules 
for home health payments. Because of the bizarre incentives against 
caring for patients with the most complex cases, many home health 
agencies have also been actively managing the types of patients they 
care for, trying to avoid or discharge costlier patients.
  All of this is bad for patients, and it will likely get worse. 
Without Congressional action, it may never get better. I truly believe 
that without significant changes, home health services within Medicare 
could practically disappear. Home health services would theoretically 
still be part of the Medicare program, but few if any people with 
Medicare would be able to receive care in their home simply because 
there will be nobody there to provide it for them.
  The Medicare Home Health Equity Act--which I am introducing today 
with Senator Collins and 12 other colleagues--responds to this crisis 
and attempts to save home health care within the Medicare program.
  This bill addresses a variety of payment and regulatory issues, all 
of which have impeded or prevented home health agencies from providing 
high-quality, efficient care. Two provisions are particularly critical.
  First, as I have mentioned, home health agencies currently have 
little incentive to provide care for sicker and costlier patients. In 
fact, because more complex patients put an agency at risk of exceeding 
the annual per patient budget that is now in place for each home health 
agency, there is actually an incentive not to care for sicker patients. 
The result--which shouldn't be a surprise--is that home health agencies 
are actively trying to avoid these sicker patients, either leaving them 
without care or leaving them to check in to a more expensive health 
facility such as a nursing home or a hospital.
  The Medicare Home Health Equity Act solves this problem by creating a 
system of ``extra'' payments for sicker patients--sometimes these are 
called ``outlier'' payments. Under this plan, home health agencies 
would be assured from the start that they could receive extra payments 
for patients who meet the criteria for ``sicker'' patients. This way, 
we can remove the incentive for home health agencies to try to deny 
care to seniors with complex cases.
  The second crucial provision in the bill is something similar to a 
last-minute pardon from the governor. In addition to all of the 
problems they have faced in the last couple of years, home health 
agencies are scheduled to take another huge payment cut--about 15% of 
the total amount they receive from Medicare--in October of 2000. I fear 
that this cut would truly be the death-knell for the industry. We 
cannot allow this radical payment reduction to take place.
  In addition to these core provisions, the Collins-Bond bill deals 
with a variety of payment and regulatory issues, all designed to make 
sure that Medicare recipients continue to have access to quality home 
health care and that the home health agencies are permitted to provide 
that care in an efficient manner.
  I would like to commend Senator Collins for her leadership on this 
issue. I am pleased that we were able to develop a joint bill so that 
we could unite our forces behind one bipartisan legislative vehicle and 
one bipartisan solution. It is also encouraging to see that all of the 
national trade associations that represent home health agencies are 
supporting this bill. Finally, I would like to again thank this bill's 
cosponsors for supporting this effort and for helping to raise 
awareness that there is a home health crisis that desperately needs our 
attention in Congress.
  I for one pledge to do my best to maintain seniors access to home 
health care. We cannot allow home health services within the Medicare 
program to disappear. It doesn't make sense for the patients, and it 
doesn't make sense for Medicare.
                                 ______