[Congressional Record Volume 145, Number 105 (Thursday, July 22, 1999)]
[Senate]
[Pages S9075-S9077]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MACK:
  S. 1414. A bill to amend title XVIII of the Social Security Act to 
restore access to home health services covered under the Medicare 
Program, and to protect the Medicare Program from financial loss while 
preserving the due process rights of home health agencies to the 
Committee on Finance.


medicare home health beneficiary equity and payment simplification act 
                                of 1999

  Mr. MACK. Mr. President today I am pleased to join my colleague, Mr. 
Breaux, in sponsoring The Medicare Home Health Beneficiary Equity and 
Payment Simplification Act of 1999.
  This legislation sets forth a fully developed prospective payment 
system for Medicare home health benefits that can be implemented easily 
using currently available data and can be accurately monitored to 
prevent fraud and abuse. Most importantly, the bill restores access to 
covered services for the sickest, most frail Medicare beneficiaries 
while providing incentives for efficient treatment of all patients 
regardless of the acuity of their medical condition.
  The bill provides for a simple four-category prospective payment 
system for home health services (similar to the four-category system 
which has been in place for hospice services since 1983) which is based 
on data from a 1997 study conducted by the Kaiser Family Foundation on 
characteristics of Medicare patients in need of covered home health 
services. The Kaiser Foundation study found that Medicare patients in 
need of home health services historically have fallen into one of the 
following categories:
  1. Post-hospital, short stay beneficiaries
  2. Medically stable, long-stay beneficiaries
  3. Medically complex, long-stay beneficiaries
  4. Medically unstable and complex, extremely high use beneficiaries
  Beneficiaries who meet all eligibility and coverage requirements for 
Medicare will be assigned to the appropriate category by a physician 
who does not have a prohibited relationship with the home health agency 
as defined in the ``Stark II'' law. Beneficiaries who do not clearly 
fit in one of the four categories will be placed in the first, lowest 
rate category.
  Payment rates for each of the categories is the average cost of 
treating patients in that category in 1994 as determined by the Kaiser 
Foundation study. Those rates are adjusted for wage variations in 
different parts of the country and updated by the home health market 
basket for each fiscal year. The Secretary of HHS is given the 
authority to provide additional payments to certain agencies that have 
higher costs due to reasons beyond their control.
  The bill would eliminate the 15% cut in Medicare home health 
reimbursement which is scheduled to go into effect on October 1, 2000. 
The bill would also simplify the reimbursement system by making 
payments based on the location of the agency rather than the residence 
of the patient. The bill is intended to provide a ``fail safe'' 
prospective payment mechanism in the event that HCFA falls behind in 
its schedule to implement a prospective payment system by October 1, 
2000 that can be administered efficiently and monitored effectively.
  I urge my colleagues to join us in co-sponsoring this important piece 
of legislation.
  Mr. President, I ask unanimous consent that a copy of the legislation 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1414

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Home Health 
     Beneficiary Equity and Payment Simplification Act of 1999''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Research has shown that medicare beneficiaries who are 
     in need of home health services that are covered under the 
     medicare program generally fall into 1 of the 4 following 
     categories:

[[Page S9076]]

       (A) Post-hospital, short-stay beneficiaries.
       (B) Medically stable, long-stay beneficiaries.
       (C) Medically complex, long-stay beneficiaries.
       (D) Medically unstable and complex, extremely high-use 
     beneficiaries.
       (2) The interim payment system for home health services 
     under the medicare program, enacted as part of the Balanced 
     Budget Act of 1997 and amended by title V of the Tax and 
     Trade Relief Extension Act of 1998 (contained in Division J 
     of Public Law 105-277), is having the following unintended 
     consequences:
       (A) The sickest, most frail medicare beneficiaries are 
     losing access to medically necessary home health services 
     that are otherwise covered under the medicare program.
       (B) Many high quality, cost-effective home health agencies 
     have had per beneficiary limits under the interim payment 
     system set so low that such agencies are finding it 
     impossible to continue to provide home health services under 
     the medicare program.
       (C) Many home health agencies are being subjected to 
     aggregate per beneficiary limits under the interim payment 
     system that do not accurately reflect the current patient mix 
     of such agencies, thereby making it impossible for such 
     agencies to compete with similarly situated home health 
     agencies.
       (D) Medicare beneficiaries that reside in certain States 
     and regions of the country have far less access to home 
     health services under the medicare program than individuals 
     who have identical medical conditions but reside in other 
     States or regions of the country.
       (E) The health status of home health beneficiaries varies 
     significantly in different regions of the country, creating 
     differing needs for home health services.

     SEC. 3. PAYMENTS TO HOME HEALTH AGENCIES UNDER MEDICARE.

       (a) Revision of Prospective Payment System.--
       (1) In general.--Section 1895 of the Social Security Act 
     (42 U.S.C. 1395fff) (as amended by section 5101 of the Tax 
     and Trade Relief Extension Act of 1998 (contained in Division 
     J of Public Law 105-277)) is amended--
       (A) in subsection (a), by striking ``for portions of cost 
     reporting periods occurring on or after October 1, 2000'' and 
     inserting ``for cost reporting periods beginning on or after 
     October 1, 1999''; and
       (B) in subsection (b), by striking the last sentence of 
     paragraph (1) and all that follows and inserting the 
     following:
       ``(2) Payment basis.--
       ``(A) In general.--The prospective payment amount to be 
     paid to a home health agency under this section for all of 
     the home health services (including medical supplies) 
     provided to a beneficiary under this title during the 12-
     month period beginning on the date that such services are 
     first provided by such agency to such beneficiary pursuant to 
     a plan for furnishing such services (and for each subsequent 
     12-month period that services are provided under such plan) 
     shall be an amount equal to the applicable amount specified 
     in subparagraph (B) for the fiscal year in which the 12-month 
     period begins.
       ``(B) Applicable amount.--Subject to subparagraphs (C), 
     (D), and (E) and paragraph (5), for purposes of this 
     subsection, the applicable amount is equal to--
       ``(i) $2,603 for a beneficiary described in subparagraphs 
     (A) and (E) of paragraph (3);
       ``(ii) $3,335 for a beneficiary described in paragraph 
     (3)(B);
       ``(iii) $4,228 for a beneficiary described in paragraph 
     (3)(C); and
       ``(iv) $21,864 for a beneficiary described in paragraph 
     (3)(D).
       ``(C) Annual update.--
       ``(i) In general.--The applicable amount specified in 
     subparagraph (B) shall be adjusted for each fiscal year 
     (beginning with fiscal year 2001) in a prospective manner 
     specified by the Secretary by the home health market basket 
     percentage increase applicable to the fiscal year involved.
       ``(ii) Home health market basket percentage increase.--For 
     purposes of clause (i), the term `home health market basket 
     percentage increase' means, with respect to a fiscal year, a 
     percentage (estimated by the Secretary before the beginning 
     of the fiscal year) determined and applied with respect to 
     the mix of goods and services included in home health 
     services in the same manner as the market basket percentage 
     increase under section 1886(b)(3)(B)(iii) is determined and 
     applied to the mix of goods and services comprising inpatient 
     hospital services for the fiscal year.
       ``(D) Area wage adjustment.--
       ``(i) In general.--The portion of the applicable amount 
     specified in subparagraph (B) (as updated under subparagraph 
     (C)) that the Secretary estimates to be attributable to wages 
     and wage-related costs shall be adjusted for geographic 
     differences in such costs by an area wage adjustment factor 
     for the area in which the home health agency is located.
       ``(ii) Establishment of area wage adjustment factors.--The 
     Secretary shall establish area wage adjustment factors that 
     reflect the relative level of wages and wage-related costs 
     applicable to the furnishing of home health services in a 
     geographic area compared to the national average applicable 
     level. Such factors may be the factors used by the Secretary 
     for purposes of section 1886(d)(3)(E).
       ``(E) Medical supplies.--The applicable amount specified in 
     subparagraph (B) shall be adjusted for each fiscal year 
     (beginning with fiscal year 2001) in a prospective manner 
     specified by the Secretary by the percentage increase (as 
     determined by the Secretary) in the average costs of medical 
     supplies (as described in section 1861(m)(5)) for the fiscal 
     year involved.
       ``(3) Description of beneficiaries.--
       ``(A) Post-hospital, short-stay beneficiary.--A beneficiary 
     described in this subparagraph is a beneficiary under this 
     title who--
       ``(i) has experienced at least one 24-hour hospitalization 
     within the 14-day period immediately preceding the date that 
     the beneficiary is first provided services by the home health 
     agency;
       ``(ii) suffers from 1 or more illnesses or injuries which 
     are post-operative or post-trauma; and
       ``(iii) has a prognosis of a prompt and substantial 
     recovery.
       ``(B) Medically stable, long-stay beneficiary.--A 
     beneficiary described in this subparagraph is a beneficiary 
     under this title who--
       ``(i) has not been admitted to a hospital within the 6-
     month period immediately preceding the date that the 
     beneficiary is first provided services by the home health 
     agency;
       ``(ii) suffers from 1 or more illnesses or injuries 
     requiring acute medical treatment or management in the home; 
     and
       ``(iii) is experiencing 1 or more impairments in activities 
     of daily living.
       ``(C) Medically complex, long-stay beneficiary.--A 
     beneficiary described in this subparagraph is a beneficiary 
     under this title who--
       ``(i) has experienced 2 or more hospitalizations or 
     admissions to skilled nursing facilities within the 12-month 
     period immediately preceding the date that the beneficiary is 
     first provided services by the home health agency;
       ``(ii) suffers from 1 or more illnesses or injuries 
     requiring acute medical treatment or management in the home; 
     and
       ``(iii) is experiencing 1 or more impairments in activities 
     of daily living.
       ``(D) Medically unstable and complex, extremely high-use 
     beneficiaries.--A beneficiary described in this subparagraph 
     is a beneficiary under this title who--
       ``(i) has experienced 2 or more hospitalizations or 
     admissions to skilled nursing facilities within the 6-month 
     period immediately preceding the date that the beneficiary is 
     first provided services by the home health agency;
       ``(ii) suffers from 1 or more illnesses or injuries 
     requiring acute medical treatment or management in the home; 
     and
       ``(iii) is experiencing 2 or more impairments in activities 
     of daily living.
       ``(E) Other beneficiaries.--A beneficiary described in this 
     subparagraph is a beneficiary under this title who is not 
     otherwise described in subparagraphs (A) through (D).
       ``(4) Determination.--
       ``(A) In general.--The determination of which of the 
     subparagraphs under paragraph (3) applies to a beneficiary 
     under this title shall be based on the diagnosis and 
     assessment of a physician who shall have no financial 
     relationship with the home health agency that is receiving 
     payments under this title for the provision of home health 
     services to such beneficiary. For purposes of the preceding 
     sentence, any financial relationship shall be determined 
     under rules similar to the rules with respect to referrals 
     under section 1877.
       ``(B) Regulations.--The Secretary shall issues regulations 
     to assist physicians in making the determination described in 
     subparagraph (A).
       ``(5) Additional payment amount.--The Secretary may 
     increase the applicable amount specified in paragraph (2)(B) 
     to be paid to a home health agency if the Secretary 
     determines that such agency is--
       ``(A) experiencing higher than average costs for providing 
     home health services as compared to other similarly situated 
     home health agencies; or
       ``(B) providing home health services that are not reflected 
     in the determination of the applicable amount.
       ``(6) Notice of prospective payment rate.--Not later than 
     July 1 of each year (beginning in 2000), the Secretary shall 
     publish in the Federal Register the applicable amount to be 
     paid to home health agencies for home health services 
     provided to a beneficiary under this title during the fiscal 
     year beginning October 1 of the year.
       ``(7) Proration of prospective payment amounts.--If a 
     beneficiary elects to transfer to, or receive services from, 
     another home health agency within the period covered by the 
     prospective payment amount, the payment shall be prorated 
     between the home health agencies involved.''.
       (2) Conforming amendments.--Section 1895 of the Social 
     Security Act (42 U.S.C. 1395fff) (as amended by section 5101 
     of the Tax and Trade Relief Extension Act of 1998 (contained 
     in Division J of Public Law 105-277)) is amended--
       (A) by amending subsection (c) to read as follows:
       ``(c) Requirement for Payment Information.--With respect to 
     home health services furnished on or after October 1, 1998, 
     no claim for such a service may be paid under this title 
     unless the claim has the unique identifier (provided under 
     section 1842(r)) for the physician who prescribed the 
     services or made the certification described in section 
     1814(a)(2) or 1835(a)(2)(A).''; and
       (B) by striking subsection (d).

[[Page S9077]]

       (3) Change in effective date.--Section 4603(d) of the 
     Balanced Budget Act of 1997 (42 U.S.C. 1395fff note) (as 
     amended by section 5101(c)(2) of the Tax and Trade Relief 
     Extension Act of 1998 (contained in Division J of Public Law 
     105-277)) is amended by striking ``October 1, 2000'' and 
     inserting ``October 1, 1999''.
       (4) Elimination of contingency 15 percent reduction.--
     Subsection (e) of section 4603 of the Balanced Budget Act of 
     1997 (42 U.S.C. 1395fff note) is repealed.
       (5) Effective date.--The amendments made by this subsection 
     shall take effect on the date of enactment of this Act.
       (b) Payment Rates Based on Location of Home Health Agency 
     Rather Than Patient.--
       (1) Conditions of participation.--Section 1891 of the 
     Social Security Act (42 U.S.C. 1395bbb) is amended by 
     striking subsection (g).
       (2) Wage adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
     1395x(v)(1)(L)(iii)) is amended by striking ``service is 
     furnished'' and inserting ``agency is located''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to services provided on or after October 1, 1999.
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