[Congressional Record Volume 146, Number 86 (Friday, June 30, 2000)]
[Senate]
[Pages S6257-S6259]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself and Mr. Feingold):
  S. 2835. A bill to provide an appropriate transition from the interim 
payment system for home health services to the prospective payment 
system for such services under the medicare program; to the Committee 
on Finance.


              medicare home health refinement act of 2000

  Mr. GRASSLEY. Mr. President, today I am joining Senator Feingold of 
Wisconsin in introducing the Medicare Home Health Refinement Act of 
2000. I want to thank my colleague for inviting me to join him in this 
effort to preserve our nation's home health providers.
  In my work as Chairman of the Senate Special Committee on Aging, of 
which Senator Feingold is a member, I have been monitoring our nation's 
critical home health care system closely. In 1997, we investigated 
distressing examples of fraud and abuse among a few home health 
agencies (HHAs). In 1998, I chaired a hearing on the devastating 
effects of the Interim Payment System (IPS) for home health. 
Unfortunately, my legislative efforts to improve the payment system 
that year were blocked. Last year, the Aging Committee held a hearing 
on the new OASIS information collection instrument, and on the burden 
it imposed on home care providers.
  At this point in 2000, the main challenge facing our system of home 
care is the new Prospective Payment System (PPS), which will take 
effect on October 1 of this year. We've been working

[[Page S6258]]

toward this for many years, and I am gratified that it will finally 
happen. The Health Care Financing Administration (HCFA) published the 
final PPS rule on June 28, and I was pleased to hear that many home 
health providers consider it an improvement over the proposed rule. 
After the trauma of the Interim Payment System, I have high hopes that 
the PPS will be great news for our Medicare beneficiaries who need home 
care.
  Even so, the new PPS will pose major transitional challenges for home 
health agencies, and this bill seeks to ease that transition so that 
the PPS will succeed. The bill does the following:
  1. Emergency cash flow assistance. The bill provides one-time advance 
payments to home health agencies during transition from IPS to PPS. 
Eligible agencies either have low cash reserves, have negative cash 
flow under PPS as defined by the Secretary of HHS, or were eligible to 
receive funds from the Periodic Interim Payment (PIP) system on 
September 30, 2000. Payments equal the average total Medicare costs 
incurred by the agency in a three-month period as reported on the 
agency's most recently settled cost report. Payments would be available 
for six months and repaid within twelve months.
  Agencies would also receive 80 percent of the 60-day episode payment 
rate after notifying HCFA of admission, with the remaining 20 percent 
coming after submission of final episode claim, instead of 60/40 under 
the rule published on June 28, 2000. HCFA would also be prohibited from 
imposing conditions on a claim based on the status of an earlier claim 
for the same beneficiary.
  The rationale for this is that PIP, which largely serves nonprofit, 
community-based agencies with minimal cash reserve, will be 
discontinued as of October 1. If PPS delays a substantial portion of 
payment until after termination of patient episode, providers will have 
significant cash flow problems. Many agencies are unable to secure 
lines of credit or other loans because of the effect of IPS on cash 
reserves.
  2. Reimbursement for unfunded PPS-related costs. The bill reimburses 
agencies for technology costs required for PPS compliance, up to $10 
per beneficiary. Payments would be authorized for Fiscal Years 2001 
through 2003.
  The rationale for this item: agencies have had to purchase new 
hardware, software, and other technology to comply with new rules. 
These costs are not reimbursed by Medicare.
  3. Reimbursement for OASIS labor costs. It reimburses agencies for 
labor costs associated with OASIS assessments, up to $30 per 
beneficiary annually. Payments are authorized for FY 2001-2003.
  This is needed because the final rule provides for only a modest 
payment per episode, despite an estimated hour of time needed for a 
skilled clinician to collect information at admission, plus time for 
data quality review and follow-up.
  4. Creation of a fee schedule for non-routine medical supplies. The 
bill develops a separate fee schedule for medical supplies under 
prospective payment.
  This is essential because PPS rates include the average medical 
supply cost, but some agencies' patient populations have greater or 
lesser medical supply needs. The original rates would underpay agencies 
that treat these vulnerable populations and overpay agencies that treat 
patients with low medical supply needs. This provision has no budget 
impact.
  Mr. President, I recognize that there are other issues that pose a 
major threat to our home care system, including the 15 percent cut 
scheduled for October 2001. This bill does not address that issue, 
though it is obvious that Congress will have to do so. But this bill 
will help make the new PPS a success, so home care providers can use 
their resources to see patients, which is what they do best. I will 
seek the inclusion of this bill in any Finance Committee Medicare 
provider package we put together this year.
  Mr. FEINGOLD. Mr. President, I am pleased to join Senator Grassley in 
introducing the Medicare Home Health Refinement Act of 2000. This 
legislation will provide a measure of financial relief for cost 
efficient home health agencies that are making the transition from the 
Interim Payment System to the soon to be implemented Prospective 
Payment System.
  Since the enactment of the Balanced Budget Act of 1997, many cost-
effective home health agencies have experienced financial hardship, 
which has forced agencies to divert funds away from patient care.
  We must ensure that home health care agencies can continue to provide 
their invaluable service to the elderly and the disabled.
  As I travel to each of Wisconsin's 72 counties each year, I have 
heard countless stories from home health agencies that a number of 
burdensome new regulations imposed by the Health Care Financing 
Administration have hindered their ability to do what they do best--
provide quality care.
  Our legislation addresses many of these concerns. In fact, a number 
of the provisions come directly from the providers in Wisconsin.
  Our bill offers a combination of emergency cash flow assistance, 
reimbursement for transition costs, and a system to separate medical 
supply costs from other home health expenses as home health agencies 
switch to a new payment system.
  Home health care provides compassionate, at-home care to seniors and 
people with disabilities in cities and towns throughout Wisconsin. 
Without it, many patients have no choice but to go to a nursing home, 
or even an emergency room, to get the care they need. For too many home 
health patients in Wisconsin, that day has arrived.
  Home health agencies around my state have closed their doors due to 
massive changes in Medicare, and seniors and the disabled have been 
forced to go elsewhere for care.


                        The Balanced Budget Act

  As my colleagues know, the Balanced Budget Act of 1997 contained a 
number of measures that were intended to slow home health care 
spending. Congress targeted home health spending due to the fact that 
prior to the Balanced Budget Act, home health care had become the 
fastest growing component of Medicare spending.
  Unfortunately, the cuts went deeper than anyone anticipated, and have 
left many Medicare beneficiaries without access to the services they 
need.
  These unintended consequences of the Balanced Budget Act of 1997 have 
been severe indeed. Instead of the $100 billion in five-year savings 
that we targeted, present projections indicate that actual Medicare 
reductions have been in the area of $200 billion. Home health care 
spending, which the Congressional Budget Office expected to rise by $2 
billion in the last two years even after factoring in the Balanced 
Budget Act cuts, has instead fallen by nearly 8 billion, or 45 percent.
  These painful cuts have forced more than 40 home health care agencies 
in 22 Wisconsin counties to close their doors, in just two years.
  Mr. President, I stand by my vote in favor of the Balanced Budget 
Act. And, like many of my colleagues, I believe that it contained 
meaningful provisions to balance the budget. I want to emphasize that 
the goal was to balance the budget--it was not to punish home health 
agencies, and certainly not to deny Medicare beneficiaries access to 
the home health services they need.
  The Balanced Budget Act also included a number of burdensome 
administration changes, and a new reimbursement system for home health 
care agencies. It required the creation of a Prospective Payment 
System, and, until that system was developed an interim payment system.
  These new rules are forcing agencies to overhaul their computer 
systems, purchase new software, and fill out more and more forms. Many 
of these agencies already face major cash-flow problems, and are 
rightly concerned that any delays in payments could hurt their ability 
to properly care for beneficiaries.

  With all of the changes, Congress must ensure that these home health 
agencies, which have already been hit hard by payment cuts, have the 
resources they need to provide quality home care to the American public 
in a cost-effective manner.


                   rdf's home health care legislation

  My legislation provides for some common sense provisions to ease the 
transition to the new PPS system.
  Under the first provision, the Health Care Financing Administration 
would

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be able to provide one-time advance payments to home health agencies 
which have been experiencing cash-flow problems. These payments are 
temporary: agencies would be required to repay them within twelve 
months.
  It also provides some relief to agencies for their compliance with 
the new regulations and rules. Across the country, home health agencies 
have had to spend millions of dollars buying new computers and software 
which can handle the new PPS. This provision also targets those small 
agencies with a lesser cash flow and are relatively more affected by 
the burdensome regulations.
  My bill also includes compensation for agencies who must perform 
patient outcome assessments under the new rules. We should recognize 
that physicians' time is precious, and that we cannot expect them to 
provide accurate, helpful data if every hour they spend filling out 
forms is an hour less treatment that the agency can afford to provide.
  Finally, the bill carves out funding for non-routine medical supplies 
from the PPS, so that agencies who treat patients with complex medical 
needs are not punished with low payments. We must ensure that all 
beneficiaries have the choice to receive care at home, and not be 
turned down or shut out of the market because agencies are afraid that 
they'll be too costly to assist.
  These are sensible changes which go a long way to alleviate the 
burden that the change to the Prospective Payment System has imposed on 
the agencies. These changes will allow agencies to focus their care on 
Medicare beneficiaries, and reduce their burden as they transition to 
PPS.


                             access to care

  In Wisconsin, over 46 Medicare home health providers have shut down 
since the implementation of Interim Payment System. Still more have 
shrunken their service areas, stopped accepting Medicare patients, or 
refused assignment for high cost patients because the payments are 
simply too low.
  So, what do these changes mean for Medicare beneficiaries? Well, 
quite frankly, in many parts of Wisconsin, beneficiaries in certain 
areas or with certain diagnoses simply don't have access to home health 
care. The Interim Payment System has created disincentives to treat 
patients with expensive medical diagnoses. Few agencies, if any, can 
afford to care for patients with expensive medical diagnosis.


                               conclusion

  I believe that Congress must take a serious look at what refinements 
need to occur to ensure that our home bound elderly and disabled 
constituents--among the frailest and most vulnerable people we serve--
can receive the services they need.
  Without that fine-tuning, I am quite certain that more home health 
agencies in Wisconsin and across our country will close, leaving some 
of our frailest Medicare beneficiaries without the choice to receive 
care at home. Again, I think Seniors need and deserve that choice, and 
I hope my colleagues will join us in supporting this legislation.

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