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Industry calls for HCFA to rethink reform plan

Feds putting clamp on Medicare expenses with tougher rules, regs for home health

The recent investigation by General Accounting Office — that calls into question several management practices and decisions by Mid-Delta Home Health Agency — is only the tip of the iceberg in the federal government’s recent attempt to get under control what it considers run-away spending in the home health industry.

Proponents of home health care, who are highly critical of the federal government’s recent efforts to regulate the industry, say its tremendous growth is the natural result of dramatic shifts in how health care is now provided — some of which the federal government is itself responsible.

Furthermore, leaders in the home health industry say the steps now being taken by the Department of Health and Human Services (HHS) to try and rein in rising costs and fight fraud and abuse are comparable to trying to kill a fly with a sledgehammer.

In the last couple of years, after decades of virtual inattention by regulators, the home health industry has been put under the magnifying glass.

Just last year, a report by the General Accounting Office in preparation for upcoming legislation, closely examined the Medicare payment system for home health benefits and concluded that the payment mechanisms needed to be greatly improved, an implementation of incentives for agencies to control costs needed to be instituted and tougher regulation and oversight of the system had to occur.

That GAO report estimated that if HCFA undertook all of the steps it was considering, a savings of nearly $12.4 billion could be realized over five years.

It was the GAO that, at the request of a congressional subcommittee, said it uncovered numerous instances of Belzoni-based Mid-Delta trying to defraud the Medicare and Medicaid system by misappropriating funds for employee salaries, refunded bonuses and leave payments that were charged to Medicare and conducted “unnecessary and excessive” visits to patient’s homes.

Clara Reed, owner and CEO of Mid-Delta, has flatly denied any abuse.

“I provide jobs for people and give them a chance at education they wouldn’t have,” Reed said in a recent report. “Why would I want to steal from the federal government?”

A growing problem

Home health has been one of the fastest-growing expenditures in Medicare, rising from just 2.9% of all payments in 1990 to nearly 9% now. In that same time, the average number of visits per beneficiary doubled from 33 to 76 per year, and total home health spending increased from $3.1 billion in 1990 to $16.7 billion in 1996, according to a Jan. 13 press release from the Health Care Financing Administration which runs Medicare. Medicare is the primary federal program that funds home health benefits.

The release was issued to announce a new approach to regulating home health care agencies receiving Medicare as a part of the Balanced Budget Act of 1997. Those changes include, in part, requiring agencies to obtain surety bonds of $50,000 or 15% of annual Medicare payments received, whichever is greater; closer scrutiny of claims; closing loopholes that allowed agencies providing care in rural areas to charge urban rates; and dramatic payment reform which will be fully implemented in 1999. Until that time an interim payment system is being used which essentially reimburses agencies at a percentage of their 1994 billings.

“The new regulations are part of much broader efforts to fight fraud and abuse, which is one of our top priorities,” said Nancy-Ann Min DeParle, administrator of the Health Care Financing Administration.

DeParle said the growth of the home health industry was held to just 5.7% in 1997, down dramatically from the 25% rates seen from 1990 through 1995.

“Our work to prevent fraud and abuse accounts for an important part of that reduction in growth,” she said.

Industry feeling sick about new regs

Maybe so, but some of the department’s plans could also put quite a few agencies out of business and are patently unfair to those that have kept their noses clean and tried to operate their agencies by the book, said Jean McCarty, executive director of the Mississippi Association for Home Care.

“There are people out there who would find a way to work the system no matter how regulated it is,” McCarty said.

Of immediate concern to the home health industry are the departments calls for surety bonds and the interim payment system, McCarty said.

“It’s an overreaction to a problem of growth,” she said, and one her national association is challenging in court.

McCarty said the home health industry does not argue the point that the growth has gotten out of hand, only that the federal government’s plan is unfair.

“We want to work with them to establish rules they can live with and rules we can live with,” she said.

Joey Spearman, administrator for Gilbert’s Home Health in Tupelo, which provides service to 15 north Mississippi counties, said confusion is reigning now within the industry because the federal government’s plan to reform home health care has not been well thought out or implemented.

Spearman said his agency was set to begin their fiscal year April 1 and just five days before had yet to receive their interim payment schedule from HCFA.

Spearman said legislators who supported the changes in the rules and regulations have been caught off guard by their impact and some are frantically scrambling to re-address the issue. It can’t happen soon enough for him.

As for Mississippi agencies, the state by-and-large has avoided many black eyes. Statewide, Mississippi has 55 hospital and free-standing home health agencies. The investigation of Mid-Delta is one of the first in recent memory, McCarty said.

“Mississippi is not wide open” for fraud and abuse, she said.


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