Date: 8/1/2003

Background Materials for Grassroots Activity
During August Recess 2003

This background information is designed for use in August 2003 advocacy efforts to fight imposition of a home health copayment and other cuts in the Medicare home health program as part of the Medicare reform/Prescription drug legislation.
Currently, the House and Senate bills (HR 1/S 1) have very different provisions relative to home health payment issues, and the National Association for Home Care & Hospice (NAHC), along with the other national home health associations, is advocating generally in support of the Senate bill in this area. Following are the differences in how the two bills deal with home health payment issues:

It is imperative that your members of Congress, as well as the members of the joint House-Senate conference committee that will work out the differences between the two bills, hear from their constituents during the August district work period (House: July 25–Sept. 2; Senate: Aug. 1–Sept. 1) about the dangers posed by any additional cuts to the Medicare home health program. A list of conference committee members, along with useful contact information, is provided as ATTACHMENT A. If you don't know who your member of Congress is, use the tool provided below.

STEP BY STEP GUIDANCE ON WHAT TO DO

1. Identify the Senators and Representative(s) who serve within your agency’s census area.
2. Assess your agency’s financial problems as a result of recent or future cuts. A Template is provided to assist you in gathering this information. (See ATTACHMENT B.)
3. Seek information from your Agency records on good examples of patients (with permission to disclose information) that have incurred significant financial obligations for health care services and items they have received outside of home health. A Template is provided to assist you in gathering this information. (See ATTACHMENT C.)
4. If possible, identify members of senior advocacy groups that might be willing to participate in a meeting with the Senator/Representative in opposing cuts to home health copays and/or other home health cuts.
5. Call the local office of the Representative/Senator and schedule a group meeting during the August district work period. If you cannot schedule an office visit, ask about public appearances.

PREPARING FOR THE MEETING

1. Gather the agency and patient profiles.
2. Organize specific talking points regarding what is happening in the home health field on a national basis, as well as what’s happening in your state.
3. Determine the points that each individual will make in the meeting and rehearse your presentations.
4. Ask the Senator/Representative to commit to fighting any further cuts in home health and copays as part of the conference committee discussions.

BACKGROUND INFORMATION FOR USE IN ADDRESSING HOME HEALTH ISSUES

The Medicare home health program has undergone tremendous upheaval since 1997. Outlays have dropped by about 50%, and the number of patients served annually has dropped by 1.3 million. While the Medicare Payment Advisory Commission (MedPAC) did a limited study that indicated significant profits under Medicare home health, another study using ten times the number of cost reports indicated that over 30% of home health agencies were operating at negative Medicare margins prior to a 7% payment cut in October 2002 and prior to elimination of a 10% rural add-on in April 2003. (NAHC study, ATTACHMENT D).

Importantly, MedPAC has advised the Congress that some of the patients that previously were receiving home health care are now getting their care in skilled nursing facilities, at a much higher cost to the Medicare program. All of these findings provide ample reason for the Congress to resist any further cuts to the Medicare home health benefit, including imposition of beneficiary copays and reductions in the annual market basket inflation update, and to restore the 10% payment add-on for patients in rural areas.

OPPOSE HOME HEALTH COPAYS—USE PATIENT PROFILES AND SELECT TALKING POINTS FROM THE FOLLOWING TO MAKE THE CASE AGAINST COPAYS
(background information/talking points is available on each copay point is available in ATTACHMENT E)

• A copayment would create a significant barrier for those in need of home care and lead to increased use of more costly institutional care. MedPAC has found that nursing home care is already used to substitute for home health, even without a copay.
• Cost sharing as a means of reducing utilization would be particularly inappropriate for home health care as utilization has declined each year since 1997.
• Home care patients and their families already contribute to the cost of their home care.
• YOUR PATIENT PROFILES CAN BE USED AS EXAMPLES HERE
• Copayments are an inefficient and regressive “sick tax” that would fall most heavily on the poorest and oldest Medicare beneficiaries.
• Copayments would be another federal administrative burden on providers and would increase Medicare costs.

RESTORE RURAL ADD-ON, IMPOSE NO FURTHER HOME HEALTH CUTS—USE AGENCY FINANCIAL PROFILES AND SELECT TALKING POINTS FROM THE FOLLOWING (and from ATTACHMENT F and ATTACHMENT G) TO MAKE THE CASE FOR RESTORING THE RURAL ADD-ON AND RESISTING ANY FURTHER CUTS TO HOME HEALTH

PRESERVE THE FULL HOME HEALTH MARKET BASKET (ATTACHMENT F)

• Current reimbursement levels have failed to adequately cover the rising costs of providing care.
• Home health agencies have already experienced a disproportionate amount of cuts in reimbursement as a result of Balanced Budget Act of 1997 (BBA).
• As a result of the BBA cuts and other factors, approximately 1.3 million fewer Medicare beneficiaries are receiving home health services annually than in 1997.
• A loss of the market basket inflation update could leave home health providers no alternative but to cut down on the number of visits per episode which could have potential adverse consequences to a patient’s clinical outcome. Outcome Concept Systems, a national home health benchmarking firm, has found that reductions in average visits below 20 visits per episode result in lower outcome scores.

RURAL ADD-ON (ATTACHMENT G)

• Delays in placing rural patients are already occurring, particularly for patients
  needing therapy services.
• Rural agencies have greater difficulty hiring or contracting with therapists, and frequently must use nurses instead of therapists to provide a limited array of rehabilitative services.
• Home health agencies generally cannot compete with hospitals to hire staff because they are unable to offer signing bonuses of the magnitude that hospitals are able. Further, home health agencies are not eligible for reclassification of their wage index—this option is available only to hospitals. This problem can be even greater for rural agencies in cases where their rural hospital counterparts are eligible to become critical access hospitals or sole community providers, which afford them the opportunity for greater reimbursement
• Agencies in rural areas frequently are smaller than their urban counterparts, which means that costs are higher due to smaller scale operations.
• In many rural areas, home health agencies can be the primary caregivers for
  homebound beneficiaries with limited access to transportation. This means that rural patients often require more resources than their urban counterparts, and are more expensive for agencies to serve.
• Rural home health agencies don’t have access to the capital needed to take advantage of time-saving technological advances that could increase efficiency, such as home monitoring devices. This problem is compounded by the fact that Medicare payment policy does not allow for reimbursement of such devices.
• The loss of the rural add-on has resulted in reductions in service areas and the inability to care for the sickest Medicare beneficiaries.
• In its March 2003 Report to Congress, MedPAC found that profit margins of rural agencies were below those of urban agencies. Moreover, margins for rural home health agencies fell even further when adjusting for the loss of the 10% rural add-on in April 2003. An industry study of home health Medicare margins found that for rural agencies the average margin was –0.46%. With consideration of the October 1, 2002, cut in home health payments and the loss of the 10% point rural add-on beginning April 1, 2003, the estimated average margin for 2003 is –10.36% for rural home health agencies.

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