Rural Add-On Bill Introduced in Senate
February 16, 2017 07:35 AM
Senator Susan Collins (R-ME), a good friend of home care and hospice, has introduced a bill to the United States Senate make permanent the three percent add-on for home health services delivered to residents of rural areas.
The bill, S.353, will likely be known as the Preserve Access to Medicare Rural Home Health Services Act and has been referred to the Senate Finance Committee. Senator Collins, who introduced the bill after hours of advocacy work on Capitol Hill by NAHC staffers, has already picked up a bipartisan co-sponsor, Senator Maria Cantwell (D-WA).
In late 2000, as part of the Benefits Improvement and Protection Act (BIPA), Congress enacted a 10 percent add-on for home health services delivered in rural areas between April 2001 and April 2003. On April 1, 2003, the payment add-on expired. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 reinstated the rural payment improvement at five percent for a period of one year (April 1, 2004, through March 31, 2005). In February 2006, as part of S. 1932, the Deficit Reduction Act of 2005 (PL 109 - 171), a one-year (calendar year 2006) five percent rural add-on for home health services delivered in rural areas was signed into law. The rural add-on expired on December 31, 2006.
In 2010 the Patient Protection and Affordable Care Act (H.R. 3590; P.L. 111-148) reinstated a three percent payment add on for home health services delivered to residents of rural areas. Under the legislation the rural add-on payment became effective for visits ending on or after April 1, 2010, and before January 1, 2016. The SGR Repeal and Medicare Provider Payment Modernization Act of 2015 (H.R.2; Pub Law No: 114-10) included a provision extending the rural add on through the end of 2017. The Preserve Access to Medicare Rural Home Health Services Act of 2017 (S.353) would make permanent the rural add on.
The rural add-on is critical for a number of reasons. Firstly, the loss of the rural add-on will likely result in reductions in service areas and some agencies may have to turn away high resource use patients in rural areas. Access to care is a critical issue in rural America. Before the rural add on was reinstated in 2010, some agencies reported that they had to eliminate delivery of services to remote areas. For example, some agencies in Maine had to eliminate delivery of services to outlying islands.
Secondly, rural agencies have greater difficulty hiring or contracting with therapists, and frequently must use nurses instead of therapists to provide rehabilitative services, which could affect a patient’s rehabilitation progress. Additionally, when an agency does not use a physical therapist for therapy services, it cannot qualify for the higher therapy rates allowed by the prospective payment system (PPS).
Thirdly, home health agencies have difficulty competing with hospitals to hire staff because they are unable to afford the wages, benefits, and large signing bonuses that hospitals offer. Further, home health agencies are not eligible for reclassification of their wage index – an option 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. Despite this, rural home health agencies must offer competitive wages for care workers that are comparable to wages paid in urban areas because of the nationwide nursing and staffing shortages. In certain frontier states, graduating nurses leave the state seeking better wages, thus compounding the workforce shortage.
Fourth, agencies in rural areas frequently are smaller than their urban counterparts, which means that costs are higher due to smaller scale operations. Smaller agencies with fewer patients and fewer visits means that fixed costs, particularly those associated with meeting regulatory requirements, are spread over a smaller number of patients and visits, increasing overall per-patient and per-visit costs. Smaller agencies have less likelihood of maintaining a high patient volume –which means they have less access to a varied case mix. There are not always enough marginally profitable cases to offset the resource-intensive, expensive cases. Outlier payments are not sufficient to cover these costs. A small agency’s census of patients is often inconsistent, which makes it difficult to retain consistent full-time staff.
Furthermore, rural agencies have less access to capital needed to invest in efficient and time-saving technologies, have lower profit margins than urban agencies, and must provide more care to many patients because home health agencies are often the primary caregivers for homebound beneficiaries with limited access to transportation.
The rural add-on is a critical issue for many home care agencies and thus is very important to us at NAHC. We will continue to advocate tirelessly on this issue and will keep our membership informed of all developments.