Budget:
INDUSTRY TAKES UP ARMS AGAINST 2007 RATE FREEZE PROPOSAL
Published on Thu Feb 09, 2006
MedPAC pushes freeze at House hearing.
The final decision on 2007 Medicare payment rates is probably at least half-a-year away, but the battle over home care reimbursement is already escalating into an all-out war.
In its annual March report to Congress, the Medicare Payment Advisory Commission recommends keeping home health agency payment rates at 2006 levels for 2007 (see Eli's HCW, Vol. XV, No. 9). Beneficiaries' access to home care services is good and quality has actually increased under the prospective payment system, MedPAC maintains in the report. Vital Statistics The influential advisory body to Congress justifies a rate freeze next year in part due to HHAs' Medicare profit margins. Agencies' average margin for 2004 was 16 percent, and MedPAC estimates the 2006 margin will be 14.7 percent.
The number of home health providers and users is also growing, MedPAC points out. In 2003, 2.6 million Medicare benes used home health services while in 2004 that number was 2.8 million.
And while the number of HHAs dropped to about 7,000 after the interim payment system in the late 1990s, 8,082 agencies were participating in the Medi-care program as of October 2005.
State boom: The number of HHAs increased by 10 percent in the last year alone, MedPAC Chair Glenn Hackbarth told the House Ways and Means Subcommittee on Health in a March 1 hearing on the Commission's report recommendations. About one-third of the new agencies are in Texas, and Florida also has many new entrants.
Home health patients appear to be using more services as well, the report notes. The average length of stay increased from 62 days in 2003 to 65 days in 2004. The average number of episodes per beneficiary grew from 1.5 in 2001 to 1.7 in 2004.
Finally, the Centers for Medicare & Medicaid Services projects home health spending will grow 5 percent a year from 2005 to 2015, MedPAC notes.
"Agencies should be able to accommodate cost increases over the coming year without an increase in base payments," Hackbarth said in prepared testimony.
"No adverse impacts are expected," MedPAC says in the report. "This recommendation is not expected to affect providers' ability to provide care to Medicare beneficiaries."
Watch out: MedPAC has "assembled statistics ... to make a case for a freeze that will be very damaging," warns Bob Wardwell with the Visiting Nurse Associations of America.
But the home care industry isn't taking MedPAC's assertions lying down. MedPAC's profit margin data is way off, national trade groups charge.
The Commission leaves nearly one-quarter of HHAs out of its margin calculation by excluding provider-based agencies' data, VNAA notes in a release.
"The Medicare margins of hospital-based HHAs are generally much lower than MedPAC's average for all other HHAs," VNAA's Kathy Thompson says in a release.
With provider-based data [...]
