Medicare Compliance & Reimbursement

Increased Medicare bill cost estimate puts HHAs at risk.

Just when home health agencies are taking a breather after their epic fight against copayments in 2003, it's time to man the defenses again for this year's congressional session.

The Office of Management and Budget recently issued a new - and significantly higher - cost estimate for the Medicare reform bill President Bush signed into law in December. Just weeks after the law's enactment, the estimated cost went from $400 billion to $534 billion over the next 10 years.

After passage of last year's landmark bill, most observers agreed that a Medicare bill in 2004 - an election year - was highly unlikely. Ever since passage of the bill, many Democrats have vowed to seek changes to it this session, especially to the managed care portions. But Republican congressional leadership and the Bush Administration seem firmly against reopening Medicare legislation before the elections this fall, notes Bob Wardwell with the Visiting Nurse Associations of America.

However, now the sharply increased spending estimate for the bill, which includes the new prescription drug benefit, may change all that. "The budget issues can create the possibility of reopening the Medicare matters," allows William Dombi, vice president for law with the National Association for Home Care and Hospice's Center for Health Care Law.

The estimate has angered both the Democrats already against the bill and the conservative Republicans who were reluctant to vote for it in the first place for fear of overspending, according to news reports. Their combined momentum may open up Medicare legislation this session.

"Many wise folks believe that there won't be any Medicare legislation in 2004," says Ann Howard of the American Association for Homecare. "I don't believe this conventional wisdom."

If serious Medicare legislation does arise, HHAs may have a lot to worry about. Thanks to the newly increased estimate, lawmakers will be looking harder than ever for places to make cuts - and home care has long been considered a juicy target. "Anytime they are writing Medicare legislation and casting about for savings to pay for program enhancements and provider increases, we will be at risk," Howard warns.

A small group of politicians is committed to the idea of having a copayment for HHA services, and that issue could easily become part of cost-saving proposals this year. "Given the structure of the Medicare Advantage legislation, a fee-for-service benefit without a copay will continue to stand out as inconsistent with the privatization goal," Wardwell notes. Bad News From MedPAC The Medicare Payment Advisory Commission has recommended cuts to home care payment increases this year, Wardwell and Howard note - another danger sign for HHAs.

Reopening Medicare legislation is likely to lead mostly to criticisms and complaints rather than passage of new provisions, Dombi expects. "Nevertheless, [...]