TO: Health Access Oversight Committee
FROM: Peter Cobb
RE: Long Term Care
DATE: October 4, 1999

Background:

In October 1997, Medicare instituted a new payment plan for home care agencies, the Interim Payment System (IPS). IPS has severely reduced payments to Vermont home care agencies. Medicare also instituted a nationwide anti-fraud effort entitled Operation Restore Trust to eliminate inappropriate payments and to reduce what the Health Care Financing Administration believes has been excessive growth in home health services.

Although the intent of these programs is laudable, they have not worked. Instead they have created chaos and have severely challenged the ability of the agencies to provide service to all who need home health. In the meantime, Medicare is interpreting the eligibility rules so narrowly that many who had been eligible and need Medicare home health services, no longer qualify.

Interim Payment System - The main problem with the Interim Payment System is that it is neither fish nor fowl, neither managed care nor fee-for-service. Instead it is in the netherland between the two, stuck in the worst of both. Under IPS, home care agencies either get paid a total for each patient per year, or get a payment which is based on the cost per visit, whichever is lower. Under this system, agencies cannot manage their care, because if they do, the cost per visit may rise and then the visit cost could exceed the per visit payment. This system also provides disincentives for agencies to care for chronically ill and complex patients, whose cost per year often far exceeds the per year patient cap.

Fraud and Abuse. A major anti-fraud campaign known as Operation Restore Trust (ORT) was launched in 1995. VAHHA supports all legitimate efforts to rout out fraud. We believe, however, that ORT has been misguided and frequently destructive to legiti-mate agencies. The result of ORT in Massachusetts is a perfect example. In that state in 1997 there were twenty ORT surveys which resulted in only $9,011.34 in overpayments after reconsideration, just $450 per facility. Of the more than 10,000 visits reviewed, there were no instances of fraud. That is an awful lot of effort and money spent to return so little. Most of the overpayments were legitimate disagreements between the Medicare surveyors and the home care agencies, not fraud or abuse by the agencies.

Homebound Rule - In order to qualify for Medicare home health coverage, the bene-ficiary must meet several eligibility criteria including the "homebound" requirement. Home care agencies in New England contend that the homebound requirement has been read by the fiscal intermediary and HCFA to limit coverage for persons who can leave home, even if leaving requires assistance and a taxing effort. Among the areas of dispute between the fiscal intermediary and the home care providers are disagreements over the interpretation of the definition of frequency of absences from the home, the rules concerning eligibility of chronic care patients, and the rules on what constitutes a taxing efforts.

Chronic Care, The Disabled and Home Care - Over the past two years it appears to home care providers that an unwritten rule has been used to the effect that home health patients are ineligible for Medicare when they are no longer acutely ill. Accordingly, chronically ill, long term patients have had increasing difficulty in getting Medicare coverage for necessary medical services. Especially hard hit are the disabled who depend on home care to help them start their days.

Medicaid Payments - Medicaid does not pay the cost of home care service.

Demographics - The growing number of elderly has major implications for home health. There will be a greater frequency of debilitating conditions and greater demand for extended care provided by home health agencies.

The 85+ group is the fastest growing segment of the population.

Poverty - Poverty rates are highest during older age partly because of substantial reductions in income and also because of the likelihood of major expenditures for health care. Many Vermonters face poverty for the first time after they retire.

Personnel - There aren't enough nurses, homemakers, home health aides and therapists now and shortage is likely to get worse before it gets better. Finding qualified staff to meet the need is a concern for all health providers, and is both a state and national problem.

 

Long Term Care Policy - Comprehensive long term care policy must be enacted at the federal level. The state government must continue the work of Act 160, and to assure that the goal of the program, to shift the balance to community based care, is accomplished.

Fair Payments - Medicaid and Medicare must pay reasonable costs for services.

Service Networks - Providers must work to assure there is no duplication of effort and that needed services are available to those in need.

Staffing - The state, advocates, consumers and providers must work together to create incentives to attract and retain employees, especially for the paraprofessional level employee. In addition, new incentives to promote a career in nursing must be considered.

Medicaid Eligibility - Medicaid should consider expanding eligibility for Vermont's most frail, those 85 and older, to 300% of poverty.

Homemaker - Continued and expanded support of the Homemaker Program as a service alternative that helps fill gaps between traditional payments and needs.

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