Submitted - May, 2002

The strength and resiliency of Vermont’s home health system have been well demonstrated in recent years. Vermont’s community based, non-profit home health agencies have been highly successful in assuring that all Vermonters have access to comprehensive, high quality, low cost, medically necessary home health services and hospice services, regardless of ability to pay or location of their residence. Vermont’s home health agencies not only survived (Over 3,000 agencies closed - Vermont is the only state where no agency closed) the federal changes to Medicare reimbursement known as the Interim Payment System (IPS), but also played a significant national role in advocating for and obtaining greater funding for the low cost agencies around the country hurt by IPS. They also played a significant role in advocating for Medicare beneficiaries who were experiencing the loss of Medicare home health services under increasingly restrictive interpretations of Medicare eligibility qualifications.

Vermont agencies have adapted successfully to the newly implemented Prospective Payment System (PPS) and have been able to absorb the expenses related to numerous "high-cost" beneficiaries for whom Medicare payments cover only a portion of the cost of delivering services. Currently, however, there are ongoing federal threats to reduce PPS payments by 15%, and to add a home care patient co-payment, which would add costs and reduce revenues. Vermont agencies are also threatened with an additional 10% cut related to a redefinition of the "rural add-on" presently paid to most Vermont agencies, but unavailable if the redefinition is adopted.

PPS requires each home health agency to assume the risk of the cost of serving the patient. The larger the population of patients served, the better this risk is spread. If anything, the implementation of PPS strengthens the rationale supporting Vermont’s non-competitive not-for-profit system. In a competitive environment PPS encourages "cherry picking" even more than the cost reimbursement system did. There are surpluses commonly achieved serving certain types of diagnoses and there are very real losses related to others. The result is that in a competitive system, agencies have a very real incentive to market the profitable diagnoses and refuse to serve certain types of patients with expensive money losing diagnoses. The Centers for Medicaid and Medicare (CMS) has already warned home care agencies not to select patients by diagnosis. Competition, especially in a rural setting, diminishes the ability of a particular agency to spread the risk among the broadest group of beneficiaries. It can create very real access problems, because no single agency is bound to the commitment to their communities that they will serve all in need, not just those cases in which they can make some money.

Moreover, expensive compliance requirements under Health Insurance Portability and Accountability Act (HIPAA) and increased paperwork requirements related to the federal anti-fraud efforts have substantially increased the administrative costs of providing services and will continue to do so for the foreseeable future.

In this complex funding and regulatory environment, the value of Vermont’s home health agencies and their commitment to the communities which they serve and from which they receive support, should be clear.

The 1999 CON guidelines support the retention and protection of this system from competition by new for-profit and not-for-profit agencies. However, the guidelines note the existence of a number of complaints and anecdotal accounts of poor service, difficulties in access, and inflexibility at times. As a result, it recommended that BISHCA begin collecting and assessing these complaints to determine the level of dissatisfaction with the current system. Since then, agencies have been required to report to BISHCA certain types of complaints received by them. BISHCA also monitors reports to the hot-line maintained by the Department of Aging and Disabilities. As a result, we can now discern the statistical significance of these complaints. During 2001, there were only 39 reportable complaints received by the agencies during this same period. DAD reported only 7 complaints, only 3 of which were substantiated. During this same period, Vermont’s home health agencies served over 20,000 patients, providing nearly a million home care visits.

Vermont’s home health agencies do not treat any complaint lightly. However, the number of complaints is extremely small compared to the number of people served

(0.18 %) and the number of visits provided during this past year.

This level of complaints appears to be well within, if not substantially below, the number of complaints one would expect in any system. In our view, the numbers do not rise to the level that they warrant consideration of any changes to the existing system in Vermont. Rather, the lack of a greater number of complaints is additional evidence of the commitment and flexibility of our current system. In comparison with other states, Vermont agencies are noteworthy for being virtually free of fraudulent and exploitative practices and committed to and highly successful at minimizing access, scheduling, and service related problems.

The tight labor market has resulted in staff shortages for most agencies especially for nurses and home health aides. The Assembly has vigorously recruited and trained additional staff. However, this shortage has increased expenses related to salaries, benefits, and training and has created some access problems for beneficiaries. Competition would not alleviate this problem, it might actually exacerbate it (1) by increasing expenses as a result of competition for employees (2) by the inefficient use of the staff that is available and (3) by removing the obligation accepted by agencies in the present system to serve all in need.

For all of these reasons, the Assembly submits that no substantive changes be made to the existing CON guidelines as they pertain to the delivery of home health services in Vermont.

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