VAHHA Opposes Cuts
On April 1, 2001, 10 of 12 Medicare-certified home care agencies in Vermont were hit with a 10% cut in their Medicare rates. This decrease followed the 5% rate reduction of last October. Rates paid to the other two agencies, Chittenden and Franklin, were lowered 11% last October, with a combination of the 5% reduction plus a change in how Medicare calculates their payments. In addition, Medicare plans to freeze the Medicare home care rates for four years and wants participants to pay a 10% co-payment. The October cuts cost Vermont agencies more than $2 million and the reduction this April will cut payments by $3 to 4 million more. VAHHA staff and representatives from the 12 agencies have been active with Vermont’s Congressional delegation in opposing these cuts. VAHHA representatives will be meeting with Vermont’s Washington delegation this spring. In the meantime, the following letter was sent to Vermont’s the three-person Congressional Delegation by VAHHA Executive Director Peter Cobb.
"The budget option presented by CBO to impose home health copays will not work and will result in significant cost shifts to the agencies. The CBO plan would impose a 10% copayment on the home care benefit. This option makes no sense for several reasons. First, point of service collections are not feasible for home health. Home care services in Vermont are provide by more than 3000 nurses, therapists and home care aides. To make each of them also a bill collector is ludicrous. With point-of-service collection not an option, the only other option is to bill the patient. We believe the cost to collect these payments would add, unnecessarily, thousands of dollars to our costs and could exceed the payments themselves. More importantly, adding deductibles would restrict access to home care because many patients, who would need home health services but who would not be able to afford the copayments, would not get the help they need. This would result in worse health outcomes, would increase institutionalization in hospitals and nursing homes, and would prove costlier for the Medicare program.
"The proposed freeze on base payments for Medicare home health through 2007 and a reduction in the payments for each Home Health Resource Group (HHRG) would threaten the financial viability of the 12 Vermont agencies and could force agencies to reducing services to high cost, high need patients.
"In its March 2003 report to Congress, MedPAC used average profit margins for home health agencies that it had computed to justify proposals for major additional cuts in home health payments. There are several problems regarding MedPAC’s home health margin calculations including: 1) while MedPAC calculated average profit margins (from somewhat limited data), it does not discuss actual ranges in margins; 2) MedPAC estimated average profit margins by weighting more heavily high volume Medicare providers; 3) the data used to calculate home health margins does not include pending retroactive adjustments that will significantly reduce profit margins; 4) MedPAC fails to consider foreseeable increased home health costs in estimating profit margins and projecting future costs; and 5) MedPAC did not evaluate the overall financial status of home health agencies.
"MedPAC also suggests that home health agencies can handle these proposed cuts by further reducing services to patients. This a very bad idea from a health care quality perspective. Since 1997, the average visits provided over a 60-day episode has already dropped nationwide from 36 to 20 (also 1.3 million fewer Medicare beneficiaries got home health services in 2002 than in 1997).
"We believe Congress should provide much-needed stability in the Medicare home health benefit by rejecting proposals to increase home health beneficiary cost sharing and rejecting further cuts in payments and access to care. Further, serious consideration should be given to restoring home health care funding and extending the 10% rural add which expires April 1of this year.