Home health agencies try to minimize expected cuts in Medicare payments

The lobbying organization representing companies and practitioners that provide in-home medical services is enlisting the support of lawmakers in an effort to discourage Congress from eyeing cuts to their payments as a way to offset other Medicare expenses.

Already facing a regulation that would offer them a below-inflation pay raise next year, home health providers have cautioned Congress against viewing their payment pool as a source of funds to help cover other initiatives, such as blocking a 5.1 percent cut in Medicare’s payments to doctors.

These companies send nurses and other caregivers to the homes of elderly and disabled people to help them with basic healthcare needs and daily activities. The industry has been growing, driven partially by the aging of the population. Some patients’ groups, along with government healthcare programs and private health-insurance companies, also have been trying to deemphasize nursing-home care and promote in-home healthcare services.

The providers’ cause has attracted the support of 76 senators, who sent a letter sent to Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Max Baucus (D-Mont.) this month, urging that the home health providers receive a fee hike next year equal to the increase in their expenses.

A spokesman for the National Association of Home Care and Hospice (NAHC) emphasized that the group is not aware of any lawmakers who are looking to carve into their payments. But in a written statement last week, the NAHC’s president indicated that providers are concerned that they could find themselves in the crosshairs as Congress scrambles to find a short-term fix to the physician-payments issue.

“Some policymakers may even be tempted to use savings in home care as a means of canceling the five percent in program payments to physicians scheduled to take effect on January, 1, 2007. Trading home care for physician payments would be a terrible bargain,” Val Halamandaris, the NAHC’s president, said in the statement.

Home health providers form only one of the groups dependent on Medicare payments that have cause to worry about taking late-session hits.

Even a one-year freeze on physician payments would cost more than $10 billion over five years, so lawmakers devising a fix are eager to find offsets in the program.

Home health agencies and other home care providers have seen their Medicare payment hikes reduced for several consecutive years, with the Bush administration, Congress and the Medicare Payment Advisory Commission (MedPAC) agreeing that the fees are adequate.

Although the home health providers are not expecting to see their fees actually reduced, they contend that the annual increases in recent years have not kept pace with rising costs.

The Centers for Medicare and Medicaid Services (CMS) has proposed another below-inflation payment increase for next year.

In the statute that created the Medicare prescription-drug benefit, Congress specifically mandated that these providers receive fee hikes below the rate of inflation used to set their rates.

The formulas used to calculate Medicare’s payments to most healthcare providers, known as prospective payments systems, are based on market baskets of expenses that the providers incur. A market-basket pay raise would be 3.3 percent for next year but the proposed regulation calls for an increase of 2.5 percent.

The home health providers contend that CMS and MedPAC underestimate their expenses and overestimate their profit margins. NAHC and other trade groups, such as the American Association for Homecare, say that their technology, personnel and transportation costs are rising faster than their fees.