Better prospects.

Home health faces new payment system

HCFA's PROPOSED PAYMENT SYSTEM FOR home health agencies is an improvement over the current interim payment system (IPS) but still leaves much to be desired, say industry sources.

The home health prospective payment system, proposed by HCFA October 29, 1999, is scheduled to go into effect October 1, 2000, for all agencies, regardless of when their cost-reporting period begins. HCFA has said it will publish the final payment system by July 30, 2000.

"The concept of a prospective payment system is much better than working under the IPS," says Valerie Tully, director of public relations for the National Association of Home Care. "IPS simply capped payment while the PPS would actually recognize different types of care that the patient requires and pay accordingly."

Tully notes that a study by the George Washington University Center for Health Services Research and Policy, released about the same time HCFA proposed the home health PPS, found that the IPS had significantly reduced Medicare funding for home health services and made it more difficult for high-cost patients to receive care. New HCFA data, which shows the home health Medicare payments fell 38 percent between 1997 and 1998, supports that finding.

Under the proposed system, HHAs would be paid a standardized rate for a 60-day episode of care. The rate for fiscal year 2001 would be $2,037.04, which would then be adjusted for each agency based on geographic location and case mix. The payment is for all services, except durable medical equipment, including the costs for continuous OASIS assessments and nonroutine medical supplies previously billed separately to Medicare Part B.

The case-mix system proposed by HCFA consists of 80 home health resource groups. The assignment to a particular group is driven by OASIS data based on the severity of the patient's condition in terms of functional status, clinical factors, and utilization considerations, such as therapy and prior hospitalization.

HCFA also has proposed a low utilization payment adjustment for four or fewer visits, as well as adjustments for outliers, partial episodes, and for a significant change in condition. Periodic interim payment (PIP) would be eliminated.

While the proposed PPS would be an improvement over the current payment system, says Scott Lara, director of governmental affairs for the Home Care Association of America, elimination of the PIP and the split in payment could cause cash flow problems for HHAS. "This is going to create problems," he says. "From the day a bill is submitted to an intermediary until you get your first 50 percent can take 41 days. That's a ridiculous amount of time to expect providers to go without any payment."