Fair payment.

Updated data should impact reimbursement

GROUPS REPRESENTING HOME HEALTH AGENCIES (HHAs) are urging the Health Care Financing Administration (HCFA) to modify the proposed prospective payment system for HHAs to ensure fair payment and cash flow.

While the proposed system is an improvement over the current interim payment system (IPS), it contains several fundamental flaws that must be modified before the final payment system is in place, say the National Association for Home Care (NAHC) and the Visiting Nurses Association of America (VNAA) in comments submitted on the proposal, published Oct. 29, 1999. HCFA is expected to publish the final rule by July 30, 2000 and the new system should kick in Oct. 1.

Two main concerns of the industry are the data used to establish the standardized payment amounts to agencies and adequacy of cash flow under the new payment system. As proposed, providers would be paid a standardized rate for a 60-day episode care adjusted by location and case mix. Agencies would be paid 50 percent of the full payment upon submission of the initial bill and 50 percent when the final bill is submitted. The proposal also includes a low utilization payment adjustment for four or fewer visits, and adjustments for outliers, partial episodes, and significant changes in condition. Periodic interim payments would be eliminated.

Both NAHC and VNAA urge HCFA to recalculate the standardized payments using recent data. The proposal uses assumptions based on 1997 data, which fail to reflect the utilization and financial turmoil caused by the IPS. HCFA should publish revised calculations prior to issuance of the final rule, accounting for postponement of the 15 percent payment limit reductions, updated data regarding service utilization, and refined cost report data, they say.

"We think it's critical for agencies to know what the budget neutrality numbers are before the final rule is published," says Cathy Sullivan, a research analyst with NAHC.

The groups also recommend that HCFA change the payment blend so that HHAs receive 90 percent of the total payment after submission of the first claim; and the rest after submission of the final claim. This would improve the cash flow of providers and is more equitable than the 50/50 blend because agencies generally have provided more than 80 percent of the total care for the episode by the time they receive the first payment, the groups argue.

NAHC and VNAA also asked HCFA to:

* refine the case-mix measure to better account for resource utilization,

* provide accelerated payments to HHAs that are experiencing a cash flow crisis,

* limit medical review to 30 calendar days.

Rising Costs

Skilled nursing facility expenses for Alzheimer's disease residents will increase an estimated 51 percent between 1995 and 2015, according to the General Accounting Office. AD expenses represented $19.7 billion of the $64.3 billion spent on SNF care in 1995.

Source: The Gerontologist