Nurseweek/Healthweek| Home health feels the burn

	By Megan Flaherty Illustration by Malcolm Garris/PhotoDisc October 1, 1998 The days of rapid growth in the home care industry have come to an abrupt halt, leaving many home health nurses reeling. Since the Balanced Budget Act of 1997 took effect, more than a tenth of the nation’s 10,000 Medicare-certified home health agencies have closed. Many more have drastically downsized and are teetering on the brink of closure, industry analysts say. The pandemonium stems from reduced Medicare reimbursements to agencies—averaging 31 percent less per patient—and increased government regulation that requires costly compliance efforts. These changes are forcing agencies to cut staff, reduce pay and benefits, and demand higher productivity, administrators say. Patients in jeopardy Employees aren’t the main victims, however. Because of the new reimbursement structure, many patients are receiving fewer, shorter home health visits, and other patients that need home health care may not get it at all, experts say. The system potentially restricts access for all Medicare home health beneficiaries, said Carole Burkemper, RN, CEO of Great Rivers Home Care Inc., in St. Peters, Mo. In addition, "it discriminates against the sicker, more medically complex, long-term patients," Burkemper said. That’s because the new system, which was developed by the Health Care Financing Administration (HCFA), not only reduces the amount health agencies can bill Medicare for each visit, but imposes a limit on the total amount agencies can bill per patient. An agency is assigned this annual per-beneficiary cost limit based on its historical costs. Then the agency is expected to offset the higher costs of long-term patients who require a lot of care with the lower costs of short-term patients who require minimal care. For example, the per-beneficiary cost limit assigned to Chicken Soup, Plus in Sacramento is $3,800 a year, which translates into 30 to 40 visits a year. That $3,800 would be depleted in about a month on a patient who needed twice-a-day insulin injections or treatment for severe bedsores, said Mary Baker, MSN, FNP, RN, president and CEO of Chicken Soup, Plus. Her agency hasn’t traditionally sought out patients who need insulin injections, but some agencies built the backbone of their businesses on them, she said. "Now those are the patients nobody wants," Baker said. Home care providers know it’s not right to accept patients with intensive, long-term needs and discharge them before their needs are met, said Mary St. Pierre, RN, director of regulatory affairs for the National Association for Home Care. But when agencies go out of business or close branch offices, they must tell patients and families to try to find other providers, St. Pierre said. In other cases, if a patient is re-hospitalized, the agency may not be able to accept the long-term care or intensive care patient back again. Unless there are some changes to reverse the damage inflicted by the Balanced Budget Act, some patients inevitably won’t get the care and services they need, St. Pierre predicts. Industry in trouble The new reimbursement system—called the interim payment system because it was meant to be temporary—and other parts of the Balanced Budget Act weren’t intended to jeopardize patient care. Rather, they were meant to increase efficiency, reduce fraud, and curtail growth in the home care industry while saving Medicare an estimated $1.6 billion during the first year. The efforts have instead decimated the industry, say agency representatives who are asking Congress to repeal or alter the most damaging aspects of the budget act before adjourning in October. Specifically, the complex formula for calculating the new reimbursement rates rewards agencies with histories of inefficiencies, Burkemper said. In addition, the budget act punishes all agencies for the fraudulent activities of a few, she said. To some extent, HCFA itself acknowledges the shortcomings of the new payment system it developed, although representatives say they cannot change it without congressional action. "When Congress passed and the president signed the Balanced Budget Act, we all assumed that home health agencies would be able to operate within the interim payment system. We now recognize, however, that there are a number of concerns regarding the impact of the interim payment system on agencies that have provided care efficiently," HCFA Deputy Administrator Michael Hash told Congress in August. Hash pledged to work with Congress on any IPS reform proposal that has broad bipartisan support, is budget neutral, and does not involve systems changes that conflict with HCFA’s Year 2000 work priority. For example, HCFA could change the blend of national, regional, or agency-specific rates based on 1994 data, but couldn’t change the base year for the calculation, he said. But it’s unlikely that the IPS will be eliminated, especially because a Congressional Budget Office report shows that doing so would cost $21 billion in five years in lost savings. The bare bones Until Congress takes action, home health agencies are struggling to say afloat. Burkemper had to cut her staff of 100 at Great Rivers by 20. The laid-off employees included nurses and physical, occupational, and speech therapists, she said. In addition, she has had to suspend most benefits to her remaining staff. Other agencies have made even deeper cuts to personnel. The Visiting Nurse Association in Santa Maria has laid off at least half of its employees since the beginning of the year because of declining reimbursement, said Lee Hickman, former chief financial officer of the organization. The country’s approximately 500 nonprofit Visiting Nurse Associations of America have been providing home care to patients regardless of ability to pay for generations, Hickman said. Only in the last 10 or 15 years did profit-hungry players enter the industry, he said. "Yes, there were cases of fraud and abuse and there would be in any industry," Hickman said. "But they weren’t from the old, established agencies, but from those recently started and money-motivated." Outlook for nurses It’s hard to tell exactly how the changes in the industry will shake out in the long term as far as job security and prospects for nurses, said Connie Little, MS, RN, senior vice president at the California Association for Health Services at Home. She’s still seeing a lot of home health recruitment ads in publications. "We’ll be seeing consolidations and nurses going to work for other surviving agencies," she said. At the same time, it’s possible that trends in nursing employment of the last several years—hospitals downsizing and home health agencies growing—may be changing, she said. "If the climate remains as it is in home care, nurses will be working a lot harder and seeing more patients," Little said. The average number of daily visits by a home health nurse used to be four or five; now it’s closer to six or seven, according to Little and agency administrators. "I would imagine that some are looking at other career options because it’s a hard time in home health," Little said. Some agencies are switching from paying nurses per visit to paying them on salary, St. Pierre said. "If they’re paying a nurse on an hourly or salary basis, then the agency is certainly going to make sure that nurse is more productive and conducts more effective visits," St. Pierre said. Since the incentives for more visits to each patient have been taken away, agencies will focus on more efficient and effective care, she said. "Every visit has to count." In the long term, "I see us going to a Peace Corps model of teaching a person to fish instead of giving them a fish," she said. "Staff will have to be more adept at teaching people to help themselves."

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ADDITIONAL INFO Small, proprietary home health agencies are getting hit hardest by declining Medicare reimbursements and increased government regulation, said Mary St. Pierre, RN, director of regulatory affairs for the National Association for Home Care. These smaller agencies are the ones most likely to be owned by nurses, St. Pierre said. Although a lack of business savvy among small-business owners may account for some of the problems, "it’s inappropriate to generalize. Many nurses are smart businesspeople and have been able to set up efficient agencies," she said. Shawne Carter McGibbon, JD, assistant chief counsel for advocacy at the Small Business Administration, has urged Congress and the Health Care Financing Administration to change the Balanced Budget Act provisions that are hurting the 80 to 85 percent of home health agencies considered small businesses. "They’re conscientious and trying to play by the rules, but now they’re being subjected to harsh regulations that are designed to weed out bad actors," she said. "We can’t throw the baby out with the bathwater." When facing challenges like the interim payment system, new billing regulations, and government computer glitches, small agencies don’t have a bottomless well from which to draw resources, according to St. Pierre. "Hospital-based agencies or those owned by large corporations may have more resources to weather the storm," she said.
Before the Balanced Budget Act of 1997, Medicare reimbursed agencies on a fee-for-service basis. The new Medicare payment system that home health agencies hate—the interim payment system—was intended to bridge the old system and a long-anticipated prospective payment system. However, the PPS—which was originally scheduled for a 1999 launch—has been delayed indefinitely because of Year 2000 computer problems at the Health Care Financing Administration.