No Place
Like Home
Under fire but adaptable, home care faces the future

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National Association for Home Care

Visiting Nurse Associations of America

Health Care Financing Administration information on the Balanced Budget Act of 1997

Health Care Financing Administration information on Medicare

National Family Caregivers Association
 

An Industry Under Fire

Two years ago, the government slashed Medicare reimbursements for home care to rein in escalating costs and promote the efficient delivery of care. The cuts, mandated under the Balanced Budget Act of 1997, have been dramatic: Data from the Health Care Financing Administration shows that Medicare home health payments fell 38 percent from 1997 to 1998, decreasing from $16.7 billion to $10.5 billion.

As a result of the Balanced Budget Act, approximately 2,500 agencies closed nationwide between October 1997 and August 1999. About 7,500 agencies remain open, said Cathie Sullivan, senior research analyst at the National Association for Home Care. Small and large agencies, both for-profit and nonprofit, have been affected. Columbia HCA/Healthcare Corp., which once had a significant presence in the home care market, left the business altogether.

Home care agencies have had a bit of good news recently. Congress and the White House agreed Nov. 11 to delay a scheduled 15 percent cut in home care reimbursement that was part of the Balanced Budget Act. The reduction will be postponed until 2001.

Agencies that survived the cuts that have already been made are still waiting for the Health Care Financing Administration to release details on the long-anticipated Prospective Payment System. Last month, HCFA released its PPS proposal, under which Medicare pays home health agencies for 60-day episodes of care, including skilled nursing and health aide visits, covered therapy, medical social services, and supplies. Under the proposal, Medicare pays agencies at a higher rate to care for beneficiaries with greater needs. Those payment rates will be based on data that nurses and other clinical workers have begun collecting through the Outcome and Assessment Information Set (OASIS). PPS will go into effect Oct. 1, 2000.

“Under this system, Medicare will base payments on patients’ health status so that agencies will get more money to care for sicker patients than healthier ones,” said Michael Hash, HCFA deputy administrator, in a written statement. “This new system will pay providers fairly and promote efficiency, while helping Medicare protect the home health benefit that is essential for millions of beneficiaries who qualify for these services.”

Home health agencies are still analyzing what the proposed system means to them, Sullivan said. “One advantage of PPS is they are attempting to adjust payments according to patients’ needs,” she said. But most agencies are reserving judgment for the time being. “The big question is whether PPS works.”

~ Megan Malugani
 

Brighter Skies Ahead

The clouds are lifting after a stormy period that shook up the job market for home care nurses, experts say.
“While the demand for home care nurses isn’t as high as it used to be, it won’t stay that way in the long haul,” said Alexis Wilson, PhD, RN, the founder of Outcome Concept Systems, a home health benchmarking and software company based in Seattle, and assistant professor for the nursing program at the University of Washington, Tacoma. Not only will demand rise again, but RNs could gain more influence in the home if the nursing profession makes a concerted effort to expand its scope of practice in that setting, Wilson said. “With change comes tremendous opportunity,” she said.

Home care agencies in some parts of the country—like New Jersey—are offering sign-on bonuses for home care nurses with experience, said Carolyn Markey, RN, president and CEO of the Visiting Nurse Associations of America. In the years to come, there will continue to be home care opportunities across the whole nursing spectrum, from nurse practitioners down to aides, Markey said.

The nurses most in demand will be highly skilled clinicians capable of caring for sicker patients and using high-tech interventions. “I remember the days when home care nurses were not considered as technically and clinically astute. That’s not true anymore,” Markey said. In particular, they’ll have to be comfortable with sophisticated computers and telemedicine, added Suzanne Denson, RN, owner of Denson Home Health Inc. in Clear Lake.

~ Megan Malugani
 

By Megan Malugani
November 22, 1999
Illustration: Hal Pham

After a stint as the darling of health care, home care has suffered a number of blows in the past few years. Regulation and funding changes have begun to transform the industry, but don’t expect home care to fold under pressure. It’s just changing to keep up with the times.

Home health is evolving in response to huge Medicare reimbursement cuts and increased government regulation under the Balanced Budget Act of 1997. When the transformation is complete, non-Medicare payers will foot more of the bill for home care, and home care will likely serve a different case mix, experts predict.

“Somehow home care always survives. Its staying power is spectacular,” said Karen Buhler-Wilkerson, PhD, RN, FAAN, a professor of community health at the University of Pennsylvania School of Nursing who is writing a book on the history of home care. Consumer demand for home care remains consistently strong, she said. “There’s no place like home. It’s where we’d all really like to be.”

Despite upheaval in the industry during the last two years, home care will play a growing role in the healthcare continuum as the population ages, said Cathie Sullivan, senior research analyst at the National Association for Home Care. “Technological innovations are allowing more to be done in the home,” she said. “Getting payers to pay for it is another hurdle, though. We have to prove its cost-effectiveness.”

Home sweet home

A new home care model—actually a return to the idea of home care as a community service—is emerging as the result of the recent shake-up in the industry, said Carolyn Markey, RN, president and CEO of the Visiting Nurse Associations of America. Since Medicare only pays for skilled services at home and not for long-term care for the chronically ill, new programs will have to fill in the gaps to allow the elderly to stay at home.

“As Medicare pays less and less, we’ll see different payers and programs mushrooming up across the country,” Markey said. “We’ll see many more community-sponsored programs for the elderly that are less focused on skilled intermittent care and more focused on long-term care [in the home],” she said. “This country needs to come to grips with long-term care and how to care for the elderly.”

For now, though, Medicare won’t be the way to address the nation’s long-term care needs, Markey said. “That’s really the reason all these home care changes were handed down by the government. They said, ‘Look, we’re not in the business of long-term care. That wasn’t what the Medicare program was designed to do.’ ”

However, the time may be right to eliminate the “institutional bias” in Medicare and make the program more responsive to the chronic care population in their homes rather than in nursing homes, said Suzanne Mintz, president and co-founder of the National Family Caregivers Association. The future of home care is tied to many tough issues, such as how best to care for the elderly when families are small and scattered geographically. “Family caregivers provide the bulk of home care already. Caregivers aren’t going away, but we need support from many sectors, including our communities and the government,” Mintz said.

The advantages of patients recuperating at home must be weighed against the burdens to family caregivers, especially if an elderly spouse is unable to provide proper care, said Ruth L. Jenkins, PhD, RN, associate professor at the Barnes College of Nursing at the University of Missouri-St. Louis. “It makes you wonder if people being served by home care are too sick in some cases,” Jenkins said.

New ways to pay

Besides new community-based programs, private insurers will continue to cover many home care services, experts say. Critical Care Registered Nursing Services in Stony Brook, N.Y., has succeeded in the home care business since 1985 without ever going through the costly process of Medicare certification, said owner June Julier, RN, a certified adult nurse practitioner. The future looks bright for non-Medicare agencies like hers. “As long as insurance companies stay solvent, my business will grow,” she said.

Many agencies have left the Medicare business altogether and increased their work with other payer sources instead. Suzanne Denson, RN, owner of Denson Home Health Inc. in Clear Lake, sold the Medicare side of her business in June, after almost 15 years serving Medicare patients. “Our strategy for survival was to sell that part of our agency,” she said. Now her agency focuses on serving patients covered under managed care and Medicaid. The patient load includes fewer seniors, and the focus tends to be on chronic care.

In the future, more people are likely to be willing to pay for home health services out of their own pockets. “The elderly of today are depression babies who squirrel their money away, but the generations coming up are spenders,” Julier said. “We may see cash supplements to Medicare, as families or patients themselves will be able to pay for extra home care.” Such out-of-pocket expenses will be necessary unless there are some major changes in the healthcare system. “The big picture is that we’re still a very under-insured society,” she said.

Dollars, sense, and safety

Although the home isn’t always the best setting for a patient, it’s often a viable place for interim healthcare services, experts say. “As patients come out of the hospital more quickly and more acutely ill, home care is a perfect service to provide so a patient can stay at home and not end up back at the hospital,” said Alexis Wilson, PhD, RN, the founder of Outcome Concept Systems, a home health benchmarking and software company based in Seattle, and assistant professor for the nursing program at the University of Washington, Tacoma.

Home care still makes economic sense in many cases. For example, a nurse visiting a patient newly diagnosed with diabetes once a day to teach injections and skin care is much less expensive than hospitalization, Wilson said. On the other hand, an insulin-dependent double amputee who is wheelchair-bound and blind needs total care rather than a daily visit from a nurse. Caring for that patient at home would be more expensive than caring for him or her in a nursing home, Wilson said. The “million-dollar question” is how to measure the intangible effects of home care, such as how a patient’s quality of life is different at home or how care at home affects a family’s level of stress, Wilson said.

The costs of home care—and the safety—will be the subject of ongoing scrutiny in future years, Denson said. Delivering safe care in the home is the real challenge of the new millennium, she said. “There is a demand to get people out of the hospital sooner with lots of complex care, but we haven’t been able to implement all the safety components we need to care for medically fragile people with more acute illnesses at home,” Denson said.