GAO Releases Report on Home Health Costs Using 'Outdated Numbers,' Says AAHomecare; Findings Also Rejected by CMS 5/7/2002
From: Julie Phillips of the American Association for Homecare, 703-535-1889, juliep@aahomecare.org ALEXANDRIA, Va., May 7 -- Today, the General Accounting Office (GAO) released a report titled Payment to Home Health Agencies Are Considerably Higher than Costs (GAO-02-663), which recommends that further cuts in the Medicare home health benefit are warranted. The report, originally scheduled for release on April 1, 2002, uses cost data from 1997 -- two payment systems ago, before the Balanced Budget Act was implemented -- and, as even CMS agrees, does not present an accurate assessment of the home health industry's current costs. According to the GAO report, a "risk sharing" modification and additional cuts in the home health benefit are warranted because average Medicare payments to home health agencies (HHAs) under PPS are about 35 percent higher than preliminary "estimated costs of home health care provided in the first six months of 2001." In a letter to the GAO, CMS rejected the findings and recommendations, stating that the cost report data for the first year of the prospective payment system (PPS) are not available, and that "without that data, it cannot be known with certainty what it costs the HHAs to render the services provided." CMS further pointed out that (a) data necessary to make year-end adjustments in reimbursement based on cost would not be available until at least 18 months after the end of an HHA's cost reporting year; (b) such a modification would increase the regulatory burdens on providers, which is inconsistent with the Administration's goals; and (c) CMS has the statutory authority to make appropriate adjustments in PPS to avoid excessive profits, based on "complete outcome-based quality improvement data" which CMS is currently analyzing. These are many of the same points the industry has been using to show that the cut is not necessary. In commenting on the report, AAHomecare President & CEO Tom Connaughton said, "We are disappointed that GAO would issue a report that does not reflect the industry's true current financial standing and that uses data that do not reflect the true current costs of Medicare home health. We are pleased, however, that CMS has clearly revealed the flaws in the report and has so unequivocally rejected its recommendations. It would appear that CMS's reasons for rejecting risk sharing would apply with equal force to the 15 percent cut and co-payments." In January 2002, the Medicare Payment Advisory Commission (MedPAC), unanimously recommended to Congress that the 15 percent cut be eliminated. In March 2002, AAHomecare released a study conducted by the Polisher Research Institute (PRI) showing that a further cut to Medicare home health services is unnecessary. Home health agencies, as well as beneficiaries, have been threatened by the 15 percent cut since 1999. The PRI report recommended that the cut, now scheduled for October 2002, be permanently eliminated rather than postponed again, as a pending cut would only extend the period of uncertainty and instability for homecare providers. Additional key findings include: -- There have been significant reductions in the number of patients receiving the home health benefit since 1997. On a national basis the reduction of beneficiaries served declined nearly 24 percent since 1997, totaling nearly 800,000 patients. Declines in beneficiaries served in different states ranged from 10 to38 percent as set out on a state-by-state basis, shown in the report. -- The original five-year Medicare home health savings goal of $16.2 billion, set by the Balanced Budget Act of 1997 (BBA '97), more than doubled between FY1998 and FY2000, equaling $35.8 billion in savings. An additional $35.3 billion in savings is expected between FY2001 and FY2002, equaling a total of $71.1 billion in savings over the five-year period -- an amount more than four times that of the BBA '97 goal for savings to the Medicare program. -- By 1999, only two years after the initial cuts enforced by the BBA '97, over 1,400 home health agencies closed. AAHomecare Chairman David Savitsky also offered his comments on the GAO findings stating, "The recommendations are particularly disappointing since the GAO failed to mention the effect of the IPS system on home health after the BBA '97 -- they completely ignored it. In 1997, the GAO reached conclusions about the industry based on erroneous assumptions -- and they've done it again. They were wrong the first time and they'll likely be wrong now. Congress should base their decisions on supportable findings like MedPAC's and not this report. It appears that the GAO believes that Congress should act on the same type of inadequate information that led to the disastrous interim payment system of 1997 to 1999." The American Association for Homecare (AAHomecare) is the unified voice that represents all the elements of homecare under one roof -- from home medical equipment and respiratory therapy to home health services and from re/hab and assistive technology to infusion therapy. With 3,000 members, AAHomecare is dedicated to advancing the value and practice of quality health care services at home, while building a community of support for the homecare industry. AAHomecare's Polisher Research Institute Report on the elimination of the 15 percent cut can be accessed online at http://www.aahomecare.org/govrelations/polisher-study.html The GAO report on Payment to Home Health Agencies Are Considerably Higher than Costs (GAO-02-663) can be accessed online at http://www.gao.gov/cgi-bin/getrpt?GAO-02-663 |