Proposal to cut less from health payments

12.8 percent reduction planned for for-profit home-health agencies

Medicare

July 04, 2000|By BLOOMBERG NEWS

WASHINGTON - The Clinton administration yesterday scaled back planned cuts in Medicare reimbursements to many for-profit home-nursing agencies under a system that will take effect in October.

Medicare, the government health insurance program for the elderly, will reduce payments by 12.8 percent to for-profit home-nursing agencies that are not owned by a hospital. The prospective payment system is designed to provide incentives for the agencies to hold down costs.

The regulations describing the reimbursement system were published in today's Federal Register. Draft regulations published last October proposed Medicare pay cuts of 18 percent for for-profit home health agencies not owned by a hospital.

The plan will increase Medicare per-visit payments and change billing procedures to help improve cash flow for home health agencies, said a report by the National Association for Home Care. In addition, the regulations incorporate some financial relief for home health-care agencies, who have complained that Medicare payments are too low.

The regulations say that Medicare payments to nonprofit home health agencies will rise 17.9 percent under the new system.

But the association said Medicare will still underpay for home health care.

"These changes do not make up for the inadequacy of the overall financing of the home-health benefit," the report says.

The Clinton administration was required to create the payment system under a 1997 law that cut growth in Medicare home health payments by $16 billion over five years. Annual Medicare spending on home health-care services has fallen 44 percent since then.

Under the new system, Medicare payments to home health-care agencies run by hospitals will fall 1.03 percent.

Hospitals and home health-care providers are lobbying Congress and Clinton to raise their Medicare payments next year. The payment system will give home health-care agencies fixed fees for care, based on the severity of the patient's condition.

The 1997 law followed seven years in which annual Medicare home health-care payments grew to $17.8 billion from $3.7 billion. In the same period, Congress and the Clinton administration concluded the industry was rife with fraud and abuse.

Last year Olsten Corp., which renamed its home health division Gentiva, agreed to pay $61 million and allow a home health-care management subsidiary to plead guilty to criminal charges to resolve Medicare billing fraud investigations.

Gentiva Health Services Inc., based in Melville, N.Y., is the largest U.S. provider of home health services.

Olsten did business with Columbia/HCA Healthcare Corp., which in May reached a tentative agreement with the Justice Department to pay $745 million to partly settle investigations into whether the company over-billed Medicare for home health-care and other services. Columbia, which recently renamed itself HCA, no longer runs home health agencies.

Still, industry representatives complain that the 1997 cuts have turned out to be much deeper than expected.

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