MedPAC's Home Health "Freeze Is Unwarranted, Unjust And Unsound", USA

This morning, the American Association for Homecare (AAHomecare) questioned the recommendation in the Medicare Payment Advisory Commission's (MedPAC) "March 2006 Report to Congress" to freeze Medicare payment rates in 2007 for the nation's 7,300 home health agencies. This proposed cut, if enacted by Congress, would come on top of the negative market basket updates for home health agencies in each of the last five years.



"For MedPAC to suggest anything that continues to undercut the financial underpinnings of the home health benefit is simply beyond the pale at a time when the first wave of the baby boomers will begin retiring in the next 18 months and will be depending on Medicare," said Sue Mairena, Chief Operating Officer of AAHomecare. "Simply put - the freeze is unwarranted, unjust and unsound."



AAHomecare believes that the MedPAC home health freeze recommendation is based on two critically flawed assumptions:



-- Distorted Margin Data - MedPAC continues to base its annual update recommendation on only part of the homecare sector by excluding all hospital-based home health agencies. Yet, hospital-based agencies represent a full 25 percent of the total sector, according to data from the Centers for Medicare & Medicaid Services (CMS). Similarly, MedPAC gives disproportionate weight to large home health agencies (HHAs) with higher profit margins through utilization of a "weighted" methodology rather than a method that gives equal weight to all providers. There is no statistically sound reason for either of these actions on the part of MedPAC.



-- Overstated Sector Growth - One of the principal underpinnings of MedPAC's recommendation for a freeze in the payment rate is the recent growth in the number of Medicare home health agencies nationwide. In fact, between 2003 and 2004 the total number of HHAs grew by a net total of about 335, representing growth of less than five percent nationally. But virtually all of the growth came from two states, Florida and Texas, that together accounted for 395 new agencies. Twenty-eight states saw a decline in the number of HHAs, seven states had no change, and the remaining 15 states had fractional increases.



Continuing, Mairena said, "Federal policymakers should be looking for ways to support this program. The home health benefit is clinically effective, patient-preferred and cost-effective, as evidenced by recent data from the Medicare program itself."


A number of studies illustrate the cost-effectiveness of homecare:



-- A Rand Corporation study commissioned by MedPAC found that the cost for joint replacement patients treated at home was approximately $3,500 less than for patients discharged to a skilled nursing facility (SNF) and $8,000 less than for those sent to inpatient rehabilitation facilities. A panel of eleven physicians stated, "Ideally patients with hip or knee replacements should go home for rehabilitation."



-- According to a 2000 article in Clinical Infectious Diseases, home intravenous antibiotic (HIVA) treatment is less costly than the same service provided in other settings. The average cost per day of HIVA therapy was $122, compared to $798 in a hospital and $541 in a SNF setting.



-- According to reports in Respiratory Care and Chest, long-term oxygen therapy at home reduces Medicare expenditures. Oxygen can be provided to a chronic obstructive pulmonary disease patient at home for one full year at less than the average Medicare cost for one day in a hospital ($8.35 vs. $3,605 per day).



The great majority of Medicare beneficiaries choose to receive care at home when possible. AAHomecare rejects the MedPAC recommendation to further cut payments to home health agencies that provide this care and will continue to work with the Congress to prevent future cuts to this critical Medicare benefit.






The American Association for Homecare represents every line of service in the homecare community, including home health and home medical equipment providers, respiratory and infusion therapy, telemedicine, rehab and assistive technology, and hospice.



American Association for Homecare

625 Slaters Lane, Suite 200

Alexandria, VA 22314-1171 703-535-1881

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