Some hospitals abuse their discharge planning powers over patients to refer Medicare beneficiaries to their own home-care agencies, often giving the elderly little choice of what home-care agency to use, according to an unreleased government report.
MODERN HEALTHCARE obtained a draft of the report, being prepared by HHS' inspector general's office.
The report concludes that hospital ownership of home-care agencies greatly influences where Medicare patients get home-care services.
The report comes amid a federal crackdown on the Medicare billing practices of home-care companies, including some owned by hospitals. For example, one of the stated targets of the federal fraud investigation of Columbia/HCA Healthcare Corp. is the company's home-care operations.
The draft report sent to HCFA Administrator Bruce Vladeck on June 30 concluded that 62% of Medicare home-care patients, who were discharged from a hospital that owned a home health agency, received services from the hospital's own agency. And many of those patients reported not having full choice in selecting a home health agency.
Also, the report said Medicare patients who received services from a hospital home-care agency did so for a longer period of time.
Home care is big business for hospitals. According to the Washington-based National Association for Home Care, there are more than 2,600 hospital-based home-care agencies. Medicare spending on home-care services was almost $17 billion in fiscal 1996, and that's expected to increase to almost $20 billion by the end of this fiscal year on Sept. 30.
"Hospital ownership does influence decisions about the home health agency to which a hospital patient is discharged," the report said.
But hospital ownership seems to have "little influence" on which nursing homes patients are referred to, the draft report said.
Among its recommendations to address the problems, the inspector general's office urged HCFA to assure that hospitals disclose ownership interests in post-hospital services and that patients have a choice about nursing homes and home-care services.
A new federal law taking effect in November could help do that.
The law, which was passed as part of the recent five-year federal balanced-budget package, requires hospitals to furnish patients with lists of alternative home-care providers and to disclose their financial interests in ancillary healthcare services to HHS.
Independent home-care providers have long complained that hospitals steer Medicare patients to their own businesses.
The new law, though, already has some people skeptical of its effect.
"The only thing that I believe will stop that steering is when it becomes no longer financially viable for a hospital to own a home health agency," said Patricia Mulhern, vice president of patient services at Visiting Nurse Services of the Northwest in Seattle.
Mary Grealy, senior Washington counsel for the American Hospital Association, said some hospitals already provide such lists of alternative providers to patients to avoid antitrust problems.
Under federal antitrust laws, a corporation can't exercise its monopoly power over one product or service to force consumers to use another product or service. The steering of discharged hospital patients to hospital-owned ancillary businesses has been the subject of private antitrust litigation between independent providers and hospitals for years.
Under the new federal law, the hospital's discharge plan cannot "specify or otherwise limit" qualified home-care providers and must disclose the hospital's financial interest in any agency.
The HHS secretary has until August 1998 to issue regulations to implement the provisions of the new law that require hospitals to report their financial interests in ancillary healthcare businesses to the department.