Although home health agencies are lobbying the federal government to change Medicare payment methodologies that may slash reimbursement, most agencies realize the inevitability of some kind of prospective payment system.
More than 1,000 home health agencies were forced to close in the past year because of new financial pressures, the National Association for Home Care reported this month. To keep afloat, agencies say they have cut costs and administrative staff and are closely monitoring the number of nurse visits. They have even asked patients with pressure ulcers to buy their own dressings.
Some agencies are beginning to avoid Medicare patients with complex needs, fearing that a case mix heavy with high-acuity patients could drain their budgets and shut them down.
"We were asked to take a patient who would have taken a couple of hundred visits (to treat)," says Eileen Van Tassel, owner of Kansas City, Mo.-based Barr Home Health. "We had the discharge planner put her in a nursing home.. . . I feel I have an obligation to the patients I already have." Van Tassel calls such decisions traumatic.
After nearly a decade of growth in Medicare home-care expenditures-to $17.5 billion in 1996 from $3.5 billion in 1990-Congress used the federal Balanced Budget Act of 1997 to direct HCFA to implement cost controls in its home health Medicare reimbursement policies.
"The old cost-based payment system lacked incentives to provide care efficiently," Michael Hash, deputy administrator of HCFA, told the House Ways and Means health subcommittee in August. The agency is now phasing in an interim prospective payment system, to be replaced by a permanent system after 2000. Implementation has been delayed by the agency's slow progress on solutions to year-2000 computer problems.
The IPS bases home health agency reimbursements on each agency's past costs. But low-cost operators complain the system punishes agencies that held down costs under the old system.
At the same subcommittee hearing, Gail Wilensky, chairwoman of the Medicare Payment Advisory Commission, or MedPAC, said: "In the absence of either clinical standards for the provision of effective home healthcare or reliable information about case mix across agencies, HCFA cannot determine whether relatively high or low agency spending is a function of relative efficiency or differences in patient population."
To become cost-effective, home health agencies need to know the minimum number of visits they can safely make to patients with given conditions. There are no studies that determine an optimum number of visits, according to Barbara Phillips, a research scientist at the San Diego Veterans Medical Research Foundation. Without such data, however, home health agencies may curtail nurse visits to save money, not knowing how such actions will affect patient outcomes.
Or, like Van Tassel's Barr Home Health, they may accept only patients with the fewest needs.
The bigger question is whether home healthcare, even when practiced efficiently, saves overall healthcare dollars, Phillips says. "There has been very little research on the question, Does home health keep people out of institutions?" she says.
The answer is clear to operators of home health agencies: "Hospitals cost 10 times what home care costs," says Larry Breeding, who heads the Iowa Association for Home Care. Since access to home care allows patients to leave the hospital earlier than would otherwise be possible, it saves hospital costs, Breeding says.
But about half of home health recipients are not referred from hospitals, so savings cannot be measured by comparing per day home health costs to hospital costs, Phillips notes.
"Home care itself is not very expensive," says Rashid Bashshur, director of telemedicine at the University of Michigan in Ann Arbor. On average, a home-care visit in 1995 cost between $40 and $141, according to an analysis by MedPAC, which reports to Congress on Medicare issues.
"If home care is a substitute for a visit to the ER, it will be quite cost-effective. . . . But unless it substitutes for other kinds of care, it will be an add-on," Bashshur says.
Meanwhile, some home health agencies are trying to determine how to replace costly home nursing visits with telemedicine. Tele-home care can help home-care agencies save on a per-contact basis, according to an article in the October edition of the NAHC monthly journal Caring. But researchers don't know whether such technologies can save money overall.
"Telemedicine makes home healthcare more effective and convenient, (but it is) yet to be determined if it is cost-effective," Bashshur says. Cost-benefit studies are under way in England, he says.
Cathie Sullivan, a senior research analyst at the NAHC, notes that "there have been some well-done studies" showing that home healthcare is cost-effective. These studies, however, look at only a few populations, including terminally ill veterans and patients experiencing congestive heart failure, chronic obstructive pulmonary disease or psychiatric problems. But home care serves a much wider range of patients, from homebound diabetics to children with special healthcare needs.
Without studies of such populations, Sullivan says, there is still a "certain intuitive sense" that says home care is cost-effective. Even if home care did not strictly save money, she says, it still might be worthwhile. "Someone might be able to stay alive at home (without home healthcare), but their quality of life is significantly diminished," she says.
Under the new payment system, agencies need to watch their bottom lines and help their patients maintain quality of life. To do so, they need better data to understand if and how they can save money for the healthcare system, Phillips says.