You could almost hear a collective cheer from the home health industry last week as it greeted HCFA's release of the final regulations for the new post-acute-care prospective payment system.
The rules, posted on HCFA's World Wide Web site (www.hcfa.gov) and to be published in the Federal Register, promise higher rates and faster payments compared with what HCFA proposed last November.
"HCFA has obviously listened to a number of concerns that have been expressed (by the industry)," said Neal Baum, president and chief executive officer of Visiting Nurse Services of the Northwest, Seattle.
"I can tell you that from our agency's perspective we are seeing this potentially as a very bright light at the end of the tunnel."
The regulations don't change the broad outlines of the new payment system, which was mandated by the 1997 balanced-budget law and has been eagerly anticipated by the industry. That law, which reduced budgeted Medicare payments to all types of post-acute providers, imposed an immediate cap on payments to home health agencies; they've operated under the cap since October 1997. Through this unpopular interim system, agencies with historically high costs receive more money than those with traditionally low costs regardless of how sick their patients are.
The new PPS evens the playing field by setting flat payments that apply to all of the nation's approximately 8,000 Medicare-certified home health agencies (See box).
By boosting rates and speeding up the payment process, the new regulations resolved some key concerns.
Baum's Seattle home health agency, which provides more than 100,000 visits a year, hadn't been happy with the proposed rates for the 30% of its patients who need only four or fewer visits. Those rates were bumped up by 20% in the final regulations.
The new rules also allow agencies to submit bills based on a doctor's verbal orders, saving weeks of waiting for written authorization. That change "will go a long way" toward alleviating the cash-flow problem many expected the PPS would create, Baum said.
"Everybody is better off under this system than they were under the proposed one," said Bill Dombi, vice president for law at the National Association for Home Care.
"But there is no way to have had the reductions that we've gone through in the last three years that this would solve all the problems created by the interim payment system," Dombi said. Under the IPS, agencies cut the number of visits they provided so as not to exceed caps, and Medicare payments fell from a projected $22 billion to $12.8 billion.
Some providers agreed that the rules didn't resolve everything.
"I think it's going to take the first couple of quarters of financial data to really understand the whole picture," said Edward Blechschmidt, chairman, chief executive officer and president of Gentiva Health Services, the nation's largest home nursing provider. Blechschmidt said he was optimistic about the financial picture once the new system starts Oct. 1. Gentiva, based in Melville, N.Y., has 262 home nursing locations and is the former health services division of Olsten Corp.
The stakes go beyond the financial, some said.
"I think how the industry handles the PPS is going to be key to reinstating the trust and respect from Washington that we have lost," said Carolyn Markey, president and CEO of the Visiting Nurse Associations of America, Boston.
Now that HCFA has addressed many of its concerns, the industry has placed a new goal at the top of its agenda: rescinding a 15% payment cut scheduled for Oct. 1, 2001.