Home Health

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Physicians: Coming to a Home Near You

November 18, 2011 in Home Health, Medicaid/Medicare, Medicare, Nonphysician Clinicians, Physician Compensation | No comments

In the 18th and early 19th centuries, physician home visits in the U.S. were very common.  In fact, the home was the primary place where medicine was practiced.  Because physician wages at this time were comparable to those of the average laborer, a market which forced physicians to internalize the time and transportation costs to visit physicians made sense.

As physician wages have grown over time, however, the home visit has made less economic sense.  Consider the table below.  Primary care physician median wages are five times as high as the typical earners wages.  If it takes 30 minutes for the physician to drive and set up his equipment for a home visit, the incremental cost for the typical physician visit would be about $40 compared to only a time cost of about $8 if the patient visited the doctor. Having physician assistants or nurses make a home visit would be relatively more economical, but still is not economically efficient given the current labor market.

Nevertheless, home visits may be making a comeback.

A number of physicians in Great Britain’s National Health Service already make home visits. Further, Health Reform (specifically Section 3024 of the Affordable Care Act) mandated the creation of the Independence at Home (IAH) Demonstration. The IAH demonstration will begin in January 2012. Do home visits make economic sense?

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The President’s Proposal to “Live Within Our Means”

September 29, 2011 in CHIP, Home Health, Medicaid, Medicaid/Medicare, Medicare, Medicare Part D, Part B, Physician Compensation, Public Policy | 3 comments

President Obama released a proposal last week to jump start the economy and reduce the deficit.  The proposal includes many cuts to Medicare and increased cost sharing.  Senators Coburn and Lieberman are supporting these cuts.

Increased cost sharing is a common theme in Medicare, Medicaid, but also for other programs as well.  For instance, the proposal includes increases to TRICARE pharmacy benefit co-payments to be fall more in line with the most popular Federal employee health plan

The proposal, however, also has some interesting provisions.  For instance, it would require providers to secure prior authorization to perform advanced imaging.  This is one of the first moves away from the fee-for-service free-for-all towards managed care (read: rationing).

A pro-competition rule would prohibit ‘pay-for-delay’ where brand drug companies pay off other drug makers to delay their introduction of a generic into the market.  The FTC is charged with enforcing this requirement. The proposal also would reduce the exclusive period of generic biologics.  Weakening patent protection, for this authors perspective, is likely a good idea.

Specific changes under consideration which are related to medicare are highlighted below (with potential savings per year in parentheses):

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MedPAC’s Home Health Recommendations

June 2, 2011 in Home Health, Medicare | 1 comment

  • The Secretary, with the Office of Inspector General, should conduct medical review activities in counties that have aberrant home health utilization.  The Secretary should implement the new authorities to suspend payment and the enrollment of new providers if they indicate significant fraud.
  • The Congress should direct the Secretary to begin a two-year rebasing of home health rates in 2013 and eliminate the market basket update for 2012.
  • The Secretary should revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services and should no longer use the number of therapy visits as a payment factor.
  • The Congress should direct the Secretary to establish a per episode copay for home health episodes that are not preceded by hospitalization or post-acute care use.

See this post to review MedPAC’s earlier home health recommendations.

High Margins and CMS Response
Home health agencies’ (HHAs’) have high Medicare margins, averaging 17.4 percent between 2001 and 2008 and averaging 17.7 percent in 2009.  Much of these high margins may be due to an increase in the reported number of visits per home-health visit (since more visits per episodes leads to higher Medicare payments per episode). Payments per episode increased 7 percent from 2008-2009.  MedPAC believes that Medicare is currently overpaying for home health services.  To reduce both the margins and the expansion of HHAs, the Patient Protection and Affordable Care Act of 2010 (PPACA) includes the following provisions:

  • 2011—The base rate for a home health episode is reduced by 2.5 percent, and the market basket update is reduced by 1 percent.
  • 2012 and 2013—The market basket update is reduced by 1 percent.
  • 2014 to 2017—A phased rebasing of an episode payment is implemented to lower payments to a level equal to the costs of the average episode. The Secretary may lower payments by no more than 3.5 percent a year, for a cumulative reduction in payments of 14 percent by 2016. These reductions will be offset by the payment update for each year (under PPACA, the update in 2015 and following years will be equal to the market basket adjusted for productivity).

Other PPACA provisions include:

  • The Secretary has authority to halt the enrollment of new HHAs in areas deemed at high risk of fraud.
  • The Secretary also has the authority to suspend payment when unusual patterns are observed for providers or geographic areas.
  • The Secretary now has the  authority to require additional background checks for new providers of services deemed to be at high risk of fraud.
  • Physician review: Beneficiaries will need to have an encounter with a physician or nurse practitioner through an office visit or “telehealth” session when receiving home health care
  • The law passed a 3 percent rural add-on for episodes delivered in rural counties.

Quality

Quality is measured using the Outcome-Based Quality Monitoring (OBQM) data set, collected via the Outcome and Assessment Information Set (OASIS). At the Commission’s direction, the University of Colorado is examining two areas for more clinically focused measures: the amount of improvement in walking for beneficiaries who receive home health care after a hip or knee replacement and the hospitalization rate for causes that are potentially preventable.

Including therapy visits as part of PPS

An analysis by the Urban Institute found that the current case-mix system predicted 55 percent of episode-level costs for all non outlier episodes, but the explanatory power dropped to 7.6 percent if the number of therapy visits received was excluded as a case-mix grouping.  The steep decline in explanatory power indicates that the case-mix adjuster is highly dependent on the inclusion of therapy visits provided and that patient characteristics are less important in the predictive power attained by the current case-mix system. This reliance on the amount of services provided is counter to the goals of prospective payment, as the number of therapy visits provided is not a prospective attribute of a patient, but a factor under the control of the provider…The current case-mix system predicted about77 percent of the variation in episode-level therapy costs but less than 1 percent of the variation in non-therapy costs.

Beneficiary Cost Sharing

Adding a beneficiary cost sharing for home health care could be an additional measure to encourage appropriate use of home health services. The health services literature has generally found that beneficiaries consume more services when cost sharing is limited or nonexistent, and some evidence suggests that these additional services do not always contribute to improved health outcomes. Cost sharing may be appropriate for home health care because there are no clear clinical standards for many uses of the benefit…Adding a cost sharing requirement would give beneficiaries some incentive to weigh the value of home health services before accepting them and would dissuade beneficiaries from using it when it has minimal value. Cost sharing would also mitigate incentives in the home health PPS that reward volume.  One drawback, however, is that copayments encourage beneficiaries to use higher cost post acute care settings, such as skilled nursing facilities or inpatient rehabilitation facilities.  Thus, limiting copayments to community-admitted beneficiaries seems more reasonable.

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Can Home Health Care Reduce Cost?

May 20, 2011 in Home Health | 5 comments

At one point, the answer may have been yes.  But today…

“Although the initial impetus for establishing home health care was charitable, the Metropolitan Life Insurance Company (MetLife) discovered that by providing home health care, it could prolong life while collecting premiums and abstaining from death benefit payments. Yet the model experienced a requisite shift in focus in the 1920s stemming from a decrease in contagious diseases coupled with the proliferation of chronic illnesses, such as heart disease, diabetes, and stroke (Buhler-Wilkerson, 2007). MetLife and other insurers found that providing more care did not improve outcomes and sought to limit visits and eliminate the type of personal services offered. Ultimately, MetLife discontinued home nursing services, determining it unprofitable (Buhler-Wilkerson, 2007).

The years following World War II witnessed an increase in chronic conditions that overwhelmed hospitals and institutions, which, in turn, renewed interest in home health as an alternative to institutional care (Benjamin, 1993). Still, the reductions in institutional care assumed to flow from home health care proved elusive to document, and it was difficult to identify the appropriate population requiring home health care.”

The argument in favor of funding home health care for the chronically ill parallels the argument supporters of much more preventive care make.  They both state the home health care/preventive care is an investment that reduces costs in other settings, but both have little evidence to document these savings in most cases.

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MedPAC’s 2011 Home Health Reform Recommendations

January 24, 2011 in Home Health, Medicare | 6 comments

In 2009, 3.3 million Medicare beneficiaries used home health.  In the past few years, the home health expenditure growth rate has outpaced Medicare spending in all other areas.  This finding is likely correlated with the 9.7% increase in the number of home health agencies between 2008 and 2009.  How should Medicare reform home health to improve outcomes and reduce spending.  A post by William Dombi of the National Association for Home Care & Hospice (NAHC) summarizes MedPAC’s recommendations.

Recommendations

  1. Eliminate any inflatinon update in 2012. In 2009, freestanding home health agency margins were 17.7% (although hospital-based home health agency margins were negative). Margins have average 17.1% since 2011.  With such large margins, MedPAC believes an inflation payment update is unnecessary.
  2. Eliminate the therapy utilization threshold. MedPAC staff belive that “the current case-mix system overpays for higher case-mix weighted services such as episodes with therapy care and underpays for many non-therapy related episodes.” Instead, the case-mix adjustment should rely on patient characteristics to set payment for both therapy and non-therapy services. The NAHC has long criticized using therapy thresholds for the purpose of case mix adjustment.
  3. Establish risk corridors. This recommendation would modify the payment system to included more of a mix of prospective and cost-based reimbursement. “The ‘corridors’ are effectively limits on profit and losses that come from an imprecise system or abusive clinical practices that define care needs based on a provider’s desired margin.” The GAO proposed this alternative a number of years ago.
  4. Beneficiary cost sharing. To reduce the rise in the number of home health episodes per beneficiary–many of which may be unnecessary–MedPAC recommends some form of cost sharing. In particular, since the growth in home health spending is primarily driven from community-admitted patients, the copayment would apply only to community-admitted patients rather than hospital-admitted patients. One suggestion for the copayment amount was $300 per episode. “..Medigap insurances would be prohibited from covering the cost of any home health copayment.”

The MedPAC commissioners will meet in January 2011 to vote on the recommendations and will issue a report to Congress in March 2011.
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The History of Home Health Quality Measurement

December 23, 2010 in Home Health, Quality | 2 comments

Today I will discuss the evolution of home health care measures over the past 15 years. The majority of the content comes from an article by Robert Rosati (2009).

Timeline

Here is a link to a TIMELINE that briefly summarizes the key developments in home health care quality measurements.

Risk Adjustment

From the early development of OASIS, consideration was given to developing case mix or risk-adjusted outcome measures. Patient outcomes are adjusted based on start or resumption of care assessment information. For example, a statistical model was developed to risk adjust the improvement in dressing the lower body based on whether the patient lives alone, receives assistance provided by a caregiver, level of functional status at the start of care, and the presence of other specific clinical conditions [ICD-9 codes]…All 41 outcomes that can be generated from OAASIS have separate risk adjustment models.” Despite the sophistication of the risk adjustment models, these mechanisms only explain variance from 10% to 27%.

Case Mix Adjustment

As part of the home health, prospective payments are adjusted based on the severity of the episodes. These episodes are adjusted for a number of factors. First, the adjustments take into account the clinical and functional status of the patient. Next the episodes are adjusted for service use. Service use before 2008 consisted of whether the patient is expected to receive physical or occupational therapy visits during a home health episode of care.

In 2008 there were major changes to the payment system, including the case mix adjustments. “In 2008, there was a major revision of Prospective Payment System (PPS) with adjustments for early versus late episodes if patients remain open for extended periods (adjustment applies for the third or later contiguous 60-day episodes for a patient) and the amount of therapy services provided to a patient.” The number of case mix adjustment categories changed from 80 before 2008 to 153 in 2008. Now, “the range in an average payment from the top categories (~$8,000) to the bottom (~$2,000) is substantial.”

Quality for Public Consumption

Although public reporting measures were a subset of the home health quality metrics CMS tracked through OASIS, there were some differences. For instance, the phrasing of the measures differed. “Improvement in ambulation and locomotion was changed to percentage of patients who get better at walking and moving around on the CMS Web site.”

The NQF’s also released a report describing its efforts to develop consensus standards for home health care.

Source:

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Home Health Case Mix

December 22, 2010 in Home Health | No comments

In 2006, 2.9 million Medicare beneficiaries received home health services.  The home health benefits provides Medicare enrollees to access to services such as: skilled nursing care;  physical, occupational, and speech therapy;  medical social work, and home health aide services.

Medicare pays home health agencies (HHA) based on 60-day episodes of care.  Each HHA receives a flat payment for all services rendered during this time period.  There are some adjustments to the 60 day payment however.  These adjustments include:

  • Adjustments for geographic differences in the price of labor using the Medicare Wage Index,
  • Case Mix Adjustment using Home Health Resource Groups (HHRGs)
  • Outlier payments  made for beneficiaries who incur unusually large costs
  • If fewer than 5 visits are delivered during a 60-day episode, the HHA is paid per visit by visit type, rather than by the episode payment method.
  • If a beneficiary switches home health providers during a 60 day episode, than the original HHA only receives only a partial payment of the 60-day prospective payment.

Today, I will briefly review how Medicare constructs the HHRG. A summary of the 5 components that make up the HIPPS code can be found here.

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