NATIONAL HOME CARE: Current Status and Expectations

1. NATIONAL HOME CARE: Current Status and Expectations Minnesota HomeCare Association May 16, 2008 William A. Dombi, Esq. National Association for Home Care & Hospice

2. Session Focus President’s 2009 Budget 2008 Congress Medicare HH PPS Status Medicare P4P Demo Miscellaneous Medicare HH Issues Medicaid Home Care Issues Medicare Hospice Issues

3. Home Health Priorities MEDICARE Market basket update Copayments Rural add-on NPs/PAs signing plans of care Telehealth visit equivalency Bundling Wage index LVNs/LPNs as aide supervisors

4. Home Health Priorities MEDICAID FMAP rates Rebalancing long term care funds Managed care long term care Federal standards for home care services

5. The Big Three Legislative Issues 2009 Inflation Update Rural Add-On Mix Creep Adjustment

6. Roadblocks Deficit/Trigger Physician Rate Fix President’s Budget MedPAC Recommendation

7. Deficit Trigger • Medicare changes must be proposed when general revenues are 45% or more of Medicare financing for two consecutive years • President has proposed: limits on malpractice damages; performance based purchasing; quality data; and higher Part D premiums for certain wealthy elderly

8. Physician Rate Fix 2007 Fix for 2008 Ends June 28 10+% Cut Thereafter Limited Medicare Advantage Offset $$ Available

9. President’s Budget Home Health: 5 Year rate freeze; 0.65% reduction in the inflation rate increase thereafter Hospice: three year freeze and 0.65% inflation rate reduction thereafter plus regulatory cut through wage index HH redux of 2008; Worse than 2008 for all others

10. MedPAC Recommendation 2009 HH Rate Freeze 11.4% Medicare margin in 2008 HHA growth at 37% since PPS start to 9300+ agencies Spending growth at 59% since PPS to $14.2 B Utilization growth at 48% to 3.1 B users

11. Impact of President’s Budget

12. MedPAC HHAs are growing in numbers Volume of users is increasing Average margins projected at 11.4% in 2008 Context/Comment Fewer HHAs than 1997 Fewer users than 1997 Overall Medicare margins projected at 2.75% in 2008 Fair Portrait of Home Care?

13. MedPAC 8868/9227 in 2006 34% change since 2000 6.1% average annual change Context/Comment 10,447 in 1997 -34% change 1997-2000 60% of growth in Texas and Florida Decline in HHAs in rural states Many HHAs shrunk service area HHA Growth

14. MedPAC 2.9 million in 2006 5.6% per annum increase $13.2 billion in 2006 10.2% spending increase 2002-2005 Context/Comment 3.6 million in 1997 21% decrease since 1997 $17.1 billion in 1997 23% spending decrease since 1997 (2006 dollars) Medicare nursing home spending now exceeds home care User Growth

15. MedPAC 11.4% projected in 2008 15.4% in 2006 17.3% in 2005 Context/Comment 2.75% projected overall in 2008 MedPAC excludes approx. 1700 hospital based HHAs MedPAC uses a weighted average Range of margins is very wide Rural HHAs lower average margins New PPS in 2008 Medicare Margins

16. STRATEGY • Inflation Update and Rural Add-On Fused Together as Single Matter • Offer a Cost Savings Offset for Rural Add-On Cost • Push for Regulatory Relief on Case Mix Creep Adjustment: S. 2181, HR 3865 • Lawsuit on Case Mix Creep Adjustment • Challenge hospice regulatory cut

17. SPENDING OFFSETS Moratorium Savings, but unknown amount LTCH precedent Exceptions needed

18. SPENDING OFFSETS • P4P expansion • Dynamic savings • In-favor politically • Very limited risk

19. Congressional Climate • House will continue with 2007 package: Big MA cuts, freeze HH rates, 5% two year rural add-on • Senate expects to mark-up a bill in April/May: looking to avoid provider rate cuts; possibility of going directly to floor w/o committee reviews • Anything is possible!!!!

20. TECHNOLOGY SUPPORT • House and Senate interest • Home care related efforts: information center; visit equivalency; new telehealth benefit • Outlook: Funding issue; competition among provider sectors

21. Chronic Care Management • New generation “disease management” • Docs vs. DM Cos. vs. Home Care • Pending legislation makes docs the center • Home care centered demo in the works • The future of home care?

22. HHPPS UPDATE Fixes are in -- finally Smaller problems still surfacing Some overpayments in offing Provider readiness: B+ Vendor readiness: B+ CMS/FI readiness: C

23. HHPPS EARLY INSIGHTS No big industry shake-up Some consolidation HHA value slightly dropping Clinical practice stable Financial status TBD: appears to be average revenue reduction

24. OUTLIER PAYMENT CONCERNS • CMS tightened eligibility standard: FDL set at .89 • Spike in outlier spending in 2005-6 • Spending primarily in Miami • Crackdown will stop abuse but leave HHAs with less outlier payment nationally

25. Research & Demonstrations • Post-acute care payment reform • Continuity Assessment Record and Evaluation (CARE tool) • Home Health CAHPS • Home Health P4P demo • Revised OASIS for 2009 • Refined outcome measures • Added process measures • Testing • Future use

26. HOME HEALTH P4P • Demonstration underway • Seven states (CT, MA, IL, AL, GA, TN, CA) • 2-year demo (January 08-December 09) • Incentives • Highest quality • Greatest improvement • Seven OASIS outcomes • Five outcome measures • Two adverse events • Payment from savings

27. Future Regulations • Revised Home Health CoP • Quality with OBQI • Patient perception of care survey • Infection control • Qualifications • Emergency preparedness requirements • Criminal background check???

28. OTHER ISSUES • Provider re-enrollment • NPI

29. MEDICAID HOME CARE • Payment Rates!!!!! • Home Care Expansion • Long Term Managed Care • Dual Eligible Medicare Maximization • Self-Directed Care

30. MEDICAID SELF-DIRECTED CARE RULE CMS proposes self-directed care option benefit Founded in Deficit Reduction Act of 2005

31. SELF-DIRECTED CARE: THE GOOD Require state to have and maintain PCA or waiver programs Beneficiary option to use self-directed care State must provide emergency replacement services Provides for fiscal agent support Care plan driven service level Beneficiary capability assessment

32. SELF-DIRECTED CARE: NOT SO GOOD No uniform quality or competency standards Beneficiary spending flexibility nearly endless No caregiver protections

33. Changing Hospice Environment • Demand for Accountability • Ongoing MedPAC Review • Increased CMS Scrutiny • Additional OIG Study

34. MedPAC 2006Report to Congress • Insufficient Hospice Data to make payment recommendations • CMS should collect more detailed service information • $2.9 billion in 2000 to $8.2 billion in 2005

35. MedPAC TestimonyNovember 2007 • Increasing number of hospices exceeding cap • 44 in 2002 to 177 in 2005 • Most new hospices are for-profit • Hospice growth exceeds all other providers

36. MedPAC Focus • MHB payments and costs • Longer term reform to payment system • Eligibility for benefit • Incentives in current per diem system • Case mix issues • Hospice carved out of managed care • Better definition of hospice visits

37. Increased Scrutiny by CMS • Growth in number of long stay patients • Increase in GIP & continuous care • Responding to MedPAC recommendations • Increased Medical Review • Pushing for Release of New CoPs in May 2008

38. Annual Hospice Cap • Past: rare application of cap • Present: growing application of cap • Focus: southern states plus • Type of Hospice: freestanding for profit • Patient mix: nursing facility residents, non-cancer diagnosis, long stay • Outlook: limited chance of congressional remedy, but interest in learning more

39. CMS Hospice Wage Index Reduction • Current wage index 8 points higher to address budget neutrality • Genesis: negotiated rulemaking in the 90s • CMS plans to eliminate adjustment over 3 years: 25%: 50%; and 100% • Congressional interest growing, but cost complications • Litigation?

40. CMS Hospice Data Collection • Phase I - Effective January 2007 • New 15-minute continuous care billing • New HCPCS codes for patient location

41. CMS Hospice Data Collection • Phase II – Effective July 2008 • CR 5567 • Report weekly visits of nurses, sws, hhas, MDs, NPs • For all levels of care • Hospice charges per visit on bill • Agreed to future meetings w/hospice industry • Data collected will be expanded • NAHC/HHFMA cost calculator available

42. OIG Hospice Study Released December 2007 • Compared Hospice patients at Home & in NHs • 28% of Hospice patients in NHs in 2005 • Care more expensive in NHs ($10,631 vs $8,500) • Lower use of inpatient level of care in NHs • Higher use of continuous care in NHs • Longer LoS in NHs (80 vs 62)

43. OIG 2008 Hospice Study • To determine nature of care provided to NH residents • Extent of services provided by hospices • Assess appropriateness of Medicare payment

44. Duke Study - Hospice Saves Medicare Money • Savings reversed at 233 days for cancer patients • Reversed at 154 days for other primary diagnoses • 7% on benefit for more than 180 days • 25% on benefit for 5 days or less • Average savings of $2,309 per beneficiary

45. CONCLUSION • It Will Be A Busy Year • Timing is Accelerated • Home Care is Well Positioned but Risks Exist • Hospice Honeymoon May Be Ending • Emphasize the SOLUTION!