Fall Update

Fairness of Home Health Payments for Ostomy and Wound Care Supplies Questioned

   In an effort to incentivize home health agencies (HHAs) to control their costs of care and use of supplies, a prospective payment system (PPS) was established in October 2000. Under this program, HHAs receive one all-inclusive payment, adjusted to reflect the care needs of the individual patient, for providing 60 days (called an “episode”) of home healthcare. This episodic payment is based on the historical national average cost of providing care, not on the HHAs actual costs to provide care, and includes all home health visits and all routine and nonroutine medical supplies.

   Under the Medicare, Medicaid, and State Children’s Health Insurance program (SCHIP) Benefits Improvement and Protection Act of 2000, and in response to concerns expressed by home health industry representatives and professional organizations, the General Accounting Office (GAO) examined home health agency payments for nonroutine medical supplies. In a report published on August 15, 2003, the GAO agreed with what home health advocates have been saying for quite some time: the adjusted episodic payments may not accurately reflect variation in supply costs across types of patients — particularly patients with wounds and ostomies.

   Experts interviewed by the GAO expressed concern that patients who had been managing a chronic condition, such as an ostomy, before receiving home care were at risk for disruption of their care routine and continuity of supplies. This disruption and lack of continuity were related to cost containment strategies established by the HHA, such as limited inventories or a reduction in the number of supplies they provide to patients. Switching products on admission to a home health agency also impairs a patient’s sense of security and the ability to function as normally as possible.

   The report concludes that under the current 60-day episodic payment PPS, patients who require costly supplies may have problems accessing home health care, and the agencies who admit them for treatment may be financially disadvantaged by doing so. The system also makes it possible for HHAs to be paid the same amount for treating patients with quite different supply costs. These issues are of particular concern for patients who have nonroutine medical supply needs that are easily identified before admission and those who require supplies for which no lower-cost alternatives are available.

   The GAO recommends that the Centers for Medicare and Medicaid Services (CMS) collect and analyze the data necessary to determine whether Medicare’s home health payments appropriately reflect the difference in nonroutine medical supplies across types of patients. If CMS identifies problems, it should modify PPS or seek congressional authority to exclude certain nonroutine medical supplies from the PPS home health episodic payment. The Centers for Medicare and Medicaid Services has asked HHAs to provide patient-specific information on the use and charges for wound care supplies. Until HHAs provide this data, CMS will be hampered in its ability to better account for these costs in the episode payments. The entire report (GAO-03-878) can be viewed at www.gao.gov.

GAO Wants Increases in CMS Oversight of Nursing Homes

   Considerable attention is being paid to the nation’s 1.7 million nursing home residents and the quality of the care they receive. Poor quality of care in about 15% of our country’s 17,000 nursing homes contributes to actual harm to residents, including avoidable and worsening pressure ulcers. A recent report from the GAO investigated CMS federal and state survey processes. The report stated that federal surveyors found examples of actual harm deficiencies in about one-fifth of the homes state surveyors had previously judged to be deficiency-free. During a comparative survey, federal surveyors found that one in 16 homes reviewed failed to prevent pressure ulcers, failed to consistently monitor pressure ulcers when they did develop, and failed to notify the physician promptly so proper treatment could be initiated.

   Documentation weaknesses, a lack of experienced surveyors, and the timing and predictability of some surveys, as well as confusion among states regarding the definition of “actual harm” and “immediate jeopardy” were cited as some of the problems noted by the GAO. For example, with regard to preventable Stage II pressure ulcers, California surveyors stated that guidance they had received from their CMS regional office precluded citing actual harm unless the pressure ulcer had an impact on the resident’s ability to function. Before this instruction, California surveyors routinely cited preventable Stage II pressure ulcers as actual harm. At that time, controversy existed regarding whether several small Stage II pressure ulcers could actually cause harm because they have the potential to heal relatively quickly and seldom limit the resident’s ability to function.

   The report ends by recommending that CMS 1) strengthen the nursing home survey process, 2) ensure that state survey and complaint activities adequately assess quality-of-care problems; and 3) improve oversight of state survey activities. While CMS agreed with the report’s recommendations, the agency did not have action plans in response to every recommendation. Several states complained that they did not have the resources to meet federal standards for the oversight of nursing homes. The complete report (GAO-03-561) is available at: www.gao.gov.