STATEMENT OF THE NATIONAL ASSOCIATION OF HOME HEALTH AGENCIES The National Association of Home Health Agencies appreciate this opportunity to comment on S. 3205, the Medicare-Medicaid Administrative and Reimbursement Reform Act. Started in 1970, our Association membership includes home health agencies, individuals, state associations and national organizations interested in home health care. Our purpose is twofold: (1) to foster high standards of patient care, and (2) to promote methods of financing home health care and encourage the development of quality home health services through the nation. Our Association concurs with the sponsors of S. 3205, that without improved controls with Medicare and Medicaid the future of expanded benefits to beneficiaries is limited. We wholeheartedly endorse the reform of procedures that must be followed by providers, and, we in general, are most supportive of the effort to improved the program as set forth in S. 3205.

Our Association cannot over-emphasize our support for necessary expanded federal control over the provision of home health services. While our members share the apprehensions of other providers that controls may be too cumbersome and detract from service delivery, we are even more apprehensive of the dangers which lurk without a more uniform application of Federal program monitoring. We have been shocked by the disclosures of abusive practices within our delivery mechanism, and, we fear a negative reaction to such fraudulent behaviors. Only through constructive reform can these incidences of abuse be overcome. While the analogy between the abuses in nursing homes and in home health has been worn thin, there is some merit in establishing similar control mechanisms between the two service delivery components so as to prevent a shifting of investments from the controlled to the uncontrolled sector. One of the failures of Public Law 92-603 was that Congress did not adequately predict the growth of home service, and therefore, it did not impose sufficient controls. This Congress must write legislation to establish necessary controls. The National Association of Home Health Agencies envision three essential components of such legislation: (1) uniform Federal standards of home health providers for certification and participation in Medicare, Medicaid and Title XX Social Services: (2) effective disclosure and conflict of interest provisions; and (3) requirement of a certificate of need for entry and expansion in delivering home health services.

In our previous conversations with the staff of this committee we have spelled out a comprehensive program for the liberalization of the Medicare home health benefit and expansion of the Medicaid home health benefit. Because we share the concerns of the sponsors of S. 3205 that without improved administrative procedures benefit liberalizations will not materialize, we shall focus the entirety of this testimony to the necessity for administrative and reimbursement reforms. This should not be construed as a consession that benefit improvements are not important, but as an overt attempt by our members to emphasize to the members of this committee that we welcome constructive reforms.

In an attempt to underscore our basic support for the Medicare-Medicaid Administrative and Reimbursement Reform Act and to point out where we believe the legislation can be strengthened or clarified, we present the following section-by-section analysis of those provisions which impact upon the delivery of home health services:

Our Association sees much merit in the proposed Section 2 of S. 3205 reorganizing the government management of health reimbursement and health monitoring programs. As many members of this committee know, the confused management of present programs has contributed greatly to retarding the natural growth of home health services in general, and, it has stalled the positive response to the 1974 General Accounting Office recommendations on Medicare and Medicaid home health services in particular. We hope that the attempt to bring the various health efforts of the Bureau of Health Insurance, Medical Services Administration, Office of Long-Term Care and the Bureau of Quality Assurance under one central direction will improve program responsiveness.

At the same time, however, we must candidly point out to the members of this committee that centralized management will not bring the necessary consistency of quality service delivery of the home health benefits unless additional steps are taken to provide for uniform definitions and standards for home health agencies. We would encourage this committee to include within S. 3205 provision for such federal uniform standards for home health providers. Our Associations cannot emphasize the importance of such a measure to overcome the confusing incon

sistency of service requirements in Medicare, Medicaid and in Title XX Social Services. Many of the abusive practices in the provision of home care which have received media attention are directly attributable to the lack of a single uniform definition of a home health agency being applied across the board with standardized requirements as conditions of participation.

While central management may overcome the confusion of the separate reimbursement and monitoring programs, such steps of themselves do not ensure administrative conformity of the benefit. Inasmuch as home care does present a unique opportunity for those who would abuse the privileges of program participation, a strong argument must be made for uniform federal standards in the reimbursement programs.

Some may argue that this approach restricts provider entry and forces the agency to provide a range of services, some of which may not be applicable to each patient's needs; however, the reimbursement mechanism is the control on utilization with the patient receiving such services as prescribed. If we are to build a continuum of health care services then it is certainly within the public interest to concentrate efforts at the development of home health agencies which provide a full range of services. We advocate a certificate of need requirement as the test for entry. Certainly, NAHIA would support amendments to allow waiver provisions for a limited period to assist agencies, especially in rural areas, to improve their capacities to meet the uniform standards.

Likewise, the National Association of Home Health Agencies is supportive of Section 3 of S. 3205 establishing an Inspector General for Health Administration. The development of an independent reviewer within the Department to monitor program performance may prevent a repetition of the neglect which home health care has received in the Medicare and Medicaid reimbursement programs. The most objective viewers of the documented abuses in the provision of home care services attribute such abuses to lax management by the Bureau of Health Insurance and lack of interest in such services by the intermediary. Such beliefs, i.e., that home health care is not important enough to be bothered with by government administrators and programs intermediaries, set the stage for abusive practices.

We can only overcome disinterest by establishing an overseer to monitor program performance.

As with the previous two sections, NAHHA supports Section 4 of S. 3205 reforming the State Medicaid administration. We emphasize to the committee that within the efforts to improve the administrative management of the State Medicaid programs consideration be given to strengthen the uniformity of benefit and consistency of reimbursement. While the development of the home health benefit has been seriously retarded in the state Medicaid program for a variety of reasons (many of which were pointed out in the 1974 General Accounting Office report) the failure of the states to provide consistency in program application has breached the spirit (if not the statute) of the statewideness requirement.

While the other provisions of the general administrative reforms have limited bearing upon the delivery of home health care, we do wish to set forth our support for Section 7 of S. 3205. The prompt promulgation of regulations by the Secretary while ensuring sufficient time for interested parties to comment upon the draft regulations is in the public interest. Many of the last regulations to be promulgated under the authority of Public Law 92-603 were those Congressional directives regarding long-term care.

NAHHA has particular interest in the provisions of Section 10 of S. 3205. While Section 10(e) exempts the Part A home health providers from the improved methods for determining reasonable costs of services directed for hospitals, consideration must be given to the specifics of hospital based home health providers. Inasmuch as the apparent intent of Section 10(e) is to allow time for analytic studies on the impact of such controls on the extended care benefit, we believe a more accurate accounting of home care benefits would occur if hospital-based home health servies were accounted for in the same manner as other providers of those services. Thus, Section 10(b) should be specific in requiring the separate accounting of home health services from other services delivered by hospitals. Evidence from the Cost of Living Council and the Economic Stabilization programs, while tentative, indicate there is a tendency for ancillary serv real shifting of funds giving an allusion of services delivery that is less than accurate. Inasmuch as we can appreciate that such separate accounting can be difficult in certain instances, we would urge the committee to provide for waivers

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where the institution can prove that compliance with the separate accounting would be a hardship.

Section 10 (c) should be strengthened to provide for a series of test projects to develop a range of options for policy markers. As you know, home care is delivered by a variety of provider types, and, we anticipate that without test data imposed reimbursement procedures may disadvantage some agencies. For instance, while many costs are similar among different agencies, transportation costs are more severe in sparsely settled rural areas than in urban areas. How should the reimbursement system account for this variable while holding other data comparative?

Turning to the long-term care provisions of S. 3205, our Association note that limited attention is given to home health providers in any of these three sections. NAHHA believes that the improved certification and approval procedures set forth for skilled nursing facilities participating in the Medicare and Medicaid programs should also be applicable for delivery of home health. We have testi. fied on numerous occasions for a more vigorous monitoring of the quality of care rendered. Our members are conscious of the fact that some individuals who have exploited the weakness of the nursing home reimbursement system have given thought to entering the home health marketplace to escape the ever increasing scrutiny of institutional services. Likewise, we are concerned about the developing trend of for-profit management consultant services establishing control arrangements over non-profit home health agencies. Controls must be imposed, and, we urge they be imposed uniformly and at the Federal level.

Certainly the recent decisive action by the Under Secretary of Health, Education and Welfare requiring the Medical Services Administration to promulgate in final the revised home health services regulations for Medicaid point to the need for an expanded monitoring system. The revised regulations (if we can rely upon the Under Secretary's directive) will provide for certain single service agencies to deliver Medicaid reimbursed home care services. Who is going to monitor such provision and who will ensure that such limited single service agency growth will not proliferate? Allow us to reiterate NAHH's basic belief that the proliferation of differing standards for Medicare and Medicaid is wrong. and that the proliferation of single service agencies is a step backwards. But even accepting the Under Secretary's decision, where are the controls to prevent abuse? The federal government must have reviewed responsibility.

With specific reference to the upcoming Medicaid home health regulations, our Association urge this committee to require a geographic limitation on the proposed use of single-service agencies. While we can appreciate the rationale for allowing the use of single-service nursing agencies in underserved areas, there is no excuse for the utilization of such services in metropolitan areas. Congress must continue to move toward developing home health providers that will provide a broad range of services thereby upgrading the ability of these agencies to meet patients needs.

While Section 30 of the legislation is responsive to the profit motivations of skilled nursing providers, such limited language fails to address the more serious problem of cash flow encountered by nonprofit home health providers. While we believe certain non-profit institutions encounter similar problems, there is a major difference between the capital requirement and equity return issues of such facilities and the cash flow difficulties encountered by the less capital intensive home health provider. A facility often can rely upon its capital investment as a source for funds to meet short-range deficits. Home health providers seldom have the base from which to secure marketplace financing to overcome short-range cash flow deficits. Many of our members have often been forced to write personal notes to meet cash flow. Serious attention must be given to this issue if expanding the home health benefit is to be a priority. NAHHA encourages the committee to explore efficiency incentives bonuses for nonprofit providers as a possible solution to the problem. We further point out that this particular problem has been exacerbated by the policies of most charitable organizations that underwrite home care services. Many of these groups, such as United Way, will not pay for services in advance, and, therefore, the home health agency is left to meet cash demands until the reimbursement is forthcoming. Obviously, PIP has been an incentive for Medicare participation, but such limited advance funding has also been an incentive for 100 percent Medicare agencies.

NAHHA supports Section 33 of S. 3205, however, we would point to the committee that many of the beneficiaries of home visitation may be inappropriately

placed in the institution in the first place. It would appear that this provision could be a flag to cases of inappropriate setting and that the regulations which implement this section should encourage a monitoring of its use. The necessity for extensive home visits from the institutional setting may be symptomatic of the reimbursement system skewing service delivery to nursing homes, rather than facilitating proper placement with adequate reimbursement. While we pledged not to reiterate our previous statements to this committee for expansion of the benefit package vis-a-vis home health care, the necessity for home visits from the institution could be evidence of inappropriate patient placement.

From the viewpoint of our Association, the most important provision of S. 3205 is section 40. We cannot underscore our support for these necessary monitoring controls. Certainly, our member agencies are concerned that the control procedures may be cumbersome, but we trust Congress will design a system that is both effective and efficient to the government and the provider.

Consideration should be given to the inclusion of Title XX health-related services to the requirements of Section 40, The ever expanding role of Title XX in procuring homemaker, chore and home management services becries the need for monitoring. Even without the uniformity in provider standards which NAHHA believes is vitally necessary, controls must be placed on potential conflicts of interest and possible over-utilization schemes.

We urge the committee to be cognizant of the paperwork requirements which are imposed upon providers in the Medicare and Medicaid programs. Reference is made to consolidate cost-reporting in this section. Our Associations urge the adoption of consolidated cost reporting as a means of improving efficiency while maintaining sufficient monitoring of reimbursements, and, we strongly support its implementation.

In addition to expanding the coverage of such control mechanisms, NAHHA has several suggestions to improve the application of Section 40. We share the expressed concerns of several of the public witnesses who testified that the dollar limitations may be too low within the legislation. Rather than set hard and fast dollar limits, we suggest consideration should be given to a sliding scale for contract review predicated on a percentage amount for instance 5 percent of gross business. Dollar limitations are relative, while, a percent figure captures the importance of the contractual obligations to the agency.

Consideration should also be given to expanding the definition of related organizations. During recent years, several patterns have emerged in home health management. One of these variations has centered on the control of information as a mechanism of management. Through the use of a centralized information system, contro's have been imposed over agencies while avoiding present definitions of related organization for purposes of disclosure and reimbursement. Hence, a for-profit organization can effectively operate through non-profit subsidiaries conflict of interest and disclosure provisions should be reviewed to ensure that potential conflicts and third party involvements are sufficiently monitored. Finally, consideration should be given to the application of such controls within sparsely served areas. Certain waiver criteria from the imposed reporting requirements should be allowed in underserved areas as a possible incentive for agency expansion.

One of the prime ommissions from S. 3205 is a certificate of need requirement for home health services. While NAHHA can appreciate that the legislation was in the final stages of drafting when the Department promulgated regulations revising the Section 1122 rules to eliminate a certificate of need requirement for home health services, we hope the committee will attentively consider the issue. Attached to our statement is a copy of our response to the Health Services Administration regulations. Rather than repeat the language of the letter, allow us to just emphasize that entry into the home health market must be restricted through federal guidelines, administered at the local level where needs can best be assessed and decisions properly structured. To allow for uncontrolled entry and exit from the home health sector by removing the certificate of need requirement is to invite massive exploitation of the marketplace at tremendous public costs and human suffering. If our goal is to build home health agencies within the continuum of health services, then we must cultivate their expansion.

Public Law 92-603 provided authority for consultants to assist skilled nursing facilities upgrade administrative skills. Such a provision should be expanded to provide for such assistance to home health agencies.

Attention should be given to the role of the fiscal intermediary in managing the home health benefit. Our membership continues to point out differing deci

sions among intermediaries with respect to coverage. Uniform definitions must be instilled. An equally important problem, especially in light of the recent oversight interest in the administration of home benefits, has been the increasing reluctance of certain intermediaries to work with home health agencies. Inasmuch as the program gives the intermediary broad lattitude in program management, this trend could cripple the advances which our agencies have made in encouraging home benefit utilization by beneficiaries. Likewise, with recently promulgated regulations for Section 228 of Public Law 92-603, concerning presumed coverage, there is a danger that intermediaries will construe the program minimums set forth in the rules as maximums, thus effectively reducing home health service development.

In conclusion, the National Association of Home Health Agencies wish to commend the sponsors of S. 3205 for drafting an effective piece of legislation that goes a long way toward improving through administrative and reimbursement reforms the prospects for benefit liberalizations. We stand ready to assist in perfecting S. 3205, and we urge the Senate Committee on Finance to expedite consideration of the measure so we may see necessary controls imposed by this Congress. NATIONAL ASSOCIATION OF HOME HEALTH AGENCIES,

HOWARD B. KELLY,

LEGISLATIVE COMMITTEE,
Portland, Oreg., May 3, 1976.

Director, Office of Policy Coordination, Bureau of Health Planning and Resources Development, Rockville, Md.

DEAR MR. KELLY: The National Association of Home Health Agencies (NAHHA), representing the concerns of certified Medicare home health providers, vigorously opposes the suggested deletion of home health agencies from coverage under Section 1122 as proposed in the revisions to CFR Part 100 promulgated in the Federal Register (Volume 41, No. 55) March 19, 1976.

We find that the Department in recommending the deletion of the certificate of need requirement for home health agencies is advocating a policy of chaos in the health sector which can only lead to pre-emption of the home health field by economic interests, threatening the availability and quality of services to the patient, and leading to adverse cost consequences in the long run.

The argument which has been advanced to remove the certificate of need requirement from home health is based on clearly speculative economic theory. The logic is steeped in classical textbook theory devoid of attention to the realities of the situation. While on paper it may appear that competition in the marketplace might stimulate rapid expansion of home health services, little attention is being given to (1) the question of costs of such policies, and (2) the implications of chaos upon the quality of services to the patient. The textbook approach to growth dissolves when consideration is given to these externalities. With respect to the cost of unbridled competition in the home health sphere, attention must be given to the patterns which are emerging with the liberalization of the home health benefit under reimbursement programs. The past several years have witnessed the establishment of new control modalities in home health premised on the exploitation of the marketplace. To ignore the potential for abuse which accompanies these developments is to ignore the realities of the circumstances which the Department is monitoring in Regions IV and X. The cost of unchecked exploitation and an increased concentration within the health sector by a handful must be viewed in the longrun consequences of conscious government policy: Can we afford to dissolve our community based service agencies in lieu of nationally controlled economic conglomerates?

The marketplace theory toward development might have credence if it could be proven that development is stimulated to meet the needs of underserved Poulations. Growth trends in recent years have clearly indicated the opposite. Rather than stimulating growth in underserved areas, the marketplace mechanism which encourage exploitation also forces focus on population centers which will support profit. Thus, new agencies are sprouting up where old agencies exist forcing a vigorous competition; not in price, but in marketing. And, unfortunately, community based home health agencies are no match to the Madison Avenue marketing techniques.

Consideration must be given to the effect of unchecked service expansion upon the quality of services to the patient. Should the recipient of services be subjected to abusive practices while the marketplace mechanisms adjust to a