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Answer. (a) Yes. HCFA studied carefully the possibility that patients would be discharged prematurely under a DRG system. However, the evaluation of our New Jersey experiment provided no evidence that patients were being discharged too early. The data from New Jersey did not indicate any increase in hospital readmissions due to premature discharge.

(b) No. Yale University did not address the issue.

(c) Under the system proposed by former Secretary Schweiker, admission pattern monitoring would be used to detect inappropriate discharge practices. If inappropriate practices were identified, the medical review agent would take action ranging from communication and education efforts with the provider to preadmission review of hospital admissions. If necessary, sanctions would be applied.

Question 2. In submitting the prospective payment plan to Congress last December, Secretary Schweiker considered peer review to be a vital component of ensuring the program's success.

(a) Can you describe in detail HCFA's plans for promoting and continuing peer review under the DRG system?

(b) Do you envision any strengthening of the current PSRO system under DRG? Answer. Below is a combined response to your two-part question. Since our hearing in New Jersey, the Social Security Amendments of 1983, H.R. 1900, was passed by Congress and has been signed into law (Public Law 98-21). This legislation has a number of provisions that require peer review activities under prospective payement.

First of all, it requires hospitals by no later than October 1, 1984 to contract with a peer review organization as a condition of payment in the Medicare program. These new peer review organizations have a number of medical review responsibilities including, but not limited to, admissions pattern monitoring, DRG validation, and quality of care studies.

Second, Public Law 98–21 also specifies certain functions to be performed by peer review organizations.

Third, Public Law 98-21 specifies a minimum funding level for peer review (no less than the 1982 PSRO budget adjusted for inflation), mandates funding from the trust funds, and removes the budget from the appropriations process.

We have activities underway to implement these legislative requirements. As we are still in our initial planning period, it is too soon to specify the shape of the new peer review program under the prospective payment system.

Question 3. The New Jersey DRG system, unlike the Federal plan recently enacted, provides for prospective payment for all payors, not just Medicare patients. Some economists have warned that this could result in cost-shifting from Medicare patients to private patients.

(a) Has HCFA done any analysis of such a possible cost-shifting and how to guard against it?

(b) Do you envision extending the prospective payment system to all patients in hospitals?

Answer. (a) HCFA believes that the DRG system particularly guards against cost shifting. The DRG system directly associates the hospital treatment received by the beneficiary with a fair and identifiable price for that care. Consequently, it will be more difficult for providers to inflate the price they charge for this service to other payors.

(b) We do not require extension of this system to all hosptial inpatients. However, private insurers and States may elect to use this system for the inpatients that they

Question 4. There has been continuing interest in home health care in Congress.

(a) Could you describe in detail the Department's or the Administration's current policies with respect to home health care, including ongoing demonstration projects, their goals, and expected completion dates, along with funding levels?

(b) Do you envision any proposals from HCFA or the department to increase home health care, either through tax incentives, demonstration projects, or policy changes within Medicare and Medicaid?

Answer. (a) The following provides a summary of home health care coverage and demonstration activity under the Medicare and Medicaid programs.

cover.

HOME HEALTH CARE UNDER MEDICARE

Covered Services. - Medicare covers the following services:

Part-time or intermittent nursing care provided by or under the supervision of a registered professional nurse; physical, occupational, or speech therapy; medical social services which include services necessary for assisting the patient to adjust to

social and emotional conditions related to his/her health problem; part-time or intermittent services from a home health aide; and medical supplies (other than drugs and biologicals) and medical appliances.

There is no limit on the number of home health care visits that may be provided and there is no requirement for deductible, coinsurance, or prior hospital stay.

Coverage Requirements. — The Medicare law limits payment of home health services to beneficiaries who are 1) under the care of a physician; 2) confined to their home (homebound); and 3) in need of skilled nursing care on an intermittent basis or physical or speech therapy. The care must be prescribed by a physician and the services must be provided by a participating home health agency (HHA), either directly or through arrangements, in accordance with the physician's written plan of

care.

The Medicare home health benefit was specifically designed for situations where it is necessary to provide medical care in the home. An exception is made in instances where required medical equipment cannot readily be made available in the home. Similarly, Medicare home health benefits are oriented toward a need for skilled care and were not designed to cover services related to assistance in daily living activities unless the patient also requires skilled nursing care or physical or speech therapy.

Reimbursement.Home health agencies are reimbursed the lower of the reasonable costs, both direct and indirect, of providing covered services (subject to the Medicare Section 223 cost limits for HHAs) or the customary charges of the home health agency

for the services.

HOME HEALTH CARE UNDER MEDICAID

Mandatory Services. — The Medicaid State agency must ensure that home health services are provided to all individuals entitled to skilled nursing facility services under the State plan. Home health services must include, at a minimum:

Nursing services; home health aide services, and medical supplies, equipment, and appliances suitable for use in the home.

The home health services must be provided at the recipient's residence. A residence does not include a hospital, skilled nursing facility (SNF), or intermediate care facility (ICF) (except that home health services may be provided in an intermediate care facility if the facility is not required to provide those services). The services must also be provided on the orders of the recipient's physician as part of a written plan of care that the physician reviews every 60 days.

Optional Services. —States may also provide the following types of home health services under the Medicaid State plans: physical therapy, occupational therapy, or speech pathology and audiology services provided by an HHA or by a facility licensed by the State to provide medical rehabilitation services.

Reimbursement.--States determine the method and level of reimbursement for home agency services under their Medicaid programs. These include negotiated rates, fee schedules, cost-based reimbursement, and other methods.

Home and Community-based Services Waivers. -Section 2176 of the Omnibus Budget Reconciliation Act of 1981 (Public Law 97–35) authorizes the Department to grant waivers of Medicaid requirements in order to permit States to offer a wide array of home and community-based services that an individual may need to avoid Medicaid coverage for such services as case management, homemaker/home health aides, personal care, adult day health care, habilitation, respite care, and other services requested by the State and approved by the Secretary. Other services may include, for example, medical equipment and supplies, physical and occupational therapy, speech pathology and audiology, minor physical adaptations to the home, transportation, and hospice care.

In order to receive a waiver, States must provide adequate assurances concerning the health and welfare of individuals under the waiver, the cost-effectiveness of services under the waiver, the need for such services for individuals entitled to SNF or ICF care, and financial accountability. States must also agree to provide information annually to the Department on the impact of the waiver.

As of March 31, 1983, the Department has received 66 home and community-based services waiver requests from 40 different States. Of these, 38 separate requests from 31 States have been approved. There have been six disapprovals and three requests have been withdrawn. The remaining requests are currently under review and discussion.

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RESEARCH AND DEMONSTRATION ACTIVITY

Evaluation of coordinated community oriented long-term care demonstration

Period: September 1980-December 1983.
Funding: $1,999,980.
Contractor: Berkeley Planning Associates Berkeley, Calif.

Description: This long-term care project evaluates a series of demonstration projects on the delivery of coordinated community care services. The demonstrations test whether care tailored to a client's needs can preclude moving them out of the community into expensive institutional care settings.

Status: The contractor has completed draft case studies for the participating projects. These studies highlight the history and origin of the project, describe project organization, and operation issues. A final report is expected in December 1983 and will focus on quality of care and cost-effectiveness issues. National long-term care channeling demonstrations

Period: September 1980-May 1985.

Description: This is a major national research and demonstration program. It is a combined effort of three components within the Department of Health and Human Services: HCFA; the Office of the Assistant Secretary for Planning and Evaluation, Office of the Secretary; and the Administration on Aging, Office of Human Development Services. The program is testing whether and to what extent the long-term care needs of elderly impaired persons can be met in a cost-effective way through a community-based system of comprehensive needs assessment, care planning, and case management. These components are the core channeling services. Five of the projects were designated as "complex model projects.” These projects alter the basic channeling model by adding three program elements under HCFA waivers: expanded Medicare and Medicaid service coverage, authorization to approve reimbursement for services, and limitations on per capita expenditures.

Funding: $932,896.
Contractor: Florida Department of Health and Rehabilitative Services.
Grantee: Tallahassee, Fla.

Status: The Miami Jewish Home and Hospital for the Aged has been designated as the organization responsible for implementing the Florida project. This site has been selected as a complex model project. The project catchment area includes the City of Miami and several surrounding communities. The project began serving clients in May 1982. Currently, this site has more than 200 clients. The organization hopes to reach a caseload of 429 clients by the end of June 1983.

Funding: $700,000.
Contractor: Kentucky Cabinet for Human Resources, Frankfort, Ky.

Status: The Kentucky Department for Social Services has been designated as the agency responsible for implementing the Kentucky project. This site has been selected as a basic model project. The project catchment area covers eight rural counties in eastern Kentucky. The project began serving clients in February 1982. Currently, this site has 140 clients. The Department hopes to reach a caseload of 160 clients by the end of June 1983.

Funding: $609,839.
Contractor: Maine Department of Human Services, Augusta, Maine.

Status: The Maine demonstration site is a basic model project administered under a subcontract with Southern Maine Senior Citizens, Inc., an Area Agency on Aging in Portland. The two-county catchment area, Cumberland and York Counties, covers 2,000 square miles. The project began serving clients in February 1982. Currently, the project has more than 120 clients in the active caseload. The project expects to reach an active caseload of 196 clients by the end of June 1983.

Funding: $1,657,617.
Contractor: Massachusetts Department of Elder Affairs.
Grantee: Boston, Mass.

Status: The Massachusets channeling demonstration is a complex model site operated by Greater Lynn Senior Services. The catchment area includes greater Lynn and the Beverly area. The project began serving clients in May 1982. Currently, the project has more than 140 active clients and expects to reach an active caseload of 300 clients by the end of June 1983. The project's major referral sources are the Visiting Nurse Association, hospitals, and the greater Lynn Senior Services.

Grantee: New York State Department of Social Services, Albany, N.Y.

Status: The Rennselaer County Department for the Aging has been designated as the agency responsible for implementing the New York project. This site has been selected as a complex model project. The project catchment area is Rennselaer County, New York. The project began serving clients in May 1982. Currently, the site has approximately 100 clients. The project hopes to reach a caseload of 159 by the end of June 1983.

Grantee: Ohio Department of Public Welfare, Columbus, Ohio.

Status: The Cuyahoga County Board of Commissioners has been designated as the agency responsible for implementing the Ohio project. The project site is administered by the Western Reserve Area Agency on Aging. The project catchment area covers Cuyahoga County, which consists of the City of Cleveland and 59 suburbs. The project began serving clients in May 1982. Currently, the site has approximately 200 clients. The project hopes to reach a caseload of 354 clients by the end of June 1983.

Funding: $2,235,982. Contractor: Pennsylvania Department of Public Welfare. Grantee: Harrisburg, Pa. Status: The Pennsylvania Channeling project is operated through a subcontract with the Philadelphia Corporation for Aging. This site is a fully centralized complex model project site. The catchment area covers more than 129 sites and includes the city and county of Philadelphia. The project began serving clients in May 1982. Currently, the projet has an active caseload of 350 clients. The project estimates that its active caseload will reach 500 clients by the end of June 1983. The major project referral sources are hospitals, senior centers, and home health agencies. Multipurpose senior services project

Period: October 1979-September 1983.
Grantee: State of California Health and Welfare Agency, Sacramento, Calif.

Description: The purpose of this project is to reduce client hospital and skilled nursing facility days, to reduce total expenditures by social and health services for clients, and to improve clients' functional abilities. Service delivery is administered through eight separate demonstration sites located throughout the State. Each site has an average of 60 organizations with which they contract for the provision of direct services to clients. A wide range of waivered health and social services are provided under the project.

Status: The project is in its fourth and final year. Full caseload (1,900 clients) was reached in the second year of the project. The comparison group (2,500 clients) was recruited without major problems and continues to be interviewed and assessed. Also, a computerized management information system has been developed, and extensive evaluation efforts have been performed. During this fourth year, the focus of the project is shifting from maintenance to wind-down. A special task force of Multipurpose Senior Services Project State and site staff has been formed to identify issues relating to project closure. Demonstration of community-wide alternative long term care model

Period: July 1976-July 1983.
Funding: $960,938.
Grantee: New York State Department of Social Services, Albany, N.Y.

Description: The New York State Department of Social Services is demonstrating alternative approaches to delivering and financing long-term care to the adult disabled and elderly Medicaid population of Monore County, New York. The project has developed the Assessment for Community Care Services (ACCESS) model as a centralized unit responsible for all aspects of long-term care for Monroe County residents 18 years of age or over who are eligible for Medicaid and have long-term health care needs. ACCESS staff provides each client with comprehensive needs-assessment and case-management services.

Status: the project received waivers to permit provision of certain community long-term care services not normally provided under Medicaid in New York. Since the project became operational in 1977, more than 18,000 people with potential longterm care needs have received assessments under this program. Continued demonstration of a long-term care center through inclusion and expansion

Period: August 1980-July 1984.
Funding: $1,802,768.
Grantee: Monore County Long-Term Care Program, Inc., Rochester, N.Y.

Description: The purpose of tis demonstration is to expand the alternative longterm care delivery model Assessment for Community Care Services (ACCESS) developed for the Medicaid population in Monroe County, New York to include the coun

ty's Medicare population. The addition of this Medicare project is for the purpose of working toward an integration of Medicare and Medicaid long-term care services.

Status: The development phase of this demonstration was completed, and the project began operations in October 1982. HCFA has contracted with New York Blue Cross to serve as Medicare fiscal intermediary for the demonstration. Thus far, more than 500 Medicare beneficiaries with potential long-term care needs have received assessments from the project. Home services for functionally disabled adults

Period: June 1980-June 1983.
Funding: $488,075.
Grantee: Community Service Society, New York, N.Y.

Description: Functionally disabled, low-income adults will be followed for 12 months after acute hospitalization to determine the impact of ongoing home service programs. Access to services, quality of services delivered, participation of informal supports, quality of circumstances, durability of independent living arrangements, and public costs will be examined.

Status: The data collection for the baseline period has been completed. Plans for a follow-up survey are underway. The project is in the process of obtaining patientspecific Medicare and Medicaid utilization data. New York State's long-term home health care program

Period: September 1978-September 1983.
Funding: $225,688.
Grantee: New York State Department of Social Services, Albany, N.Y.

Description: This program provides an alternative to institutionalization for Medicaid clients who meet the medical criteria for SNFs or ICFs. A maximum expenditure for home care has been set at 75 percent of the going rate in a locale for SNF or ICF levels of care for which the client is eligible. The program objectives include promoting cost containment by reducing fragmentation in the provision of home care services through a single entry system that coordinates and provides these services.

Status: By the end of the fourth project year, 17 provider sites were operating and the caseload had reached 983 patients. HCFA approved the project's fifth and final year through September 29, 1983. The final year allows time to complete reassessments, prepare a final report, transmit data to the evaluator, and expand the program statewide under the authority of Section 2176 (Home and Community-Based Services Program). In December 1982, the program began statewide expansion. Evaluation of New York State's Long-Term Home Health Program

Period: September 1979-September 1983. Funding: $742,694. Contractor: Abt Associates, Inc., Cambridge, Mass. Description: The Long-Term Home Health Care Program (LTHHCP) is designed to offer coordinated comprehensive home health care services through a single health care provider to Medicaid eligible aged or disabled individuals in need of skilled nursing or health-related facility care. The major evaluation objective is to determine whether or not the LTHHCP provides an alternative to institutional care in terms of cost, service use, and quality of care. The research is designed to identify 700 program participants and 700 matched comparison participants, and follow the individuals for at least one year by collecting cost and utilization data and applying a health assessment instrument at three points in time. The data being collected are Medicare, Medicaid, Title XX, food stamps, energy assistance, public assistance, and Supplemental Security Income. The final analysis will compare total public expenditures for the program participants to those of the comparison population, with measures of health status outcome for both groups.

Status: A case study qualitative analysis was completed after one year of operation. The case study report was completed in March 1983 and will be combined with the quantitative analysis at the end of the study. The resulting final report is expected in September 1983. South Carolina Community Long-Term Care Project

Period: September 1979-September 1984.
Grantee: Department of Social Services, Columbia, S.C.

Description: Through Medicaid and Medicare waivers, the State is conducting a demonstration in three counties to test community-based client assessment, coordination of services, and provision of alternative services. It is anticipated that these

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