Home-health reform

Rather than penalize home health care agencies that have been careful with Medicare dollars, as a federal payment plan currently does, a bill gaining support in Congress would reimburse the agencies at a rate that more fairly reflects costs. It is a solid improvement to a poorly assembled system.

To be introduced by Sen. Susan Collins, the Medicare Home Health Equity Act removes the unintentional reward system for wasteful spending and ensures that agencies can afford to care for people with more serious illnesses. It’s a process change that may seem like detail work for bureaucrats but actually has a serious impact on Maine and the rest of New England.

Here’s why. The Northeast traditionally has been frugal with home-health money, having a much lower average cost than the national average even though there is no evidence that people are less sick here or that expenses are lower. But when Congress passed its balanced budget act, one of the ways it made its debits equal its credits was to approve cutting back the amount of home-health reimbursement to below 1994 levels, based on per-patient average costs and regardless of the type of illness.

This has at least two painful effects. First, it disproportionately hurts agencies that kept the fat out of their budgets. The cutbacks will push these agencies into the red while leaving enough profit in the wasteful agencies to keep operating. Sort of a reverse Darwinism.

Second, it forces all agencies to review the costs of each type of illness and, for some, make choices about who will get help and who won’t. The large majority of agencies work extremely hard to provide care to everyone who qualifies, but the unambiguous incentive in the interim payment plan is to care for as many inexpensive cases as possible while avoiding the expensive ones.

The bill by Sen. Collins changes the formula to reimburse all agencies similarly for similar treatment by establishing costs based on a blend of national and regional averages. It takes the reward out of wasteful spending and ensures that agencies can afford to help all who need it. The bill further recognizes that not all treatments and care fall neatly into categories, and instructs the secreatry of Health and Human Services to adjust payments where events beyond an agency’s control push up costs.

This entirely sensible legislation will have opposition because it takes agencies — particularly those in the South — that have been getting unusually large reimbursements and pulls them back toward the national average. If these agencies are unhappy, chances are their representation in Congress is going to be unhappy. The challenge for Sen. Collins and like-minded senators is to round up enough bipartisan support from everywhere else to push this reform through.

There are a lot of well-run agencies in the Northeast counting on it.