II

106TH CONGRESS

1ST SESSION S. 1358

To amend title XVIII of the Social Security Act to provide more equitable

payments to home health agencies under the medicare program.

IN THE SENATE OF THE UNITED STATES

JULY 13 (legislative day, JULY 12), 1999

Mr. JEFFORDS (for himself, Mr. REED, Mr. ENZI, and Mr. LEAHY) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to provide

more equitable payments to home health agencies under

the medicare program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Preserve Access to

5 Care in the Home (PATCH) Act of 1999’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds the following:

8 (1) Home health services are a vital component

9 of the benefits that are provided to beneficiaries
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1 under the medicare program under title XVIII of the

2 Social Security Act.

3 (2) Home health services under the medicare

4 program enable homebound individuals who are at

5 great risk for costly institutionalized care to stay in

6 their own homes and communities.

7 (3) Implementation of the home health interim

8 payment system under the medicare program has in9 advertently exacerbated payment disparities for

10 home health services between regions, penalizing ef11 ficient, low-cost home health agencies in rural areas

12 and providing insufficient compensation for the care

13 of higher acuity, medically complex patients.

14 (4) The frequency and volume of prepayment

15 medical reviews, including requests for medical

16 records, and other administrative changes imposed

17 upon home health agencies, particularly those agen18 cies that are located in rural areas, has had a dev19 astating effect on smaller care agencies.

20 (5) The combination of insufficient payments

21 and new administrative changes has precipitated the

22 closure of nearly 2,000 home health agencies and

23 branch offices and has forced many surviving agen24 cies to shrink their service areas or limit the types
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1 of patients they may serve, resulting in restricted ac2 cess to home health services in many areas.

3 (6) The scheduled additional 15 percent across

4 the board reduction in home health payments under

5 the medicare program will severely compromise ex6 isting access to home health services, particularly in

7 low-cost rural areas.

8 (b) PURPOSES.—The purposes of this Act are as fol9 lows:

10 (1) To ensure access to care for patients with

11 high medical needs by establishing a process for

12 home health agencies to exclude high acuity, medi13 cally complex patients from the per-beneficiary limits

14 under the interim payment system for home health

15 services and instead receive cost-based reimburse16 ment for services provided such patients.

17 (2) To eliminate the 15 percent across the

18 board reduction in home health payments under the

19 medicare program.

20 (3) To bring relief from certain administrative

21 requirements to home health agencies with—

22 (A) strong, established compliance records;

23 and

24 (B) a history of claim denial rates of less

25 than 5 percent.
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1 SEC. 3. ELIMINATION OF AUTOMATIC 15 PERCENT REDUC2 TION IN HOME HEALTH PAYMENTS.

3 (a) CONTINGENCY REDUCTION.—Section 4603 of the

4 Balanced Budget Act of 1997 (42 U.S.C. 1395fff note)

5 (as amended by section 5101(c)(3) of the Tax and Trade

6 Relief Extension Act of 1998 (contained in division J of

7 Public Law 105–277)) is amended by striking subsection

8 (e).

9 (b) PROSPECTIVE PAYMENT SYSTEM.—Section

10 1895(b)(3)(A) of the Social Security Act (42 U.S.C.

11 1395fff(b)(3)(A)) is amended—

12 (1) by striking ‘‘INITIAL BASIS.—’’ and all that

13 follows through ‘‘Under such system’’, and inserting

14 ‘‘INITIAL BASIS.—Under such system’’;

15 (2) in the matter preceding clause (ii), by strik16 ing ‘‘but if the reduction in limits described in clause

17 (ii) had been in effect’’; and

18 (3) by striking clause (ii).

19 SEC. 4. OUTLIER PAYMENTS FOR HOME HEALTH SERVICES.

20 (a) WAIVER OF APPLICABLE HOME HEALTH PAY21 MENT LIMITS FOR OUTLIERS.—

22 (1) IN GENERAL.—Section 1861(v)(1)(L) of the

23 Social Security Act (42 U.S.C. 1395x(v)(1)(L)) (as

24 amended by section 5101 of the Tax and Trade Re25 lief Extension Act of 1998 (contained in Division J

26 of Public Law 105–277) is amended—
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1 (A) by redesignating clause (ix) as clause

2 (x); and

3 (B) by inserting after clause (viii) the fol4 lowing:

5 ‘‘(ix)(I) Notwithstanding the applicable limit under

6 this subparagraph, in the case of a provider that dem7 onstrates to the Secretary that with respect to an indi8 vidual to whom the provider furnished home health serv9 ices appropriate to the individual’s condition (as deter10 mined by the Secretary) at a reasonable cost (as deter11 mined by the Secretary), and that such reasonable cost

12 significantly exceeded such applicable limit because of un13 usual variations in the type or amount of medically nec14 essary care required to treat the individual, the Secretary,

15 upon application by the provider, shall pay to such pro16 vider for such individual such reasonable cost.

17 ‘‘(II) The Secretary shall establish such criteria as

18 is required for payment under this clause, including a de19 scription of the type of patient, patient condition, unusual

20 variations, and home health service that qualifies for such

21 payment.

22 ‘‘(III) In making determinations under subclause (I),

23 the Secretary shall use data from the cost report, or from

24 other data collected by the Secretary, of the provider for

25 such year.
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1 ‘‘(IV) A provider may make an application for pay2 ment under this clause for a fiscal year no earlier than

3 the end of the cost reporting period beginning in such fis4 cal year.

5 ‘‘(V) In the case of an application for payment under

6 this clause that is approved by the Secretary, a home

7 health agency may elect to receive payment on a quarterly

8 basis.’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall take effect on September 30, 1999,

11 and apply with respect to each application for payment

12 of reasonable costs for outliers submitted by any home

13 health agency for cost reporting periods ending on or after

14 such date.

15 SEC. 5. CLARIFICATION OF THE DEFINITION OF HOME16 BOUND.

17 (a) IN GENERAL.—The last sentence of sections

18 1814(a) and 1835(a) of the Social Security Act (42 U.S.C.

19 1395f(a); 1395n(a)) are each amended—

20 (1) by striking ‘‘leave home,’’ and inserting

21 ‘‘leave home and’’; and

22 (2) by striking ‘‘, and that absences’’ and all

23 that follows before the period.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall apply to items and services provided

3 on or after the date of enactment of this Act.

4 SEC. 6. REVIEW OF CLAIMS SUBMITTED BY HOME HEALTH

5 AGENCIES.

6 (a) IN GENERAL.—Section 1816(c)(2) of the Social

7 Security Act (42 U.S.C. 1395h(c)(2)) is amended by add8 ing at the end the following:

9 ‘‘(D)(i) Each agreement under this section shall pro10 vide that if the average finalized denial rate of claims sub11 mitted by a home health agency (determined for the 3

12 most recent cost reporting periods ending before the date

13 of such determination) is less than 5 percent—

14 ‘‘(I) no prepayment medical review, including

15 requests for medical records and focused medical re16 views, may be conducted with respect to a claim sub17 mitted by such agency (absent probable cause that

18 the particular claim is invalid) during the agency’s

19 next succeeding cost reporting period; and

20 ‘‘(II) post-payment review of claims submitted

21 by the agency during the agency’s next succeeding

22 cost reporting period shall not exceed 10 percent of

23 the dollar value of all of the services provided by the

24 agency for which a claim for reimbursement is filed

25 under this title during such period.
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1 ‘‘(ii) For purposes of clause (i), the finalized denial

2 rate of claims submitted by a home health agency for any

3 cost reporting period is equal to the percentage deter4 mined by dividing—

5 ‘‘(I) the dollar value of all of the services pro6 vided by the agency for which—

7 ‘‘(aa) a claim for reimbursement is filed

8 under this title during such period; and

9 ‘‘(bb) a denial for such claim has become

10 final after all rights to request reconsideration

11 or to appeal have been exhausted, by

12 ‘‘(II) the dollar value of all of the services pro13 vided by the agency for which a claim for reimburse14 ment is—

15 ‘‘(aa) filed under this title during such pe16 riod; and

17 ‘‘(bb) reviewed by the Secretary or an

18 agency or organization with an agreement

19 under this section.’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 subsection (a) shall take effect on the date of enactment

22 of this Act and shall apply to agreements entered into or

23 renewed on or after such date.
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1 SEC. 7. RESTORATION OF PERIODIC INTERIM PAYMENTS

2 FOR HOME HEALTH AGENCIES.

3 Section 4603(b) of Public Law 105–33 is repealed.

4 SEC. 8. SENSE OF THE SENATE REGARDING THE IMPLE5 MENTATION OF PPS FOR HOME HEALTH

6 SERVICES.

7 It is the sense of the Senate that the Secretary of

8 Health and Human Services should—

9 (1) ensure that the prospective payment system

10 for home health services under section 1895 of the

11 Social Security Act (42 U.S.C. 1395fff) provides for

12 appropriate payment of services that are provided to

13 beneficiaries;

14 (2) ensure that reimbursement rates under such

15 system —

16 (A) include incentives to provide services

17 efficiently to all beneficiaries; and

18 (B) do not create unintentional incentives

19 to discriminate against beneficiaries with medi20 cally complex conditions;

21 (3) ensure that the establishment of the case

22 mix adjustment for such services under subsection

23 (b)(4) of such section—

24 (A) does not penalize agencies that serve

25 beneficiaries with medically complex conditions;
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1 (B) provides some predictive value and ac2 counts for a fair portion of the variation in

3 costs associated with providing services to bene4 ficiaries; and

5 (C) takes into account such variables as

6 the health status, age, and socioeconomic status

7 of beneficiaries;

8 (4) establish a nationally uniform process to en9 sure that fiscal intermediaries have the training and

10 ability to provide timely and accurate coverage and

11 payment information to home health agencies under

12 the medicare program under title XVIII of such Act

13 (42 U.S.C. 1395 et seq.);

14 (5) assess the costs to home health agencies of

15 implementing new regulations and interpretations

16 associated with the prospective payment system for

17 home health services and consider the impact of

18 such costs on the ability of such agencies to provide

19 home health services to beneficiaries; and

20 (6) provide periodic updates to Congress and

21 home health agencies regarding the progress by the

22 Secretary of implementing the prospective payment

23 system for home health services.

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