II

106TH CONGRESS

1ST SESSION S. 1414

To amend title XVIII of the Social Security Act to restore access to home

health services covered under the medicare program, and to protect

the medicare program from financial loss while preserving the due process

rights of home health agencies.

IN THE SENATE OF THE UNITED STATES

JULY 22, 1999

Mr. MACK 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 restore

access to home health services covered under the medicare program, and to protect the medicare program from

financial loss while preserving the due process rights

of home health agencies.

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 ‘‘Medicare Home Health

5 Beneficiary Equity and Payment Simplification Act of

6 1999’’.
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1 SEC. 2. FINDINGS.

2 Congress finds the following:

3 (1) Research has shown that medicare bene4 ficiaries who are in need of home health services

5 that are covered under the medicare program gen6 erally fall into 1 of the 4 following categories:

7 (A) Post-hospital, short-stay beneficiaries.

8 (B) Medically stable, long-stay bene9 ficiaries.

10 (C) Medically complex, long-stay bene11 ficiaries.

12 (D) Medically unstable and complex, ex13 tremely high-use beneficiaries.

14 (2) The interim payment system for home

15 health services under the medicare program, enacted

16 as part of the Balanced Budget Act of 1997 and

17 amended by title V of the Tax and Trade Relief Ex18 tension Act of 1998 (contained in Division J of Pub19 lic Law 105–277), is having the following unin20 tended consequences:

21 (A) The sickest, most frail medicare bene22 ficiaries are losing access to medically necessary

23 home health services that are otherwise covered

24 under the medicare program.

25 (B) Many high quality, cost-effective home

26 health agencies have had per beneficiary limits
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1 under the interim payment system set so low

2 that such agencies are finding it impossible to

3 continue to provide home health services under

4 the medicare program.

5 (C) Many home health agencies are being

6 subjected to aggregate per beneficiary limits

7 under the interim payment system that do not

8 accurately reflect the current patient mix of

9 such agencies, thereby making it impossible for

10 such agencies to compete with similarly situated

11 home health agencies.

12 (D) Medicare beneficiaries that reside in

13 certain States and regions of the country have

14 far less access to home health services under

15 the medicare program than individuals who

16 have identical medical conditions but reside in

17 other States or regions of the country.

18 (E) The health status of home health bene19 ficiaries varies significantly in different regions

20 of the country, creating differing needs for

21 home health services.

22 SEC. 3. PAYMENTS TO HOME HEALTH AGENCIES UNDER

23 MEDICARE.

24 (a) REVISION OF PROSPECTIVE PAYMENT SYSTEM.—
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1 (1) IN GENERAL.—Section 1895 of the Social

2 Security Act (42 U.S.C. 1395fff) (as amended by

3 section 5101 of the Tax and Trade Relief Extension

4 Act of 1998 (contained in Division J of Public Law

5 105–277)) is amended—

6 (A) in subsection (a), by striking ‘‘for por7 tions of cost reporting periods occurring on or

8 after October 1, 2000’’ and inserting ‘‘for cost

9 reporting periods beginning on or after October

10 1, 1999’’; and

11 (B) in subsection (b), by striking the last

12 sentence of paragraph (1) and all that follows

13 and inserting the following:

14 ‘‘(2) PAYMENT BASIS.—

15 ‘‘(A) IN GENERAL.—The prospective pay16 ment amount to be paid to a home health agen17 cy under this section for all of the home health

18 services (including medical supplies) provided to

19 a beneficiary under this title during the 12-

20 month period beginning on the date that such

21 services are first provided by such agency to

22 such beneficiary pursuant to a plan for fur23 nishing such services (and for each subsequent

24 12-month period that services are provided

25 under such plan) shall be an amount equal to
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1 the applicable amount specified in subpara2 graph (B) for the fiscal year in which the 12-

3 month period begins.

4 ‘‘(B) APPLICABLE AMOUNT.—Subject to

5 subparagraphs (C), (D), and (E) and para6 graph (5), for purposes of this subsection, the

7 applicable amount is equal to—

8 ‘‘(i) $2,603 for a beneficiary described

9 in subparagraphs (A) and (E) of para10 graph (3);

11 ‘‘(ii) $3,335 for a beneficiary de12 scribed in paragraph (3)(B);

13 ‘‘(iii) $4,228 for a beneficiary de14 scribed in paragraph (3)(C); and

15 ‘‘(iv) $21,864 for a beneficiary de16 scribed in paragraph (3)(D).

17 ‘‘(C) ANNUAL UPDATE.—

18 ‘‘(i) IN GENERAL.—The applicable

19 amount specified in subparagraph (B)

20 shall be adjusted for each fiscal year (be21 ginning with fiscal year 2001) in a pro22 spective manner specified by the Secretary

23 by the home health market basket percent24 age increase applicable to the fiscal year

25 involved.
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1 ‘‘(ii) HOME HEALTH MARKET BASKET

2 PERCENTAGE INCREASE.—For purposes of

3 clause (i), the term ‘home health market

4 basket percentage increase’ means, with re5 spect to a fiscal year, a percentage (esti6 mated by the Secretary before the begin7 ning of the fiscal year) determined and ap8 plied with respect to the mix of goods and

9 services included in home health services in

10 the same manner as the market basket

11 percentage increase under section

12 1886(b)(3)(B)(iii) is determined and ap13 plied to the mix of goods and services com14 prising inpatient hospital services for the

15 fiscal year.

16 ‘‘(D) AREA WAGE ADJUSTMENT.—

17 ‘‘(i) IN GENERAL.—The portion of the

18 applicable amount specified in subpara19 graph (B) (as updated under subparagraph

20 (C)) that the Secretary estimates to be at21 tributable to wages and wage-related costs

22 shall be adjusted for geographic differences

23 in such costs by an area wage adjustment

24 factor for the area in which the home

25 health agency is located.
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1 ‘‘(ii) ESTABLISHMENT OF AREA WAGE

2 ADJUSTMENT FACTORS.—The Secretary

3 shall establish area wage adjustment fac4 tors that reflect the relative level of wages

5 and wage-related costs applicable to the

6 furnishing of home health services in a ge7 ographic area compared to the national av8 erage applicable level. Such factors may be

9 the factors used by the Secretary for pur10 poses of section 1886(d)(3)(E).

11 ‘‘(E) MEDICAL SUPPLIES.—The applicable

12 amount specified in subparagraph (B) shall be

13 adjusted for each fiscal year (beginning with

14 fiscal year 2001) in a prospective manner speci15 fied by the Secretary by the percentage increase

16 (as determined by the Secretary) in the average

17 costs of medical supplies (as described in sec18 tion 1861(m)(5)) for the fiscal year involved.

19 ‘‘(3) DESCRIPTION OF BENEFICIARIES.—

20 ‘‘(A) POST-HOSPITAL, SHORT-STAY BENE21 FICIARY.—A beneficiary described in this sub22 paragraph is a beneficiary under this title

23 who—

24 ‘‘(i) has experienced at least one 24-

25 hour hospitalization within the 14-day pe-
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1 riod immediately preceding the date that

2 the beneficiary is first provided services by

3 the home health agency;

4 ‘‘(ii) suffers from 1 or more illnesses

5 or injuries which are post-operative or

6 post-trauma; and

7 ‘‘(iii) has a prognosis of a prompt and

8 substantial recovery.

9 ‘‘(B) MEDICALLY STABLE, LONG-STAY

10 BENEFICIARY.—A beneficiary described in this

11 subparagraph is a beneficiary under this title

12 who—

13 ‘‘(i) has not been admitted to a hos14 pital within the 6-month period imme15 diately preceding the date that the bene16 ficiary is first provided services by the

17 home health agency;

18 ‘‘(ii) suffers from 1 or more illnesses

19 or injuries requiring acute medical treat20 ment or management in the home; and

21 ‘‘(iii) is experiencing 1 or more im22 pairments in activities of daily living.

23 ‘‘(C) MEDICALLY COMPLEX, LONG-STAY

24 BENEFICIARY.—A beneficiary described in this
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1 subparagraph is a beneficiary under this title

2 who—

3 ‘‘(i) has experienced 2 or more hos4 pitalizations or admissions to skilled nurs5 ing facilities within the 12-month period

6 immediately preceding the date that the

7 beneficiary is first provided services by the

8 home health agency;

9 ‘‘(ii) suffers from 1 or more illnesses

10 or injuries requiring acute medical treat11 ment or management in the home; and

12 ‘‘(iii) is experiencing 1 or more im13 pairments in activities of daily living.

14 ‘‘(D) MEDICALLY UNSTABLE AND COM15 PLEX, EXTREMELY HIGH-USE BENE16 FICIARIES.—A beneficiary described in this sub17 paragraph is a beneficiary under this title

18 who—

19 ‘‘(i) has experienced 2 or more hos20 pitalizations or admissions to skilled nurs21 ing facilities within the 6-month period im22 mediately preceding the date that the bene23 ficiary is first provided services by the

24 home health agency;
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1 ‘‘(ii) suffers from 1 or more illnesses

2 or injuries requiring acute medical treat3 ment or management in the home; and

4 ‘‘(iii) is experiencing 2 or more im5 pairments in activities of daily living.

6 ‘‘(E) OTHER BENEFICIARIES.—A bene7 ficiary described in this subparagraph is a bene8 ficiary under this title who is not otherwise de9 scribed in subparagraphs (A) through (D).

10 ‘‘(4) DETERMINATION.—

11 ‘‘(A) IN GENERAL.—The determination of

12 which of the subparagraphs under paragraph

13 (3) applies to a beneficiary under this title shall

14 be based on the diagnosis and assessment of a

15 physician who shall have no financial relation16 ship with the home health agency that is receiv17 ing payments under this title for the provision

18 of home health services to such beneficiary. For

19 purposes of the preceding sentence, any finan20 cial relationship shall be determined under rules

21 similar to the rules with respect to referrals

22 under section 1877.

23 ‘‘(B) REGULATIONS.—The Secretary shall

24 issues regulations to assist physicians in mak-
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1 ing the determination described in subpara2 graph (A).

3 ‘‘(5) ADDITIONAL PAYMENT AMOUNT.—The

4 Secretary may increase the applicable amount speci5 fied in paragraph (2)(B) to be paid to a home health

6 agency if the Secretary determines that such agency

7 is—

8 ‘‘(A) experiencing higher than average

9 costs for providing home health services as com10 pared to other similarly situated home health

11 agencies; or

12 ‘‘(B) providing home health services that

13 are not reflected in the determination of the ap14 plicable amount.

15 ‘‘(6) NOTICE OF PROSPECTIVE PAYMENT

16 RATE.—Not later than July 1 of each year (begin17 ning in 2000), the Secretary shall publish in the

18 Federal Register the applicable amount to be paid to

19 home health agencies for home health services pro20 vided to a beneficiary under this title during the fis21 cal year beginning October 1 of the year.

22 ‘‘(7) PRORATION OF PROSPECTIVE PAYMENT

23 AMOUNTS.—If a beneficiary elects to transfer to, or

24 receive services from, another home health agency

25 within the period covered by the prospective payment
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1 amount, the payment shall be prorated between the

2 home health agencies involved.’’.

3 (2) CONFORMING AMENDMENTS.—Section 1895

4 of the Social Security Act (42 U.S.C. 1395fff) (as

5 amended by section 5101 of the Tax and Trade Re6 lief Extension Act of 1998 (contained in Division J

7 of Public Law 105–277)) is amended—

8 (A) by amending subsection (c) to read as

9 follows:

10 ‘‘(c) REQUIREMENT FOR PAYMENT INFORMATION.—

11 With respect to home health services furnished on or after

12 October 1, 1998, no claim for such a service may be paid

13 under this title unless the claim has the unique identifier

14 (provided under section 1842(r)) for the physician who

15 prescribed the services or made the certification described

16 in section 1814(a)(2) or 1835(a)(2)(A).’’; and

17 (B) by striking subsection (d).

18 (3) CHANGE IN EFFECTIVE DATE.—Section

19 4603(d) of the Balanced Budget Act of 1997 (42

20 U.S.C. 1395fff note) (as amended by section

21 5101(c)(2) of the Tax and Trade Relief Extension

22 Act of 1998 (contained in Division J of Public Law

23 105–277)) is amended by striking ‘‘October 1,

24 2000’’ and inserting ‘‘October 1, 1999’’.
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1 (4) ELIMINATION OF CONTINGENCY 15 PER2 CENT REDUCTION.—Subsection (e) of section 4603

3 of the Balanced Budget Act of 1997 (42 U.S.C.

4 1395fff note) is repealed.

5 (5) EFFECTIVE DATE.—The amendments made

6 by this subsection shall take effect on the date of en7 actment of this Act.

8 (b) PAYMENT RATES BASED ON LOCATION OF HOME

9 HEALTH AGENCY RATHER THAN PATIENT.—

10 (1) CONDITIONS OF PARTICIPATION.—Section

11 1891 of the Social Security Act (42 U.S.C.

12 1395bbb) is amended by striking subsection (g).

13 (2) WAGE ADJUSTMENT.—Section

14 1861(v)(1)(L)(iii) (42 U.S.C. 1395x(v)(1)(L)(iii)) is

15 amended by striking ‘‘service is furnished’’ and in16 serting ‘‘agency is located’’.

17 (3) EFFECTIVE DATE.—The amendments made

18 by this subsection shall apply to services provided on

19 or after October 1, 1999.

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