I
106TH CONGRESS
1ST SESSION
H. R. 2546
To amend title XVIII of the Social Security Act to provide more equitable
payments to home health agencies under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
JULY 16, 1999
Mr. RILEY (for himself and Mr. ETHERIDGE) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Commerce, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
more equitable payments to home health agencies under
the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Preserve Access to
Care in the Home (PATCH) Act of 1999’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—Congress finds the following:
(1) Home health services are a vital component
of the benefits that are provided to beneficiaries
under the medicare program under title XVIII of the
Social Security Act.
(2) Home health services under the medicare
program enable homebound individuals who are at
great risk for costly institutionalized care to stay in
their own homes and communities.
(3) Implementation of the home health interim
payment system under the medicare program has in-
advertently exacerbated payment disparities for
home health services between regions, penalizing ef-
ficient, low-cost home health agencies in rural areas
and providing insufficient compensation for the care
of higher acuity, medically complex patients.
(4) The frequency and volume of prepayment
medical reviews, including requests for medical
records, and other administrative changes imposed
upon home health agencies, particularly those agen-
cies that are located in rural areas, has had a dev-
astating effect on smaller care agencies.
(5) The combination of insufficient payments
and new administrative changes has precipitated the
closure of nearly 2,000 home health agencies and
branch offices and has forced many surviving agen-
cies to shrink their service areas or limit the types
of patients they may serve, resulting in restricted ac-
cess to home health services in many areas.
(6) The scheduled additional 15 percent across
the board reduction in home health payments under
the medicare program will severely compromise ex-
isting access to home health services, particularly in
low-cost rural areas.
(b) PURPOSES.—The purposes of this Act are as fol-
lows:
(1) To ensure access to care for patients with
high medical needs by establishing a process for
home health agencies to exclude high acuity, medi-
cally complex patients from the per-beneficiary limits
under the interim payment system for home health
services and instead receive cost-based reimburse-
ment for services provided such patients.
(2) To eliminate the 15 percent across the
board reduction in home health payments under the
medicare program.
(3) To bring relief from certain administrative
requirements to home health agencies with—
(A) strong, established compliance records;
and
(B) a history of claim denial rates of less
than 5 percent.
SEC. 3. ELIMINATION OF AUTOMATIC 15 PERCENT REDUC-
TION IN HOME HEALTH PAYMENTS.
(a) CONTINGENCY REDUCTION.—Section 4603 of the
Balanced Budget Act of 1997 (42 U.S.C. 1395fff note)
(as amended by section 5101(c)(3) of the Tax and Trade
Relief Extension Act of 1998 (contained in division J of
Public Law 105–277)) is amended by striking subsection
(e).
(b) 
PROSPECTIVE
PAYMENT
SYSTEM.—Section
1895(b)(3)(A) of the Social Security Act (42 U.S.C.
1395fff(b)(3)(A)) is amended—
(1) by striking ‘‘INITIAL BASIS.—’’ and all that
follows through ‘‘Under such system’’, and inserting
‘‘INITIAL BASIS.—Under such system’’;
(2) in the matter preceding clause (ii), by strik-
ing ‘‘but if the reduction in limits described in clause
(ii) had been in effect’’; and
(3) by striking clause (ii).
SEC. 4. OUTLIER PAYMENTS FOR HOME HEALTH SERVICES.
(a) WAIVER OF APPLICABLE HOME HEALTH PAY-
MENT LIMITS FOR OUTLIERS.—
(1) IN GENERAL.—Section 1861(v)(1)(L) of the
Social Security Act (42 U.S.C. 1395x(v)(1)(L)) (as
amended by section 5101 of the Tax and Trade Re-
lief Extension Act of 1998 (contained in Division J
of Public Law 105–277) is amended—
(A) by redesignating clause (ix) as clause
(x); and
(B) by inserting after clause (viii) the fol-
lowing:
‘‘(ix)(I) Notwithstanding the applicable limit under
this subparagraph, in the case of a provider that dem-
onstrates to the Secretary that with respect to an indi-
vidual to whom the provider furnished home health serv-
ices appropriate to the individual’s condition (as deter-
mined by the Secretary) at a reasonable cost (as deter-
mined by the Secretary), and that such reasonable cost
significantly exceeded such applicable limit because of un-
usual variations in the type or amount of medically nec-
essary care required to treat the individual, the Secretary,
upon application by the provider, shall pay to such pro-
vider for such individual such reasonable cost.
‘‘(II) The Secretary shall establish such criteria as
is required for payment under this clause, including a de-
scription of the type of patient, patient condition, unusual
variations, and home health service that qualifies for such
payment.
‘‘(III) In making determinations under subclause (I),
the Secretary shall use data from the cost report, or from
other data collected by the Secretary, of the provider for
such year.
‘‘(IV) A provider may make an application for pay-
ment under this clause for a fiscal year no earlier than
the end of the cost reporting period beginning in such fis-
cal year.
‘‘(V) In the case of an application for payment under
this clause that is approved by the Secretary, a home
health agency may elect to receive payment on a quarterly
basis.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on September 30, 1999,
and apply with respect to each application for payment
of reasonable costs for outliers submitted by any home
health agency for cost reporting periods ending on or after
such date.
SEC. 5. CLARIFICATION OF THE DEFINITION OF HOME-
BOUND.
(a) IN GENERAL.—The last sentence of sections
1814(a) and 1835(a) of the Social Security Act (42 U.S.C.
1395f(a); 1395n(a)) are each amended—
(1) by striking ‘‘leave home,’’ and inserting
‘‘leave home and’’; and
(2) by striking ‘‘, and that absences’’ and all
that follows before the period.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to items and services provided
on or after the date of enactment of this Act.
SEC. 6. REVIEW OF CLAIMS SUBMITTED BY HOME HEALTH
AGENCIES.
(a) IN GENERAL.—Section 1816(c)(2) of the Social
Security Act (42 U.S.C. 1395h(c)(2)) is amended by add-
ing at the end the following:
‘‘(D)(i) Each agreement under this section shall pro-
vide that if the average finalized denial rate of claims sub-
mitted by a home health agency (determined for the 3
most recent cost reporting periods ending before the date
of such determination) is less than 5 percent—
‘‘(I) no prepayment medical review, including
requests for medical records and focused medical re-
views, may be conducted with respect to a claim sub-
mitted by such agency (absent probable cause that
the particular claim is invalid) during the agency’s
next succeeding cost reporting period; and
‘‘(II) post-payment review of claims submitted
by the agency during the agency’s next succeeding
cost reporting period shall not exceed 10 percent of
the dollar value of all of the services provided by the