Clinton Seeking Cuts in Home Care for Elderly

WASHINGTON — Alarmed by runaway costs, the Clinton administration proposes to cut back on the health care that many elderly Medicare recipients receive at home.

The administration’s proposed fiscal 1998 budget, to be released next month, would place strict new limits on payments for home health care, the fastest growing part of Medicare. An increasing number of elderly invalids and shut-ins have been seeking nursing care, physical therapy and help with dressing and bathing at home.

Government costs for the care are climbing at 23% a year, far exceeding the 9% overall growth rate in the total Medicare program.

“We are trying to get a handle on what is a considerable growth problem,” an administration official said Thursday, noting that the number of home visits virtually exploded from 31 million in 1984 to 209 million in 1994. “Volume has gone through the roof and there is clearly some excess,” he said.

The proposal reflects the delicate nature of efforts underway to wring savings from Medicare without drawing all-out opposition from the elderly, whose powerful lobby is capable of igniting a political firestorm.

President Clinton and Democratic candidates used Medicare as a major campaign issue last year, accusing Republicans of seeking cuts in the popular program that elicited a strong reaction from seniors. Now the president finds himself having to develop savings to extend the life of the Medicare trust fund, which includes payments for home health care and which is projected to run out of money in the year 2001 if changes are not made.

So far, advocates for seniors are expressing concern about the home health care proposal, but holding their fire.

The administration proposal would cut reimbursement to home health agencies in the short run--over the next two years. For the year 2000 and beyond, the government would try to develop a new system that would pay fixed amounts based on the nature of an ailment and its duration.

Currently, beneficiaries can get as much as 35 hours a week of care at home for virtually unlimited periods of time. The government will pay for services “as long as they are considered medically reasonable and necessary,” according to Medicare’s home health guidebook. The beneficiary must be confined at home and have a condition requiring skilled care.

For each visit, a home health agency dealing with Medicare is paid an amount equal to 112% of the average charge for such a visit for non-Medicare patients.

In the short term, the administration budget would produce lower payments by the government for each visit, the official predicted.

Home health agencies either would get the same amount per visit that they received in a past base year or would receive an amount equal to 105% of the median payment for the industry.

For 2000 and beyond, the government would devise a system to cap spending by adopting the fixed payment system, similar to the “prospective payment system” used by Medicare for hospital treatment.

For hospital visits, Medicare now pays a fixed amount for each of more than 400 separate diagnoses and medical conditions. If the hospital can treat and discharge the patient for less than the fixed amount, it makes a profit. If the cost is more than the government allows, the hospital loses money.

With home health care, the government might, for example, say that it would impose a maximum of 12 visits in 30 days for physical therapy for a recovering stroke victim. Under the current system, beneficiaries are entitled to unlimited visits by a nurse, physical therapist, home health aide or other person providing services.

Typical home health beneficiaries are recovering stroke victims, diabetics and those with unstable heart conditions. In addition to skilled care, Medicare also pays for homemaker aides, who may help with vital activities of daily living, such as getting in and out of bed, using the toilet, dressing and eating.

Advocates for the elderly are worried that new spending controls could hurt the most vulnerable population. “We understand the need to hold down costs but you have to realize who is affected,” said Horace Deets, executive director of the 32-million-member American Assn. of Retired Persons. The poorest of the elderly, primarily women 85 and over suffering from chronic ailments, are the biggest users of the home care benefit, he noted.

But Deets said that the organization wants to see the full Medicare package in the president’s budget before deciding what position to take.

Medicare serves 38 million people, those 65 and over and the disabled of all ages. About 3.5 million of the beneficiaries use home health care in a typical year. The benefit has been expanding rapidly since a 1989 lawsuit forced the government to ease requirements for coverage. Since then, there has been relatively little oversight of the program, said Marilyn Moon, a Medicare expert at the Urban Institute.

About $20 billion will be spent this year for home health care, out of total estimated Medicare outlays of $213.1 billion, according to government estimates.

Under the administration budget, some of the financial risk would move from the government to the home health care agency, said William Dombi, vice president of the National Assn. for Home Care, the industry trade group. His organization is particularly concerned about elements of the long-range reform plan that might cap the number of visits.

“Some people might need four or five visits, another person might need 200 visits,” he said.

A prospective payment system to limit home care spending is inevitable, Dombi said. “The only question,” he said, is the timing and the form of the program, with the industry hoping it can win some adjustments later to help home health agencies with large numbers of severe, costly cases.

The idea of controlling spending through a system of fixed payments is likely to be welcomed by most members of Congress. But Republicans say that they are adamantly opposed to another part of the budget proposal.

The president’s budget would move home health care out of Part A of Medicare, the troubled trust fund, to Medicare Part B, which is paid for by a combination of general tax revenue (about 75%) and premiums from beneficiaries (about 25%). Through this bookkeeping device, it would remove about $50 billion in costs over five years from Part A, helping to delay the trust fund bankruptcy.

Republicans call the proposed switch a gimmick and say that it would be unacceptable as a step toward getting the $100 billion needed to extend the life of the trust fund.

“The home health care shell game represents a tax increase on the next generation,” said Rep. Bill Archer (R-Texas), chairman of the House Ways and Means Committee, which handles Medicare legislation.