WASHINGTON, D.C. – U.S. Senators Susan Collins and Olympia J. Snowe today urged the Chairman of the Senate Finance Committee, Senator Charles Grassley (R-IA), and Ranking Member Senator Max Baucus (D-MT), to reject any consideration of further reductions to the Medicare home health benefit during reconciliation of the Senate Deficit Reduction Omnibus Act and the House Deficit Reduction Act.
The Medicare home health benefit provides skilled services and therapies for patients who do not need the more intensive level of care offered in hospitals. In a letter to Senators Grassley and Baucus, signed by a bipartisan group of their colleagues, Senators Collins and Snowe point out that despite call for greater use, the home health share of Medicare spending has already dropped from 8.7 percent in 1997 to 3.8 percent in 2005 and is projected to decline to 2.6 percent of Medicare spending by 2015.
The full text of the letter is as follows:
Dear Senators Grassley and Baucus:
As you work to reconcile the differences between S.1932, the Deficit Reduction Omnibus Reconciliation Act, and H.R.4241, the Deficit Reduction Act, we urge you to continue to protect the value of home care and reject any consideration of reductions to the Medicare home health benefit as part of the final conference agreement. This position would be in keeping with the legislative packages passed by both chambers.
We believe that further reducing payments for home health care would be counter-productive to controlling overall health care costs. Home care has been demonstrated to be a cost-effective alternative to institutional care in both the Medicare and Medicaid programs. In fact, the Medicare Payment Advisory Commission (MedPAC) recently noted the results of a 2002 RAND study which showed “that in terms of Part A costs, episodes in an inpatient rehabilitation facility or skilled nursing facility are much more costly for Medicare than episodes of care among patients going home.” (MedPAC’s June 2005 Report to Congress).
Reducing Medicare home health care expenditures would also be inconsistent with the Administration’s and the national Governors Association’s objective to prioritize home and community-based care. As Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan testified before the House Energy and Commerce Committee in April: “The most cost-effective place to provide care is where most people prefer to receive their care—living in their homes, connected to the their communities, surrounded by friends and family… And that means better outcomes without higher costs in Medicaid—a result that we cannot afford to pass up any longer.”
Despite calls for greater use of home and community-based care by the Administration and the Governors, the home health share of Medicare spending has dropped from 8.7 percent in 1997 to 3.8 percent in 2005, and is projected by CMS to decline to 2.6 percent of Medicare spending by 2015. Moreover, overall operating margins for freestanding home health agencies, which take into account all revenue and expenses, were just 1.2 percent in fiscal years 2003 and 2004. Yet home health agencies are already facing an additional .8 percent reduction in their annual update for 2006, as mandated under the Medicare Modernization Act.
In order to ensure that home health care remains a viable option to beneficiaries, we urge you to stand by the current positions in both the House and Senate bills and not include a further reduction in home health payments in the final conference agreement. Thank you for your consideration of this important matter.