Statement of Susan Wilson, Vice President, Clinical Operations, and 
Chief Operating Officer, VNA of Central Connecticut, Inc., New Britain, Connecticut;
President, Board of Directors, Connecticut Association for Home Care, Wallingford, Connecticut; 
and Member, National Association for Home Care

Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means

Hearing on H.R. 2768, the "Medicare Regulatory and Contracting Reform Act of 2001"

September 25, 2001

Thank you, Madame Chairman, Representative Stark, and Subcommittee members, for inviting me to present testimony on ways to bring regulatory relief to beneficiaries and providers, and specifically to discuss the many benefits that would result from enactment of HR 2768, the “Medicare Regulatory and Contracting Reform Act of 2001.”  My name is Susan Wilson.  I am Vice President of Clinical Operations and Chief Operating Officer of the Visiting Nurse Association (VNA) of Central Connecticut.  I am also the President of the Board of Directors of the Connecticut Association for Home Care (CAHC), the voice of home care in Connecticut, and a member of the National Association for Home Care (NAHC).

NAHC is the largest national organization representing home health care providers, hospices, and home care aide organizations.  Among the nearly 6,000 organizations NAHC represents are every type of home care agency, including nonprofit agencies like the VNA, for-profit chains, public and hospital-based agencies, and free-standing agencies.  CAHC represents 61 providers that collectively deliver more than 75 percent of all home health and hospice services provided in the state.

In March I had the honor of being called before this panel to provide testimony on a number of the regulations and policies that impact a provider’s ability to deliver high-quality patient care in an efficient manner.  I am pleased to be back here today to personally extend my most sincere thanks for the many efforts that you, members of this Subcommittee, your staff, and others have made to ease burdens on home care and other providers.

Madame Chairman, you and all of the members of the Subcommittee, particularly, are to be commended for developing HR 2768, the “Medicare Regulatory and Contracting Reform Act of 2001.”  This legislation will go a long way toward easing the impact of some of the most troublesome policies of the Medicare program.  You have included a number of provisions that address specific problems that hospices and home health agencies have struggled with in recent years, including:

New Requirements for Regulatory and Policy Issuances

Among the changes that would be enacted as part of HR 2768, you have included several provisions related to regulatory or policy issuances that will be of tremendous help to providers.  First, the legislation prohibits any provision published in a final regulation that is not a logical outgrowth of the proposed regulation from taking effect until after appropriate opportunity for public comment.  Additionally, your bill generally prohibits retroactive application of substantive changes in regulations or other policies, and extends protection against compliance actions relative to the change until 30 days after issuance of the change.  Home care has faced great difficulties in the past with policy issued with retroactive impact, such as the revision in standards for allowable branch offices.  The bill should prevent this in the future.

The bill also protects providers against sanction in cases where they have followed written guidance from one of Medicare’s contractors.  NAHC believes that it would be helpful if, with respect to this particular provision, the Subcommittee could provide clarification regarding what would constitute a “sanction” – does this mean that a provider would not be subject to fines for wrongdoing, or would the protections extend to other obligations that resulted from the faulty guidance of the contractor?  Home health agencies have followed written guidance from intermediaries on cost reporting only to find the intermediary later rejecting its own approval.  This led to unfounded allegations of overpayments.  We hope that these circumstances are included under this provision.

 Contractor Accountability

NAHC applauds your efforts as part of HR 2768 to improve Medicare contractor compliance and accountability through development of specific performance measures.  We also believe that the emphasis you have placed on provider education is a sound foundation for improved provider relations with the contractors and greater understanding of the Medicare program.  Of particular note is the bill’s establishment of provision of technical assistance and program information to providers as one of the contractors’ key functions.  The availability of program information is so vital to the ability of providers to operate in compliance with the program that NAHC recommends inclusion of a similar provision applicable to Medicare’s contractors for survey and certification, the state survey offices.  An educational role for state survey offices is a key way to secure quality of care for patients.

Section 6 of HR 2768 establishes a Small Provider Technical Assistance Demonstration Program.  We believe that this is an excellent approach for evaluating billing and other practices of small providers to ensure compliance with Medicare law.  As you know, Madame Chairman and members of the Subcommittee, the vast majority of home health agencies and hospices are small businesses that could greatly benefit from participation in such a demonstration.  We support this effort wholeheartedly. We also would ask that the definition of “small providers of services or suppliers” be clarified to be certain that it would include providers of care such as hospices and home health agencies as it currently references “institutional” providers.

 Medicare Provider Ombudsman

Your establishment, under Section 7, of a Medicare Provider Ombudsman is a concept that NAHC has long advocated, and is very much in keeping with the spirit of your efforts and those of others who are working to ease regulatory burdens.

 Recovery of Overpayments and Prepayment Review; Enrollment of Providers

We have several comments and questions regarding the provisions in HR 2768 that relate to overpayments.  As you are well aware, Madame Chairman, the Balanced Budget Act of 1997 (BBA) imposed deep and swift cuts on Medicare home health providers.  Many providers operated for as much as one full year without knowing what the limits on their payments would be.  As a result, a great number of agencies throughout the country found themselves in situations where they owed such significant amounts of money to the Medicare program that even a 36-month payment plan was too short a time.  In such cases it was not unusual for the provider, contractor, and Medicare to establish a 60-month repayment schedule.  We would urge that your legislation create sufficient flexibility so that repayment schedules of more than 36 months might be allowed under such special circumstances.

Similarly, your establishment of a “bright-line” test for “hardship” for overpayment obligations at 10 percent of the provider’s Medicare income is understandable.  However, and particularly in the case of home health agencies and hospices that are not heavily capitalized, “hardship” may occur with overpayment obligations at less than 10 percent.  We would, once again, urge that some discretionary authority be extended so that special circumstances are considered for exceptions to the rule.

We are delighted, Madame Chairman, that your bill would prohibit any recoupment of an overpayment until after a decision on a reconsideration has been rendered.  Under the home health and hospice programs, significant numbers of denied claims are reversed on appeal, and nearly all denials taken to the administrative law judge level are overturned.  We would encourage you to consider taking this particular provision one step further so that providers would be protected from overpayment recoupment until after their appeals are exhausted.

The bill also appears to limit the postponement of the overpayment recovery to circumstances where the provider has initiated the appeal.  In many of the appeals, the provider does not have a direct appeal right and must proceed as the beneficiary’s representative in order to have the dispute reviewed.  For example, a claim denial based on an alleged failure to submit a document can only be appealed by the beneficiary even though the provider suffers the financial consequences.  We would suggest that the language of this provision be modified to provide the pre-recovery protection in all instances where the issue in dispute is under appeal.

Under the Subcommittee’s bill, Medicare contractors would be permitted to request the periodic production of records or supporting documentation for a limited sample of submitted claims to ensure that the previous practice is not continuing.  As I have discussed with you and your staff, Madame Chairman, the duplication of records can be costly and time consuming.  It is my hope that this particular provision was designed to encourage contractors to limit their requests to what is absolutely necessary, rather than to affirm some of the contractors’ current practices.

Use of statistical sampling by Medicare’s contractors has been a significant problem for home health agencies at times, and we applaud your efforts to limit its use only to cases in which there is a sustained or high level of payment error or where documented educational interventions have failed to correct the payment error.  This should ensure that sampling is used only in appropriate circumstances.

Ability to Correct Minor Errors and Omissions on Claims

The vast majority of home health and hospice claims that are denied are rejected because they do not meet one or more of the technical requirements set out by the Medicare program. Under current practice, if an agency fails to meet a technical requirement in developing and filing claims – examples of which are failure to record the verbal order date on the plan of care, secure physicians’ signatures on all verbal orders prior to billing (including minor treatment changes), or date the receipt of signed orders if the physician has not dated his or her signature -- the claim is denied and the agency’s only recourse is to undergo a costly and lengthy appeals process.  This can delay payment to the agency for up to a year and a half, and unnecessarily burden providers and intermediaries.  Your legislation would address this long-standing problem by establishing a process under which health care providers would be given an opportunity to correct these minor errors or omissions without having to initiate an appeal.  We consider this change in the law as a significant advance for providers, patients, and the Medicare program that will achieve great savings while providing Medicare payment for necessary care.

Additional Action to Shore Up the Home Health Program

Madame Chairman and members of the Subcommittee, the issues addressed by your legislation may seem quite technical in nature, but they will make a tremendous difference in day-to-day operations of all types of providers.  We in the home health and hospice world have sought a number of these solutions for many years and will work diligently for their enactment.

I would be remiss in my testimony if I did not at least touch upon one additional issue that weighs heavily on home health providers nationwide-—that of the 15 percent cut currently scheduled for October 2002.  As you will recall, the Congress included the additional 15 percent cut in home health payments as part of a series of cuts under the Balanced Budget Amendment  at the recommendation of the Congressional Budget Office (CBO).  At the time, CBO estimated that the additional 15 percent cut would be needed in order to meet the targeted $16 billion in savings from home health for fiscal years 1998 through 2002.  With each passing year since BBA’s enactment, it has become increasingly clear that those calculations were dangerously off the mark.  According to the latest numbers from CBO, the five-year total in reductions for home health will exceed $70 billion—a far cry from the $16 billion goal.

We in home care are painfully aware of the state of the nation’s dwindling surplus.  However, we respectfully urge that you take steps this year to eliminate the 15 percent “Sword of Damocles” that has hung over our heads these past few years.

In closing, I cannot thank you enough, Madame Chairman, for your long-standing efforts on behalf of our nation’s home health providers and the patients and families they serve.  On a more personal note, it is a source of great pride for me to be able to call you “my Representative” in the Congress.  Many thanks, again, for your exemplary advocacy.

This concludes my formal remarks but I would be happy to answer any questions that any members of the panel might have.