Medicare cuts will harm many providers


The current debate in Washington isn’t solely about the grand goal of expanding access to health insurance. It has turned into a spar about spending and controlling costs in the federal Medicare program. For those who need reminding, the Medicare program covers all Americans over age 65, as well as many disabled younger people.

The current versions of reform bills in both the House and Senate use “savings” from Medicare payment reductions over the next 10 years to support insurance expansion for an additional 30 to 40 million Americans. All sectors providing care to people over 65 (hospitals, nursing homes, home health etc.) will be affected. But the recent debate in Washington regarding home health raises issues of what degree of cuts is sustainable and what is too much.

Although home health services comprise less than four percent of all Medicare spending, the proposed home care payment reductions account for 10.2 percent of the total Medicare “savings” in the House version of reform and 9.4 percent of savings in the Senate reform bill.

Recent coverage of these proposed cuts in the New York Times and other media have described these cuts as reasonable, cutting industry profit margins of close to 13 percent. This profit margin number is far from accurate and is more reflective of outdated and selective data than in the Vineyard Nursing Association’s experience on Martha’s Vineyard and many nonprofit home care agencies’ experience with Medicare payments. The truth is that when all agency margins are included in the numbers and weighted equally, national profits in home health are closer to two percent and that is before already scheduled payment cuts equaling about 7 percent in 2010 and 2011 are applied.

The problem we face in home care is that the cuts proposed by Congress are applied at all agencies equally and are not targeted to where waste has been identified. Reports to Congress on home health care spending have been very clear that the problem profit figures come from certain geographic areas (notably Florida and Texas), where the issue is lack of federal oversight. An across-the-board cut to all agencies regardless of circumstances as is proposed only ends up hurting and possibly crippling those agencies that have provided high-quality care and played by the rules. If what the House and Senate are proposing goes through, close to 60 percent of home health agencies in Massachusetts, including Vineyard Nursing Association, will be in significant financial jeopardy.

The home health care community has put forward a credible and substantive alternative set of proposals for home health payment reform that would save Medicare money while targeting abuse and phasing in certain cuts to allow home health providers to adapt.

Massachusetts is fortunate to have the backing of Sen. John Kerry, who is leading the charge on a bipartisan amendment to reduce the home health cuts in the Senate health care reform bill by nearly $5 billion. This comes on the heels of another amendment by Senator Kerry – which passed the Senate by a vote of 96-0 – that indicated widespread support for the work of home health care agencies.

The message we need to deliver to our representatives is that home health is an essential Medicare service, especially for isolated elders. We need to remind those who set policy that because home health keeps people out of hospitals and nursing homes, it is a win-win for the patients, the taxpayers, and the government. Finally, we need to communicate that expanding access to insurance to those without it by putting home health care agencies like Vineyard Nursing Association at risk is not reform – it is reckless.

If you agree, contact Congressman William Delahunt at 202-225-3111 and ask that the Senate version of home health payment reform – with the Senator Kerry amended language – be adopted in the final bill to be signed by the President.

Robert Tonti is the chief executive of Vineyard Nursing Association