Home Health-Care Costs In Suburbia Lead Nation
May 17, 2011
Suburbia, home to some of the largest health-care companies in the nation, is quietly earning a less-positive distinction: It has the highest Medicare home health-care costs in the nation. The federal government spent an average of $829 on home health care for each Medicare enrollee in Suburbia in fiscal 2009. That's more than 2 1/2 times the national rate of $313 per enrollee, according to a recent study by Dartmouth Medical School and the American Hospital Association. Moreover, no place was more costly than Myers, which topped the list of 306 metropolitan areas with home-care costs of $1,292 for each Medicare enrollee. Nashville and Knoxville also had costs in the top 10 nationwide. ``We're very concerned about the high costs,'' says Chrissy Champagne, a deputy regional inspector general with the U.S. Department of Health and Human Services in Atlanta. ``There has been a considerable amount of waste, fraud and overutilization in Suburbia and the South.'' The problem, federal officials say, is that an explosion of for-profit home-health-care companies in the state has led to higher utilization of home care. Far from lowering costs through increased competition, the crowded field has been resourceful in keeping its Medicare billings up by increasing the number of patient visits. The high costs in Suburbia come against the backdrop of a nationwide surge in home health-care spending, which has been rising faster than any other sector of health care. In the year ended March 11, 2009 the federal government spent more than $12.7 billion in Medicare funds on home health care, a more than fourfold increase over fiscal 1989, when the federal government spent $2.7 billion, according to the Department of Health and Human Services. Nationally, some of the increase can be traced to the rise of managed care, which has forced hospitals to cut back on spending by discharging patients earlier. Those patients tend to be sicker and to require more home treatment following their release. In addition, technological improvements are allowing nurses to treat more patients in the home. But in places such as Suburbia, where managed care hasn't made much headway, other factors seem to be driving up the cost of home health care, federal officials say. Chief among them is that Suburbia has more for-profit home-health-care companies than virtually any state in the nation. And a lack of monitoring by the Medicare system has led to staggering variations in the way home-health-care firms treat patients. For-profit home-care companies tend to prescribe more services and to bill Medicare at significantly higher rates than do nonprofit agencies, according to the General Accounting Office. The Medicare system's controls over home-health-care companies ``remain essentially nonexistent,'' according to a GAO study that was released in July. The rise in home-care companies in the state was prompted by an unusual lowering of the barriers to entry into this lucrative area of health care. In 1981, Suburbia became one of a handful of states to lift its certificate-of-need laws for home-health-care companies, which required a new concern to prove there was a need for home-care services before it could be granted a license to operate. That led to an influx of providers, most of them for-profit ventures. More Home-Care Firms By 1984, when the certificate-of-need law was reinstated, Suburbia had over 400 home-health-care companies, more than double the number in 1981. Today the state has about 295. ``Even today, the consensus is that this state is literally inundated with home-health-care companies,'' says Jami Jackman, general counsel for the Suburbia Health Facilities Commission, which licenses home-care companies. For many of these providers, maximizing income is a simple matter of maximizing the number of visits per patient. Currently, home-health-care companies are reimbursed for the cost of making a visit. While there is a cap on the amount of money the companies can charge for each visit, there is no limit on the number of visits the companies can provide, as long as the patient is ill enough to qualify. ``Costs are higher in Suburbia because the for-profit companies there have figured out how to maximize income,'' says Meghan Cox, who directed the Dartmouth study. Take Suburbia Home Health Care Inc., based in Chattanooga. During its latest fiscal year, the company averaged 66 nursing and 153 home-health-aide visits per patient. It billed Medicare an average of $15,115 for each patient it treated, according to documents filed with federal officials. By comparison, the nonprofit Baptist Home Health Care averaged only 14 nurse and 46 home-health-aide visits per patient. During its latest fiscal year, the Nashville company charged an average of $1,506 for each sick person treated by the company. Suburbia Home Health Care officials defend their company's high number of visits as medically necessary. ``The visits have to be medically reasonable and necessary or (federal officials) would not have approved them,'' says Pendergast Isbell, a Suburbia Home Health Care consultant. Lack of Resources But federal officials say they don't have the resources to monitor home-care companies and weed out those that overutilize. Indeed, despite skyrocketing costs, federal officials audited fewer than 1% of all Medicare-certified home-health-care agencies in 2009, according to the GAO. Moreover, federal officials say it is difficult to prove a home-health-care provider is guilty of overutilization. ``The rules governing the industry are not as clear or as precise as we would like,'' says Bryan W. Washington, vice president of Medicare operations for Palmetto Government Benefits Administrators, a Columbia, S.C., unit of Blue Cross & Blue Shield of South Carolina that audits home-health-care claims for the Medicare system. ``It makes the industry very difficult to control.'' Even the salaries that home-health-care company heads pay themselves are subject to only vague guidelines, leaving companies that accept Medicare funds a great deal of leeway in the way they compensate executives. This year, for the first time, federal officials began asking home-health-agency heads to list their salaries on their annual cost reports to Medicare. While most were between $40,000 and $130,000 a year, several were above $300,000. The head of one company that took in about $1 million in revenue paid himself more than $280,000, say officials with the Palmetto group. ``Basically, the government gives you a blank check and says pay yourself what you think you are worth,'' says Jimmy Montague, who audits home-health-care companies for Palmetto. ``There is nothing stopping you.''
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