Provides for the exclusion of certain costs associated with home health care and the formula for calculating state reimbursements to such programs

The amendment also establishes the method by which providers shall report to the Department of Health the costs to be excluded from the A&G cap and specifies the rate calculation information which the Department shall in turn provide home care providers demonstrating and reflecting the exclusion of these costs in the A&G cap and final rate in fulfillment of the Legislature's intent. The bill establishes a "hold harmless" provision with regard to the newly calculated A&G cap so that there is no inadvertent adverse effect to any agency by having excluded patient care related costs from the cap calculation.

Justification

This legislation would provide critical relief from an ill-conceived A&G cap applied as a component of home care services reimbursement. In so doing, the legislation is essential to the accessibility, quality and stability of home care services in the state and consistent with state policies seeking to reduce institutional care use in favor of community-based care.

The A&G cap on home care providers has been extremely problematic and detrimental, as it improperly captures, and artificially and imprudently limits, many vital patient care and clinically related costs which in home care are required to be allocated to a broad and "mischaracterized" administrative and general cost center. Indeed, some of the most critical services which the state and the health care delivery system seek and need to promote (such as care coordination with the therapeutic care team and physician, supporting effective reentry of hospital patients into the community, screening and outreach to divert nursing home bound patients into home care, the establishment of electronic medical records and the technological monitoring necessary for new levels of disease management) are inadvertently but directly suppressed by the application of this A&G cap.

The A&G cap is a highly regressive mechanism which, as the demands for patient care increase, compromises the stability of the agencies and the accessibility of patient care. It also risks greater hardship on smaller, often sole community agencies, which do not have the same economies of scale as larger agencies as well as on providers who are attempting to make critical clinical investments in care management, technology, quality assurance/corporate compliance, staff training/qualification, protection and enhancement and so on. In addition, in the case of LTHHCPs, multiple caps already exist on this program, including a cap on the rates of individual services and an overall cap on the expenditures for each patient.

This legislation ensures that the A&G cap on certified home health agency services and long term home health care programs does not inadvertently limit or discourage critical care and clinically related activities and investments, and as such would help correct a significant contradiction in state policy.

Prior legislative history

2007-2008: S.5230 Referred to Senate Health Committee; A.8390 Reported to Rules; Ways and Means.

Fiscal implications

While the aforementioned patient care related costs would be removed from the A&G cap, the cap itself would still apply to costs that are more purely administrative. In the aggregate, the reform established by this bill would promote Medicaid efficiency by fostering care management, effective home care operation, improved patient outcomes and avoidance of patient hospitalization and long term institutionalization. The reform represents a cost-effective action within the Medicaid program.

Effective date

The bill would take effect April 1, succeeding the date it shall have become law.