Congressional Outlook

Against the backdrop of war, Congress is trying to go about its regular business. At this writing, both houses are working to pass budget resolutions for 2004. Fortunately, the House of Representatives’ budget resolution, which originally called for severe cuts in Medicare, has been modified so that Medicare is protected. This favorable change came about as a result of the strident protests of health care providers and suppliers, including the American Association for Homecare and its members.

Although the nearly evenly divided Senate just passed a budget resolution, whether that resolution can be reconciled successfully with the House version is questionable. However, whether or not a budget resolution is finally enacted, and no matter what that resolution contains, we can expect Congress to attempt to reduce payments to home care providers and suppliers.

For example, Congress remains intent on enacting a prescription drug benefit under Medicare. The projected cost of this legislation is more than $400 billion over a 10-year period. Consequently, there is no question that Congress will be looking for savings, and most providers will be fighting against reduced or, at best, frozen reimbursements.

Although the war is likely to become more distracting, we are relatively certain that Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee, will move a prescription drug benefit bill through the House this summer. Although such a bill has not been drafted at this time, we see clear indications that Rep. Thomas will include provisions to establish a national competitive bidding program for durable medical equipment and to eliminate the market basket increases and rural add-on for home health.

On the other hand, Congressional observers in Washington are skeptical that the divided Senate, consumed with war and tax issues, will be able to move a Medicare bill this year. Nonetheless, we cannot afford to sit back and watch.

Competitive Bidding Update

At AAHomecare, we continue to work with the Coalition for Access to Medical Services, Equipment and Technology, or CAMSET, to educate members of Congress about the problems presented by national competitive bidding. Last month, we had dozens of meetings with legislators on both the House and Senate sides of Capitol Hill.

We also organized meetings of CAMSET members with the General Accounting Office, which is conducting a follow-up study of the competitive bidding demonstrations in Polk County, Fla., and San Antonio. We were able to present a very strong case to the GAO’s investigators that national competitive bidding simply will not work from the standpoint of DME providers, manufacturers or consumers. The GAO seemed particularly impressed by the arguments raised by representatives from CAMSET member organizations, such as the Consortium for Citizens with Disabilities Health Task Force, the United Ostomy Association, the National Alliance for Infusion Therapy, the American Association of Occupational Therapists and the Diabetes Suppliers Coalition.

The AAHomecare-led CAMSET Coalition will continue to provide information to the GAO as it continues its work on the competitive-bidding study, expected to be released in the next several months.

Grassroots Growth

Additionally, companies in the home care industry have been working diligently to build upon the grassroots education that was initiated last year. I would like to commend The VGM Group particularly for the terrific work that it and its members have been doing with Sens. Chuck Grassley, R-Iowa, and Bill Frist, R-Tenn., and Rep. Jim Nussle, R-Iowa. All members of our industry must continue to remind their Congressional representatives that competitive bidding remains a very controversial issue. To this end, AAHomecare has scheduled Capitol Hill visits for June 3 as part of the association’s annual Washington Legislative Conference. Keeping up this drumbeat is a somewhat tiresome task, but we must continue to do so if we are to block this misguided legislation.

As we continue to fight on these specific issues, we are making every effort to establish that home care is part of the solution to our nation’s health care crisis. We want to work with policy makers to avoid institutionalizing the baby boomers, a move that this country simply cannot afford. Our industry can care for an aging population much more effectively and efficiently at home, and home is where the elderly want to be treated.

2003 Leadership Conference

While I repeat this message continuously in Washington, I was pleased to see that those who observe our industry already have reached this conclusion. At AAHomecare’s 2003 Leadership Conference and IT Summit, held in late February, the repeated message was that home care is truly part of the long-term care solution. The more than 30 speakers and panelists included experts on international regulation and reimbursement, a former commissioner of the U.S. Food and Drug Administration, a consumer advocate, investment analysts, accountants and IT professionals. Every one of them believes that home care is becoming recognized as an essential element in the health care continuum.

We learned that, in Japan and several European countries, governments recently have initiated programs aimed at moving people out of institutions or keeping people from being institutionalized in the first place. Investment analysts made clear that home care markets will continue to grow dramatically as the average American’s lifespan increases and the “baby boomers” come of age. Technology experts pointed out that devices currently used in acute settings will be used in home settings and that, in the electronic age, our ability to monitor physical conditions at home will increase exponentially.

All of the experts also pointed out that the uncertainties of government policy make it difficult to predict exactly how our home care industry will develop. Investment analysts point out that we will not see exceptionally high multiples of earnings in this industry due to these uncertainties. Further, there is no question that all payers, or more accurately “purchasers” of health care, including the government, will seek to reduce reimbursement rates as volume soars.

To meet these challenges, the assembled experts provided relatively simple advice: Home care providers must manage their businesses — clinically and administratively — as professionally and efficiently as possible.

Focus on Business

While we will continue the fight to oppose irrational reductions in reimbursements by policymakers in Washington, AAHomecare will do its best to provide assistance to our members so that they can successfully face the future that was outlined at our meeting. Later this year, Tom Pryor, president of Dallas-based Integrated Cost Management Systems and one of our expert panelists, will conduct seminars to help AAHomecare members use the tools of activity-based cost management.

We’re also interested in providing a forum to facilitate and expedite the use of technology to bring greater efficiencies into our business operations. Our chairman, Steve Knoll, is making this a top priority.

The speakers at the Leadership Conference painted a very exciting picture of our industry’s future. For those who were unable to join us, we will be doing our very best to share the lessons that we learned so that you can take full advantage of them. At AAHomecare, we are not only an advocate, but we also are doing our best to become the business association for the home care industry!

Tom Connaughton is president and chief executive officer of the American Association for Homecare in Alexandria, Va.