Thursday, July 30, 2015

Observation Status Bill Heads to President's Desk

A new federal law will require hospitals to notify patients of their status as outpatients.
H.R. 876 Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act was signed into law by President Obama on August 6, 2015. Outpatient status limits the patient’s ability to receive Medicare coverage for care in a skilled nursing facility after discharge from the hospital.
The law will apply in situations where a patient is receiving services as an outpatient for more than 24 hours. It will require hospitals to notify those patients of their outpatient status within 36 hours, or, upon discharge if that occurs sooner. The law will become effective one year after it is signed by the President. During that time regulations will be developed to implement the law.
The outpatient notification will have to explain that, because the beneficiary is receiving outpatient—rather than inpatient—services:

  •     The beneficiary will be subject to cost-sharing requirements that apply to outpatient services, and

  •     The beneficiary’s outpatient stay will not count toward the three-day inpatient stay required for a beneficiary to be eligible for Medicare coverage of subsequent skilled nursing facility services.

Congressional Research Service summarizes the legislation by noting that the new law will require hospitals to give each individual who receives observation services as an outpatient for more than 24 hours an adequate oral and written notification within 36 hours after beginning to receive them which:
  • explains the individual's status as an outpatient and not as an inpatient and the reasons why;
  • explains the implications of that status on services furnished (including those furnished as an inpatient), in particular the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility;
  • includes appropriate additional information;
  • is written and formatted using plain language and made available in appropriate languages; and
  • is signed by the individual or a person acting on the individual's behalf (representative) to acknowledge receipt of the notification, or if the individual or representative refuses to sign, the written notification is signed by the hospital staff who presented it.
I’ve written previously about the problems created by hospitals growing use of observation status for patients. See: Beware of Hospital "Observation Status." The new law will not cure these problems, but will at least give patients a warning before they spend thousands of dollars on care that will not be covered by Medicare. Some beneficiaries will likely decide to receive a different set of medical services after being notified of their observation status.

In 2014 Pennsylvania enacted a state law which requires hospitals to provide notice of observation status to outpatients who receive onsite services for more than 23 consecutive hours which includes a hospital bed and meals that have been provided in area of the hospital other than the emergency room.  See Act 169 of 2014.  Hospitals will likely need to provide notices that comply with the slightly different requirements of both the Pennsylvania and federal laws. 
For More Information:

Tuesday, July 28, 2015

Happy Anniversary to Key Social Welfare Programs

This summer marks milestone anniversaries for several of America’s most important social welfare programs. While these programs have not eliminated poverty and inequality most people acknowledge that they do limit impoverishment and deprivation and create opportunity and a better life for tens of millions of Americans each year.  

Happy anniversary to Social Security, Medicare, Medicaid and the American’s with Disabilities Act.
80th Anniversary
On August 14, 1935 President Roosevelt signed the Social Security Act into law. He described it as “a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”  It has surely fulfilled that promise.

For information on the historical background and history of Social Security see:
50th Anniversary
Medicare and Medicaid. “On July 30, 1965, President Johnson signed legislation to establish Medicare for the elderly and Medicaid for low-income adults, children, pregnant women, and people with disabilities. Though Medicare and Medicaid started as basic health coverage programs for Americans, the programs have evolved over the years to provide more Americans with improved access to quality and affordable health care coverage. These programs have transformed the delivery of health care in the United States.”
25th Anniversary
The American’s with Disabilities Act was enacted 25 years ago on July 26, 1990 when it was signed by President George H.W. Bush. The law committed our nation to eliminating discrimination against people with disabilities. See
Here is an article on some of the current challenges facing one of these programs: Medicare. It was written by Mary Agnes Carey of Kaiser Health News and is reprinted with permission. Kaiser Health News (KHN) is a nonprofit national health policy news service.]   
By Mary Agnes Carey July 27, 2015
Medicare, the federal health insurance program for the elderly and disabled, has come a long way since its creation in 1965 when nearly half of all seniors were uninsured.  Now the program covers 55 million people, providing insurance to one in six Americans.  With that in mind, Medicare faces a host of challenges in the decades to come.  Here’s a look at some of them.
Financing – While Medicare spending growth has slowed in recent years – a trend that may continue into the future – 10,000 people a day are becoming eligible for Medicare as the trend-setting baby boomers age. Yet the number of workers paying taxes to help fund the program is decreasing.  That means Medicare will consume a greater share of the federal budget and beneficiaries’ share of the tab will likely climb. An abundance of proposals to curb federal expenditures on Medicare exist.  They include increasing the eligibility age, restructuring benefits and cost-sharing, raising the current payroll tax rate and asking wealthier beneficiaries to pay more for coverage.  Many Republicans have backed a “premium support” model — the government would give beneficiaries a set amount of money to purchase coverage from a number of competing plans — as a way to limit Medicare spending. Democrats say premium support would undermine traditional Medicare and shift more of the program’s financial risk to beneficiaries. They favor other reforms in the program. By at least two-to-one margins, majorities of Democrats, Republicans and independents favor keeping Medicare as it is rather than changing to a premium support program, according to a recent poll from the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)
Affordability — Most Medicare beneficiaries don’t have a lot of money and spend a large chunk of their finances on health care. Unlike many private health insurance plans, there is no cap on out-of-pocket expenditures in traditional Medicare, and the program does not cover services that many beneficiaries need, such as dental care and eyeglasses. (Private insurers that participate in Medicare Advantage may cover these and other items that traditional Medicare does not.) In 2013, half of all people on Medicare had incomes below $23,500 per person, and premiums for Medicare and supplemental insurance accounted for 42 percent of average total out-of-pocket spending among beneficiaries in traditional Medicare in 2010, according to an analysis from the Kaiser Family Foundation. Medicare does have some programs to help beneficiaries pay their Medicare expenses but the income limits can be as low as $1,001 per month with savings and other assets at or below $7,280 (limits are higher for couples).
Managing Chronic Disease — Illnesses such as heart disease or diabetes can ring up huge medical costs, so keeping beneficiaries with these conditions as healthy as possible helps not only the patients but also Medicare’s bottom line. An analysis from the Urban Institute finds that half of all Medicare beneficiaries will have diabetes in 2030 and a third will be afflicted with heart disease. Nearly half of the people on Medicare have four or more chronic conditions and 10 percent of the Medicare population accounts for 58 percent of spending. Reducing the rate of chronic disease by just 5 percent would save Medicare and Medicaid $5.5 billion a year by 2030 and reducing it by 25 percent would save $26.2 billion per year, the Urban Institute found. As beneficiaries age, many will want to remain in their homes and communities, requiring Medicare to identify ways to serve these beneficiaries as they face physical and cognitive impairments and meet their needs for more personal care, according to the Commonwealth Fund.
Delivery-System Reform — Medicare hopes to better manage beneficiaries’ needs by revolutionizing the way in which it pays for medical care. Federal officials have taken several steps to better coordinate and improve medical care, including implementing the health law’s requirement to reduce preventable hospital readmissions and form accountable care organizations, or ACOs, where doctors and others band together to care for patients with the promise of getting a piece of any savings.  Another federal effort uses bundled payments, where Medicare gives providers a fixed sum for each patient, which is supposed to cover not only their initial treatment but also all the follow-up care. Last year, 20 percent of traditional Medicare spending — $72 billion — went to doctors, hospitals and other providers that coordinated patient care to make it better and cheaper.  Department of Health and Human Services Secretary Sylvia M. Burwell has said that by the end of 2018 Medicare aims to have half of all traditional program payments linked to quality.
The Growth of Medicare Advantage — Enrollment in these private plans that offer alternative coverage is growing sharply. But the health law seeks to cut the rate at which the government reimburses insurers to make it closer to what it spends on beneficiaries in traditional Medicare. Nearly a third of beneficiaries are enrolled in Medicare Advantage plans.   Many of the plans provide benefits beyond what traditional Medicare covers, such as eyeglasses and dental care, as well as lower out-of-pocket costs.  But as federal payment rates decline the plans may become less generous.  Another factor to watch is concentration in the Medicare Advantage market with just a handful of insurers now accounting for more than half of enrollment.
KHN’s coverage of aging and long term care issues is supported in part by a grant from The SCAN Foundation.

Monday, July 20, 2015

Understanding Medicaid's 5 Year Look-Back

[Nicholas Lutz, an attorney with my law firm, wrote the following explanation of Medicaid’s five-year look-back period.  I thought some readers of this blog might find it helpful, so I am publishing it here.] 

Medicaid’s 5 (Five) Year Look-Back Rule

By Nicholas Lutz

One of the most confusing and misunderstood topics in elder law is Medicaid’s 5 (Five) year look-back rule. The following are five points that I hope will demystify this rule for you. (This discussion is based on the current (July 2015) Medicaid rules in Pennsylvania).

It’s a look-back period from the date of a Medicaid application.

Despite its complexities, the look-back rule has a simple purpose: require individuals seeking to apply for Medicaid assistance with long-term care costs to report any substantial transfers of assets in a chosen time period leading up to the application for benefits. The chosen time period is five years back from the date of a Medicaid application. For example, if an individual applies for Medicaid on 7/6/15, the five year period covers the dates from 7/6/10-7/6/15.

Substantial transfers of assets are those greater than $500 in a month, in the aggregate (meaning all gifts in the given month added together must be less than $500 to escape scrutiny). As you can see, this is quite a low threshold for reporting transfers.

Transfers or gifts made during the look-back period are not an outright bar to Medicaid eligibility.

A point of confusion that I often hear is concern that a gift or transfer made during the five year look-back period is an outright bar to receiving Medicaid. While there are consequences to making gifts or transfers during the look-back period, doing so is not an outright bar to Medicaid eligibility.

Individuals who engage in gifting during the look-back period are penalized.

As I mentioned previously, gifting during the look-back period is not a complete bar to receiving Medicaid benefits. Instead, an individual who makes gifts during this period is penalized.

The penalty that an applicant must endure is a denial of Medicaid benefits for a period of time that roughly corresponds with the amount of days in the nursing home that the gifted asset(s) would have paid for. Expressed in terms of a formula, the amount of the gift is divided by the average cost of one day in the nursing home (also known as the penalty divisor). The result of performing this calculation is the number of days the applicant is ineligible for Medicaid long-term care benefits, or their “penalty period.”

For example, if John Doe made a non-exempt gift to his daughter, Jane Doe in the amount of $5,000 and needed to apply for Medicaid within the look-back period, he would be ineligible for 17 days. The amount of the gift, $5,000 divided by the current (2015) statewide (Pennsylvania) average cost of one day in the nursing home, $293.15, equals 17 days.

It is vitally important to note that the penalty period does not begin to run until the applicant is “otherwise eligible” for Medicaid. This means that the penalty period will not begin until their available assets are depleted to the point where applicants are financially eligible for assistance; either $2,400 or $8,000, depending on their income.

The look-back period does not bar individuals from making gifts.

The look-back period is a Medicaid rule. The spirit of the rule is to prevent individuals from impoverishing themselves immediately before applying for Medicaid to cover long-term care expenses.

Because the reporting period is so long, it captures more than just individuals attempting to impoverish themselves to qualify for assistance. Consequently, many people are concerned about the propriety of gifting in their own various circumstances.

The truth is that every situation is different. The Medicaid rules do not bar gifting; they simply penalize individuals who make gifts in the five years leading up to an application for Medicaid.

In general, it is wise to understand the rules and consider your unique circumstances before engaging in gifting. An elder law attorney can both counsel you on the rules at play and on the wisdom of gifting (or not).

Transfers made outside of the look-back period are not penalized.

The inverse of the rule that transfers made within the five year period immediately preceding a Medicaid application must be disclosed is that transfers made outside of that window do not. In simple terms, a gift made six years prior to applying for Medicaid would not be reported on the Medicaid application and therefore the applicant would suffer no penalty for this activity.

Engaging in gifting more than five years before applying for Medicaid can be an effective strategy for protecting assets from nursing home costs by lowering the amount of available assets an individual will have at the time an application is completed. It is extremely important to consult a lawyer if you are considering making such gifts. Good advice at this juncture can be invaluable later.

Friday, July 17, 2015

Medicare Rates Home Health Agencies

Consumers seeking help meeting their health care needs face a confusing array of choices in care providers. It's difficult to evaluate the quality of care that is available through numerous doctors, hospitals, nursing homes, Medicare plans, and home health agencies. 
The federal government, through its Centers for Medicare and Medicaid Services (CMS), is trying to give consumers information that will allow them to navigate their  many care options and make better informed choices when selecting health care plans and providers.
CMS uses a five-star quality rating system to summarize Medicare beneficiaries’ experience with various plans and providers. Ratings posted on the CMS website at give beneficiaries some help in choosing from among the services in their area. CMS states that the “star ratings are an additional tool to support consumers’ health care decision-making.” Star ratings are currently publicly displayed by CMS on Nursing Home Compare, Physician Compare, Dialysis Facility Compare, the Medicare Advantage Plan Finder, Hospital Compare, and Home Health Compare.
On July 16th CMS issued its initial “Star Ratings” for Home Health Agencies. The ratings provide consumers in Pennsylvania and elsewhere with a gauge of how the Commonwealth’s individual home health agencies have performed in meeting various goals that are important to patients. In addition to summarizing Home Health Agency performance for consumers, star ratings are also intended to help the agencies identify areas for improvement.
Medicare certified home health agencies are primarily engaged in providing skilled nursing services and other therapeutic services in your home. You must be under the care of a doctor, and you must be getting services under a plan of care established and reviewed regularly by a doctor. Additional restrictions apply. Medicare doesn't pay for homemaker services or personal care. 
All Home Health Agencies in Pennsylvania are licensed by the PA Department of Health. Medicare will only pay for services provided by agencies that are also approved by CMS.
The CMS rating summarizes each agency’s performance across 9 quality measures, including things like: Managing daily activities; Managing pain and treating symptoms; Treating wounds and preventing pressure sores (bed sores); Preventing harm; Preventing unplanned hospital care.
The rating range is 1 to 5 stars, with 5 stars being the highest rating. A rating of 4 or 5 stars means the agency performed better than most other agencies on selected measures. A rating of 1 or 2 stars means that the agency’s performance was below the average of other agencies on selected measures. Most agencies fall “in the middle” with a rating of 3 to 3½ stars.
CMS rated 286 Pennsylvania Home Health Agencies. 38% of the Commonwealth’s agencies received either 4 or 5 stars, 45% received 3 or 3.5 stars, and 18% received 2.5 stars or lower.  
Star Ratings are available on the CMS website at
Getting the star rating and other information on a home health agency seems a bit confusing at first (at least to me). You need to enter your city and state or zip code and choose from the list of providers in your area. Then click “Add to Compare” on the chosen agency and scroll down and click on “Compare Now.”  (Choosing more than one provider didn’t seem to work – at least for me. But choosing just one provider and then clicking “Compare Now” takes you to the information for that agency.) To get to the star rating click on the “Quality of Patient Care” tab and then scroll down. In some cases a rating is not currently available for a particular agency.   
CMS also provides consumers with a checklist to use when comparing Home Health Agencies.
The new Home Health Agency star ratings are described in further detail in the article below which was written by Jordan Rau of Kaiser Health News and published on July 16, 2015. It is reprinted here with permission. Kaiser Health News (KHN) is a nonprofit national health policy news service.

By Jordan Rau July 16, 2015
The federal government released on Thursday a new five-star rating system for home health agencies, hoping to bring clarity to a fast-growing but fragmented corner of the medical industry where it’s often difficult to distinguish good from bad.
Medicare applied the new quality measure to more than 9,000 agencies based on how quickly visits began and how often patients improved while under their care. Nearly half received average scores, with the government sparingly doling out top and bottom ratings.
The star ratings come as home health agencies play an increasingly important role in caring for the elderly. Last year 3.4 million Medicare beneficiaries received home health services, with nurses, aides, and physical and occupational therapists treating them in the home. Medicare spends about $18 billion on the home health benefit, which provides skilled services that must be authorized by a doctor, not housekeeping care that some elderly pay for privately.
Home health agencies have received a star rating based on quality and other patient-related metrics. We looked at the ratings:
Get the data:
For both the government and patients, Medicare’s home health visits are one of the least expensive ways to provide care, and the system has been especially susceptible to fraud. Assessing quality is often challenging for patients and their doctors, who must authorize the visits, often just as patients are leaving the hospital. The elderly tend to be less familiar with the reputation of home health agencies than they are with hospitals and other institutions. That makes evaluating quality difficult for family members and guardians.
“It’s not like a nursing home, where you can go and walk around,” said Dr. Cheryl Phillips, an executive at LeadingAge, an association of nonprofit groups focused on the elderly. “You can call the agencies and find out a little bit about them and their philosophy of care, but even for an informed consumer like me, you’re kind of stuck with whatever your physician has ordered.”
Experts said the ratings could have substantial financial impacts on agencies, even driving some low-rated ones out of business. Hospitals, doctors and nursing homes may be reluctant to refer patients to agencies with fewer than three stars. A total of 2,628 agencies — 28 percent of those Medicare evaluated — received those below average ratings.
“It’s a very fragmented, competitive market in a lot of metropolitan areas,” said Lilly Hummel, a manager at Avalere, a health care consulting firm in Washington, D.C. “It could get difficult for home health agencies that, for whatever reason, aren’t doing well on the star ratings.”
The ratings are based on agencies’ assessments of their own patients, which the agencies report to the government, as well as Medicare billing records. The data is adjusted to take into account how frail the patients are and other potential influences. Medicare intends to use the same or similar data sources when it eventually begins to pay bonuses and penalties to agencies based on performance, as it does for hospitals.
More than 12,000 home health agencies take Medicare, including local for-profit shops with just a few employees, nonprofit associations of nurses, hospital affiliates and subsidiaries of publicly traded corporations like Kindred Healthcare and Amedisys. Medicare assigned stars to all but 2,902 agencies that did not have enough patients to evaluate, had only started business recently or did not provide enough data.
Among those Medicare did rate, 46 percent received 3 or 3 ½ stars. Medicare gave the top rating of five stars to 239 agencies while 195 agencies received 1 ½ stars. Only six agencies received a single star. “What this indicates to us is a large proportion of home health agencies are performing reasonably well,” said Dr. Kate Goodrich, who directs the quality measurement program at the Centers for Medicare & Medicaid Services.
There was a wide variation in scoring among types of providers, a Kaiser Health News analysis found. Visiting nurse associations and agencies with religious affiliations tended to get the most stars. Home health agencies run out of skilled nursing homes and agencies run or paid for by local governments tended to perform poorly.
A third or more of home health agencies that Medicare rated received four or more stars in Alabama, California, Florida, Maryland, New Jersey, Pennsylvania, Rhode Island, South Dakota and Utah, the KHN analysis found. The highest proportion of one or two star agencies were in Alaska, Arkansas, Minnesota, Ohio, Oregon, Texas, Wyoming, and the District of Columbia. In those places, four out of 10 agencies or more received less than three stars.
The star ratings were designed to capture overall quality by summing up the results of nine of 27 measures Medicare already publishes on its Home Health Compare website. Agencies were evaluated by how quickly they started visiting a patient, whether they explained all the drugs a patient was taking either to the patient or their caretaker and whether they made sure a patient got a flu shot for the season.
The agencies also were judged on how much their patients improve in skills like walking, getting in and out of bed, bathing, breathing and being able to move around with less pain. Finally, the agencies were rated on how many of their patients ended up going to the hospital. The current star ratings are based on performance from the fall of 2013 through the end of last year. Medicare will reassess the stars quarterly.
Some in the home health industry are welcoming the ratings, but there is concern that consumers will interpret the scores differently than Medicare intends. The government considers three stars to be solid performers, but in rankings for restaurants, hotels and other common services, three stars are often interpreted as mediocre.
“It kind of equates us to a hotel and it’s not the same,” said Carrie Koenig, an executive at MedStar Visiting Nurse Association, which serves people in Maryland, Virginia and Washington and received 3 ½ stars. “I don’t know how confusing that will be for consumers.”
Another concern is that many of the quality results are self-reported by home health agencies. “Down the line, we are absolutely going to have to find another data source,” said Molly Smith, an executive at the Visiting Nurse Association of America. “It really undermines the home health industry to always be reporting with data that has, yes, the potential to be manipulated.”
Medicare publishes the results of patient surveys but did not include those in the star ratings. Agencies will be assigned their own stars for patient satisfaction starting in January 2016. Those ratings are more likely to reflect some of the more common complaints about home health care over things like the scheduling of visits.
There’s little evidence consumers use the data that are already published, which are not always easy to interpret. The government hopes the stars will make that easier. Alex Alvarez, an official at Montefiore Care Management Organization in New York, said it is difficult to talk about these choices when patients are about to leave the hospital. Hospitals are required to give patients several choices of home health agencies, even when a hospital runs its own.
“You give them as much information as you can, but they’re not really in a receptive mode. They remember, ‘Oh, somebody spoke to me,’ but they don’t remember what they said,” Alvarez said. “They just want to go home.”