Adopting language introduced by Rep. Pete Stark (D-California), the Balanced Budget Act of 1997 (the Act) includes several provisions dealing with hospitals' relationships with home health agencies. The Act significantly restricts a hospital's ability to refer discharged patients to affiliated home health agencies, or to home health agencies with which the hospital has a preferred referral arrangement. These changes apparently are intended to enhance a patient's ability to make a free and informed choice of his or her post-hospital home health provider.
Home Health Referrals
The Act amends the discharge planning sections of the Social Security Act to prevent hospitals from offering only the services of affiliated or preferred providers of home health services. Effective November 3, 1997, hospitals must advise patients who need home health services about all Medicare-certified home health agencies that serve the patient's geographic area and that have requested to be included in the hospital's referral list. Additionally, patient discharge plans may not specify or otherwise limit the provider of home health services for the patient.
Data Collection
The Act also imposes significant new data collection duties on hospitals. If a patient is referred to a home health agency in which the hospital has a "disclosable financial interest" or which has a "disclosable financial interest" in the hospital, then the hospital must identify that home health agency in the discharge plan in a form and manner to be required by the HCFA. The new legislation, however, does not define "disclosable financial interest" nor does it specify the form and manner in which hospitals must identify affiliated home health providers. Instead, the HCFA must publish regulations by August 5, 1998 regarding both of these issues. The term "disclosable financial interest" is similar to language adopted by Congress, and interpreted by HCFA, in the "Stark" law which regulates physician self-referrals. It is not unreasonable to anticipate that the definition of "disclosable financial interest" may parallel the definitions adopted in connection with Stark, however, nothing in the Act obligates HCFA to adopt Stark definitions.
Reporting
The Act also imposes a new reporting obligation on hospitals. Effective on or after the date HCFA publishes the regulations defining "disclosable financial interest" (i.e. on or about August 5, 1998), each hospital will be required to report to HCFA if it has a "financial interest" in a home health agency; if a home health agency has a "financial interest" in the hospital; or if a third entity has a "financial interest" in both the hospital and a home health agency. Specifically, hospitals will be required to report to HCFA:
- the nature of the financial interests;
- the number of discharged patients who required home health services; and
- the percentage of those patients who were referred to a home health agency with respect to which one of the specified financial interests existed.
It is not clear why the reporting provisions of the Act use the term "financial interest" while the discharge planning provisions use the term "disclosable financial interest." Presumably this will be clarified in the upcoming regulations. These new reporting obligations are part of the hospitals' Medicare provider agreement, so failure to comply could result in termination from the Medicare program.
Public Disclosure
Finally, the Act empowers HCFA to make public disclosure of the information that it receives from hospitals under the newly enacted reporting requirements.
How Should You Respond?
Hospitals that own or are under common ownership with, joint venture with, or have preferred relationships with home health agencies should take two steps immediately. First, all discharge planning policies and procedures must be reviewed no later than November 3, 1997. The review must focus on, and make provisions for, the following:
- the list of home health agencies to which clinically suitable patients are referred must be expanded to include any Medicare-certified home health agency that requests to be included on the list;
- a format must be established for providing patients with the required list of home health agencies, either with or without accompanying disclaimer language depending on appropriateness;
- individual discharge plans must not name a particular home health agency unless the patient has specifically requested the agency;
- individual discharge plans may not limit a patient's option to select a home health agency from among all available providers who have requested to be included on the hospital's list.
Secondly, in anticipation of the issuance of the regulations defining "disclosable financial interest" and implementation of the reporting obligations, hospitals would be wise to begin developing systems to capture the type of data which they ultimately will be required to report to HCFA.