November/December 2002
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The Impacts of Federal Legislation
on Rural Home Health Care
Health care delivery to rural areas is a challenge. From the
family doctor to the acute care hospital, health care providers
and institutions in rural areas are under pressure to meet the
needs of the state's population - a population that continues
to grow older.
An integral component of the rural health care delivery system
is Medicare-funded home health agencies. Home health agencies
are home care providers that offer therapeutic and skilled and
supportive post-acute care nursing services for homebound patients
and provide clinical services for chronic conditions, such as
diabetes. The importance of Medicare home health services has
grown as the nation attempts to shift health care away from expensive
modes of delivery, such as hospital and long-term care, into less
costly service delivery methods like home health.
Federal legislation, specifically the Balanced Budget Act of
1997, has the potential to compromise both the financial viability
of rural home health agencies and the level of service that they
provide to their patients. The legislation cut the total amount
of Medicare reimbursements to home health agencies and forced
them to assume more financial risk by changing the reimbursement
method from one based on the agency's cost to a fixed-rate schedule.
The smaller the agency, the greater the potential risk. This is
why the change in reimbursement methods is of great importance
to rural residents of the commonwealth.
To learn how the Medicare home health provisions of the Balanced
Budget Act of 1997 are affecting rural home health agencies and
the services they provide to rural patients, the Center for Rural
Pennsylvania sponsored a one-year grant project, conducted by
Lisa A. Davis and Myron R. Schwartz of the Pennsylvania Office
of Rural Health at Penn State University, and by Dr. Joel Leon,
Joan K. Davitt, and Jonas Marainen, of the Edward and Esther Polisher
Research Institute. The results of that project, entitled The
Effect of New Medicare Reimbursement Methodologies on Rural Home
Health Agencies and Their Beneficiaries, are now available.
Payment methods set in motion
The Medicare home health provisions of the Balanced Budget Act
of 1997 set into motion two sequential payment methods. The first,
an Interim Payment System (IPS), operating from 1998 to 2000,
was implemented to immediately control spending under the then
existing cost-based system, a system that paid agencies based
on the actual cost of providing each visit. Under IPS, total national
expenditures for home health care declined by 44 percent from
16.2 billion dollars in 1997 to 9 billion dollars in 2000. The
second payment method, the Prospective Payment System (PPS), set
into place a case-mix system that would permanently build efficiency
incentives into the home health payment structure and pay agencies
on a prospective rather than a cost reimbursement method. The
PPS transfers financial risks to providers, and in so doing, has
the potential to result in the provision of fewer services and
the avoidance of high cost patients. The PPS went into effect
in late 2000 and evaluations of its impact are not widespread.
Research goals
The goals of the research project sponsored by the Center were
to assess the financial effects of the new reimbursement methodologies
on rural home health agencies and analyze patterns in these effects;
assess the effects of the new reimbursement methodologies on beneficiaries
of rural home health agencies and analyze patterns in these effects;
document levels of home health service and utilization across
the commonwealth and analyze changes in these levels over time;
and formulate policy recommendations.
The researchers used and integrated five major data sources to
achieve the results of the research. The data sources included:
Key findings offered
From the study, the researchers identified seven key findings.
1. There are fewer home health agencies serving the commonwealth
and they operate fewer branch offices than prior to the implementation
of the new reimbursement methodologies.
2. There are fewer users of Medicare home health services than
before the implementation of the new reimbursement methodologies.
This pattern is true for most of the commonwealth.
3. There is variance in the rate of use of Medicare home health
services across the commonwealth. Rural areas include areas of
both high and low use. High use areas are disproportionately represented
in the western half of the commonwealth and low use areas in the
eastern half.
4. Medicare home health agencies are operating under more financially
challenging circumstances than before the implementation of the
new reimbursement methodologies. The agencies' total revenues
are significantly lower, and the agencies must manage more financial
risk in treating certain high cost patients.
5. Medicare agencies operate under more administratively challenging
conditions than before the implementation of the new reimbursement
methodologies. These conditions include implementation of the
Outcome and Assessment Information Set (OASIS) assessment procedures,
managing financial risk, and managing fewer visits per patient
to accommodate the episode-based payments of PPS.
6. Certain high cost patients may find it more difficult to obtain
traditional Medicare home health services than before the implementation
of the new reimbursement methodologies, and other patients more
frequently may have to confront the necessities of their Medicare
home health provider spending less time on care.
7. Because of more restricted use and service levels for traditional
Medicare home health than before the implementation of the new
reimbursement methodologies, users are being referred to other
publicly supported services in the commonwealth.
Specific activities to pursue
The results of the research suggested some specific activities
that may benefit the commonwealth. First, service delivery to
patients has changed significantly since the implementation of
the new reimbursement methodologies. However, the details associated
with these changes, especially for high cost patients, have yet
to be documented. The researchers suggest that commonwealth agencies
with an interest in home health, such as the Departments of Health,
Public Welfare, and Aging, fully document the level and variance
in service provision.
Second, the regional variation in rates for Medicare home health
use is quite striking. Commonwealth agencies with a vested interest
in home health need to make sure that regional access inequalities
do not exist in the commonwealth.
Third, the administrative burden under the new reimbursement
methodologies is quite demanding for small rural agencies. The
commonwealth should consider offering technical assistance to
these agencies directly or through associations.
Next, since some patients are being diverted from Medicare home
health to other commonwealth services, the commonwealth should
consider increasing support for rural Area Agencies on Aging and
Medical Assistance to assist those patients who are unable to
get adequate (or any) home health care services through Medicare.
Lastly, rural home health agencies receive a 10 percent add-on
to their reimbursements for Medicare. The add-on was about to
expire when the research was being completed. The researchers
suggested that to avoid further taxing commonwealth resources,
state legislators should approach the Pennsylvania Congressional
delegation and ask that it seek a continuance of the add-on. (Editor's
note: In May, the Pennsylvania General Assembly passed House Resolution
576, which urged Congress to extend the 10 percent rural add-on.
Congress provided for a continuance of the add-on until spring
2003.)
Want more info?
For a copy of the report, The Effect of New Medicare Reimbursement
Methodologies on Rural Home Health Agencies and Their Beneficiaries,
call the Center for Rural Pennsylvania at (717) 787-9555 or email
info@ruralpa.org.
Chairman's Message
According to the National Center for Health Statistics, in 2000,
the average life expectancy for all Americans was 76.9 years of
age; more specifically, 74.1 for males and 79.5 for females. That's
wonderful news for our nation and testament to the advances in
nutrition, medicine, and health care.
As we focus on helping our population to live longer and to continue
leading active lives, it's not hard to understand why health care
services and delivery have become some of the most pressing issues
facing our nation and our state.
For rural Pennsylvanians, the adequacy and availability of health
care services and delivery are major concerns. To better understand
the questions surrounding the issues, the Center for Rural Pennsylvania
has focused much of its research on a variety of health care topics
over the years.
This past year, researchers from Penn State University and the
Edward and Esther Polisher Research Institute studied the Medicare
home health provisions of the Balanced Budget Act of 1997.
Medicare-funded home health agencies are an integral component
of the rural health care delivery system, and as the nation attempts
to shift health care away from more expensive forms of delivery,
such as hospital and long-term care, into less costly service
delivery methods like home health, the importance of Medicare
home health services has grown.
The results of the research provide important information and
recommendations for health care providers and policy makers at
the state and national levels. For more on the research, turn
to the feature article on page 1.
Another health-care-related initiative sponsored by the Center
for Rural Pennsylvania is also reaping positive results. The pilot
project, which was conducted by the Penn State College of Medicine
at the Milton S. Hershey Medical Center, was instrumental in demonstrating
the viability of a technology approach to education. The project
has received additional funding from the federal government to
continue and expand the program over the next three years. See
the related article on page 4 for more information.
Also on page 4 are some helpful hints on developing a successful
grant application. If you or your organization have ever applied
for a grant, you know that the process can sometimes be confusing
or even frustrating. The article on getting that grant will hopefully
take some of the guesswork out of grant writing, and more importantly,
help to secure those funds.
As we study the comments received from the Rural Definition Forums
that were held throughout the state in October, we are reminded
of the diversity of our rural state. The rural forums were a great
opportunity for the Center's Board members to learn your thoughts
on defining "rural" for Pennsylvania and we will depend
heavily on your comments as we work to develop that designation.
Thank you again for your participation in the forums and your
comments.
We look forward to sharing the results of those meetings with
you in the months ahead.
Representative Sheila Miller
Helpful Hints on Getting that Grant
Have a great idea for a community project but no dollars to make
it happen? Many state, federal, and non-profit organizations have
grant funds that can help get your project off the ground. To
give you a better idea on what it takes to write a grant and get
your hands on that funding, the Center for Rural Pennsylvania's
Program Manager for Grants offers the following tips to get you
started.
Sounds like a plan
Translate your great idea into a plan of action. Funding agencies
like to know, specifically, how the grant funds will be used and
how the funds will make a difference. Make sure that your project
focuses on a real need for your community, organization or topic
area. For instance, don't just ask for money for computers. Describe
why you need the computers and how a community problem will be
affected. For example, explain how a pilot after-school computer
program for middle school youth is helping to eliminate the vandalism
problem in your community.
Convince the funding source that you have a plan that can solve
the problem and that your plan is appropriate for your community.
Funding agencies want to see that you are addressing a documented
need that will result in measurable positive impact.
Research your funding source
Since there are many kinds of funding agencies that might be a
source of funds for your project, do some legwork. A good place
to start is the Center for Rural Pennsylvania's
Rural Access Guide, which is available online at www.ruralpa.org
and lists general information and contacts for state, federal
and non-profit grants, loans and technical assistance. Another
great starting point is your local library, which has information
and publications on other funding sources.
Make sure that your organization is eligible for the grant you
are interested in and that the funding source makes grants in
the amount you are after. If you are not eligible, consider partnering
with an organization that is.
Fill in the blanks
Don't assume that the funding source is familiar with your community
or with jargon that may be specific to your topic area. Everyone
in town may know that the drinking water is bad, but a funder
sitting in Harrisburg or Washington may not. Paint the picture
with facts to make your case. Provide quantitative and qualitative
evidence of the need as support for your proposed solution. The
Center for Rural Pennsylvania can provide you with demographic
information about your community that will help you make your
case. Check our website or call for specifics.
Show it is a "can-do" project
No one wants to pay for something that will not have any results.
Provide as much evidence as possible that your project will result
in measurable positive outcomes. How will you document that a
grant for extended hours at the community library has been good
for the community? Include evaluation in your work plan.
Follow up
Finally, if you are not successful in winning the grant, contact
the funding source and ask for feedback. This may help you target
your application to successfully secure that grant in the next
round.
Center-Sponsored Health Initiative Receives
$387,000 Federal Funding
A pilot project to encourage the retention of rural physicians,
funded by a $15,000 Center for Rural Pennsylvania initiative in
2001 and administered by Penn State University's Center for Primary
Care at the Milton S. Hershey Medical Center, has met with considerable
success. The project involved rural physician practice sites where
third-year medical students were assigned in a Preceptor Training
Program. The Center for Primary Care created a special website
for access by the rural physician preceptors and medical students.
The pilot project was instrumental in demonstrating the viability
of a technology approach to education, retaining rural preceptors,
and helping to improve patient care. The results from the pilot
project resulted in the funding of a three-year, $387,000 faculty
development grant from the federal Health Resources Service Administration
to continue and expand the program to include 280 physician preceptors
across Pennsylvania.
For more information about the development grant, contact Dr.
John George, Director of Predoctoral Education, Penn State College
of Medicine, Penn State Milton S. Hershey Medical Center, Family
and Community Medicine, H154, 500 University Drive, PO Box 850,
Hershey, PA 17033-0850, telephone (717) 531-8736.
Comments Roll In During Rural Forums
Representative Sheila Miller welcomes participants
to the Harrisburg Rural Definition Forum. |
On October 8, 2002, Representative Sheila Miller, chairman of the
Center for Rural Pennsylvania, kicked off the first of six Rural
Definition Forums in Harrisburg.
Representative Miller welcomed more than 70 attendees to the
forum, which was held at the Hospital and Health-system Association
of Pennsylvania.
The forums, which were also held in Franklin, Lock Haven, Greensburg,
Towanda and West Chester, were attended by municipal officials,
planners, hospital administrators, grant writers, and other data
users from around the commonwealth.
The input received from the forum attendees will help the Center's
Board of Directors to determine the best way to designate counties
and other entities as rural or urban according to Census 2000
data.
Lisa Davis (standing at podium), executive
director of the Pennsylvania Office of Rural Health, answers
questions related to her presentation on rural health from
the 2000 Census. Amy Jonas of the Center for Rural Pennsylvania
is standing at left. |
Jonathan Johnson of the Center for Rural
Pennsylvania offers discussion points for the forum. |
Senator Mary Jo White, Center Board treasurer, hosted the October
10 forum in Franklin and Representative Mike Hanna and Lock Haven
University President Craig Willis, Center Board members, hosted
the October 11 session at Lock Haven.
To learn more about the information presented at the forums, visit
the Center for Rural Pennsylvania's website at www.ruralpa.org
or call the Center at (717) 787-9555.
Did you know . . .
Rural Farm and Non-Farm Populations
As the Center for Rural Pennsylvania wrestles with the formula
for a working definition of rural within the commonwealth, it
may be a good time to look at how the rural population has changed
according to the U.S. Census Bureau. Census 2000 data show that
Pennsylvania's 2.8 million rural residents account for 23 percent
of the state's total population.
The Census divides the rural population into rural farm and rural
non-farm residents.
The rural farm population consists of people living in farm residences.
A household is a farm residence if: (1) the housing unit is located
on a property of one acre or more, and (2) at least $1,000 worth
of agricultural products were sold from the property in 1999.
People, such as farm workers, who reside in multi-unit buildings
or group quarters on a farm property are excluded from the farm
population.
Less than 1 percent of Pennsylvania's population was classified
as rural farm, while about 22 percent was classified as rural
non-farm.
The rural population in Pennsylvania grew in each Decennial Census
since 1970 until the definition change of 2000, at which time
the numbers dropped dramatically.
The rural farm population, however, declined with each Census,
regardless of definition, showing that fewer and fewer people
are living in households on farms in the commonwealth. Over the
same period, the urban population continued to decrease from 1970
on and then took a huge leap in 2000 with the change in definition.
Rural and Urban Pennsylvania Population
Shares, 2000
Just the Facts: Property Taxes
Most everyone loves to hate real estate property taxes. But no
matter what your feelings are for property taxes, the fact is
that for rural Pennsylvania's 1,500 local governments, counties,
and school districts, these taxes are a critical source of revenue.
According to data from the Center for Local Government Services
and the Pennsylvania Department of Education, in 2000-2001, rural
Pennsylvanians collectively paid nearly $1.5 billion in property
taxes, or $569 per person to support local services, infrastructure,
and education. In urban areas, the total real estate tax bill
came to almost $8.4 billion, or $864 per person.
In rural areas, nearly 73 cents out of each dollar collected
in property taxes, or $1.1 billion, went to help finance school
districts. This amount, however, only provides about 33 percent
of total revenues to the average rural school district. For urban
schools, these taxes provide nearly 47 percent of school district
revenues. The difference is partially due to differences in the
amount of state funding received by rural and urban districts.
The state provides monies to school districts based on need, enrollment,
and other factors. During the 2000-2001 school year, rural districts
received 49 percent of their total revenues from the state, while
urban districts received 34 percent. Over the last 10 years, the
importance of property tax receipts as a percentage of total district
revenues has remained fairly constant for both rural and urban
schools.
As total school district revenues have increased, so have property
tax revenues. Adjusted for inflation, the property tax receipts
among rural schools have increased 30 percent between 1991 and
2001. This rate is nearly identical to the urban rate. The increase
in property tax receipts does not necessarily mean that land and
homeowner tax rates have increased. Among rural schools, the increase
in property tax receipts is more a result of increasing property
values rather than increasing tax millage.
Between 1990 and 2000, the market value of real taxable property
increased 30 percent in rural areas. This increase means that
each mill of tax generated more revenue. Evidence of this increased
value can be seen in the ratio of real estate taxes to market
values. In both 1991 and 2000, rural school districts collected
1.4 percent of the market value of real estate.
A comparison of school tax payments by rural and urban residents
shows that in 2001, using equalized mills, which is the total
taxes collected divided by total market values, rural areas had
a millage rate of 19.0 while urban areas had a slightly higher
rate of 20.8 mills.
If all of this talk about taxes is getting you down, consider
this: according to the U.S. Census Bureau, Pennsylvania ranked
26th in local government property taxes per capita, in 1998, with
each resident paying $740. New Jersey, New Hampshire, and Connecticut
residents each paid more than $1,470 in local government property
taxes per capita. Kentucky, New Mexico, and Alabama residents
each paid less than $300 per capita.
