A 0.8 percentage point reduction in the Medicare home health inflation update for fiscal 2004-2006 is about to become a reality. The reduction is included in the Medicare reform bill passed by the Senate and is now before President Bush, who has already voiced support for the measure.

The Congressional Budget Office estimates the inflation update reduction will cost the home health industry $6.5 billion over 10 years. The reduction would run for almost three years, taking effect April 1, 2004, and running through December 31, 2006.

The 678-page legislation doesn't include co-pays for home health agencies. Provisions affecting home health include:

• Access temporary suspension of OASIS requirement for collection of data on non-Medicare and non-Medicaid patients, and a study on the necessity of home health associations collecting such information. 
• Access a 10-state pilot demonstration project for home health association state and national criminal background checks (reduced from a nationwide requirement for the checks). 
• A one-year, five percent add-on to home health payments for rural patients, beginning April 1, 2004. 
• Access a two-year, three-state demonstration project to clarify the definition of "homebound" in which Medicare beneficiaries with permanent and severe, disabling conditions are eligible to receive home health services.
• A Medicare Payment Advisory Commission study on Medicare margins of home health agencies based on home health associations’ cost reports. 
• A three-year rate freeze for HME, orthotics, and prosthetics suppliers, followed by competitive bidding starting in 2007 with the 10 largest metro areas, and expanding to 70 additional metro areas by 2009.
• Access Medicare payment reductions for five high-volume items where Medicare pays more than private plans. Those are expected to be oxygen, wheelchairs, hospital beds, nebulizers, and diabetic supplies.