RELEASE: April 3, 2000

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Department of Human Services Commissioner Michele K. Guhl announced today that the state had reached a tentative, three-year agreement with the state's providers of home health services that would infuse about $19 million into the industry and restore cuts made to home health rates in 1999.

"We have been listening to the concerns of the home health industry and we felt we needed to make some adjustments," she said. "We implemented rate changes to the system in good faith last year, but as we continued to study the issue, and meet with home health providers we saw there was more complexity and more variables to the economic conditions of the home health agencies than we originally thought."

Under the agreement, the providers of home health services would be paid 100 percent of the costs they incurred in 1999. Individual rates for each agency will be established based on those costs. In 2000, and 2001 agencies would receive allocations based on rates set on their 1999 costs plus an increase equal to the rate of inflation each year.

The expenditure level for home health would rise from $54 million to $64.2 million in Fiscal Year 2000 and would rise from $57.4 million to $63.8 million in FY 2001. An additional $2.5 million would be paid retroactively to the home health agencies for fiscal 1999.

No new state revenues would be required because utilization of home health services has been decreasing over the last three years and expenditures have fallen below appropriations.

In January 1999, DHS changed its reimbursement rates for home health services. Previously DHS paid agencies whatever costs they incurred, which is known as a cost-based system of reimbursement.

The state's Medicaid program pays for home health services, such as nursing, social services, dietary services and physical and occupational services to about 6,000 elderly and disabled people. There are 55 home health agencies in the state providing those services to Medicaid clients. Medicaid, operated by the Division of Medical Assistance and Health Services, part of the Department of Human Services (DHS), is a state-and federally funded health care program serving about 670,000 low-income, elderly and disabled people.

"Home health is a vital part of the state's health care system,"Commissioner Guhl said. "It helps elderly and disabled people receive services in their homes and avoid going to nursing homes."