Senator Edward M. Kennedy
Page Eight

regulations under P.L. 93-641. Therefore, we
recommend that the proposed definition of "in-
stitutional health services" be amended to in-
clude recognition of home health agencies and
rehabilitation facilities as health care faci-
lities by adding these terms to the definition
so that it reads as follows:

"(5) (A) The term 'institutional health service'
means (i) the health services provided through
health care facilities as defined in regulations
of the Secretary including, but not limited to,
private and public hospitals, nursing homes,
home health agencies and rehabilitation facili-
ties; ...!

Discontinuance and Conversion of Hospital Services.
Section 206 of S.2410 establishes a new program
to encourage limiting the development of acute
care hospitals and encourage the development of
alternative health care facilities and services.
This program would allow existing hospitals to
convert part of their facility or all of their
facility to another form of health care service
including ambulatory care, home health care, long-
term care or other services as designated by the
Secretary. Prior to any such conversion the state
agency, (SHPDA), which would otherwise have juris-
diction over the service, and taking into consid-
eration the HSA's recommendation, must made a de-
termination that the new service is needed. S.2551
establishes a similiar, but not as completely de-
fined program to terminate unneeded hospital ser-
vices.

We applaud the requirement in S.2410 that any conversion receive a determination of need prior to its occurence. This determination will help assure that new services are developed only in needed sectors of the health care de-livery system. Hopefully this will prevent an over proliferation in any one area. However, we do recommend that section 1642(a)(1)(C), and (2)(A), be amended to include rehabilitation services as eligible services for conversion and incentive payments. As a corrolary it is important that existing rehabilitation services and facilities be recognized and assessed to determine total public need.

We would appreciate your attention to this matter and will be pleased to provide any further information.

So that you might review some documents prior to our discussion on the Health Planning Amendments, I have enclosed three pieces of information for your review.

1.

2.

A brief issue paper developed by The Bennett Group for Homemakers Upjohn, the largest single provider of home health care in the United States.

A Hunter College study on home health care regulation.

3. The recent GAO report on home health care.

I hope these documents will convince you that Certificate-of-Need for home health agencies is premature at this time. Upjohn has testified on numerous occasions their stance on CON--they support it, perhaps two or three years down the road, but not at the present because:

1.

2.

CON implies a balance between the health needs of the community and the resources available.

CON will hamper and discourage the development of a resource that presently does not meet the need.

3. CON implies a cohesive and coordinated national home health policy which does not exist.

Stuart Shapiro, M.D.

March 22, 1978

Page 2

4.

5.

6.

CON would preempt the home health study mandated by the Health
Subcommittee (see P.L. 95-142, Sec. 18).

The need at present is undeterminable because all figures are based on Medicare, where recent figures show home health expenditures total 1% of the Medicare budget.

Home health care should first be incorporated into national
health planning priorities and integrated into state and
regional health plans.

Because the Congress will be on recess next week and markup is tentatively scheduled for April 7, perhaps we could talk early next week. I'll call to set up specifics.

Looking forward to talking.

Sincerely

Phillip L. Porte
Associate

PLP: 8g

CERTIFICATE OF NEED

44 44

ISSUE

1

ISSUE

2

ISSUE

3

ISSUE 4

ISSUE PAPER

WHAT IS THE DOCUMENTED NEED FOR HOME HEALTH CARE?

ARE COSTS COMPARABLE AND WILL THE COST OF HOME HEALTH
CARE PROVIDE A SAVINGS TO THE DELIVERY SYSTEM?

HOW CAN THE QUALITY OF HOME HEALTH SERVICES BE MEASURED?

IS COMPETITION CRITICAL TO COST SAVINGS IN HOME HEALTH
AND WHAT IS THE ROLE OF THE PROPRIETARY PROVIDER?

ISSUE 5 SHOULD CERTIFICATE-OF-NEED BE USED TO CONTROL PROVIDERS
AND PATIENTS IN ORDER TO MINIMIZE OVER-UTILIZATION?

The Planning Act established certificate-of-need requirements for new institutional health services. The certificate-of-need requirements are administered by Health Systems Agencies (HSAs) serving more than 200 health service areas in the United States.

P.L. 93-641 did not mention the explicit needs of home health care. Consequently, HEW excluded it from the regulations implementing the law.

HEW excluded home health because total national expenditures in home health
care represent only one percent of the total health budget. In addition,
many of the home health care facilities are too small to meet the minimal
Federal CON criteria that require new services expending $150,000 or more
to be included.

Nevertheless, a number of states have enacted CON laws which mandate
coverage of home health care. According to the Hunter College study, "Such
misuse of CON by states is at odds with the implicit Federal policy not to
29
use CON to prematurely restrict the growth of home health care.'

In fact, certificate-of-need regulates only new services and facilities since the existing old, often inefficient and high cost facilities, are usually grandfathered into the CON program. "A new facility or service is measured for need against all existing services. Even if the new service can offer higher