Government Watch

Medicare Cuts End Personal Touch of ‘Mom and Pop’ Business Serving Seniors

from – The Daily Signal – by Melissa Quinn

For Robert and Susan Blair, it was time for an exit strategy.

The couple had been in the business of home health care for three decades, and retirement looked more and more attractive.

The Blairs’ history of working in the home health care industry began as Ronald Reagan’s presidency was winding down. In 1998, they opened their own agency, Riverside Home Health Care, in Grants Pass, Ore. Come 2005, though, they began to set their sights on retirement.

Across the Pacific Ocean, their son, Michael Blair, was maintaining and repairing electronics, weapons systems, and vehicles for a government contractor in Waimanalo, Hawaii, and living with his wife, Liz, and son, Machenna.

The family made annual trips to Grants Pass every Christmas to visit family.  In 2006, Robert and Susan Blair asked their son if he would be interested in taking over the family business.

“Let’s either do this or not,” Michael Blair, now 44, recalls his parents saying.

But Liz was born and raised in Hawaii, and had never left the state until she met her husband. The decision, Michael Blair said, eventually fell to her. He told his wife:

I want you to look at this town. I want you to see if this is someplace you can live … and see what you think. It’s up to you.

Six months later, in July 2007, the family of three made the 2,600-mile move to Grants Pass, population 34,000, and Michael Blair began working side-by-side with his father. Two years later, he took the helm as administrator of Riverside Home Health Care.

Feeling the Squeeze

The home health care industry is no stranger to cuts to Medicare.

Michael Blair, like his father before him, was active on the board of directors of Oregon’s Association for Home Care, and with home health programs continuing to feel the squeeze, he made annual trips out to Washington, D.C., to meet with members of Oregon’s congressional delegation. He recalled:

I wanted to tell the small business side of the story and show how the cuts were impacting us. We were the small, family, mom-and-pop company. We didn’t have corporate profits to fall back on.

But the cuts kept coming.

In his years at Riverside, Blair worked to keep his business out of the red as Medicare payments to home health companies fell and fell. Blair stalled raises to his employees and reduced their health benefits, and his nurses stopped seeing “heavy-hitter” patients, or those with serious ailments that are resource intensive.

“There always are some patients you make money on and some you lose money on,” Blair said. “As cuts kept getting deeper and deeper, you lost money on more.”

His employees, though, liked the way Riverside operated compared to its corporate competitors. During every visit, nurses would sit for five to 10 minutes talking with patients before stethoscopes and blood pressure cuffs left their bags, learning about their lives, experiences and stories from another time. Doing so, Blair said, helped Riverside’s nurses gain their patients’ trust.

Then, the home health care industry learned it would have to brace for a cut of 14 percent to Medicare home health programs through 2017 — the maximum amount allowed under the Affordable Care Act. Blair recalled:

Everyone figured there’s no way in hell they’ll do a full 14 percent. The data doesn’t support it.

Blair decided to make the trip out to the nation’s capital once more in March 2013 to make the rounds of the state’s delegation to Congress. That, he said, was an “eye-opener.”

“They are going to do the full 14-percent,” Blair said he realized after meeting with lawmakers:

And I couldn’t cut anymore. I had nowhere else to go. … With good conscience, I couldn’t operate and treat people with what we were getting paid.

On the flight back home to Oregon, Blair made up his mind — he would have to sell Riverside.

By that time, his two dozen employees hadn’t had a raise in four years.

A History of Cuts

Upward of 3.5 million elderly Americans are beneficiaries of home health care, and the vast majority — close to 90 percent — are covered under Medicare.

To qualify, an individual must be homebound, require skilled nursing care or rehabilitation services, and be under the care of a doctor who established home visits as medically necessary.

The majority of home health beneficiaries, according to industry analysis, are older, sicker, and poorer than the typical Medicare recipient. Many live in rural areas like Oregon and lack immediate access to hospitals and other care facilities.

But the cost of home health care has long been a sore on the federal budget, Robert Moffit, senior fellow at The Heritage Foundation’s Center for Health Policy, told The Daily Signal.

Though home health care keeps elderly Americans out of hospitals and in the comfort of their homes, the program historically has been vulnerable to fraud and abuse, despite heavy regulation at the federal and state levels.

Congress has a history of making drastic cuts to Medicare, as the legislative body did in 1997 with the Balanced Budget Act when it capped payments per patient to agencies and replaced the industry’s cost-based reimbursement system with a prospective payment system in which a fixed amount is designated for a specific service.

The result, Moffit said, was disastrous for home health agencies.

More than 2,500 home health agencies went out of business as a result of the 1997 budget cuts, and Congress later reversed them.

Moffit contends that slowing the growth of Medicare spending is necessary because it will reduce the huge Medicare debt already facing taxpayers. However,  he said better policies could accomplish the same savings without putting such a tight squeeze on struggling home health agencies serving seniors.

For example, the health policy expert suggested introducing a 10 percent copay for Medicare home health beneficiaries. Home health care is one of the few Medicare benefits that doesn’t include a copayment, and savings from one should be put back into “Medicare and Medicare only,” Moffit said, to increase the solvency of the program.

Home Health and Obamacare

The Affordable Care Act, popularly known as Obamacare, gave then-HHS Secretary Kathleen Sebelius the power to make cuts to Medicare. Most of the money saved was to be put toward funding the Medicaid expansion and insurance subsidies included in the new health care law.

Just months after Blair decided to sell Riverside, HHS announced a proposed rule to cut home health care just as he suspected — 3.5 percent per year until 2017, or a total of 14 percent.

In November, HHS quietly issued its final ruling, solidifying the funding cuts despite public comments calling for input from health health agencies. The cuts — which are a drop in the rates Medicare pays home health businesses — went into effect in January.

According to an analysis conducted by Avalere Health, the cuts left more than 1 million seniors without access to home health care services. And by the Obama administration’s own calculations, roughly 40 percent of the nation’s more than 11,000 home health care agencies could be operating in the red by 2017.

The industry really began to feel the squeeze.

In December, one month after HHS’ final ruling, the Bureau of Labor Statisticsreported the loss of 3,700 jobs in the home health sector.  February saw approximately 3,800 job losses in the industry — the single highest monthly jobs loss the industry has experienced in more than a decade. From March to July, however, the industry bounced back, adding jobs.

Reforming Medicare is a thread typically woven through Republican agendas, and two GOP lawmakers are looking to roll back the major cuts in Medicare home health services by introducing a new payments system to home health agencies.

Last month in the House, Oregon’s Greg Walden — who, Blair said, always made time to sit down with him — and Georgia’s Tom Price introduced a bill to repeal the 14 percent cuts under Obamacare. In place of the slashed funding, the bill would implement a system of value-based purchasing, or pay-for-performance.

Value-based purchasing earned bipartisan support in February when the payment system was included in a bill on nursing home facilities. In the home health care industry, agencies would be rewarded monetarily for meeting or exceeding goals set by HHS’s Centers for Medicare and Medicaid Services for keeping patients out of hospitals. Agencies failing to meet the goals would face a penalty.

Walden and Price argued that  the same savings would be achieved without putting  the squeeze on home health agencies, patients, and employees. Walden said:

We’ll get more for our money and better care for patients without these across-the-board cuts. This common-sense bill will stop the administration’s cuts to home health care, and allow Oregon seniors to continue to receive the care they need and … depend on.

Leaving Medicare Behind

One week after deciding to sell Riverside as he flew from coast to coast, Michael Blair ran into an old industry friend, Ben Garber, at a local nursing home.

Garber’s father, Mark, owned a larger company called Pinnacle that operated nursing and rehabilitation services. Garber pulled Blair aside and told him if he ever wanted to sell, to let Garber know.

With that, Robert Blair, now 70 and retired to Phoenix with wife Susan, 69, flew to Oregon for a meeting with his son and the Garbers.

Over lunch, the two father-son teams discussed a deal. Seven months later, Riverside — one of the last remaining home health care companies in Oregon without corporate backing — was sold to Pinnacle.

For Michael Blair, the sale was bittersweet. Having to deal with the day-to-day hassles of Medicare wore on him, but he thought Riverside provided a “personal touch” that corporate operations don’t offer.

Now, less than a year after leaving the business, Blair owns a non-medical home health care agency, Caring Senior Service of Grants Pass. It is a franchise of San Antonio-based Caring Senior Service.

Blair is able to operate without relying on Medicare, and he still views himself as making an impact on the community — just like he did at Riverside:

We were the ones they like to deal with because of what was a lot more of a personal touch. They knew that their patients were going to be taken care of. They don’t feel that from the bigger boys. … We did provide a great service in town.

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Linda Wilson
8 years ago

The affordable Care Act has begun To repeal it totally just remember your vote GET ALL DEMOCRATS OUT AND PUT IN REPBLICANS to take back the senate and GET RID OF HARRY REID AND NANCY PELOSI. This is our chance to get back or put some sanity to what has to be done otherwise like others have stated we will be drugged and killed underlaw to meet their goals. SCAREY Huh!!!!

8 years ago

Well, we senior citizens used to believe in and respect the government and had faith in their promises. This is where it has come to. An totally inept president and incompetent advisors have destroyed the american system we pledged allegience to. Now, that is all gone. We are going to have to fend for ourselves, as the government looks at us as an expense that needs to be eliminated. This is the basic truth. Thinking otherwise is a dream. Unless we could unite, then there is really not much for the future for senior citizens.
This is a case of a government actually hijacked with the help of laws written to put and keep them in power.

Pete Ferretti
8 years ago

Do everything to win the Senate this Nov. and the WH IN 2016, then you can gain the Pres. and repeal ACA completely. Until then, the Repub. response to ACA should be ” you the People chose to give Obama (already the worst Pres. of all time) a second Term, so we can do little but grudgingly go along with his wishes until you vote us into the Senate and WH”. Since the Tea Party is totally correct on future Repub. policy, but doesn’t know how to win (even causes you to lose the most important Races), the Repub. Party should make a deal with them — you stand down until we win the Senate and WH and then we will give you free reign to eliminate the ACA, most of the IRS (with Flat Tax), NSA, the Dept. of Educ. (not even suggested in our Constitution and merely a giant voting and funding element of the Demo. Party, and HS ( CIA and FBI are enough — they won’t even work together). Try to focus on ways to create a boom in jobs and the Economy so that our Astronomical Debt doesn’t plunge us into a 3rd.-World status almost overnight — then the gravy train is over for everyone including the Fat Cats in Gov., Defense Contractors, and Lifetime Politicians !!

Marie Bowers
8 years ago

I have been a nurse for 47 years. For the last 25 years I have specialized in the care of geriatric patients in homecare and hospice for the past 16 years. Medicare is a primary provider of care in this population. There is definitely room for responsible cost management but not in the legislative arena.
Medical supplies are totally thrown away unopened and medications[also unopened and not expired] doled out by the hundreds are tossed down drains across the country. Even trying to pass these clean unused supplies to free clinics fails because of regulations that only allow them to take supplies from suppliers. Nurses are packaging these and sending them to missions outside the U.S.. Hospices supply soap, nail files and are often asked for hospital gowns and sheets for beds! Costly nutritional supplements and wet wipes replace home foods and toilet paper.
Personal responsibility!!!! People want it all free. We warehouse our grandparents and parents in understaffed facilities.
The answers is not cutting Medicare funding. The answer should include cutting legislators who make laws that restrict us and decide to put our funds into projects that line their pockets and undermine basic human kindness.

8 years ago
Reply to  Marie Bowers

This kind of waste is disgusting. there should be a way to trade excess sterile supplies and unexpired meds for what is in short supply or to receive a credit for what you can distribute locally to free clinics. The regulation that limits receiving supplies only from suppliers may have been meant to insure quality and safety, but there was probably also a financial motive in it, too. As in every other good suggestion for changing our healthcare system, common sense should be a component of supply regulations.

Sherry Billy
8 years ago

Vote for REPEAL of the ACA. Nothing less.

8 years ago

Isn’t it transparent to everyone, that if this government can eliminate seniors, who most likely act and vote conservative, that it will make it much easier to promote their socialist agenda on an unsuspecting, drugged out, tattooed, nose-ring wearing, under educated youthful population? Mad Max, the movie, soon becomes reality!

8 years ago

Thank you for your story. It highlights such a jamup in our medical system. Both of my parents used home health care to a point. They were able and did pay for any other services they needed in addition to keep them home.

It was well worth it. However, I cannot imagine how dreadful it would be if one couldn’t have help at home. I also know that when these types of patients (not very ill – just disabled) are hospitalized because Medicaid would pay for the institution, the hospital staffs simply sedate them and the patient is at the mercy of an overly generous, overworked nursing staff for civilized treatment. Some thing I have experienced in various parts of the country. I am not impressed with our level of health care workers in these places. I met numerous people who work underground so to speak who are intelligent and qualified as private home caterers. This section of the medical care world should have a light shined on it and they should supplant the poorly educated home health worker who is bound by so many state and federal regulations. Anyone knows that a medicare worker is not allowed to administer even an aspirin…due to regulations. Patients and their families should be reimbursed for their choices of private caretakers for themselves. I believe our standard is third world due to so many regulations and no one will speak up about it.

8 years ago

The “Unaffordable Care Act” in action!!

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