Vermont’s network of independent nonprofit home health organizations wasn’t broke. But the U.S. Department of Justice (DoJ) decided to fix it anyway.

In the Green Mountain State, the community-based network of home health organizations was working exceedingly well, providing economically efficient, high-quality home care to thousands of Vermonters who would otherwise be in nursing homes. They provide skilled assistance to thousands of families whose loved ones require attention due to advanced age, dementia, or physical disability. Vermont pioneered unique Medicaid-waiver programs that lead the nation in developing caring home and community options for our elders’ health needs.

File photo.

In December 2004, the state’s home health network was slammed with a U.S. Justice Department anti-trust investigation. The DoJ did not question that Vermont’s home health entities provide stellar-quality care. Rather, it took umbrage at the fact that they did it so cooperatively. Although children’s television programs admonish our kids to always co-op-er-ate, when businesses do it, it can be illegal.

“They said we had two options to avoid an anti-trust finding: Compete with one another, or have the state set up a state-sanctioned monopoly system like they do with utilities,” says Larry Goitschius, director of Addison County Home Health and Hospice.

From Community to Monopoly

Although the DoJ declined to point to any specific event that triggered the investigation, Vermont’s home-care-provider community widely assumes that complaints were lodged by for-profit companies looking to horn in on the state’s non-profit elder care environment. With our national population over age 65 set to double in the next 30 years, and Vermont’s rate of aging moving faster than that, elder care is about to become big business, and lots of folks want in on it.

Vermont is the only state left with all nonprofit home health care agencies. The system arose in the 1960s as Vermont’s communities realized that families needed assistance attending to the needs of elders and disabled home-bound relatives.

Addison County, like many other Vermont communities, formed a grass-roots committee that evolved into Addison County Home Health and Hospice (ACHHH). The results were both civilized and pragmatic. “We’re a good investment because we keep that person from going back to a hospital which is the most expensive,” Goetschius says. Hospitals are also usually the patient’s least desired course of care — most people, naturally, want to be in their home whenever possible.

Home health clientele includes a mix of self-paying customers, clients covered by Medicare and private insurance, and persons receiving Medicaid coverage. Most other states don’t allow Medicaid coverage for home health services, but Vermont has a unique federally-approved Medicaid waiver program, Choices for Care, which allows more Vermonters to spend their end-of-life years at home.

ACHHH, like Vermont’s other home health agencies, also admittedly provides some of their services free. ACHHH views its mission as supporting the whole of the community regardless of economic status. “The entire population is my concern,” says Sharon Thompson, clinical director at ACHHH for over 35 years.

“Vermont is unique in our community-based health care,” says Janet McCarthy, director of Franklin County Home Health. “We have hospice, home health, and personal care services under one roof, and we work together with the hospitals and nursing homes and the families. When I go to any of these conferences out of state, in other places they don’t do that. You get discharged from the hospital and you have to go call visiting nurses somewhere else, and later you have to call another service that does hospice, and they don’t talk to one another.”

The way Vermont’s nonprofit home health providers would talk to one another to coordinate a course of care for their community’s elders gave rise to the federal allegation of monopoly.

“This was under the Bush administration, whose policy was that competition is good for health care,” Goitschius says. “We said we were not going to compete with one another. So the state adopted statutory franchises and the Justice investigation went away. But now instead of being independent local entities, there’s another layer of rules we have to follow.”

From Independent Entity to State-Licensed Agency

Vermont’s home care community and the state Legislature were wary of out-of-state profit-minded businesses who might “cherry pick” the most income-positive home care customers and leave the local nonprofit providers with a neutral or negative cash flow, unable to support their free and reduced-fee services. The nonprofit home health organizations take cases of all kinds: those that provide a high ratio of compensation per hours of care, and those that may be income-inverted, requiring far more health-care-worker-hours than provided for by available compensation. Without a profit motive, however, their goal is merely to break even, and these cases balance out economically in the end. When for-profits “cherry pick” the most lucrative types of clientele, the balance of income from the remaining patients runs to zero or below.

After the state passed legislation sanctioning Vermont’s nonprofit home health organizations as legal monopolies, reality sank in; the state would need to adopt regulations that mimic the accepted federal Medicare qualification conditions in order for the system to pass merit. Janet McCarthy, representative from many home health agencies, Legal Aid attorneys, and officials from the Vermont Department of Aging worked over two years putting together the regulations for state-sanctioned home health care. The final rules went into effect in 2007.

“A year later we realize we need to have some changes,” says Peter Cobb, director of the Vermont Assembly of Home Health Agencies. “So we’ve been working with the state for over a year now. Our concern is, does the interpretation of the rules match the intent.

ACHHH was “just beginning to understand the implications of it,” Goetschius says. “We are in serious discussion with the Department of Aging and Independent Living over rules interpretations.”

Rules: The New Reality

Those new rules require all home health entities in the state to re-apply for that state sanction every four years. In theory this means the present non-profits could be summarily bumped from their slots if someone else makes a pitch that they could provide services better or cheaper, but right now, that is the least of Vermont’s home health care worries. What concerns home health providers is how to keep up the community-based high-quality care while dealing with massive new layers of time-consuming administrative requirements.

“There are new quarterly fiscal reports to be filed with the state,” Janet McCarthy explains. “Those take about twelve to sixteen hours staff time per quarterly report. Maybe that doesn’t sound like much, but there are only a few of us in administration here, and there are only so many hours in the day.

In addition to the quarterly reports, there is an annual inspection of each region’s home health agency. “We are accustomed to being surveyed and inspected. Under the federal rules if you are in compliance then you get inspected every three years,” McCarthy says. “But now under the state rules it’s every year. It is very disruptive. The inspections are unannounced, the inspectors arrive and are here for three or four days. They review all records, go on home visits. Necessary patient services go on during that time but everything else stops.”

There are other glitches in the implementation of the state’s rules. “There’s a misunderstanding regarding the scope of services covered,” McCarthy says. “I thought the rules were to be guidance for our home care services, not our other services that we provide. In the first year the rules were interpreted to cover all our services including private duty care, for which individuals pay out of pocket.”

Private duty care is a service offered through most home health agencies by non-professionals. It includes any kind of light service care for an elderly or homebound customer, such as simple companionship, helping with light housekeeping, or just checking in on someone when their kids are at work through the day.

“The right thing was always done for this sort of care,” McCarthy continues, “but we did not require the client’s medical records or send out a nurse and so on. Private duty care never had to follow Medicare conditions of participation. All services now including private duty have to meet those standards. We now have to send an RN out to do an initial assessment and go back every sixty days to revise the client’s plan of service. That makes private duty care more costly. And most people are like, ‘Why are you sending me a nurse? I don’t need a nurse.’”

People who provide private-duty services outside of the home health agencies do not need to follow the state-required procedures. Anyone in Vermont can offer private duty care services without training, licensing or supervision. Vermont’s home health agencies carefully screen and train their private duty care providers, but now must meet the added cost burden of administering private duty care as if it were medical care.

What’s different is the extent of the time-and-money squeeze the new procedures impose. “The change now is we have spent countless hours training our staff about the new state rules and reporting requirements. Our nurses now spend 15 minutes more per visit. We include, as visit time, the time with the client as well as the pre- and post- time, the nurse may call a doctor to share her observations, get supplies or review records to prepare for the visit … call a family member to let her know how mom is doing … all that is logged as the time for that visit,” McCarthy says.

Each home health agency has hundreds of clients. At fifteen more minutes per visit per client–plus the time for quarterly reporting, inspections, and training in the new procedures–more personnel are needed to provide the same levels of service. That high level of service is paramount throughout Vermont’s home health service providers. “The goal is to return the person to their optimal level of wellness,” Sharon Thompson of ACHHH says. “There’s no such thing as ‘we don’t want this person home because it’s too much work for us.’ We craft a plan, whatever it takes.”

But the new rules have hit the ground at the same time as rapidly diminishing dollars. “I’ve never been convinced that this additional reporting adds anything to the quality of our services,” McCarthy says. “What it does do is add to the costs. To cover the expenses we need more revenue, and we’re not seeing it. In the past we’ve often been able to rely on town support, donations from the United Way, and we do our own fundraising. But now times are tight for everyone.”

In March 2008, McCarthy and other representatives of Vermont’s home health agencies began meeting with the state over these issues. “We are trying to find common ground,” McCarthy says. “We fully accept and recognize that these rules are here to stay. The question is can we come up with rules that truly assess the services we provide and keep them accessible to everyone and keep the same high quality of service. The public has a right to expect high quality health care services.”

Cindy E. Hill practices law in Middlebury.