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Hundreds of home health care agencies around the nation are closing their doors or struggling to survive. Their problems were caused by changes Congress made last year in Medicare repayments. The impact is being strongly felt in North Dakota - and Minnesota agencies are bracing for similar financial problems.

ONCE A WEEK, REGISTERED HOME HEALTH CARE NURSE Sandy Schanzenbach drives 45 miles to visit Skyler Braseth in Ulen, Minnesota, who suffers from emphysemia and diabetes.

Schanzenbach: Well, we'll see what the oxygen holds today... OK...

As Schanzenbach clips a small monitor to Braseth's finger, she chats about the weather, tells a couple of jokes, and checks into how he's doing. This week, he's breathing a little easier with the help of a new inhaler. Schanzenbach spends about 30 minutes with him as she monitors the oxygen in his system, blood sugar level, and skin condition.

Schanzenbach also sorts the seventy pills he'll take over the next week. Braseth has received home care for the past few years. He spent part of last fall in the hospital and credits Schanzenbach's weekly visits with helping him stay out now.

Braseth: To me, it's valuable. And everytime I go to the doctor's office in Fargo, it's $62, you know... that's medicare money, too, you know. You're at home... that's the big deal.

But Braseth is one of the fortunate. Schanzenbach's employer, the Prairieland Home Health Agency, which also serves rural residents in North Dakota and Illinois, has had to cut staff by about 40 percent in the last year, and where possible, reduce the number of visits to each patient.

Medicare used to pay 100 percent of the cost for home care by reimbursing home health care agencies.

Prairieland Home Health Agency's regional administration director Barbara Bourassa says last fall Congress revised Medicare's repayment system. Instead of paying home health care agencies by the visit, it now pays one lump sum per patient per year, figured on an agency's 1993 costs.

The cuts were meant to reduce medicare costs and cut down on fraud and abuse of the system. But critics say the cuts have caused more than 1,200 agencies around the nation to close their doors.

Bourassa says the effects were first felt in the rural areas. Her agency has cut the number of home visits per patient, but each visit is more intense.

Bourassa: It's kind of like the analogy that we are through the skin line and into the... way past the muscle into the bone. You can just decrease so much and then your quality starts being affected. And so far, we have not affected our quality.

The Prairieland Health care agency faces a double whammy - due to a quirk in how its fiscal year is set up - it will probably be forced to pay the government more than $500,000 in what the government now sees as overpayments.

Bourassa says if things continue as they are, the agency will only be able to provide services for another few years.

The North Dakota Home care association says two agencies have already closed their doors and another 10 will close within a year.

The effects have not been felt that severely in Minnesota. Minnesota Home Health Care Association President Steve Lund says healthcare providers are better used to dealing with managed care. But, he says, if the current system of medicare payments remain in place, within four months agencies will begin to close in Minnesota.

Lund: They're scared. They know that a couple of wrong moves and a couple of rules made permanent now made temporary by HGFA could mean some closings of agencies - at least consolidations of some agencies here in the state.

North Dakota Congressman Earl Pomeroy has been meeting with agencies to see what might be done. At a recent meeting he told them he understands the consequences of Medicare saving billions of dollars.

Pomeroy: The system has saved because you have hemorraged.

Pomeroy says a moratorium on last year's legislation could stop more agencies from shutting down, while Congress studies another method to cut down on medicare costs.

But Pomeroy says it's going to be an uphill battle. Congress has only a few weeks until they recess - and even without the Clinton/Lewinsky scandal - there are many bills to discuss.

Pomeroy: Congress, in this instance, has got to attend to this matter before adjorning or we're going to have, I think, dozens if not hundreds of home health agencies going out of business before Congress reconvenes to fix. This isn't a longterm problem that we have to turn to next Congress. This is an immediate crisis that needs immediate attention.

Two bills which could put a moratorium on the payments are currently working their way through the U.S. House Ways and Means Committee and the Commerce Committee.