Health Care Costs and Financing

Medicare payment reforms sparked changes in use of home health care services among the elderly

Medicare's home health (HH) care reimbursement policy changed dramatically during the late 1990s. HH agencies responded swiftly to reduced reimbursements with reductions in services, according to a study supported by the Agency for Healthcare Research and Quality (HS13168).

Under the Interim Payment System (IPS), implemented in October 1997, Medicare significantly reduced reimbursements to HH care agencies both per visit and per beneficiary. In turn, agencies reduced both the selection of HH care services they offered and sharply reduced the number of visits provided to HH users. Under the IPS, the probability of any HH use and number of visits per episode of HH care fell until the IPS was refined in October 1998. With the transition to the Prospective Payment System (PPS) in October 2000, which slightly relaxed reimbursements (mean payment per user improved for orthopedic patients), agencies further reduced the number of HH visits provided from the already depressed levels seen under the IPS. Use of HH visits fell commensurately.

It is difficult to tell if these changes reflected a reduction in inefficient services, as Medicare intended, or a reduction in services needed by patients, note the researchers. They examined use of HH services by Medicare recipients undergoing either elective joint replacement or surgery for hip fracture between January 1996 and December 2001. Changes in month-to-month utilization of HH services were sharp and well correlated with policy implementation dates.

Although there was a reduction in the proportion of patients selected for HH care for the conditions studied, there was no evidence of differential access to HH care. However, there were larger reductions in HH visits at for-profit HH agencies and for the elderly, women, patients receiving State assistance, and patients first discharged to skilled nursing facilities and inpatient rehabilitation facilities.

See "Impact of changes in Medicare home health care reimbursement on month-to-month home health utilization between 1996 and 2001 for a national sample of patients undergoing orthopedic procedures," by John D. FitzGerald, M.D., Ph.D., Carol M. Mangione, M.D., M.S.P.H., John Boscardin, Ph.D., and others, in the September 2006 Medical Care 44(9), pp. 870-878.

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