Health Care Costs and Financing

Medicare reimbursement changes lessen regional disparities for home health services

From the mid-1980s to mid-1990s, Medicare's costs for providing home health services soared from $2.6 billion to $17.5 billion a year, and spending in each Medicare region varied greatly. Medicare's introduction of two payment systems in 1997 and 2000 adjusted this regional variation in home health services by clamping down on how many home health visits a beneficiary could receive and who would provide care during the visits, according to a new study by John D. FitzGerald, M.D., Ph.D., of the University of California, Los Angeles, and colleagues.

Medicare's payment systems slightly affected regional variations in how many visits patients recuperating from joint replacement surgery could receive. For instance, in March 1996, patients who underwent surgery for hip fractures in the Dallas area received 72.5 home health visits in 120 days, but patients in Seattle received only 28 visits. By September 2001, visit numbers had fallen to 37.3 in Dallas and 18.3 in Seattle. The national average also fell from 47.1 visits in 1996 to 24.3 visits in 2001.

Cost control measures had little effect on Medicare regions with the highest and lowest use of home health services, however. In 1996 the Boston, Atlanta, and San Francisco regions offered home health services at high rates for joint replacement patients while the Chicago, Seattle, and Kansas City regions were not as generous. By 2001, the rankings stayed mostly the same, except that Dallas took Kansas City's spot in the bottom ranking.

Visits from home health aides, not physical therapy or nursing services, took the biggest cuts. In fact, the number of home health aide visits fell 39 percent for patients with joint replacements and 42 percent for patients with hip replacements. The authors were uncertain if the visit reductions were accompanied by poor outcomes or if family members became burdened with home care duties. This study, which examined Medicare claims data for patients who had surgery for joint replacement or hip fractures between 1996 and 2001, was funded in part by the Agency for Healthcare Research and Quality (HS13168).

See "Changes in regional variation of Medicare home health care utilization and service mix for patients undergoing major orthopedic procedures in response to changes in reimbursement policy," by Dr. FitzGerald, W. John Boscardin, Ph.D., and Susan L. Ettner, Ph.D., in the August 2009 Health Services Research 44(4), pp. 1232-1252.

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