Medicare Home Health Benefit: Impact of Interim Payment System and Agency Closures on Access to Services: HEHS-98-238

September 1998
GAO Reports;9/9/1998, p1
Government Document
Until 1996, Medicare spending for home health care had been rising dramatically, consuming about $1 in every $11 of Medicare outlays in 1996, compared with $1 in every $40 in 1989. To control this rapid cost growth, the Health Care Financing Administration was required to implement a prospective payment system that sets fixed, predetermined payments for home health services. Until that system is developed, home health agencies will be under an interim payment system that imposes limits on the cost-based payments they receive. The limits provide incentives to control per-visit costs and the number and mix of visits for each user. Industry representatives claim that the system's new cost limits have caused some home health agencies to close or some beneficiaries, particularly those with high-cost needs, to have difficulty obtaining care. This report (1) identifies the potential impact of the interim payment system on home health agencies; (2) determines the number, distribution, and effect of recent home health agency closures; and (3) assesses whether the interim payment system could be affecting beneficiaries' access to services, particularly beneficiaries who are expensive to serve.


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