The Health of Home Health Care

Gwen B. Turnbull, RN, BS, CETN

   Toward the end of last year, the Office of Inspector General (OIG) from the Department of Health and Human Services (DHHS) published three reports1-3 on how the home health industry was managing after Medicare?s home healthcare prospective payment system (PPS) was initiated at the end of 2000. Medicare data show that between 1997 and 2000, the number of Medicare-certified home health agencies (HHAs) dropped 32% from 10,556 to 7,175.

Between fiscal years 1991 and 1997, Medicare annual expenses for home care rose from $4.7 billion to $17.6 billion. The Centers for Medicare and Medicaid Services (CMS) believes this quadrupling of costs was due to an increase in the number of beneficiaries receiving home care and the number of visits they received. After enforcement of the Balanced Budget Act of 1997 (BBA 97), home health service spending began to drop and was $8.7 billion in 1999.

Medicare Beneficiary Access to Home Health Care

   The dramatic decrease in the number of providers and lowered home health expenditures raised concern over whether patients had adequate access to home health services, prompting OIG investigations. Interestingly, however, a survey of 208 hospital discharge planners showed that 89% of them experienced no difficulty in placing Medicare patients in need of home health care. About 25% of the discharge planners surveyed reported experiences in delays in placement, particularly for patients with wounds because "they require many expensive supplies and frequent visits by home health staff."1 Most attributed these difficulties to changes in admitting patterns by HHAs, changes in staffing patterns, or the effect of agency closings in their service area. Many HHAs have adopted new admission and discharge practices since PPS was implemented. Beneficiaries most affected by these changes seemed to be those with short-term, high-intensity needs of chronic diseases, and/or those needing complex wound care or two visits a day. This coincides with empirical evidence that many HHAs have established admission criteria for patients with wounds (eg, regarding wound debridement, albumin levels, and the like).

   Another survey2 found that 38% of Medicare beneficiaries who started home health care in 2000 had not been in the hospital or a skilled nursing facility before being admitted to home care. A comparison of these "community beneficiaries" and hospital-discharged patients revealed some evidence that community beneficiaries who have more chronic conditions, along with those with certain medical conditions, are unable to obtain Medicare home health services. All respondents in the survey agreed that physicians play the most prominent role in connecting community beneficiaries to home health services.

The Role of the Physician in Home Health

   In addition to a nationwide nursing shortage and home health PPS, other Medicare trends have impacted home health care. In January 1999, the OIG issued a special fraud alert about the role of physicians in certifying Medicare services. Physicians were cautioned not to: 1) prescribe services and items as a courtesy to a patient or service provider, nor prescribe medical equipment without first making sure it was medically necessary; 2) knowingly or recklessly sign false or misleading medical certifications; and (3) accept kickbacks in return for their signature.

   In an effort to better understand actual physicians- practices in prescribing, certifying, and monitoring Medicare home health services within the context of the CMS' expectations, the OIG mailed 600 questionnaires in 2000 to physicians who regularly signed Medicare home health plans of care (POC). Nearly all the physicians (97%) reported they had some familiarity with most of the patients for whom they sign a home health POC. Most stated they were involved in identifying the specific home care services their patients needed, but more than half stated that they worked jointly with the HHAs or hospital staff to make these determinations.

   Not surprising, perhaps, is that many physicians reported they did not have a clear understanding of key Medicare rules and regulations. For example, 38% said they were unclear on what Medicare considered "homebound" - a crucial coverage criteria for home health care. Even though many knew what CMS expected of them, more felt that realistically, they were unable to provide the level of required oversight for Medicare home health patients. Of the respondents, 83% stated they believed that CMS expected them to ensure that only medically necessary services were on the POC, but only 48% said they could actually do so. Even more surprising was that 60% of the physicians stated they had never heard of Medicare HH PPS, which became effective October 1, 2000. This lack of information may be due, in part, to the timing of the survey, as it was conducted during the last 6 months of 2000, shortly after HH PPS was implemented. Nonetheless, the finding is disturbing.

   About 7 years ago, in an effort to encourage physician involvement, Medicare created a way to pay physicians for their time and expertise involved in overseeing POCs for home health patients. In a review of claims data, CMS found that less than 3% of the total healthcare claims showed evidence that physicians had actually billed for the POC oversight payment. More recently, a payment was extended to physicians that covered their time and expertise required for POC certification and recertification. Once again, a review of claims data showed that less than 5% of the physicians billed for these payments. This information indicates that physicians show little willingness to bill for these payments for the services they provide to Medicare home health patients. When asked why, physicians surveyed stated that too much paperwork was involved in submitting the claim and that the payment amount was not high enough to make the effort worthwhile or financially attractive.

Increased Burden on Home Health Agencies

   According to the American Association for Homecare and the National Association for Home Care,4 home health agencies have recently incurred a number of additional costs simultaneous to PPS. These include: OASIS, higher costs for nurse and therapist recruitment and retention, the potential for electronic private transactions, OSHA bloodborne pathogen and needlestick requirements, significantly higher cost for liability and employee health insurance, and Limited English Proficiency and Culturally and Linguistically Appropriate Services standards. Many other agencies continue to struggle with extended repayment plans to pay off their interim payment system (IPS) overpayments.


   Although these studies indicate that most Medicare beneficiaries requiring access to home health care are receiving it despite PPS, they raise several significant issues ? 1) If the trend of HHA closings continue, patient needs likely will not continue to be met in the future; 2) the nursing shortage will eventually greatly impact access by the influx of the Baby Boomer generation to home healthcare; 3) if physicians do not find payment for their services financially attractive or at a minimum, budget neutral, they may become discouraged from participating in home health care; and 4) ongoing education about Medicare home health regulations and requirements is needed for patients, HHAs, home care nurses, discharge planners, case managers, and physicians.


1. Department of Health and Human Services, Office of Inspector General. Access to Home Health Care After Hospital Discharge 2001. July 2001. OEI-02-01-00180. Available at: Accessed February 26, 2002.

2. Rehnquist J. Medicare Home Health Care Community Beneficiaries 2001. Department of Health and Human Services, Office of Inspector General. October 2001. OEI-02-01-00070. Available at: Accessed February 26, 2002.

3. Rehnquist J. The Physician?s Role in Medicare Home Health 2001. Department of Health and Human Services, Office of Inspector General. December 2001. OEI-02-00-00620. Available at: Accessed February 26, 2002.

4. American Association for Homecare. AA Homecare Update. AA Homecare meets with GAO on 15% issue. February 2, 2002:4. Available at: Accessed February 19, 2002.

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