Medicare:

Home Health Agencies With High Visit Rates Skew Averages

HEHS-97-139R: Published: Jun 2, 1997. Publicly Released: Jun 2, 1997.

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Pursuant to a congressional request, GAO reviewed Medicare's reimbursement of home health agencies (HHA), focusing on whether: (1) there are reasons why proprietary HHAs provide more visits than voluntary and governmental agencies; (2) there is any justification for the extra visits; and (3) the skewing effect of the high visit rates by proprietary agencies could be removed when calculating the number of visits for purposes of devising a prospective payment system (PPS) for home health.

GAO noted that: (1) its work and the work of others has consistently shown that proprietary agencies provide more visits per beneficiary than agencies of other types; (2) however, while an agency could provide more visits on average than other agencies for legitimate reasons, none of the factors GAO and others explored provided an explanation related to patient need for the differences in utilization among agency types; (3) in developing a PPS, one way to lessen the influence on visit rates of HHAs that consistently furnish more visits is to use the median number of visits, the point at which half of patient cases (or episodes of care) have fewer visits and half have more, rather than using the average number of visits to determine payment rates for episodes of care; (4) using the median could be combined with an "outlier" payment system for exceptional cases that justifiably have high numbers of visits so that HHAs are not financially disadvantaged by patients who need extraordinary care; (5) GAO also has concerns about the adequacy of the Health Care Financing Administration's (HCFA) current data on home health visit rates and costs for setting PPS rates; (6) GAO's concern stems from the low levels of medical reviews and cost report audits conducted by Medicare's intermediaries during the 1990s; and (7) thorough reviews and audits should be performed on a projectable sample of HHAs and the results used to adjust HCFA's databases before PPS rates are set.

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