Medicare Home Health Care Benefit

HEHS-97-70R: Published: Feb 11, 1997. Publicly Released: Feb 11, 1997.

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William J. Scanlon
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Pursuant to a congressional request, GAO reviewed: (1) the potential effects of shifting the Medicare home health care benefit from the part A trust fund to the part B trust fund; and (2) Medicare and Congressional Budget Office (CBO) projections of home health costs and utilization and made rough estimates of the dollar effects of the proposal.

GAO noted that: (1) it found three potential effects from shifting most home health costs from part A to part B; (2) as expected, the depletion date for the part A trust fund would be extended because the majority of home health payments would no longer come from that fund; (3) CBO estimated last year that the shift would add about 3 years to the 2001 depletion date it then estimated; (4) the shift would result in the need for more general revenues to fund part B in direct proportion to the costs shifted from part A; (5) available information indicates about $95 billion would be needed over the fiscal year 1998 through 2002 period, assuming no other changes to the home health benefit are made; (6) the administration and others also propose additional changes to the home health benefit designed to hold down its cost growth, and to the extent that such proposals are implemented, the amount shifted from part A to part B would be reduced; (7) the shift, however, would not affect the reported budget deficit amount because both funds are included in the unified budget, and the increase in general fund expenditures would be offset by an equal decrease in part A trust fund expenditures; and (8) Medicare beneficiaries would not be affected except that they would have less opportunity to appeal home health denials to administrative law judges because the dollar threshold for such appeals is $100 under part A but $500 under part B.

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