Medicare Home Health Agencies:

Closures Continue, With Little Evidence Beneficiary Access Is Impaired

HEHS-99-120: Published: May 26, 1999. Publicly Released: May 26, 1999.

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William J. Scanlon
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Pursuant to a congressional request, GAO provided information on the: (1) distribution of Medicare home health agencies' (HHA) closures across urban and rural counties and the characteristics of closed agencies; and (2) effect of closures on beneficiary access to home health services.

GAO noted that: (1) prior to the HHA closures that have attracted widespread attention, both the number of HHAs and utilization of home health services had grown considerably; (2) although 14 percent of agencies closed between October 1, 1997, and January 1, 1999, beneficiaries are still served by over 9,000 HHAs, approximately the same number that were available in 1996; (3) 40 percent of the closures were concentrated in three states that had experienced considerable growth in the number of HHAs and had utilization rates well above the national average; (4) furthermore, the majority of closures occurred in urban areas that still have a large number of agencies to provide services; (5) the pattern of HHA closures suggests a response to the interim payment system (IPS); (6) the IPS revenue caps would prove particularly stringent for agencies that provided more visits per user, for smaller agencies, and for those with less ability to recruit low-cost patients; (7) closing agencies were also about half the size of agencies that remained open, and they had been losing patients before the implementation of IPS; (8) attention had been focused on the number of Medicare-certified HHAs available to provide home health care, but the more important issue is whether beneficiaries have access to Medicare-covered home health services; (9) evidence shows that overall home health utilization in the first 3 months of 1998 had declined since 1996, but it was about the same as a comparable period in 1994--the year that serves as the base for IPS limits; (10) moreover, the sizeable variation in utilization between counties with high and low use has narrowed; (11) these changes are consistent with IPS incentives to control utilization; (12) in counties without a HHA, both the proportion of beneficiaries served and the visits per user declined slightly during the first 3 months of 1998 compared with a similar period in 1994, but these counties' levels of utilization remained above the national average; (13) GAO's interviews in 34 primarily rural counties with substantial closures indicate that beneficiaries continue to have access to services; (14) overall, the 130 stakeholders GAO interviewed in 34 counties with significant closures or declines in utilization reported few access problems; and (15) however, those interviews also suggest that as HHAs change their operations in response to the IPS, beneficiaries who are likely to be costlier than average to treat may have increased difficulty obtaining home health care.

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