Determining Cost-Effectiveness of Home and Community-Based Services

HRD-87-61: Published: Apr 28, 1987. Publicly Released: Apr 28, 1987.

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GAO reviewed states' reports on Medicaid home- and community-based service (HCBS) programs to determine whether the Health Care Financing Administration (HCFA) was collecting accurate and useful information on HCBS programs. HCFA collects the data to ensure that the cost of Medicaid HCBS programs does not exceed the estimated cost of providing nursing home care to HCBS recipients.

GAO found that: (1) HCFA believed that the majority of state reports were neither accurate nor useful for assessing cost-effectiveness; (2) HCFA gave states inconsistent guidance on reporting HCBS costs; (3) states varied in their interpretations of Medicaid requirements; and (4) HCFA attributed problems to its delays in specifying reporting requirements and to states' problems with HCFA guidance and with systems and procedures development. GAO also found that HCFA: (1) revised the HCBS reporting requirements in 1986; (2) believes that the new data will be more accurate and useful; and (3) will evaluate the systems states use to produce their reports. In addition, GAO found that HCFA: (1) needs to evaluate more than comparative costs, because HCBS programs sometimes supplement, rather than replace, Medicaid nursing home care; and (2) does not know the extent to which HCBS programs replace, or merely supplement Medicaid nursing home care.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HCFA agreed that HCBS services cannot be effectively targeted, but stated that its current review and waiver approval process are adequate to ensure cost-effectiveness. It plans no action on this recommendation.

    Recommendation: The Administrator, HCFA, should develop measures of HCBS programs' ability to prevent or postpone nursing home care and use these measures to evaluate the cost-effectiveness of the waiver programs.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


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