Comparison of Two Methods of Computing Home Health Care Cost Limits

HRD-90-167: Published: Sep 28, 1990. Publicly Released: Sep 28, 1990.

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Pursuant to a legislative requirement, GAO provided information on the potential effect on Medicare costs and beneficiaries of limiting home health care costs by type of visit.

GAO found that: (1) Medicare home health costs would have been about $36.9 million lower from July 1, 1987, through June 30, 1988, if the cost limits had been applied by type of visit rather than in the aggregate; (2) from July 1, 1989 through June 30, 1990, Medicare costs would have been $49.3 million less under type-of-visit cost limits; (3) applying cost limits by type of visit would not significantly affect the availability of home health services to Medicare beneficiaries; (4) although it could not directly assess the effects on quality of care resulting from shifting to a type-of-visit cost limit system, it did not anticipate a significant effect, since there would be only small or no reductions in revenues; and (5) changing the cost-limit-computation method from the 75th percentile of home health agencies to 112 percent of mean costs had little effect on limit levels.

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