.. 

Departmentof Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

HOME HEALTH AGENCIES: 

ALTERNATIVE COVERAGE AND 

PAYMENT POLICIES 

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JUNE GIBBS BROWN 

Inspector General 

MAY 1995 

OEI-12-94-00180 
. 

EXECUTIVE SUMMARY 

PURPOSE 

The purpose of this inspection is to provide information to Health Care Financing 

Administration (HCFA) on how selected other payers structure and manage their home health 

benefit. 

BACKGROUND . . . . 

Title XVIII of the Social Security Act, Section 1861, authorizes Medicare payments for home


health services under certain conditions. The care must be provided by certified home health


agencies (HHAs), which may be either freestanding or facility-based. The Medicare home


health benefit coverage includes the following items and services: 1) part-time or


intermittent nursing carq 2) physical, occupational, or speech thempy; 3) medical social


services; 4) part-time or intermittent services of a home health aide; and 5) medical supplies


other than drugs and biological.


The HCFA has convened a task force to examine its home health benefit. One of the


reasons for this examina tion is the significant increase in expenditures in this category of


service. Between 1988 and 1992, they rose from $2.3 billion to $7.1 billion. During this


time, the number of Medicare beneficiaries who used these services increased ahnost 65


percent. The number of services per beneficiary also increased by the same amount.


We selected twenty thee payers of home health services. Our fd list include fifteen


nxpondents; three Medicaid agencies; five private insurance companies; five Health


Maintenance Organizations; the Department of Veterans Affairs (DVA); and the Civilian


Health and Medical program of the Uniformed Services (CHAMPUS). We conducted


telephone interviews with each of the ftieen respondents using a focused discussion guide.


We asked each private payer to describe their policies as a general matter and to reflect in


their responses what constituted the “rule,” rather than the “exception.” Each offers many


different products, and their policies can and do differ among their insured population.


FINDINGS 

Home Health Benefits in Other Health Plans are Generally Structured Similar to 

Medicare’s 

Other payers are similar to Medicate in their criteria for eligibility; requirements placed on 

home health agencies; services covered under their basic home health benefi~ quality 

monitoring processes and how they pay providers. 
. . ---------

Other Plans Approaches to Controlling Home H@th Expenditures are Different from 

Medicare’s 

Other payers differ from Medicare in setting limits on home health benefits or moving mom 

intensive and special needs patients to targeted programs; and in their utilization control 

mechanisms. 

POINTS OF FURTHER ANALYSIS 

The practices of other payers could provide potential ideas for reforming or managing 

Medicare’s home health benefit. We believe that HCFA might study the merits of some of 

. .. .* .- these approaches .as.it-dekxmines .hmwbestxo cmxm&-utilizatiQQand expenditwes-avhik- -:-. 

assuring the appropriate delivery of high quality care to Medicare beneficiaries. Among 

those approaches which might hold promise for Medicare anx 

�	 Targeting Needs. Rather than a “one size fits all” home health benefit, Me&are 

might wish to channel different patients into different home health “progmrns” where 

the benefit could better conform to different patient needs and progmm management. 

In addition, controls could be designed more effectively. 

E	 Case Management. Case managers might be particularly appropriate for certain 

classes of beneficiaries who are expected to require services over a specified period of 

time (e.g. patients with chronic care needs). 

�	 Beneficiary Participation. The use of Explanation of Benefits @OBs) (perhaps on a 

monthly basis to avoid unnecessary administrative burden) and imposition of 

qxyrmt.s, previously proposed in various legislative initiatives are avenues to 

increase the beneficiary’s stake in their own health care and identify potential 

overutilization, abuse or quality problems. 

F	 Limitations on Coverage. Caps on number of visits allowed each year, or some 

other kinds of limitations, would not only be consistent with the policies of some 

other payers but also with Medicare’s own policies with regard to skilled nursing 

care, hospital benefits, and other categories of service. 

As HCFA considers these ideas, it must struggle with a number of questions, including the 

impact of such changes on beneficiaries. To assist HCFA in answering some of these 

important questions, the Offke of Inspector General is currently engaged in a home health 

initiative to examine payments made to home health agencies on behalf on Medicare 

beneficiaries. This initiative involves the OIG’S investigations, audit, and evaluation staffs. 

Among the upcoming products emanating from this initiative are reports on provider audits 

and validation of claims; the physician’s role in home health services; and an overall 

assessment of payment made to HHAs and the relationship of those payments to HHA 

characteristics, beneficiary characteristics, and other potentially relevant factors. 

ii 
.

COMMENTS ON THE DRAFT REPORT AND OIG RESPONSE 

The HCFA indicated that the report would be usefid in assessing possible changes to the 

home health benefit. However, HCFA stated that our report appears to assume that other 

agencies are mom effective than Medicare in controlling costs. Further, HCFA pointed out 

that there are no data in the report comparing the average number of visits or expenditures 

per beneficiary. The HCFA speculated that age, health status, and income could explain 

differences in utilization if they exist, as well as plan characteristics and benefit management. 

We appreciate HCFA’s comments. We recognize thut there are no data in the report 

compating the number of visits or expenditures per benej?ciary; however, this was beyond the .-. - WPe of ourinqm’v. Z%?purpose-of W repro? wvw 10 d~~c~~b~]~w .~~~e~~d-~~m- - .. . ... . --- -=..- .. 

structure and manage their home health hen@ as compared to Medicare. Our anulysis 

indicated that other payers lim”t the benqjit and use a variety of techniques to control 

utilim”on more than Medicare. TWether these techniqws actually result in luwer per capita 

costs is subject to fimther anulysis. It is clear, however, that other payers have many more 

oppo~”ties to mu.nugem“lization of the bengjit and control costs compared to Medicare 

coverage and payment policies for hone agencies. 

%fill text of HCFA’s comments can be found in appendix A. 

... lu 
TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY 

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...3 

POINTS OF FUR- ANALYST::. : . . . . . . . . . . ..”. .”. . . . . ..’ . ...10 

APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. A-l 
---

INTRODUCTION 

PURPOSE 

The purpose of this inspection is to provide information to Health Care Financing 

Administration (HCFA) on how selected other payers structure and manage their home health 

benefit. 

BACKGROUND 

,.. . M&i&m? . . . .... .. .. . . -..— - . t .. .. .. . ._. .,- .. ...=.. *% .,* 

Title XVIII of the Social Security Act, Section 1861, authorizes Medicare payments for home 

health services under certain conditions. The care must be provided by certified home health 

agencies (HHAs) which may be either fnxxdanding or facility-based. They can be voluntary 

not-for-profit, proprietary or governmental in nature. 

Virtually all Medicare reimbursements for home health care are made under Part A, (hospital 

insurance). Beneficiaries pay no coinsurance or deductibles for home health care covered 

under Part A or Part B, except for durable medical equipment (DME) fimished by a home 

health agency, nor do they receive an Explanation of Medicare Benefits (EOMBS). Home 

health care may be covered under Part B (supplementary medical insurance) if a beneficiary 

has only Part B coverage. ClaimS are submitted to one of nine fiscal intermediaries known 

as Regional Home Health Intermediaries. 

The Medicare home health benefit coverage includes the following items and services: 

1) part-time or intermittent nursing cae; 2) physical, occupational or speech therapy; 

3) medical social services; 4) part-time or intermittent services of a home health aide; and 

5) medical supplies other than drugs and biological. 

TO qualify for home health benefits under either Part A or Part B of Me&are, a beneficiary 

must: be considered homebound, except to receive services that due to special equipment 

needs, can not be provided in the patient’s home; need care on an intermittent basis; and 

receive services under a plan of cam established and periodically reviewed by a physician. 

Skilled care includes: skilled nursing services, physical therapy, or speech therapy services. 

In addition, only after the patient receive one of these qualifying services may he or she then 

receive the services of an occupational therapist, a medical social worker, or a home health 

aide. Home health aides provide hands-on personal care of beneficiaries which must be 

necessary to the treatment of the beneficiary’s iUness or injury. Home health aide services 

include: 1) personal care services, 2) simple dressing changes, 3) assistance with some 

medications, 4) activities to support skilled therapy services, and 4) routine care of prosthetic 

and orthotic devices. A beneficiary whose sole need is for custodial care does not qualify. 

Medicare beneficiaries who are eligible for home health services may receive care as long as 

it is reasonable and necessary; there are no limits to the number of visits or length of 

1 
coverage. Medicare does not require copayments or deductibles for home health care, except 

for dumble medical equipment. b addition, the COUrtShave limited Medicare’s ability to 

deny home health coverage. In the case, Dwzan VS. su~van, Medic-am Was hlStfUCtedthat 

suftlcient evidence in the medical record was necessary to deny a claim. This high standard 

has led to a decrease in home health denials. TO ensure that payments for home health 

services are appropriate, Medkme requires intermediaries to conduct post-payment reviews 

of home health claims and monitor those providers that appear to have high utilization rates 

that are unexplainable. 

Medicare reimburses home health agencies on a reasonable cost basis (subject to limits) for 

costs related to visits for patient care. “Visit costs” include all incurred costs related to 

,- mak!ng th? visits such. as pmpaxatiawfor the visits, tekphone calls, CQnfbmrxwsabout the , T~’ s -~ 

patient and maintaining patient records. 

The Medicare program addresses the quality of home health services through: annual 

beneficiary satisfaction surveys, certifkat.ion requirements for home health agencies, and, 

agency surveys conducted at least once every 15 months. 

The HCFA has convened a task force to examine its home health benefit. One of the 

reasons for this examination is the signifkxmt increase in expenditures. Between 1988 and 

1992, they rose from $2.3 billion to $7.1 billion. During this time, the number of Medicare 

beneficiaries who used these services increased almost 65 percent. The number of services 

per beneficiary also increased by the same amount. 

METHODOLOGY 

We selected twenty-three payers of home health services. We made initial telephone calls to 

verify that those we planned to interview provided such services. Our final list includes 

ftieen respondents; three Medicaid agencies; five private insurance companies; five Health 

Maintenance Organizations; the Department of Veterans AITairs (VA); and the Civilian 

Health and Medical Program of the Uniformed Services (CHAMPUS). We conducted 

telephone interviews with each of them using a focused discussion guide and later followed 

up to collect any missing data. 

We asked each private payer to describe their policies as a geneml matter and to reflect in 

their responses what constituted the “rule,” rather than the “exception.” Each offers many 

different products, and their policies can and do differ among their insured population. 

We also collected information from ofiicials in Australia and the province of Ontario, 

Canada. Because of the basic dissimilarity in health care systems between the United States 

and these countries, a strict comparison is not useful. Instead, we are providing a 

description of our discussions with those oftlcials under separate cover to HCFA. 

2

FINDINGS 

HOME HEALTH BENEFITS IN OTHER HEALTH PLANS ARE GENERALLY 

STRUCTURED SIMILAR TO MEDICARE’S 

Other payers are similar to Me&are in their criteria for eligibility; the requirements they 

place on home health agencies, the services covered under their basic home health benefit, 

their quality monitoring processes, and how they pay providers. 

Other Payers Have Similar Eligibility Requirements to Medicare. ,, . .. ... +-w------. --w. .. - . - - -

Medicare’s requirements for eligibility are similar to those used by the private payers we 

interviewed, as demonstrated below. 

CONDITIONS OF COVERAGE FOR HOME HEALTH BENEFIT 

Medicare and Private Payers 

MEDICARE	 PRIVATE PAYERS 

(Total = 10) 

I Homebound 1X1 6 

I Prior Hospitalization I I 1 

Requk skilledcam 

1 

x 

I 

9 

Intermittent Care 1X1 9 

Like Medicare, six of the ten private payers have a homebound requirement. The four 

private payers who do have some requirement that patients be confiied to the home, also 

consider different patient needs and circumstances when malting coverage decisions. For 

example, patients with AIDS may be employed full-time and still receive home health care 

benefits. 

Similarly, nine of the ten private insurers do not require prior hospitalization in order to 

receive home health benefits. These same nine private payers require that skilled care be 

needed as a precondition for receiving other home health services. 

One plan mandates that a completed home health care plan be completed within seven days 

following the end of a hospital confinement, and that the care be for the same or related 

condition which caused the hospitalization. Rather than having an explicit skilled care 

requirement, this plan requires that the physician certifj that, in the absence of the home 

health care services, the proper treatment of the injury or iUness would require continued 

hospitalization. 

3

--

All but one of the private payers require that care be provided to patients on an intermittent 

basis. 

The three Me&aid programs we interviewed have slightly less restrictive eligibility 

requirements. Two of the the do not require that patients need skilled care or rehabilitative 

therapy in order to receive the benefit, nor do they have a strict homebound requirement. 

The U.S. Department of Veterans Affairs (VA) and CHAMPUS are also slightly less 

restrictive than Medicare. Unlike Medicare, they do not require that patients be homebound 

in order to be eligible for home health services. The VA does not set an explicit 

“intermittent” standard for its beneficiaries; care may be authorized as long as it is necessary 

or appropriate for effeetive andeccmmnieal treatment. .-TIE5LVA allows care @be-provided =------ -

on a daily basis as long as the total costs in one month do not exceed the costs that would 

have been incurred in an institution. The CHAMPUS program does require the care be 

intermittent to qualify for its basic home health benefit. Both progmms require that patients 

need skilled care in order to be covered. 

Other Payers Place Similar Requirements on Home Health Agencies for Care to be 

Covered. 

All of the private payers requi.m a formal plan of care established for the home health care 

patients. Most payers use plans of care similar to Medicare’s, though there are some 

variations. One indemnity plan, for example, uses a formal plan of care for catastrophic 

cases only. 

All three Medicaid agencies require use of a formal plan of cam which must be ordered and 

signed by a physician. 

The VA requires a physician’s statement be completed in order for care to be authorized. 

Such a statement must include the specific medical services required, the duration authorized, 

frequency of visits by providers, and estimated total monthly costs of providing home health 

services. The VA’s physicians (either employed by the VA hospital or with staff privileges) 

are responsible for ordering the care and following the patient’s progress. Similarly, 

CHAMPUS requires that services be ordered by a physician and have a treatment plan 

describing the frequency and duration of thempies, procedures and medication, and the 

prognosis for the patient. 

Most payers require that HHAs be Medicare-certifkd, or accredited in lieu of certilkation, 

in order to receive payment. 

Benefit Packages Offered by Other Payers are Similar to Medicare’s. 

Genemlly, services covered by other payers as part of their basic benefit packages are similar


to Medicare’s, including coverage of skilled nursing care, therapy services, and aide


services. Only two differences emerged:


4

. .

�� A number of other payers also offer a drug benefit in conjunction with their 

home health benefit or as a general benefit in their insurance prugram. The 

availability of this benefit in the private market might vary from employer to 

employer. For Medicaid, prescription drug coverage is an optional offering 

but is currently included in all State Medicaid programs. 

�� The VA does not cover aide services as part of its basic home health benefit, 

which is limited to medical services. The VA has determined that 

homemaker, domestic-type services (such as house cleaning, meal preparing, 

companion) are not medical services and cannot be authorized under its home 

health program. Vetemns may qualify for another program which would 

provide those servkes. . . .----- . .. . . 

Like Medicare, other payers rely on beneficiary surveys, complaint programs and 

provider audits and reviews to ensure quality; none reported using outcome measures. 

Like Medicare, most of the private payers’ beneficiary surveys are conducted as part of a 

larger satisfaction survey on all services covered and not speciilcdly on home health 

services. The HMOS, in particular, emphasized this practice, ~rting that they conduct 

such sumeys several times a year. Indemnity plans vary more in their use of beneficiary 

surveys. One plan conducts quarterly surveys; two other plans survey only when there is a 

case manager involved; another does not survey beneficiaries at all. Many payers also 

reported using various types of internal audits, complaint monitoring progmms, and provider 

reviews, as a means of ensuring that necessary services are rendered and beneficiary abuse 

does not occur. 

The VA also conducts surveys to monitor beneficiary satisfaction with all covered services. 

In addition, VA medical centers have quality assessment committees which sample patients 

from their outpatient centers to ask them about the cm.e they receive. 

Although we asked about the use of outcome measures, none of the payers report ustig these . 

to measure the quality of home health services. A few report they are developing some 

measures for future use. 

Like Medicare, Most Other Payers Reimburse Providers on a Per Service Basis; HMOS 

Use a Capitated Approach 

AU of the private indemnity plans pay for services by visitor by hour depending on the 

service. Payers often negotiate rates with home health agencies using the Medicare fee 

schedule as the basis for negotiation. Rates frequently are determined locally, taking costof-living and other local factors into consideration. One plan pays a flat $40 per visit with a 

visit defined as an eight-hour shift from a nurse or aide, one therapy session, or one social 

worker visit. 

The HMOS negotiate capitated rates with home health agencies. One common pmctice is to 

negotiate a capitated rate for nurses and home health aides and hourly payments for therapists 

5 
or other services. Under this scenario, HMOS pay agencies a flat sum per enrollee with 

agencies providing all necessary nursing and aide care to enrollees as needed. Rates are 

established based on prior payments and can be adjusted if necessary. 

Medicaid agencies generally pay providers on a per-visit or per unit basis. 

Agencies are paid by the VA on a per visit basis, either under cent.met or on a “usual and 

customary” basis. When the cost of care at home begins to exceed nursing home care, the 

VA will authorim placement in an institution. 

OTHER PLANS APPROACHES TO CONTROLLING HOME HEALTH 

EXPENDITURES ARE llmTERENT FROM MEDICARE’S “ 

Other payers differ from Medicare in setting limits on home health benefits; moving more 

intensive and special needs patients to targeted progmms; and in their utilization control 

mechanisms. 

Several Payers Place Limits on Their Home Health Benefits. 

Some payers structurally limit their home health benefit through limits, or caps, on the 

number of services allowed for any one beneficiary. ~ of the five indemnity plans who 

use service caps either cap the number of visits allowed per year or limit the amount of time 

per visit (in programs that pay by the hour). Two HMOS lhnit the amount of physical and 

occupational thempy services delivered. 

The VA limits coverage of home health services to six months for veterans without semiceconnected injuries. 

One of the Medicaid agency officials we interviewed specitkally mentioned service caps. 

This State limits beneficiaries to 50 skilled nursing and aide visits annually, although 

exceptions are allowed. 

Other Government Payers Supplement Their Basic Home Health programs with 

Targeted Efforts Devoted to the Care of Special Populations. 

Our conversations with other government payers yielded information regarding special efforts 

to target certain populations and develop special programs to meet their requirements, rather 

than relying on their basic home health benefit to add.mss those needs. 

Medicaid 

Medicaid can cover home health m for needs beyond “part-time” or “intermittent” with 

State-only dollars. States can pay for home health services up to the equivalent cost of the 

State’s share of a nursing home stay. Long-term home-based care to special populations 

(frail elderly, disabled children, AIDS patients) can also be provided under Medicaid waivers 

with both Federal and State dollars. 

6

Depmttnent of Vetemns Aflaim 

The VA has a special “aide and attendant” program for those with severe disabilities, 

including vetemns with service-comected spinal cd injuries. ‘IMSprogram provides a cash 

benefit to purchase needed services (to pay the salary of an aide, for example); the cash 

benefit may be supplemented by skilled services under the home health benefit. 

CE4MPUS


For CHAMPUS, patients who need more intensive care than can be provided through its 

basic home health benefit can be enrolled in one of three demonstration projects. 

.	 The fmt demonstmtion project identifies patients with catastrophic, complex needs 

and develops home and cmnrmmity-based treatment plans, with case managers helping 

patients gain access to sophisticated, cost-efficient care. Patients sham in the costs, 

with active-duty families paying 20 percent of CHAMPUS’S allowable charge (limited 

to $1000 out-of-pocket) and other families paying 25 percent (limited to $7500). 

.	 The second demonstration project is designed to keep patients at home in lieu of 

hospitalization when such care is cost effective. This demonst.mtion focuses on highcost patient populations including children, hospice patients, and patients with AIDS, 

those who have had transplants, or those who require intense rehabilitation efforts. 

The physician must sign a detailed treatment plan, including an estimate of the length 

of time the patient would spend in an institution if the home health ~ were not 

provided. An itemized comparison of the costs of hospitalization versus the costs of 

home care is required. 

.	 The third demonstration provides fmcial assistance to active-duty families with a 

severely-handicapped family member. The family pays initial costs based on the 

active-duty personnel’s pay gmde; CHAMPUS pays up to $1000 a month. If more 

than one family member qualiiies, CHAMPUS pays all allowable costs for the 

additional handicapped persons. Covered services include nursing, physical, 

occupational and speech therapy, durable medical equipment, hearing aids, and 

schooling or residential care. 

In all these demonstrations, the goal is to convert the patient to the regular benefit plan.


This tmnsition would take place when the patient no longer needs the care provided under the


demonstration, when such care is no longer cost effective, or when the “policy holder” is no


longer on active duty. The transition is achieved through following the plan of care,


stabilizing the patient, and training the camgivers. The case management coordinator follows


patients’ progress after they have left the demonst.mtion, to ensure that they are stable and to


prevent rehospitalization.


7

Case Management, Post Payment Utilization Review, and Beneficiary Participation 

Through Copayments and Explanation of Benefits (E(Ilk) are Used by Other Payem to 

Ensure Appropriateness of Services and Detect Fraud and Abuse. 

When asked, about what techniques they used to manage and control utilization of their home 

health benefit, respondents indicated that the methods used in any plan depends largely on the 

tmns of the contract negotiated with employers, these payers generally reported a variety of 

techniques in common use. 

METHODS USED TO CONTROL UTILIZATION OF HOMB HEALTH BENEFITS 

Medicare and Private Payers 

MBDICARB PRIVATE PAYERS 

(Total = 10) 

Case Management 9 

Utilization Reviews x 10 

Copayment/Deductibles * 9 

Explanation of Benefits 6 

* Medicare requires a 20 percent coinsurance charge for DME. 

Case Management 

Almost all payers used some form of ease management to ensurt quality of service and to act 

as gatekeeper. Indemnity plans tend to target their case management efforts. For example, 

one plan focuses its ease management efforts on its catastrophic and chronic patients. 

Another plan hires case managers only in major urban areas to work with local physicians 

and nurses with a goal of helping patients access other community serviees. All of the 

HMOS use ease managers and primary care physicians to monitor and manage patients’ care. 

The VA also reports using ease managers. For that program, because of its link to its 

hospital system, the hospital social workers acts as a case manager and is responsible for 

reauthorizing care if appropriate. The CHAMPUS also reports using ease managers under 

one of its three home health demonstration programs. 

U#ili~”on Review 

The payers cite a number of utilization review measures including: intensive intemction with 

physicians, review of physician referral rates, post-pay edits, prior approval, utilization 

proftig combined with physician education, and active fraud units. One HMO conducts an 

analysis of the cost of providing care in the home compared to skilled nursing facilities 

(SNFS). The patient and family may then choose whether to contribute the difference in 

cost, supplement professional care with volunteers, or admit the patient to the SNF. 

8 
-- --

The three Medicaid programs cite a post-payment utilization niwiew measures such as post 

pay edits, “exception” reviews where high use cases are identified for close monitoring, and 

verification of incoming claims against the plan of care. 

Copayment and Deductibles 

Almost all of the private payers report that they commonly require some level of fmcial


participation by the beneficiary. TWOof the five indemnity plans mention a coinsurance


charge of 20 percent was common in their plans. Two other indemnity plans contract with a


network of home health providers, and when used, require no copaymen~ otherwise they


also require a copayment. The other indemnity plan requires a copayment after 90 days of


full coverage. The HMOS .cither have no copayment charges at all, or charge some nmnimd -


amount (e.g. one HMO charges $5.00 per visit). Two of the four HMOS require either a


copayment or deductible for durable medical equipment only. None of the Medicaid


agencies we interviewed require copayments (although this is not true for all Medicaid


programs).


Explanation of Bene@s 

Four of the five indemnity plans provide beneficiaries with an explanation of benefits 

(BOBS); one provides them only upon request. The HMOS were mixed in their use of 

EOBS. None of the Medicaid programs we interviewed use EOBS. 

Rece@icalion of Need/Reauthorization of Services 

Most private payers have a formal progmm in place for reauthori@ion or mcertiilcation of


need. Generally they follow Medicare’s practice of recertification every 60 days.


Medicaid agencies also review cases every 60 days, according to statutory requirements.


The VA has a 12-month review process in place for all veterans receiving home health


benefits under the fee for service program. l’his redetermination process assesses whether


care should continue in the home or another alternative employed. The VA also submits all


cases whose authorizations are to expire in the next three months to VA officials, who


consult with the home health provider, review the veteran’s medical record, and consider


alternatives and costs of alternatives.


9

POINTS OF FURTHER ANALYSIS 

Due to the rapid incmse in home health care costs and the need to ensure the quality of 

services delivemxl in the home, HCFA has initiated efforts to improve Medicare’s home 

health benefit. We are supporting HCFA in that effort by providing this report as well as 

others focusing on a variety of home health issues. 

Despite the small number of other payers that we examined during the course of this review, 

their practices could provide potential ideas for reforming or managing Medicare’s home 

health benefit. The HCFA might study the merits of some of these approaches as it 

determines how best to control utilization and expenditures while assuring the appropriate 

delivery of high quality care to Medicare beneficiaries. Among those approaches which 

might hold promise are: 

F	 Targeting needs. Rather than a “one size fits all” home health benefit, 

Medicare might wish to channel different patients into different home health 

“progmms” where the benefit could better conform to different patient needs 

and program management. In addition, controls could be designed mom 

effectively. 

b	 Case Management. Case managers might be particularly appropriate for 

certain classes of beneficiaries who are expected to require services over a 

specified period of time (e.g. patients with chronic care needs). 

b	 Beneficiary Participation. The use of EOBS (perhaps on a monthly basis to 

avoid umecessary administrative burden) and imposition of copayments, 

previously proposed in various legislative initiatives, can increase the 

beneficiaries’ stake in their own health care and identify potential 

overutilization, abuse or quality problems. 

�	 Limitations on Coverage. Caps on number of visits allowed each year, or 

some other kinds of limitations, would not only be consistent with the policies 

of some other payers but also with Medicare’s own policies with regard to 

skilled nursing care, hospital benefits, and other categories of service. 

Our additional work ongoing and planned in the home health area will assist HCFA in testing 

out some of these ideas. Some of the questions that would need to be answered in assessing 

the validity of these approaches for Medicare include: 

E	 What have been the patterns of utilization and health care consumption for 

beneficiaries in plans with experience with these approaches, as compared to 

Medicare? 

� What impact would such changes have on Medicare beneficiaries? 

10

�	 What impact would such changes have on the fiscal soundness of the Medicare 

program? 

One of the factors that makes assessment of impacts difilcult is the lack of outcome 

measures. While many of the payers we spoke to told us that they are interested in and/or 

developing outcome measures for their prugrams, we found they had little to offer on this 

subject at the current time. Therefore, we support any efforts by HCFA to address the issue 

of developing methods to measure and monitor the quality of home health services. 

AMdional OIG Work 

The OIG is currently engaged in a home health initiative to examine payments made to home 

health agencies on behalf on Medicare beneficiaries. l%is initiative involves the OIG’S 

investigations, audit, and evaluation staffs. Among the upcoming products emanating from 

this initiative am reports on provider audits and validation of claims; and on the physician’s 

role in home health services; an overall assessment of payment made to HHAs and the 

relationship of those payments to HHA chamcteristics, beneficiary characteristics, and other 

potentially relevant factors. 

COMMENTS ON THE DRAFT REPORT AND OIG RESPONSE 

The HCFA indicated that the report would be useful in assessing possible changes to the 

home health benefit. However, HCFA stated that our report appears to assume that other 

agencies are more effective than Medicare in controlling costs. Further, HCFA pointed out 

that there are no data in the report comparing the average number of visits or expenditures 

per beneficiary. The HCFA speculated that age, health status, and income could explain 

differences in utilization if they exist, as well as plan characteristics and benefit management. 

We appreciate HCFA’s comments. We recognke that there are no hta in the report 

comparing the number of visits or tzxpendituresper berw$a”ary; however, this was beyond the 

scope of our inqm”ry. I%epurpose of this report was to describe how selected payers 

structure and manage their home health benefit as compared to Medicare. Our analysis 

indicated that other payers limit the benefit and use a variety of techniques to control 

utilization more than Medicare. TW.etherthese techniques actually result in lower per capita 

costs is subject to jlwther analysis, as indicated in the report. It is clear, however, that other 

payers huve many more oppom”ties to manage utilizxx”onof the benejit and control costs 

compared to Medicare coverage and payment policies for home agencies. 

Thefidl text of HCFA’s comments can be found in appendix A. 

11

APPENDIX A 

AGENCY COMMENT S TO THE DRAFI’ REPORT 

A-1 
,* Wm,.o 

5	 *. 

�.* + 

DEPARTMENT OF HEALTI-I& HUMANSERVICES 

Health Care 

; Financing Administration 

8

‘k.& A Memorandum

DATE 

FROM 

SUBJECT 

TO 

I’fu!R27 1995 LJJLA 

Bruce C. Wade 

Administrator v 

Office of Inspector General Draft Reports: “The Physician’s Role in Home 

Health Care,” (OEI-02-94-O0170) and “Home Health Agencies: Alternative 

Coverage and Payment Policies,” (OEI-12-94-00180) 

June Gibbs Brown 

Inspector General 

We reviewed the subject draft reports which examine home health care provided under 

the Medicare program. Our comments are attached for your consideration. 

Thank you for the opportunity to review and comment on these reports. Please advise 

us if you would like to discuss our position on the recommendations. 

Attachment 
Comments of the Health Care Financing Administration (HCFA) 

on Office of In~ector General (OIG) Draft Reports: 

“The Phvsician’s Role in Home Health Care,” (OEI-02-94-00170) 

and “Home Health Agencies: Alternative Coverage and Pavment 

Policies,” (OEI-12-94-00180\ 

OIG Recommendations on “The Physician’s Role in Home Health Care” 

1.	 The HCFA should continue its efforts to change the plan of care to ensure it 

conveys critical information to caregivers and relieves unnecessary burden from 

physicians. 

2.	 The HCFA should further communicate its expectations about physician 

involvement and take steps to assure that it is more clearly understood by home 

health agencies and physicians. 

HCFA Re,soonse


HCFA defers action on the above recommendations at this time. We are in the process


of examinin g issues related to plans of care and the physician’s role and recognize the


importance of both recommendations. However, we believe it would be premature to


make immediate changes.


Clearly one of the most important problems facing the Medicare home health benefit is


utilization. OIG is commended for its attempts to better understand the appropriate


role of the physician in monitofig utilization and appropriateness and duration of care.


HCFA has addressed the i-e of physician involvement through regulations. In the


December 8, 1994 Federal Re@terj HCFA issued a new regulation providing separate


payment for physician care plan oversight services. Reimbursing physicians for care


oversight services should lead to greater physician involvement and prudent utilization of


the home health benefit


HCFA has also established a Medicare Home Health Care Work Group which is


currently drafting revised Home Heal& Agency Conditions of Participation. HCFA is


also developing a Core Standad XSsment IiMxument, Requirements for the


assessment insfiment could signifiuntiy impact the information requirements on the


plan of care. The work group expects to develop recommendations after it completes its


research. Until men our operational plans are to continue using HCFA Forms 485 and


486 (Medicare Couection of Medical Information on Home Health Services).


We note that the report recommendations do not address the two main questions listed


on page 3: “Are physicians effectively fulfilling their gatekeeper role in initiating and


monitoring the plan- of care?” “Do physicians rubber stamp the plan of care?” wile the


report recognizes bat there are discrepancies in how physicians and agencies view the

Page 2 

physician’s role in coordinating care, it does not address whether physicians are an 

effective gatekeeper, Perhaps the study might more effectively address “Does greater 

physician involvement result in a more cost-effective utilization of the home health 

benefit?” 

Additionally, we would be interested in any specific suggestions OIG may be able to 

offer on the following: 

o	 After interviewing both agencies and physicians, does OIG have any 

specific suggestions of ways the plan of care can be changed? 

o	 Does OIG have specific suggestions on how the role of physicians should 

be better communicated? 

o	 Does OIG feel tha~ after talking to agencies and physicians, there is a 

consensus on what the physician role ought to be? 

Comments on “Home Health Agencies: Alternative Coverage and Pavment Policies”


The report appears to assume that other agencies are more effective than Medicare in


controlling costs. However, there are no data in the report comparing the average


number of visits or expenditures per beneficiary. While the report identifies other plans’


limits on utilization, there may be other factors, such as age, health status, and income,


that could explain differences in utilization, if they exist.


We are in the process of develop~g our approach to revitalizing the coverage and 

payment policies for home health agencies. The Points of Further Analysis in this report 

‘raise interesting alternatives that W be considered by HCFA as it formulates its plan to 

revitalize the home health benefits.