United States General Accounting Office

GAO Report to the Chairman, Special

Committee on Aging, U.S. Senate

March 1996 MEDICARE

Home Health

Utilization Expands

While Program

Controls Deteriorate

G O A

years

1921 - 1996

GAO/HEHS-96-16

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-257049 

March 27, 1996

The Honorable William S. Cohen

Chairman, Special Committee on Aging

United States Senate

Dear Mr. Chairman:

Use of the Medicare home health benefit has seen dramatic growth in

recent years, with spending climbing from $2.7 billion in 1989 to

$12.7 billion in 1994 and projected to exceed $21.0 billion by the year 2000.

Changes in the benefit, the home health industry, and the characteristics

of home health care users have strongly affected home health care

utilization patterns and expenditure trends.

In several earlier reviews, we reported on lax controls over the use of the

Medicare home health benefit. Two reports, issued in 1981 and 1986,1

respectively, concluded that many claimed services were not medically

necessary or did not meet the coverage criteria and, therefore, should not

have been covered under the program. We also concluded that payment

systems generally were not capable of detecting noncovered services.

Thus, we recommended that steps be taken to increase the capability of

Medicare’s claims processing and utilization review systems to detect

noncovered care.

The recent rapid growth in Medicare home health expenditures continues

to raise questions about the extent to which abuse of the benefit may be

contributing to this growth. Therefore, you asked us to determine the

reasons for and the nature of the growth in the use of the Medicare home

health benefit. Specifically, you asked us to examine

• changes in the composition of the home health industry,

• changes in the composition of Medicare home health users,

• differences in utilization patterns across geographic areas,

• incentives to overutilize services, and

• the effectiveness of payment controls in preventing payment for services

not covered by Medicare.

To address these issues, we reviewed pertinent laws, regulations, court

decisions, Health Care Financing Administration (HCFA) policies, and

1

Medicare Home Health Services: A Difficult Program to Control (GAO/HRD-81-155, Sept. 25, 1981),

and Medicare: Need to Strengthen Home Health Care Payment Controls and Address Unmet Needs

(GAO/HRD-87-9, Dec. 2, 1986).

Page 1 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

relevant research. We interviewed staff from HCFA, two HCFA regional

offices, and three regional home health intermediaries. We analyzed paid

claims history data for 1989 through 1993 and provider of service data for

1989 through 1994. We did not, however, examine the internal and

automatic data processing controls for automated systems from which we

obtained data used in our analyses. With this exception, we conducted our

study from July 1994 to December 1995 in accordance with generally

accepted government auditing standards. (See app. I for details on our

scope and methodology.)

Results in Brief Recent growth in the use of Medicare’s home health benefit has largely

resulted from 1989 HCFA guideline changes that made Medicare home

health coverage criteria less restrictive, resulting in an increase in both the

number of beneficiaries receiving services and the number of services

received by each beneficiary. To illustrate, in 1989, 1.7 million Medicare

beneficiaries received home health services; by 1993, this number had

increased to 2.8 million. During the same time, the number of visits

provided to beneficiaries receiving home health care more than doubled,

from an average of 26 visits per year in 1989 to an average of 57 visits per

year in 1993. The number of home health beneficiaries receiving services

for longer periods of time also increased; in 1993, more than 25 percent of

home health beneficiaries were receiving 60 or more visits per year, up

from approximately 11 percent of home health beneficiaries in 1989.

The number of Medicare-certified home health agencies (HHA) has also

grown, from 5,692 agencies in 1989 to 7,864 at the end of 1994; 83 percent

of this growth has consisted of proprietary (for-profit) agencies. Our

analyses show that proprietary agencies consistently provide more home

health visits in all areas of the country than nonprofit agencies. In 1993,

proprietary agencies provided beneficiaries with an average of 78 visits

per year, while voluntary and government agencies provided an average of

46 visits. An analysis of beneficiaries with one of four frequently occurring

diagnoses shows that proprietary agencies provide significantly more

visits than nonprofits for beneficiaries with the same primary diagnoses.

For example, home health patients with a primary diagnosis of diabetes

received an average of 53 visits from proprietary agencies compared with

an average of 27 visits from voluntary agencies and 24 from government

agencies.

Although we have been reporting on program weaknesses over the last 15

years, controls over the Medicare home health benefit remain essentially

Page 2 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

nonexistent. Few home health claims are subject to medical review and

most claims are paid without question. Further, because (1) few on-site

coverage audits are done, (2) beneficiaries are rarely visited by

intermediaries, and (3) physicians have limited involvement in home

health care, verifying whether the beneficiaries receiving home care truly

qualify for the benefit, need the care being delivered, or are even receiving

the services billed to Medicare is nearly impossible.

Background Medicare, administered by HCFA within the Department of Health and

Human Services (HHS), is a health insurance program that covers almost all

Americans 65 years old and older and certain individuals under 65 years

old who are disabled or have chronic kidney disease. The program,

authorized under title XVIII of the Social Security Act, provides protection

under two parts. Part A, the hospital insurance program, covers inpatient

hospital services, posthospital care in skilled nursing homes, and care in

patients’ homes. Part B, the supplementary medical insurance program,

covers primarily physician services but also home health care for

beneficiaries not covered under part A.

Coverage Criteria To qualify for Medicare home health care, a person must be confined to

his or her residence (homebound); under a physician’s care; and need

part-time or intermittent skilled nursing care and/or physical therapy or

speech therapy. The services must be furnished under a plan of care

prescribed and periodically reviewed by a physician.2

 Home health

benefits covered by Medicare include

• part-time or intermittent nursing care provided by or under the

supervision of a registered nurse;

• physical, occupational, and speech therapy;

• medical social services related to the patients’ health problems; and

• part-time or intermittent home health aide services when provided as an

adjunct to skilled nursing or therapy care.3

2

The legislative authority for coverage of home health services is contained in § 1814, § 1835, and

§ 1861 of the Social Security Act; governing regulations are found in title 42 of the Code of Federal

Regulations (CFR); and HCFA coverage guidelines are found in the Medicare Home Health Agency

Manual and Medicare Intermediary Manual.

3

Home health aides provide hands-on personal care of beneficiaries that must be necessary to the

treatment of the beneficiary’s illness or injury. Home health aide services include (1) personal care

services, such as assistance with eating, bathing, and toileting; (2) simple surgical dressing changes;

(3) assistance with some medications; (4) activities to support skilled therapy services; and (5) routine

care of prosthetic and orthotic devices. A beneficiary whose sole need is for custodial or personal

care, however, does not qualify for home health aide services.

Page 3 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Medicare beneficiaries may receive home health care as long as it is

reasonable and necessary for the treatment of illness or injury; no limits

exist on the number of visits or length of coverage. Medicare does not

require copayments or deductibles for home health care.

Medicare home health services must be furnished by Medicare-certified

HHAs or by others under arrangement with such an agency. Agencies

participating in the program must meet specific requirements of the Social

Security Act. HHAs are reimbursed for the reasonable costs incurred in

providing covered visits to eligible beneficiaries up to specified cost limits

established for each area of the country.4

Medicare-certified HHAs are classified into one of three ownership

categories. Proprietary HHAs are private, for-profit agencies. Voluntary

agencies are private (nongovernmental), nonprofit agencies that are

exempt from federal income taxation; for example, Visiting Nurse

Associations and Easter Seal Societies. Government agencies are operated

by a state or local government.

Program Administration HCFA currently administers the home health care program through nine5

regional home health intermediaries (RHHI)—eight Blue Cross plans and

the Aetna Life and Casualty Insurance Company.6

 These intermediaries

• serve as a communication channel between HHAs and HCFA,

• make payments to HHAs for covered services provided to Medicare

beneficiaries, and

• establish and apply payment safeguards to prevent program abuse.

4

Under authority originally provided through § 223 of the Social Security Amendments of 1972 (P.L.

92-603), HCFA has established upper limits on the amount Medicare will pay HHAs. Based on the cost

experience of freestanding HHAs, these limits are set by type of home health visit (such as skilled

nursing or home health aide). For each agency, they are applied in the aggregate; that is, costs above

the limit for one type of visit can be offset by costs below the limit for another type. Separate limits are

set for urban and rural HHAs (because costs tend to differ between them) and adjusted to reflect local

wage rates.

5

Since conducting our review, one Blue Cross plan has dropped out of the Medicare claims processing

business; its responsibilities will be assumed by one of the remaining eight intermediaries.

6

Before the consolidation of home health intermediary functions in fiscal year 1987, 47 intermediaries

administered the home health program.

Page 4 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Changes in Eligibility

Criteria Key to Home

Health Growth

Changes in the legal and regulatory provisions governing the home health

benefit together with changes in HCFA’s policies have played a key role in

the increase in the benefit’s use. At Medicare’s inception in 1966, the home

health benefit under part A provided limited posthospital care of up to 100

visits per year that required a prior hospitalization of at least 3 days. In

addition, the services could only be provided within 1 year after the

patient’s discharge and had to be for the same illness. These restrictions

were eliminated by the Omnibus Budget Reconciliation Act of 1980.

With the implementation of the Medicare inpatient prospective payment

system in 1983, the utilization of the home health benefit was expected to

grow as patients were discharged from the hospital earlier in their

recovery period. However, expenditures changed little over the next 5

years7

 (see fig. 1). The Deficit Reduction Act of 1984 reduced the number

of intermediaries processing home health claims, and HCFA intensified

education of the home health intermediaries to promote more consistency

in claims review. Additionally, HCFA instructed the intermediaries to

increase the number of claims receiving medical review before payment.

This increased review in addition to a requirement for more detailed

documentation contributed to an increased claim denial rate—from

3.4 percent in 1985 to 7.9 percent in 1987.8

7

Helbing, C., J.A. Sangl, and H.A. Silverman, “Home Health Agency Benefits,” Health Care Financing

Review, 1992 Annual Supplement (1992), p. 125.

8

Medicare: Increased Denials of Home Health Claims During 1986 and 1987 (GAO/HRD-90-14BR,

Jan. 24, 1990).

Page 5 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Figure 1: Medicare Home Health Expenditures, 1980-94

12000


11000


10000


9000


8000


7000


6000


5000


4000


3000


2000


1000


0


Home Health Expenditure (Dollars in Millions)

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

Fiscal Years

Total

Aged

Disabled and End Stage Renal Disease

Omnibus


Reconciliation


Act of 1980

Prospective 


Payment


System

Issuance of 


Revised


Guidelines

Source: HCFA, Office of the Actuary.

A lawsuit was filed in 1988 (Duggan v. Bowen)9 that struck down HCFA’s

interpretation of benefit coverage requirements. As a result of the suit,

HCFA revised the Medicare Home Health Agency and Medicare

Intermediary manuals in 1989 so that the criteria for coverage of home

health visits would be consistent with “part-time or intermittent care,” as

required by statute, rather than “part-time and intermittent care,” as HCFA

had been interpreting it.10 This change enabled HHAs to increase the

frequency of visits because they no longer had to be intermittent. The

requirements were also changed so that patients now qualify for skilled

observation by a nurse or therapist if a reasonable potential for

9

Duggan v. Bowen, 691 F. Supp. 1487 (D.D.C. 1988).

10The manual revisions also added definitions of part-time and intermittent (see p. 17).

Page 6 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

complications or possible need to change treatment existed.11 Further, the

benefit now allows maintenance therapy where therapy services are

required to simply maintain function rather than the previous criteria that

patients show improvement from such services.

The 1989 Medicare Home Health Agency Manual changes also required

that intermediaries, in order to deny claims on the basis of medical

necessity, determine that each denied visit was not medically necessary at

the time services were ordered. Before this change, intermediaries were

denying all visits beyond what the intermediary judged necessary; for

example, denying 10 visits out of 50 visits claimed, if the intermediary

could determine that the beneficiary could be adequately treated with 40

visits. The intermediary did not need to review each visit. This change has

made it more costly for intermediaries to determine whether services are

medically necessary and, therefore, fewer claims are denied.

The effect of changes in Medicare law, regulations, and policy has been

that home health care is now available to more beneficiaries, for less acute

conditions, and for longer periods of time. For example, in 1992,

approximately one-third of home health beneficiaries entered the program

without a hospital stay at one time during the year. Of those who had been

hospitalized, only half had a hospital stay in the 30 days before starting

home health care.12

Medicare Beneficiaries

Receiving More Home

Health Services

Since the Medicare Home Health Agency Manual and Medicare

Intermediary Manual changes of 1989, the percentage of Medicare

beneficiaries receiving home health services and the number of home

health visits received per year per home health user have increased

significantly. In 1989, 1.7 million beneficiaries (5.6 percent of the Medicare

population) received home health care. In 1993, the number of

beneficiaries receiving such care increased to 2.8 million (8.8 percent of

the Medicare population). Beneficiaries receiving home health services are

typically female and over 75 years old; however, the number of disabled

beneficiaries under 65 years old receiving services has been growing. (See

table II.1 in app. II.)

11This skilled observation, in turn, qualifies the beneficiary for home health aide visits.

12The increased ability of agencies to provide high-technology care in the home has also contributed to

an increase in the number of users. Patients who might have formerly received care in an institution

can now receive services such as infusion therapy and ventilator care in the home.

Page 7 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

The average number of visits received per home health beneficiary has

also increased dramatically since 1989. From 1989 through 1993, the

average number of visits received per year more than doubled, from 26 to

57 visits. Over the same period, the median number of visits almost

doubled, from 13 to 24 visits (see fig. 2). Most of the increase in visits has

resulted from an increased use of skilled nursing (average visits increased

from 15 per year in 1989 to 26 visits per year in 1993) and home health aide

visits (average visits increased from 25 visits per year for beneficiaries

who received any aide visits in 1989 to 56 visits per year in 1993).

Figure 2: Growth in Average Visits Per

Year Per Beneficiary, 1989-93 Visits

0

5

10

15

20

25

30

35

40

45

50

55

60

1989 1990 1991 1992 1993

Year

26

13

35

16

43

19

51

22

57

24

Average

Median

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

The distribution of visits across home health beneficiaries has become

increasingly skewed toward heavy users (see fig. 3). From 1989 to 1993,

Page 8 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

the percentage of users having more than 60 visits in a year increased from

10.6 percent to 25.7 percent. While beneficiaries who had 60 or fewer visits

in 1993 averaged only 20 home health visits (with a median of 15 visits),

those with more than 60 visits, averaged 163 visits (with a median of 125

visits).13 The percentage of beneficiaries receiving more than 210 visits in 1

year has also increased, from fewer than 1.0 percent in 1989 to 5.8 percent

in 1993.

Figure 3: Distribution of Medicare

Beneficiary Visits, 1989 and 1993 Percent of Beneficiaries

0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1-30 31-60 61-90 91-120 121-150 151-180 181-210 GT 210

Number of Visits

76.0

57.0

13.5

17.3

4.5

7.7

2.3 4.6

1.4 3.2 1.0 2.6 0.6 1.8 0.8

5.8

1989

1993

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Home Health Industry

Expanding Rapidly

The home health industry has experienced rapid growth since 1989. The

number of Medicare-certified HHAs increased from 5,692 in 1989 to 7,864 at

13Home health users with more than 60 visits during the year were more likely to have a primary

diagnosis of the chronic diseases of diabetes and hypertension than those receiving fewer than 60

visits. On the other hand, home health users with fewer than 60 visits were more likely to be diagnosed

with osteoarthritis or hip fracture than those receiving more than 60 visits.

Page 9 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

the end of 1994. Growth has occurred mainly in HCFA’s Dallas, San

Francisco, and Chicago regions.14 (See fig. II.1 in app. II for individual state

growth data.)

Recent HHA growth has primarily taken place in proprietary agencies,

while the percentage of more traditional nonprofit home health

providers—visiting nurse associations and government agencies—has

declined (table 1). In 1989, approximately 35 percent of all

Medicare-certified HHAs were proprietary. In 1994, close to 50 percent of all

HHAs were in this category. (See fig. II.1 in app. II for state breakdowns.)

This increased percentage of proprietary agencies was responsible for

83 percent of the growth in the number of HHAs between 1989 and 1994.15

Table 1: Growth in HHAs Providing

Medicare Services, 1989-94 1989 1994

HHA type Number Percenta Number Percenta

Government 1,443 25.35 1,353 17.20

Proprietary 2,007 35.26 3,815 48.51

Voluntary 2,242 39.39 2,696 34.28

Total 5,692 100.00 7,864 100.00

aPercentages may not add to 100 due to rounding.

Source: GAO analysis of HCFA’s Provider of Service File.

Utilization Varies by

Geographic Area and

Type of HHA

A comparison of average visits per beneficiary receiving home health

services in 1993 indicates that beneficiaries in certain HCFA regions—most

notably in the Atlanta, Boston, and Dallas regions—receive considerably

more services on average than beneficiaries in other areas (see table 2).

(Refer to fig. II.3 in app. II for data on total home health visits per

Medicare beneficiary by state.) A further breakdown of these figures by

ownership category indicates that in all regions, proprietary HHAs provide

14The Dallas region includes Arkansas, Louisiana, New Mexico, Oklahoma, and Texas; the San

Francisco region includes Arizona, California, Hawaii, and Nevada; and the Chicago region includes

Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

15In 1989, 29.5 percent of home health beneficiaries received care from proprietary agencies. In 1993,

this number had increased to 33.3 percent of home health beneficiaries. At the same time, total visits

provided by proprietary agencies increased from 38.3 percent of total home health visits in 1989 to

45.8 percent of all visits in 1993.

Page 10 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

many more services per case than voluntary or government-run agencies.16

 (See fig. II.2 in app. II for state breakdowns.)

Table 2: Average and Median Home Health Visits by HCFA Regiona and Ownership Type, 1993

All HHAs Proprietary Government Voluntary

HCFA region Average Median Average Median Average Median Average Median

Bostona 66.2 26 89.8 37 57.4 24 62.9 24

New Yorkb 38.5 19 52.4 25 29.9 13 38.3 19

Philadelphiac 40.1 19 53.0 23 38.4 16 35.8 18

Atlantad 79.3 37 91.6 44 60.8 28 68.4 32

Chicagoe 44.2 20 60.5 28 38.9 17 38.8 18

Dallasf 77.1 33 92.8 43 55.5 25 56.8 24

Kansas Cityg 43.2 20 59.4 27 38.1 17 39.8 18

Denverh 55.6 22 85.0 33 42.3 18 47.7 21

San Franciscoi 39.7 17 53.0 23 29.8 14 31.4 15

Seattlej 36.3 17 55.2 23 33.8 16 32.0 16

Total 56.7 24 78.0 34 45.9 19 46.1 20

aIncludes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.

bIncludes New Jersey, New York, Puerto Rico, and the Virgin Islands.

cIncludes Delaware; Washington, D.C.; Maryland; Pennsylvania; Virginia; and West Virginia.

dIncludes Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and

Tennessee.

eIncludes Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

f

Includes Arkansas, Louisiana, New Mexico, Oklahoma, and Texas.

gIncludes Iowa, Kansas, Missouri, and Nebraska.

hIncludes Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming.

i

Includes Arizona, California, Hawaii, and Nevada.

j

Includes Alaska, Idaho, Oregon, and Washington.

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

On the national level, proprietary agencies have provided a significantly

higher number of average visits per home health beneficiary since 1989

(see fig. 4).

16For example in 1993, beneficiaries receiving home health aide visits from proprietary agencies

received an average of 69 of such visits, while those receiving home health aide visits from voluntary

and government agencies received an average of 43 and 48 visits, respectively.

Page 11 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Figure 4: Growth in Medicare Home

Health Visits Per Beneficiary by Type

of Agency, 1989-93

Average Visits

0

10

20

30

40

50

60

70

80

1989 1990 1991 1992 1993

Year

All HHAs

Government

Proprietary

Voluntary

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

A recent study17 noted that some of the regional variation in services may

reflect differences in the availability of substitute services. Additionally,

the study reported some regional differences in patient characteristics;

however, these differences did not seem to have a clear pattern that might

partially explain variations in utilization. Another study18 indicated that

regional variation could in part be explained by patient characteristics. For

instance, the study found that compared with Medicare home health users

17Mauser, E., and N.A. Miller, “A Profile of Home Health Users in 1992,” Health Care Financing Review,

Fall (1994), p. 17.

18Schore, J., “Patient, Agency, and Area Characteristics Associated with Regional Variation in the Use

of Medicare Home Health Services,” Mathematica Policy Research, Inc. (1994), reference number

7899-400.

Page 12 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

nationally, beneficiaries in the East South Central19 region were more

likely to be frail, chronically ill, and in poorer health. The study also noted

that home health care in the East South Central region tended to be

delivered outside large metropolitan counties and in counties that had

unusually high percentages of elderly persons living in poverty (both

characteristics associated with higher than average home health use).

While evidence might suggest that the availability of substitute services

and beneficiary case-mix may explain some of the regional variation in

utilization of home health services, why proprietary agencies consistently

provide more visits in all regions is not clear. To learn more about the

differences between care provided by proprietary and other types of HHAs,

we conducted an episode-of-care analysis20 for four diagnoses: diabetes,

heart failure, hypertension, and hip fracture.21 (See app. I for our

methodology and app. III for detailed results.)

For these diagnoses, proprietary agencies, on average, provided care for

the longest period of time and provided the most visits per episode during

the period studied (see table 3). Although government-run agencies

provided care for similar lengths of time as proprietary agencies,

government-run HHAs provided 32 to 45 percent fewer visits to

beneficiaries with these four diagnoses. Voluntary agencies, in general,

provided care for the shortest period of time for all four diagnoses, but

they provided slightly more visits per episode than government-run

agencies. Variations in utilization between the different types of HHAs were

most notable in cases of diabetes, which is regarded as a chronic problem,

and less notable in cases of hip fracture, which is more of an acute

problem.

19Consists of Alabama, Kentucky, Mississippi, and Tennessee.

20Because home health episodes are not clearly defined by admission and discharge dates, we defined

episodes of care as a series of home health visits preceded and followed by a 60-day period with no

visits.

21Approximately 22 percent of home health beneficiaries have one of these four primary diagnoses.

Page 13 GAO/HEHS-96-16 Medicare: Home Health Utilization
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Table 3: Average Episode Length and Visits Per Episode—Four Diagnoses, 1992-93

All HHAs Government Proprietary Voluntary

Diagnosis

Average

lengtha

Average

visits

Average

lengtha

Average

visits

Average

lengtha

Average

visits

Average

lengtha

Average

visits

Diabetes 59.0 38.2 61.3 28.7 63.7 52.6 55.3 30.5

Heart failure 54.9 32.1 56.1 25.8 59.7 43.4 52.1 27.5

Hypertension 57.4 34.9 58.5 26.4 62.0 44.0 52.8 27.8

Hip fracture 43.3 29.3 42.9 24.1 44.6 35.3 42.8 27.3

aIn days.

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Several HCFA and intermediary officials expressed concern that the

growing number of proprietary agencies may be generating increased

utilization of home health services. They believe that because the

beneficiary incurs no cost and little data exist on the effectiveness of

different plans of care, HHAs primarily compete by offering greater

numbers of services to beneficiaries. Some HHS Office of Inspector General

and intermediary officials further believe that the nonprofit HHAs are being

forced to offer increasingly more services in order to stay in business.

Benefit Controls

Weakened as

Utilization Expands

In two reports issued in 1981 and 1986, respectively,22 we criticized HCFA’s

administration of the Medicare home health benefit. We reported that

about 27 percent of the visits reviewed at 37 agencies and paid for under

the benefit were questionable or improper. We attributed those problems

to the vagueness of the coverage criteria (particularly uncertainty over the

exact meaning of terms such as homebound and intermittent care),

insufficient information being submitted with the claims upon which to

base a coverage decision, and poor performance of the intermediaries in

reviewing claims. We also noted that other control problems were

adversely affecting proper utilization of the home health benefit, including

insufficient physician involvement and inadequate monitoring of

beneficiary status. In revisiting these issues, we found that while controls

had improved during the mid- and late 1980s, they have largely

deteriorated since then.

22Medicare Home Health Services: A Difficult Program to Control (GAO/HRD-81-155, Sept. 25, 1981),

and Medicare: Need to Strengthen Home Health Care Payment Controls and Address Unmet Needs

(GAO/HRD-87-9, Dec. 2, 1986).

Page 14 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Considerable Room for

Interpretation of Coverage

Criteria Remains

Homebound Status The Social Security Act requires that a beneficiary be “confined to the

home” (homebound) to be eligible for Medicare home health care. In our

1981 report, we found that determining whether beneficiaries are

homebound is difficult due to the inadequacy of the definition provided by

HCFA. The report recommended that HCFA’s criteria for determining

homebound status be clarified and made more specific. The Omnibus

Reconciliation Act of 1987 added a definition of homebound to the Social

Security Act23 using the same wording as the HCFA Home Health Agency

Manual definition. Therefore, the definition of homebound remains

essentially unchanged and considerable discretion remains in interpreting

and applying the homebound definition.

As stated in the Medicare Home Health Agency Manual, homebound

means that

“the condition of these patients should be such that there exists a normal inability to leave

home and, consequently, leaving their homes would require a considerable and taxing

effort.

“[Further,] if the patient does in fact leave the home, the patient may nevertheless be

considered homebound if the absences from the home are infrequent or for periods of

relatively short duration, or are attributable to the need to receive medical treatment.” (See

app. IV for a full definition.)

Several HCFA and intermediary officials said that few denials are made on

the basis that the beneficiary was not homebound.24 One intermediary

official said that the RHHI made fewer than 10 denials a year based on the

homebound criteria. An HCFA official further noted that although the RHHIs

tend to interpret the homebound criteria fairly consistently, the criteria are

so broad that very few claims are denied on the basis that the coverage

criteria have not been met. Finally, even if intermediaries do make a denial

based on the homebound criteria, so much room for interpretation still

23Social Security Act § 1814(a), 42 U.S.C. 1395f(a).

24Denials were made only in obvious cases; for example, when the aide frequently noted in the

patient’s record that she was unable to supply care because the patient was not home at the time.

Page 15 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

exists in the infrequent or short duration requirements that such denials

may end up being reversed at the reconsideration or appeals level.25

A recent study conducted by one of the RHHIs26 identified some of the types

of abuses that are difficult for the intermediary to prevent because of the

range of interpretations possible for the homebound criterion. For

example, the study identified an instance where a physician called the RHHI

to complain that some of his patients were being told by an HHA that they

were homebound because they did not own a car. The survey also

revealed an example of a home health beneficiary who would put her

home health care on hold so that she could go fishing for a week or two.

She would then come back and resume her care.

Intermittent Care The Medicare Home Health Manual sets the parameters of the term

intermittent in two ways. The first pertains to beneficiary eligibility

requirements; to meet the requirement for intermittent skilled nursing

care, an individual must have a “medically predictable recurring need for

skilled nursing services.”27 In most instances, the definition will be met if a

patient requires a skilled nursing service at least once every 60 days.28 In

contrast, a person expected to need more or less full-time skilled nursing

care over an extended period of time would usually not qualify for home

health benefits because he or she needs a higher level of care.

The second parameter of intermittent pertains to the frequency of visits

allowed by Medicare in a given time frame and is usually used together

25In 1991, HCFA attempted to develop numerical parameters to better define the terms: infrequent,

short duration, and confined to the home. However, HCFA’s proposal received so many negative

responses during the comment period, from intermediaries as well as home health agencies, that this

proposal was never implemented. Many HHAs expressed concerns that such absolute limits would rob

them of flexibility in interpretation of the benefit.

26In 1993, Aetna of Florida did a pilot study that involved sending a sample of physicians and

beneficiaries detailed lists of claims filed on behalf of their patients or themselves, respectively.

27Social Security Act, § 1814(a)(2)(C); Medicare Home Health Agency Manual, § 204.4 and § 205.1C.

28The manual further states that since the need for intermittent skilled nursing care makes the

individual eligible for other covered home health services, the intermediary should evaluate each claim

involving skilled nursing services furnished less frequently than once every 60 days. Thus, it is possible

that a beneficiary may receive skilled care less than once every 60 days.

Page 16 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

with the term part-time.29 According to the Medicare Home Health Agency

Manual,

30 intermittent care is defined as

• up to and including 28 hours per week of skilled nursing and home health

aide services combined provided on a less than daily basis;

• up to 35 hours per week of skilled nursing and home health aide service

combined that are provided on a less than daily basis, subject to review by

fiscal intermediaries on a case-by-case basis, and determined on the basis

of documentation justifying the need for and reasonableness of such

additional care; or

• up to and including full-time (that is, 8 hours per day) skilled nursing and

home health aide services combined that are provided and needed 7 days

per week for temporary but not indefinite periods of time of up to 21 days

with allowances for extensions in exceptional circumstances where the

need for care in excess of 21 days is finite and predictable.31

Because a range of interpretations is possible for intermittent, the

requirement is difficult to enforce. For example, individuals can be

provided intermittent services (for example, blood tests or periodic skilled

observation) every 60 days simply to qualify for aide services on a

long-term basis.32 Under the part-time or intermittent coverage rules,

determining whether someone who needs daily care for an extended

period meets the intermittent requirement or might require institutional

care is difficult. Moreover, without further review, to determine whether

daily care itself is really necessary is not possible. During our recent

investigation of a large home health organization, for example,33

employees alleged instances where managers instructed nurses to visit

new patients daily for the first 14 or 21 days of care regardless of

condition—intermediaries usually do not question daily visits during the

first 21 days of care.

29Part-time means any number of days per week up to and including 28 hours per week of skilled

nursing and home health aide services combined for fewer than 8 hours per day, or up to 35 hours per

week of skilled nursing and home health aide services combined for fewer than 8 hours per day

subject to review by fiscal intermediaries on a case-by-case basis, based upon documentation

justifying the need for and reasonableness of such additional care.

30Revised in 1989 to implement the decision of the District Court of the District of Columbia in the

Duggan v. Bowen case.

31§ 206.7(B).

32For example, Aetna’s 1993 survey identified cases where patients received unneeded skilled services

in order to qualify for aide services.

33See Medicare: Allegations Against ABC Home Health Care (GAO/OSI-95-17, July 19, 1995).

Page 17 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Less Information Is

Available to Intermediaries

for Making Coverage

Decisions

In August 1985, HCFA implemented standardized medical information

forms34 for HHAs to use in requesting payment from intermediaries. These

plan-of-care and update forms, which were to be submitted with the initial

claim and the claim closest to the recertification date 60 days later, gave

medical reviewers more detailed information on each beneficiary’s general

physiological condition, homebound status, functional limitations,

nutritional requirements, services prescribed, and services received. The

additional information was intended to increase the accuracy and

consistency of coverage decisions.

In our 1990 report,35 we noted that the regional intermediaries generally

agreed that denials associated with the implementation of the new forms

were a contributor to increases in denials in fiscal year 1986.36 HCFA has,

however, dropped the requirement for routine submittal. In a

September 1994 revision, the Medicare Intermediary Manual was changed

to state:

“These forms [485/486] are no longer submitted routinely with the initial claim or other

subsequent claim. The completed HCFA-485, signed by the physician, is retained in the HHA

files and a copy of the signed form is submitted [to the intermediary] when requested for

medical review. The HCFA-486 is completed only when required for medical review.”

An HCFA official explained that the primary reason for dropping this

requirement was that over time HHAs learned how to fill out the forms in a

manner that would most likely result in the services being approved for

payment; the completed forms all started to look alike and were less

useful. Currently, the only information the intermediary routinely receives

is the bill from the HHA. A notation in the annotated intermediary version

of the Medicare Home Health Agency Manual states that RHHIs will

“assume that the type and frequency of services ordered are reasonable and necessary

unless objective clinical evidence clearly indicates otherwise, or there is a lack of clinical

evidence to support coverage.”

34HCFA forms 485, Home Health Certification and Plan of Care, and 486, Medical Update and Patient

Information. Other forms implemented at the same time include an addendum to the plan of treatment

and patient information form (the 487 form) and an intermediary medical information request form

(the 488 form).

35Medicare: Increased Denials of Home Health Claims During 1986 and 1987 (GAO/HRD-90-14BR, Jan.

24, 1990).

36We concluded that this initiative contributed to more claims denials because (1) medical reviewers

had more information on which to make coverage decisions and (2) some intermediaries denied

claims because certain information was missing, instead of requesting the required data.

Page 18 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Because the current billing form alone does not supply adequate

information to make this type of determination, most bills are paid without

question.

Little Medical Review Is

Done

The regional home health intermediaries are responsible for procedures to

assure that they only make payments for home health services that are

covered by Medicare and avoid paying for services that are (1) provided to

beneficiaries who do not meet Medicare home health criteria, (2) not

reasonable or medically necessary, or (3) in excess of the services called

for by the approved plan of treatment. Currently, the RHHI’s primary

procedure for detecting noncovered services is medical review of

claims.37

Prepayment Reviews The Consolidated Omnibus Budget Reconciliation Act of 1985 more than

doubled the funds available for medical review and audit of home health

and other Medicare claims. This allowed intermediaries to increase the

number of medical reviews performed; they conducted medical reviews on

62 percent of home health claims processed in fiscal years 1986 and 1987.

The increased number of claims subjected to medical review resulted in

more denials and higher denial rates even though the percentage of claims

being denied during medical review did not increase significantly. For

example, in both 1985 and 1987, intermediaries denied about 10 percent of

the claims subjected to medical review. However, because over twice as

many claims were subjected to medical review in 1987, there were over

twice as many denials. As a result, the HCFA-reported denial rate was

7.9 percent in 1987 compared with 3.4 percent in 1985.

Due to budget cuts since 1989,38 however, intermediaries are now required

to conduct medical reviews (pre- and postpayment) on a target of 3.2

percent of all claims, including home health claims.39 At the same time,

home health claims volume increased from 5.5 million claims in 1989 to

16.6 million claims in 1994. Of the 3.7 percent of home health claims

37Medical review involves reviewing additional information requested from and submitted by the HHA,

such as the 485, Plan of Care Form, and the beneficiary’s medical records.

38In 1989, total part A contractor funding for medical review/utilization was $61 million. Due to

subsequent budget cuts, by 1992 this funding dropped to $31 million—an almost 50-percent cut. Fiscal

year 1995 funding is $33.1 million. Payment safeguard funding for the home health benefit is based on

the number of home health claims processed by the intermediary in relation to other types of claims

processed.

39The contractor Budget and Performance Requirements, 1995 stipulate that “(t)he target review level

is 3.2 percent, however, intermediaries may reduce the review level based on resources available. The

minimum acceptable review level is 1 percent although it is expected that intermediaries review as

many claims as possible.”

Page 19 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

denied in fiscal year 1994, only 0.6 percent were denied because the

services were determined, through medical review, to not be medically

necessary or because the beneficiary did not meet the qualifying coverage

criteria.40

As a result of decreased review, HHAs are less likely to be caught if they

abuse the home health benefit. An HCFA official noted that HHAs are aware

that the intermediary only reviews a small number of claims and,

therefore, can take chances billing for noncovered services. As long as

they do not trigger the criteria that would cause the claim to be flagged,41

HHAs can submit abusive claims that will never be reviewed.

Besides covering so few claims, prepayment medical review is limited in

its ability to detect noncovered care in that it is simply a paper review

done at the offices of the RHHI. According to HCFA and intermediary

officials, it is often not possible to obtain enough information from a paper

review alone no matter how complete the medical records submitted, to

determine whether a provider is abusing the benefit or committing fraud.

If the codes are valid, the forms filled out properly, and no unusual

patterns are identified during the FMR process, the claim goes through. For

example, our investigation of a large home health organization turned up

allegations that staff were directed to alter or falsify medical records to

ensure continued or prolonged visits, including recording visits that were

never made or noting that patients were homebound even after they were

no longer confined to the home.42 To further illustrate, an intermediary

official noted that sometimes the wrong diagnosis is put on the claim form

to make beneficiaries appear sicker than they really are and, thus, in need

of more care.

Postpayment Review Postpayment utilization review differs from prepayment review in that its

principal focus is on identifying HHAs that are providing significant

amounts of noncovered care rather than on identifying services provided

40The remaining denials stemmed primarily from Common Working File edit checks; for example, the

patient was not eligible to receive Medicare benefits, Medicare was the secondary payer, the bill was

for noncovered services (such as some supplies), or the bill was a duplicate.

41To identify noncovered services, intermediaries currently evaluate claims through a focused medical

review process (FMR). According to FMR procedures, the intermediaries are to target the review of

claims where there is the greatest risk of inappropriate payment. Intermediaries analyze utilization

data and develop measures to identify predictors of aberrant utilization among their providers. The

intermediaries then put edits in their claim processing systems that flag the claims that exceed the

chosen criteria; for example, high levels of utilization. A small percentage of the flagged claims are

then reviewed. Even if a claim exceeds the screening criteria, it may still not be selected for the small

percentage that are actually reviewed.

42See Medicare: Allegations Against ABC Home Health Care (GAO/OSI-95-17, July 19, 1995).

Page 20 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

to specific beneficiaries. In 1982, HCFA implemented a selective

postpayment utilization review program that has cost effectively identified

extensive noncovered services paid for by Medicare. The essential

component of postpayment review, comprehensive medical review (CMR),

is a thorough postpayment evaluation of claims and medical

documentation that may involve an audit at the provider’s site.43 On-site

audits give the reviewer access to the information in the provider’s

records, including plans of care and documentation of visits.

According to records obtained from HCFA, only 51 on-site audits were

conducted by the nine RHHIs combined in fiscal year 1994.44 Thus, fewer

than 1 percent of all Medicare-certified HHAs were audited. Intermediaries

are required to perform 10 on-site CMRs each year for all provider types,

including, for example, outpatient, skilled nursing, and rehabilitation

facilities. An HCFA representative noted that CMRs are so resource intensive

that they may be done only in instances where a high level of return is

expected. Because HHA claims may comprise a relatively small portion of

an intermediary’s total claims volume, the intermediary may not do any

home health CMRs.

One of the best ways to verify information provided by the HHA is to visit

beneficiaries at home. Beginning in 1984, intermediaries were required to

make visits to a sample of five beneficiaries at targeted agencies to assess

coverage status; however, this requirement was subsequently dropped due

to cuts in contractor funding. In March 1995, HCFA revised the Medicare

Intermediary Manual to say that intermediaries may perform visits to

selected beneficiary homes but they are not required to do so. According

to officials at the intermediaries visited, only one of the three was doing

any beneficiary visits as part of its CMRs.45

A proposed sampling procedure for CMRs involves selecting a valid

statistical sample of claims from agencies suspected of abusive practices

and extrapolating the denial rate (and therefore payment recovery rate) in

the sample to similar claim types during the same period. In our 1986

report, we suggested that by using statistically valid sampling techniques,

such as those being used to estimate physician overpayments under

43Providers are selected for a CMR based on performance patterns identified in prepayment review; for

example, the provider submits noticeably altered documentation, has a pattern of not complying with

physician orders, or is suspected of fraud. In this type of CMR, overpayments are only collected on

claims that are reviewed.

44The number of on-site audits ranged from none to 15 for each RHHI.

45This intermediary noted, however, that HHAs sometimes coach the beneficiaries on what to say and

do to ensure that they would continue to get home health coverage.

Page 21 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

Medicare part B, overpayments to HHAs for noncovered services could be

projected to all claims submitted by the agency during the sampling period

and could result in millions of dollars in additional recoveries. In addition,

we recommended that HCFA require intermediaries to use such procedures.

However, RHHIs are currently not required to use a projectable sample of

home health visits to extend recoveries—recoveries are, therefore, limited

to the cost of actual services reviewed and denied. HCFA is circulating a

new draft sampling plan that delineates the methodology for selecting a

representative sample. However, previous attempts to implement

statistically valid postpayment sampling have not been successful,

primarily due to opposition from the home health industry and other

health care providers.

Physicians Not Actively

Involved in Monitoring

Patient Care

With the enactment of the Medicare program, it was expected that the

physician would play an important role in determining utilization of

services. Medicare law and regulations, therefore, require that home health

items and services must be furnished under a plan of treatment

established and periodically reviewed by a physician. HCFA requires that

the plan is to be reviewed and recertified in writing by the attending

physician at least every 62 days. The physician is expected but not

required to see the patient.

Few data exist about the current nature of physician involvement in home

health care. Concerns have been raised, based on audits of certain HHAs

and anecdotal reports, that physicians are not appropriately involved in

planning and coordinating home health services. For example, both HCFA

and intermediary officials expressed concern that HHAs were preparing the

plans of treatment and the physicians were signing them with little or no

review.

A recent report issued by HHS’ Office of the Inspector General (OIG)46 that

was based on a survey of physicians and HHAs around the country found

that physicians generally have a relationship with patients for whom they

sign plans of care. Physicians usually reported initiating referrals for home

care and reviewing the plans of care that they sign; however, most do not

prepare the plans of care themselves. The report also found that

physicians were most involved when caring for patients with complex

medical problems and were less involved when caring for patients with

chronic or less complex conditions. Thus, physicians frequently are not

46See “The Physician’s Role in Home Health Care,” HHS, OIG, OEI-02-94-00170 (Washington, D.C.:

1995).

Page 22 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

aware of the ongoing HHA services being provided to patients and billed to

the Medicare program. HHS’ Inspector General pointed out47 the

importance of recognizing that physicians usually do not make home visits

themselves to monitor the HHA services provided and do not directly

manage the care that a patient receives from an HHA. An intermediary

official noted that some physicians feel that because they are ordering

nonmedical services, which will generally not harm the patient, not much

review is required.

The 1993 Aetna of Florida pilot study revealed examples of different levels

of physician involvement. In one instance, a physician wrote that he took

every Friday off to spend the whole day reviewing home health plans of

care. Another physician, who received 100 plans of care a week, wrote a

letter to his intermediary reprimanding it for asking him to read the plans

of care. Our investigation of a large home health organization found that

physicians typically rely on nurses’ verbal recommendations, written

recommendations, or both. We also noted allegations that physicians’

signatures were forged and plans of care were altered after certification

without the physicians’ knowledge.

To compensate physicians for the time spent on preparing and reviewing

home health plans-of-care forms, HCFA issued a new regulation in 1994

providing separate payment for physician care plan oversight services. As

of January 1995, HCFA began allowing participating physicians to be paid

for oversight requiring at least 30 minutes. Currently, the payment rate is

approximately $81 per patient.

Physicians and

Beneficiaries Not Aware of

Services Billed

Neither the beneficiaries receiving nor the physicians ordering home

health services are sent information about which services Medicare has

paid. Beneficiaries do not receive an explanation of benefits because they

are not billed for in-home services. Therefore, neither the physician nor

the beneficiary has any way of knowing whether Medicare is paying the

HHA for services not rendered or whether the home health services are

provided according to the plan of care.

Denied Claims Likely to Be

Paid Under Waiver of

Liability

Under the waiver-of-liability provision of the Social Security Act

(§ 1879) Medicare will pay for denied services if the beneficiaries and

providers did not know and had no reason to know that the services were

47Testimony of June Gibbs Brown, Inspector General, HHS, before the Senate Special Committee on

Aging (Mar. 21, 1995).

Page 23 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

not medically reasonable and necessary or were based on the need for

custodial rather than skilled care. In implementing this provision, HCFA

generally presumed that HHAs did not know services were not covered as

long as their number of denials did not exceed 2.5 percent of total visits

billed. When a provider exceeded the 2.5-percent rate in a calendar

quarter, Medicare would not reimburse the provider for denied services,

usually for the next 3-month period.48

According to statistics obtained from HCFA, in fiscal year 1994

approximately half of all claims denied for lack of medical necessity or for

not meeting the coverage criteria were eligible for waiver. Of those eligible

for waiver, 73 percent were ultimately paid. In fiscal year 1994, the total

amount reimbursed under waiver was approximately $45.5 million.

Because so few claims are reviewed and so few technical and medical

necessity denials are made, most providers, especially those who submit

large numbers of claims, would never exceed the 2.5-percent rate

threshold.49 In an earlier report,50 we noted that savings could be realized

by changing the waiver-of-liability rules and recommended that HCFA

establish more stringent eligibility requirements for the application of

waiver of liability for health care providers under part A of Medicare.51

HCFA Striving to

Address Problems

In response to the changing climate surrounding home health care, the

Administrator of HCFA convened an internal task force in the spring of 1994

(the Medicare Home Health Initiative) to examine the home health benefit

from both a policy and an operations perspective. As of September 1995,

the task force has held four open workgroup meetings at which HCFA

officials solicited ideas and suggestions for benefit improvement from

48The Omnibus Budget Reconciliation Act of 1986 created a second waiver-of-liability category under

which the beneficiary is not liable when services are denied for technical reasons; that is, because the

beneficiary was not homebound or did not require intermittent skilled nursing care. HCFA pays

providers for services denied for technical reasons using the same 2.5-percent rate criterion that

applies to medical necessity denials.

49Providers who do exceed the threshold are usually targeted by intermediaries for high levels of

review.

50Savings Possible by Modifying Medicare’s Waiver of Liability Rules (GAO/HRD-83-38, Mar. 4, 1983).

51We suggested several ways to achieve savings: (1) eliminating the presumption that providers did not

know or could not reasonably be expected to know that certain services were not covered and

applying the waiver provision on a case-by-case basis; (2) tightening the denial rate criteria used to

determine presumed eligibility (that is, reducing the threshold); and (3) changing the waiver-of-liability

procedure so that after providers have participated in Medicare for some period of time, there would

no longer be a presumption of eligibility. The legal provision requiring HCFA to use the presumptive

level expired in January 1996. HCFA instructed the intermediaries to discontinue using presumption of

eligibility for waiver of liability and make waiver decisions for each denied claim.

Page 24 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

physician organizations, representatives of beneficiary groups, the home

health industry, state governments and their Medicaid agencies, and

others. The task force has also issued a draft revision of the conditions of

participation, developed a pamphlet to better inform beneficiaries of what

services are covered, and developed draft sampling instructions for

postpayment utilization review. Further, the task force has implemented a

four-state pilot program to investigate providing home health beneficiaries

with claims information, begun pilots of team on-site medical review of

HHAs,52 revised the Medicare Intermediary Manual to allow unannounced

on-site audits,53 and implemented a two-state pilot program involving

training state surveyors to assess patient eligibility as a part of HHA annual

surveys.

These efforts by HCFA are commendable and should help somewhat in

gaining control of the use of the home health benefit. However, as

discussed earlier in this report, HCFA cannot address many of the major

problems, such as the changes in the manuals made in response to a court

decision, that make it harder to control use of services and the shortage of

funds to perform program safeguard activities.

Conclusions The Medicare home health program is judged by HCFA as being very

difficult to control. While quantifying how much of the recent growth in

home health care is due to abuse of the benefit is not possible, lax benefit

controls leave the door open for abuses such as overutilization to occur.

While HCFA has made some notable attempts to remedy several specific

problems, a number of fundamental issues remain. For example:

• In response to a court decision, HCFA revised its requirements for

determining Medicare home health eligibility. The revisions made it

possible for more beneficiaries to qualify for Medicare home health

services and more HHAs to receive payment for higher numbers of visits

and for longer periods of care. Historically, part A of Medicare’s home

health benefit was directed at acute conditions after hospitalization. While

many beneficiaries still use the benefit in this way, an increasing number

52The March 1995 Medicare Intermediary Manual revisions added the following statement under

Review Options: “Team Reviews have been found to be very effective and are to be conducted

whenever appropriate. The team may consist of medical review, and/or audit and fraud and abuse

staff, state surveyors, carrier and/or Medicaid staff depending upon the issues identified. At minimum,

prior to conducting CMRs you are to consult and share information with other internal and external

(as appropriate) staff to determine if there are issues that you should be aware of or if a team review is

needed.”

53Until a March 1995 revision to the Medicare Intermediary Manual, RHHIs were required to give HHAs

10 days’ notice before doing an on-site audit (none if fraud was suspected). The manual now leaves the

decision of whether to give notice and how much to the RHHI.

Page 25 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

of beneficiaries are receiving visits that are more directed at long-term

care for chronic conditions.

• Physicians tend to depend on HHAs to design plans of care, especially for

less complex cases, and agencies as a rule have incentives to furnish as

many visits as possible. This combination can lead to the overprovision of

services.

• Medicare has reduced on-site audits and reviews so that HHAs have less

incentive to follow Medicare rules. The percentage of claims that are

reviewed has decreased from over 60 percent in 1987 to approximately

3 percent in 1994. We have testified on a number of occasions that

program safeguard activities are cost effective, returning close to $14 in

savings for each $1 invested in 1994, and cuts in payment safeguard areas

translate into increased program losses from fraud, waste, and abuse.

When claims volume increases and medical review of claims declines,

intermediaries’ ability to detect and prevent erroneous payments is

substantially lessened. Further, even when claims are denied, they were

often paid because the HHA qualified for a waiver of liability.

• It is nearly impossible for intermediaries to assess from paper review

alone whether a beneficiary meets the eligibility criteria, whether the

services received are appropriate given the beneficiary’s current condition,

and whether the beneficiary is actually receiving the services billed to

Medicare. Coverage criteria, such as confined to the home or intermittent,

are not meaningful when the HHAs are in effect the only ones monitoring

beneficiaries.

Matters for

Consideration by the

Congress

The emphasis of Medicare’s home health benefit program has recently

shifted from primarily posthospital acute care to more long-term care. At

the same time, HCFA’s ability to manage the program has been severely

weakened by coverage changes mandated by court decisions and a

decrease in the funds available to review HHAs and the care they provide.

The Congress may wish to consider whether the Medicare home health

benefit should continue to become more of a long-term care benefit or if it

should be limited primarily to a posthospital acute care benefit. The

Congress should also consider providing additional resources so that

controls against abuse of the home health benefit can be better enforced.

Agency Comments We provided HHS an opportunity to comment on our draft report, but it did

not provide comments in time for them to be included in the final report.

Page 26 GAO/HEHS-96-16 Medicare: Home Health Utilization
B-257049 

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 7 days after its

issue date. At that time, we will send copies to the Secretary of HHS, the

Administrator of HCFA, interested congressional committees, officials who

assisted our investigation, and other interested parties. Copies also will be

made available to others on request.

Please contact me on (202) 512-6808 if you have any questions about this

report. Other GAO contacts and staff acknowledgments are listed in

appendix V.

Sincerely yours,

Sarah F. Jaggar

Director, Health Financing and

 Policy Issues

Page 27 GAO/HEHS-96-16 Medicare: Home Health Utilization
Contents

Letter 1

Appendix I 

Scope and

Methodology

30

Appendix II 

Detailed Data Tables

32

Appendix III 

Episode-of-Care

Analysis

38

Appendix IV 

HCFA Definition of

Confined to the Home

48

Appendix V 

GAO Contacts and

Staff

Acknowledgments

51

Related GAO Products 52

Tables Table 1: Growth in HHAs Providing Medicare Services, 1989-94 10

Table 2: Average and Median Home Health Visits by HCFA

Region and Ownership Type, 1993

11

Table 3: Average Episode Length and Visits per Episode—Four

Diagnoses, 1992-93

14

Table II.1: Characteristics of Medicare Home Health Beneficiaries 32

Table III.1: Average Home Health Services per Episode by Type

of Service, 1992-93

47

Figures Figure 1: Medicare Home Health Expenditures, 1980-94 6

Page 28 GAO/HEHS-96-16 Medicare: Home Health Utilization
Contents

Figure 2: Growth in Average Visits per Year per Beneficiary,

1989-93

8

Figure 3: Distribution of Medicare Beneficiary Visits, 1989 and

1993

9

Figure 4: Growth in Medicare Home Health Visits per Beneficiary

by Type of Agency, 1989-93

12

Figure II.1: Growth in Medicare Home Health Agencies, 1989-94 34

Figure II.2: Average and Median Number of Visits per Beneficiary

per Year, 1989 and 1993

36

Figure II.3: Home Health Visits per Medicare Beneficiary, 1993, in

Descending Order

37

Figure III.1: Average Episode Length and Visits per

Episode—Diabetes, 1992-93

39

Figure III.2: Average Episode Length and Visits per

Episode—Heart Failure, 1992-93

41

Figure III.3: Average Episode Length and Visits per

Episode—Hypertension, 1992-93

43

Figure III.4: Average Episode Length and Visits per Episode—Hip

Fracture, 1992-93

45

Abbreviations

CFR Code of Federal Regulations

CMR comprehensive medical review

ESRD end-stage renal disease

FMR focused medical review

HCFA Health Care Financing Administration

HHA home health agency

HHS Department of Health and Human Services

OIG Office of Inspector General

RHHI regional home health intermediary

Page 29 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix I 

Scope and Methodology

Our work was done primarily at HCFA headquarters. We also visited three

regional home health intermediaries (in Chicago, Illinois; Milwaukee,

Wisconsin; and Clearwater, Florida) and two HCFA regional offices

(Chicago and Atlanta) to obtain workload and performance data,

information concerning RHHI claims review operations, and an update on

HCFA’s implemented and planned program changes. We also interviewed

officials at HHS’ Office of the Inspector General in Baltimore and Atlanta.

We reviewed pertinent laws, regulations, court decisions, and HCFA

policies to identify changes in eligibility determination and medical review

practices. And we reviewed studies related to home health benefit

utilization and control issues.

To identify home health growth patterns and variations in utilization, we

analyzed data from Medicare’s Provider of Service and Home Health

National Claims History files. These data include information on all paid

claims for the period 1989 through 1993.54 We used data from the Provider

of Service file to determine agency growth through time and across

geographic regions and to identify provider ownership type. And we used

the Medicare claims data to calculate mean and median home health visits,

by total and by each type of service, broken out by geographic area55 and

HHA ownership types.

While the average visits per year provides a general indication of

variations in utilization of home health services, it does not indicate the

length of each individual’s episode of care nor does it provide a picture of

the intensity of services provided during this time. To obtain a more

in-depth look at variations in practice patterns, both across regions and

among various types of HHAs, we conducted an episode-of-care analysis for

four diagnoses: diabetes, heart failure, hypertension, and hip fracture.56

The first three diagnoses were selected because they are among the most

common primary diagnoses associated with home health care.57 Hip

fracture was selected because it is generally regarded as having a more

predictable pattern of treatment with a more finite end point. We selected

beneficiaries with one of the above primary diagnoses who began

54Most recent data available.

55Geographic breakdowns were based on the state of beneficiary residence.

56Because home health episodes are not clearly defined by admission and discharge dates, we defined

episodes of care as a series of home health visits preceded and followed by a 60-day period with no

visits.

57Approximately 22 percent of Medicare home health patients have one of these four primary

diagnoses.

Page 30 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix I 

Scope and Methodology

receiving home health services in 1992. We then tracked beneficiaries’

visits up to 210 days after their episode start date.58

The principal sources of our automated data were Medicare paid claims

data systems, which are subject to periodic HCFA reviews and

examinations. HCFA relies on the data obtained from these systems as

evidence of Medicare-covered services and expenditures and to support its

management and budgetary decisions. For this reason, we did not

independently examine the internal and automatic data processing

controls for automated systems from which we obtained data used in our

analyses. With this exception, we conducted our work in accordance with

generally accepted government auditing standards between July 1994 and

December 1995.

58Because some episodes of care continued indefinitely, that is, without a 60-day gap in claims for

visits, we selected a cutoff point that allowed us to analyze utilization of most of the patients. A cutoff

point of 210 days allowed us to look at full episodes for 99.22 percent of hip fracture beneficiaries,

94.60 percent of heart failure beneficiaries, 94.59 percent of hypertension beneficiaries, and

91.54 percent of diabetes beneficiaries.

Page 31 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix II 

Detailed Data Tables

Table II.1: Characteristics of Medicare

Home Health Beneficiaries 1989 1990

Number of

beneficiaries Percent

Number of

beneficiaries Percent

1,682,139 100 1,955,170 100

Sex

Female 1,073,674 63.83 1,253,685 64.12

Male 608,169 36.15 701,451 35.88

Race

White 1,422,569 84.57 1,650,857 84.44

Black 185,959 11.05 213,174 10.90

Other 25,448 1.51 32,676 1.67

Age

Less than 65 96,103 5.71 114,578 5.86

65-70 263,740 15.68 304,211 15.56

71-80 692,258 41.15 793,679 40.59

81 or older 630,038 37.45 742,702 37.99

Medicare eligible

Aged without ESRDa 1,573,317 93.53 1,824,379 93.31

Aged with ESRD 7,022 0.42 9,540 0.49

Disability without

ESRD 94,728 5.63 112,010 5.73

Disability with ESRD 3,616 0.21 4,659 0.24

ESRD only 3,456 0.21 4,582 0.23

Page 32 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix II 

Detailed Data Tables

1991 1992 1993

t

Number of

beneficiaries Percent

Number of

beneficiaries Percent

Number of

beneficiaries Percent

0 2,228,701 100 2,526,978 100 2,836,912 100

2 1,433,111 64.30 1,628,771 64.46 1,834,899 64.68

8 795,89 35.70 898,207 35.54 1,002,008 35.32

4 1,876,723 84.21 2,118,644 83.84 2,369,476 83.52

0 243,891 10.94 278,888 11.04 314,829 11.10

7 42,558 1.91 54,208 2.15 67,328 2.37

6 132,153 5.93 156,143 6.18 186,840 6.59

6 338,514 15.19 373,912 14.80 407,177 14.35

9 897,289 40.26 1,009,229 39.94 1,111,308 39.17

9 860,745 38.62 987,694 39.09 1,131,587 39.89

2,076,599 93.18 2,345,992 92.84 2,621,323 92.40

9 12,388 0.56 16,321 0.65 19.382 0.68

3 128,320 5.76 150,133 5.94 178,340 6.29

4 5,647 0.25 7,550 0.30 9.632 0.34

3 5,747 0.26 6,982 0.28 8,235 0.29

aEnd-stage renal disease.

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Page 33 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix II 

Detailed Data Tables

Figure II.1: Growth in Medicare Home Health Agencies, 1989-94

1989 1994

Percent Percent

Region State Total HHAs Government Proprietary Voluntary Total HHAs Government Proprietary Voluntary

Boston Connecticut 103 13.59 27.18 59.22 114 9.65 36.84 53.51

Maine 22 0.00 27.27 72.73 30 0.00 40.00 60.00

Massachusetts 141 9.22 19.86 70.92 171 4.09 38.01 57.89

New Hampshire 38 7.89 13.16 78.95 40 5.00 22.50 72.50

Rhode Island 14 0.00 7.14 92.86 18 0.00 33.33 66.67

Vermont 16 0.00 0.00 100.00 13 0.00 0.00 100.00

New York New Jersey 57 17.54 10.53 71.93 53 15.09 5.66 79.25

New York 194 34.54 10.82 54.64 213 28.17 16.43 55.40

Puerto Rico 45 4.44 0.00 95.56 44 4.55 2.27 93.18

Virgin Islands 1 100.00 0.00 0.00 2 50.00 50.00 0.00

Philadelphia Delaware 20 20.00 25.00 55.00 19 0.00 36.84 63.16

D.C. 13 7.69 46.15 46.15 19 5.26 68.42 26.32

Maryland 82 18.29 40.24 41.46 75 17.33 37.33 45.33

Pennsylvania 256 0.39 41.02 58.59 313 0.00 48.88 51.12

Virginia 168 22.02 45.83 32.14 200 12.50 54.00 33.50

West Virginia 56 39.29 17.86 42.86 67 32.84 31.34 35.82

Atlanta Alabama 118 57.63 25.42 16.95 168 52.98 26.19 20.83

Florida 232 5.60 61.64 32.76 306 4.58 63.40 32.03

Georgia 71 8.45 52.11 39.44 82 3.66 58.54 37.80

Kentucky 102 24.51 36.27 39.22 107 24.30 36.45 39.25

Mississippi 78 50.00 23.08 26.92 76 47.37 28.95 23.68

North Carolina 127 48.82 19.69 31.50 149 38.26 29.53 32.21

South Carolina 46 39.13 28.26 32.61 66 25.76 45.45 28.79

Tennessee 269 27.51 55.76 16.73 237 12.66 67.51 19.83

Chicago Illinois 245 18.78 31.84 49.39 303 14.52 42.90 42.57

Indiana 131 26.72 38.93 34.35 203 15.27 56.16 28.57

MIchigan 162 24.69 35.19 40.12 175 14.29 37.71 48.00

Minnesota 194 46.91 22.68 30.41 230 38.70 28.26 33.04

Ohio 246 21.14 34.55 44.31 341 12.90 49.56 37.54

Wisconsin 157 34.39 29.30 36.31 171 26.32 31.58 42.11

Dallas Arkansas 161 58.39 14.29 27.33 203 50.25 15.76 33.99

Louisiana 174 13.79 63.22 22.99 431 5.10 77.03 17.87

New Mexico 46 8.70 47.83 43.48 81 12.35 59.26 28.40

Oklahoma 82 24.39 39.02 36.59 218 16.06 59.63 24.31

Texas 451 15.30 58.31 26.39 937 7.79 75.45 16.76

Kansas City Iowa 154 66.23 7.79 25.97 173 54.34 12.14 33.53

Kansas 126 47.62 19.05 33.33 163 36.20 33.13 30.67

Missouri 182 29.67 29.67 40.66 230 20.43 44.78 34.78

Nebraska 46 32.61 15.22 52.17 64 29.69 28.13 42.19

Denver Colorado 108 26.85 30.56 42.59 154 17.53 46.75 35.71

Montana 43 32.56 6.98 60.47 47 23.40 10.64 65.96

North Dakota 33 12.12 24.24 63.64 32 9.38 18.75 71.88

South Dakota 19 15.79 15.79 68.42 33 15.15 18.18 66.67

Utah 37 27.03 35.14 37.84 64 10.94 57.81 31.25

Wyoming 30 73.33 20.00 6.67 52 61.54 23.08 15.38

San Francisco Arizona 56 19.64 35.71 44.64 94 6.38 55.32 38.30

California 344 13.66 49.42 36.92 604 8.61 63.41 27.98

Hawaii 19 31.58 21.05 47.37 25 16.00 32.00 52.00

Nevada 24 20.83 62.50 16.67 41 7.32 78.05 14.63

Seattle Alaska 7 28.57 14.29 57.14 18 27.78 16.67 55.56

Idaho 28 25.00 39.29 35.71 56 28.57 42.86 28.57

Oregon 59 27.12 23.73 49.15 80 12.50 38.75 48.75

Washington 58 18.97 24.14 56.90 59 15.25 27.12 57.63

National Totals 5,692 25.35 35.26 39.39 7,864 17.20 48.51 34.28

(Figure notes on next page)

Page 34 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix II 

Detailed Data Tables

Source: GAO analysis of the Medicare Provider of Service File.

Page 35 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix II 

Detailed Data Tables

Figure II.2: Average and Median Number of Visits per Beneficiary per Year, 1989 and 1993

1989 1993

All HHAs Government Proprietary Voluntary All HHAs Government Proprietary Voluntary

Region State Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median

Boston Connecticut 26.28 13 23.62 12 29.50 17 26.26 13 63.08 26 45.12 20 87.23 40 56.71 24

Maine 22.70 11 17.45 8 19.00 10 22.98 11 55.46 22 34.21 19 64.86 25 54.22 22

Massachusetts 23.80 11 23.30 11 23.75 12 23.80 11 74.42 28 68.92 28 99.84 39 71.32 27

New Hampshire 22.58 10 25.48 11 37.48 18 21.62 10 50.15 19 69.68 28 72.56 32 48.49 19

Rhode Island 23.22 11 17.57 13 28.57 15 23.14 11 55.48 23 41.90 11 71.91 32 54.70 22

Vermont 25.96 11 22.00 7 19.28 13 26.13 11 54.46 22 36.19 22 49.31 22 54.55 22

New York New Jersey 19.21 10 18.77 10 20.22 11 19.17 10 37.10 18 31.69 16 48.67 24 36.75 18

New York 17.61 10 16.02 8 22.39 13 17.84 11 40.68 20 29.92 12 55.35 27 40.81 21

Puerto Rico 19.16 12 19.05 12 28.30 12 19.13 12 31.03 17 23.64 14 26.94 16 31.58 17

Virgin Islands 14.28 10 13.93 8 16.71 8 13.86 11 29.86 13 16.37 10 43.38 21 48.02 10

Philadelphia Delaware 28.04 15 22.24 11 33.74 17 27.60 15 43.75 19 33.52 10 53.21 21 42.42 19

D.C. 21.85 13 48.11 16 21.04 13 21.92 14 37.80 20 34.88 28 37.31 20 39.24 21

Maryland 21.81 12 19.66 10 24.68 14 20.85 12 35.44 18 32.66 15 39.69 19 33.11 17

Pennsylvania 22.99 13 20.55 10 26.13 14 22.34 13 39.29 19 34.77 15 56.92 25 35.52 18

Virginia 26.15 13 26.54 13 30.24 15 23.63 13 44.14 19 40.39 18 56.61 24 36.41 17

West Virginia 24.92 11 21.31 10 30.75 13 24.28 11 45.11 17 41.29 16 63.26 25 38.64 16

Atlanta Alabama 44.76 21 36.04 16 58.79 28 37.35 18 102.25 52 89.12 51 116.88 58 91.55 46

Florida 31.82 18 22.99 13 34.28 20 28.40 17 68.35 34 49.19 21 72.78 36 63.23 33

Georgia 41.85 22 35.30 17 45.43 25 37.93 19 95.09 49 74.03 39 107.37 58 72.39 35

Kentucky 32.48 14 29.83 13 37.26 16 30.02 12 60.10 24 50.40 21 75.31 32 52.48 21

Mississippi 55.49 31 47.72 25 58.95 33 56.92 32 100.98 54 84.41 43 102.86 54 105.73 59

North Carolina 28.93 15 24.71 13 36.52 18 28.11 15 52.71 23 38.87 18 66.82 30 52.00 22

South Carolina 27.41 15 24.78 14 36.02 19 29.79 16 57.16 28 52.52 28 71.52 35 44.34 23

Tennessee 52.37 26 40.29 21 60.65 32 37.81 19 105.58 51 68.74 34 122.48 65 78.74 34

Chicago Illinois 22.16 12 22.41 12 25.40 15 20.98 12 44.33 22 39.00 19 59.01 30 39.79 20

Indiana 23.56 12 23.68 12 30.49 15 21.30 11 63.09 26 53.67 23 86.25 39 54.07 22

MIchigan 24.42 14 21.98 12 27.75 17 23.37 13 38.00 20 42.33 19 48.46 26 33.15 18

Minnesota 18.08 10 19.53 10 19.69 10 16.94 10 34.82 15 30.03 13 50.33 20 31.37 14

Ohio 20.25 10 17.16 9 21.83 11 20.48 11 44.65 20 34.31 15 63.13 27 38.82 18

Wisconsin 20.85 11 18.72 10 22.46 12 21.15 11 38.90 16 32.77 14 53.67 21 36.71 16

Dallas Arkansas 33.68 16 33.00 17 39.30 18 32.03 15 64.59 29 57.68 27 87.22 40 59.07 27

Louisiana 36.87 17 30.92 15 43.66 21 27.15 13 96.05 47 63.93 29 111.32 61 64.71 27

New Mexico 21.57 11 18.52 11 27.84 14 19.09 10 41.60 18 33.34 16 56.09 25 31.58 15

Oklahoma 29.98 13 22.68 11 41.52 19 22.16 11 81.67 33 52.10 23 107.16 48 60.57 25

Texas 29.14 15 22.42 12 33.09 17 25.05 13 73.48 32 53.09 24 84.38 38 55.42 23

Kansas City Iowa 20.79 10 18.24 9 28.30 14 21.53 11 40.67 18 39.02 17 60.21 24 38.99 18

Kansas 24.88 11 20.69 9 27.76 13 25.07 11 47.51 21 35.49 16 64.38 28 44.15 20

Missouri 24.72 13 23.32 12 28.20 14 23.88 13 44.61 21 39.63 19 57.43 28 39.59 19

Nebraska 21.01 10 18.10 10 30.64 16 20.70 10 39.26 16 30.11 15 76.76 26 37.40 15

Denver Colorado 25.15 13 19.20 10 29.91 17 23.96 13 49.63 22 35.62 18 79.27 35 41.67 20

Montana 23.86 12 22.69 12 39.78 22 22.92 11 45.51 20 39.74 19 116.53 43 40.59 19

North Dakota 19.67 11 16.31 11 20.38 11 19.61 11 40.95 18 27.96 14 53.30 19 36.72 18

South Dakota 17.50 9 13.71 7 17.93 10 19.25 9 31.06 14 22.00 10 50.01 24 33.27 15

Utah 34.79 16 36.27 18 48.31 22 28.54 13 85.44 34 69.81 29 104.20 41 75.64 31

Wyoming 23.97 13 21.79 11 26.66 13 24.04 14 65.80 26 57.53 25 64.70 26 76.09 25

San Francisco Arizona 22.74 11 17.30 8 28.64 15 18.60 9 49.47 21 33.24 15 65.45 27 36.70 17

California 18.77 10 16.27 9 21.40 12 17.83 10 37.64 17 29.53 14 49.75 21 30.63 15

Hawaii 16.42 8 12.86 6 18.20 12 18.78 10 35.53 14 29.10 10 48.35 17 29.75 13

Nevada 26.08 13 17.39 10 29.26 15 22.65 11 62.70 27 30.72 15 73.90 32 42.85 21

Seattle Alaska 17.89 9 27.03 11 16.70 10 18.05 9 35.20 16 52.14 13 44.65 19 32.60 16

Idaho 20.52 10 18.08 10 25.28 12 17.44 9 45.68 20 41.40 19 56.90 23 37.34 18

Oregon 18.57 10 17.75 10 22.88 11 18.01 10 35.26 16 28.46 14 57.48 24 31.30 15

Washington 19.88 11 19.48 11 20.30 11 19.90 12 34.64 17 32.00 15 52.82 24 31.72 16

National Averages 26.49 13 23.35 11 34.45 17 23.16 12 56.71 24 45.85 19 78.04 34 46.11 20

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Page 36 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix II 

Detailed Data Tables

Figure II.3: Home Health Visits per Medicare Beneficiary, 1993, in Descending Order

 Medicare Total Visits/ Medicare Total Visits/

State eligible visits eligible State eligible visits eligible

Tennessee 737,000 9,866,429 13.39 Idaho 142,000 454,006 3.20

Mississippi 383,000 4,813,997 12.57 West Virginia 322,000 1,020,495 3.17

Louisiana 554,000 6,651,997 12.01 Virginia 768,000 2,383,971 3.10

Alabama 612,000 6,814,524 11.13 Ohio 1,610,000 4,956,780 3.08

Georgia 788,000 7,587,534 9.63 MIchigan 1,298,000 3,929,160 3.03

Massachusetts 908,000 7,284,572 8.02 Montana 125,000 359,260 2.87

Oklahoma 473,000 3,372,091 7.13 New York 2,512,000 6,740,424 2.68

Utah 176,000 1,237,638 7.03 New Mexico 195,000 516,688 2.65

Vermont 79,000 538,294 6.81 District of Columbia 75,000 198,111 2.64

Florida 2,510,000 16,727,455 6.66 Kansas 375,000 981,367 2.62

Texas 1,967,000 12,622,321 6.42 New Jersey 1,130,000 2,926,460 2.59

Connecticut 487,000 2,844,258 5.84 California 3,369,000 8,640,750 2.56

Arkansas 410,000 2,322,859 5.67 Maryland 573,000 1,466,533 2.56

Rhode Island 164,000 822,751 5.02 North Dakota 101,000 251,500 2.49

Maine 193,000 955,931 4.95 Puerto Rico 455,000 1,077,297 2.37

Kentucky 557,000 2,746,786 4.93 Arizona 556,000 1,308,968 2.35

New Hampshire 148,000 683,849 4.62 Iowa 469,000 1,100,447 2.35

Wyoming 57,000 248,383 4.36 Nebraska 244,000 537,357 2.20

South Carolina 475,000 2,048,481 4.31 Washington 655,000 1,376,519 2.10

Missouri 809,000 3,382,821 4.18 Wisconsin 743,000 1,544,315 2.08

North Carolina 970,000 3,957,762 4.08 Oregon 451,000 909,287 2.02

Indiana 802,000 3,121,017 3.89 Alaska 29,000 48,261 1.66

Pennsylvania 2,036,000 7,374,983 3.62 Minnesota 614,000 898,178 1.46

Colorado 391,000 1,407,697 3.60 South Dakota 114,000 164,935 1.45

Nevada 178,000 623,129 3.50 Hawaii 138,000 132,001 0.96

Illinois 1,574,000 5,486,165 3.49 Virgin Islands 8,000 5,046 0.63

Delaware 96,000 311,048 3.24

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database and the Social Security Bulletin, Annual Statistical Supplement, 1994.

Page 37 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

The following figures present tables (figs. III.1 to III.4) that show the

average length of episode and the average number of visits per episode for

patients with a primary diagnosis of diabetes, heart failure, hypertension,

and hip fracture for the different types of HHAs. Length of episode refers to

the average period of time during which a beneficiary receives care,59 and

visits per episode refers to the average number of home health services a

beneficiary receives during that time. We examined episodes of care

beginning during 1992. For these episodes we tracked care throughout

1992 and 1993.

Much variation in both lengths of episode and average number of visits per

episode can be seen among the different types of agencies for these four

diagnoses. For example, on a national level, proprietary agencies provided

an average of 53 visits to beneficiaries with diabetes over an average

period of 64 days. Government agencies, on the other hand, provided an

average of 29 visits to diabetic beneficiaries over a similar period of time.

The variation in utilization between the different types of agencies is less

pronounced in cases of hip fracture, which may be regarded as an acute

condition, than in cases of diabetes, heart failure, and hypertension, which

may be regarded as more chronic conditions.

Variations in utilization are also seen across geographic regions. For

example, beneficiaries diagnosed with hypertension receiving care in the

Atlanta or Dallas regions received more care for longer periods of time

than beneficiaries in other regions with the same diagnosis. (See fig. III.3.)

HHAs in these two regions, on average, consistently provided more care for

cases of diabetes, heart failure, and hypertension, while HHAs in the Boston

region provided the most care to beneficiaries with hip fracture. Some of

the variation between regions may be explained by case-mix differences

and availability of alternative sources of care. And some of the differences

are probably due to geographic variations in practice patterns.

Table III.5 shows the average number of two types of visits provided to

beneficiaries—skilled nursing visits and home health aide visits. Again,

proprietary agencies provided more of these types of services for all

diagnoses. For example, in cases of hypertension, proprietary agencies

provided almost twice as many skilled nursing visits as voluntary agencies

during a beneficiary’s episode of care.

59Capped at 210 days. Refer to app. I for methodology.

Page 38 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Figure III.1: Average Episode Length and Visits per Episode—Diabetes, 1992-93

Diabetes

All HHAs Government Proprietary Voluntary

Average Average Average Average Average Average Average Average

Region State Length Visits Length Visits Length Visits Length Visits

Boston 54.83 37.24 47.24 27.88 54.64 54.48 55.07 35.52

Connecticut 45.95 36.79 40.33 24.62 47.64 48.95 45.86 34.46

Maine 62.85 35.76 29.00 7.00 53.20 40.95 63.94 35.22

Massachusetts 57.00 41.79 50.21 27.78 62.30 67.11 56.69 39.75

New Hampshire 59.31 29.83 57.82 40.89 58.18 36.82 59.42 29.08

Rhode Island 46.49 26.76 0.00 0.00 56.24 33.88 45.91 26.30

Vermont 65.48 27.38 27.00 14.00 19.50 11.38 66.00 27.56

New York 54.11 25.18 43.37 16.72 48.14 38.22 52.40 25.19

New Jersey 37.93 22.20 24.54 15.29 41.08 26.96 39.02 22.49

New York 42.75 31.42 39.47 18.15 47.36 47.52 42.90 32.31

Puerto Rico 74.57 17.18 89.90 11.00 60.97 19.54 74.39 17.39

Virgin Islands 63.89 11.11 72.03 10.74 14.00 9.00 13.25 14.50

Philadelphia 52.06 26.45 61.40 23.31 55.24 36.19 50.40 23.39

Delaware 42.90 26.90 64.56 49.78 27.77 30.65 43.63 26.32

D.C. 44.17 23.42 22.50 4.00 43.78 22.88 46.65 26.58

Maryland 43.40 24.73 53.99 21.37 44.48 27.31 40.23 23.72

Pennsylvania 51.00 25.13 46.15 11.92 56.41 38.27 49.96 22.56

Virginia 56.44 31.13 61.81 23.16 60.14 41.04 53.37 25.46

West Virginia 66.79 29.33 65.85 24.44 66.69 39.87 67.38 26.68

Atlanta 68.32 49.59 71.86 34.89 68.66 56.59 66.20 44.10

Alabama 76.73 60.53 77.21 51.82 77.27 69.93 75.44 52.37

Florida 51.69 49.12 54.80 40.56 51.54 52.77 51.83 43.51

Georgia 77.61 58.71 72.36 39.40 77.83 64.36 77.60 45.87

Kentucky 69.49 37.11 75.58 28.35 69.55 50.34 66.15 30.93

Mississippi 80.57 51.27 77.22 42.96 80.48 50.57 82.09 55.72

North Carolina 66.98 36.89 66.61 24.70 67.77 47.48 66.61 38.48

South Carolina 68.40 34.66 69.98 28.30 70.93 46.43 59.57 31.01

Tennessee 73.68 53.80 72.27 39.08 75.12 58.12 69.99 45.92

Chicago 55.68 30.21 59.20 24.87 57.04 42.29 54.56 26.62

Illinois 62.38 30.07 69.82 22.76 63.68 40.47 61.05 27.45

Indiana 64.25 38.92 64.65 32.91 66.13 56.87 63.29 31.46

MIchigan 45.43 25.19 58.58 27.70 46.77 29.91 42.93 22.62

Minnesota 44.87 29.22 43.56 22.38 48.93 40.59 44.33 28.91

Ohio 57.30 29.81 57.68 19.58 58.01 44.18 57.00 26.42

Wisconsin 47.73 32.17 52.67 25.10 48.88 60.02 45.45 26.61

Dallas 67.28 52.06 67.82 34.46 69.54 61.38 62.56 40.13

Arkansas 70.49 38.86 70.73 32.61 71.57 50.91 69.69 38.45

Louisiana 75.31 54.82 76.51 34.48 76.92 62.25 70.15 39.34

New Mexico 53.69 23.93 62.89 17.70 54.59 28.13 50.51 20.65

Oklahoma 64.22 61.73 62.01 39.84 66.87 81.98 61.16 40.25

Texas 64.05 52.88 62.45 35.55 66.56 59.27 58.76 42.57

Kansas City 58.30 29.24 59.27 24.98 63.13 39.37 56.13 26.81

Iowa 51.73 26.03 51.17 25.67 52.68 41.82 52.05 24.63

Kansas 56.59 30.82 57.26 21.30 61.50 45.19 54.18 28.71

Missouri 61.00 30.15 68.47 26.68 63.78 37.37 57.81 27.08

Nebraska 57.50 27.59 58.63 21.77 72.55 59.92 56.32 26.48

Denver 53.98 39.41 55.09 27.37 56.65 61.46 52.52 33.52

Colorado 50.95 32.80 51.24 24.34 55.70 47.20 48.79 28.70

Montana 56.83 31.70 56.86 28.63 48.97 52.76 57.42 31.75

North Dakota 46.21 28.63 37.40 12.93 44.90 40.17 46.88 25.81

South Dakota 54.04 22.33 53.73 18.54 73.17 28.50 53.45 23.79

Utah 60.51 67.12 62.63 38.23 60.56 87.20 60.08 55.22

Wyoming 55.73 32.05 58.99 36.98 57.17 31.57 49.54 26.29

San Francisco 44.26 32.47 40.80 24.50 47.36 44.23 42.33 23.64

Arizona 44.70 39.53 45.33 19.45 46.76 57.84 42.78 25.82

California 43.99 31.39 40.30 24.98 47.36 42.41 42.06 23.26

Hawaii 46.54 25.50 48.66 16.88 46.40 39.18 45.75 22.05

Nevada 47.59 40.56 40.38 27.84 48.30 45.79 46.95 28.98

Seattle 50.93 27.88 50.59 22.98 56.57 42.56 49.55 24.95

Alaska 47.83 25.00 50.22 30.56 29.43 22.00 49.13 24.65

Idaho 60.87 37.47 64.21 27.63 63.26 48.35 56.19 31.66

Oregon 48.62 25.00 44.60 20.33 51.91 33.04 48.36 23.72

Washington 49.55 26.98 44.88 21.14 54.70 46.07 49.36 24.78

National Averages 58.99 38.24 61.28 28.74 63.73 52.58 55.29 30.54

(Figure notes on next page)

Page 39 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Source: GAO analysis of data from Medicare Standard Analytical File: Home Health Claims

History Database.

Page 40 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Figure III.2: Average Episode Length and Visits per Episode—Heart Failure, 1992-93

Heart Failure

All HHAs Government Proprietary Voluntary

Average Average Average Average Average Average Average Average

Region State Length Visits Length Visits Length Visits Length Visits

Boston 56.95 37.67 49.92 32.35 55.42 52.31 57.32 36.29

Connecticut 49.34 38.30 43.22 27.60 51.08 51.30 49.41 36.34

Maine 63.00 35.68 1.50 32.50 57.98 52.23 63.74 33.55

Massachusetts 60.06 40.14 57.29 37.90 59.16 55.37 60.21 38.88

New Hampshire 54.77 30.60 64.14 21.86 67.35 32.50 54.34 30.61

Rhode Island 53.65 31.67 90.50 30.50 58.12 36.15 53.49 31.56

Vermont 64.97 30.08 43.00 63.00 27.10 37.60 65.66 29.85

New York 41.01 21.96 37.00 15.44 43.61 29.81 41.44 22.38

New Jersey 38.23 20.94 26.12 14.71 38.89 22.60 39.24 21.36

New York 41.01 23.41 38.90 15.92 45.44 33.26 41.05 24.10

Puerto Rico 51.95 14.67 50.97 8.46 47.11 16.05 52.11 15.00

Virgin Islands 50.94 11.72 52.09 8.27 32.00 11.00 52.00 18.17

Philadelphia 50.55 24.92 56.57 21.50 53.97 33.01 49.37 23.03

Delaware 44.04 25.77 26.00 15.00 29.07 21.27 45.30 26.16

D.C. 41.06 21.30 23.33 13.33 40.10 19.48 43.60 25.65

Maryland 43.73 22.43 49.78 22.53 46.05 24.13 41.29 21.48

Pennsylvania 50.03 24.89 36.70 16.04 53.47 35.89 49.48 23.10

Virginia 55.81 28.03 67.39 25.85 60.74 36.84 52.50 23.77

West Virginia 62.39 24.21 58.65 19.72 71.49 37.83 60.74 21.01

Atlanta 63.81 44.96 68.95 35.20 63.75 50.18 62.03 40.74

Alabama 71.46 53.51 71.36 49.00 72.22 58.45 70.29 48.97

Florida 50.73 41.73 55.97 35.67 50.97 44.25 50.17 38.57

Georgia 71.16 53.13 64.97 40.55 70.33 57.83 73.54 43.86

Kentucky 64.60 32.48 70.81 27.78 60.99 37.21 64.85 30.52

Mississippi 74.77 51.31 71.28 44.06 74.07 50.52 77.38 55.85

North Carolina 64.74 32.94 65.73 24.80 64.48 41.22 64.26 32.79

South Carolina 69.86 36.28 72.58 31.33 71.30 49.00 58.13 28.70

Tennessee 69.39 51.44 66.29 35.46 71.10 56.54 65.95 43.21

Chicago 54.98 26.92 57.17 23.56 56.29 35.23 54.20 24.56

Illinois 61.30 27.95 68.56 25.10 62.43 35.72 60.21 25.69

Indiana 64.28 35.93 64.60 31.35 64.57 48.92 64.14 31.80

MIchigan 47.55 24.87 55.82 25.65 48.91 31.06 45.97 22.03

Minnesota 45.46 21.99 43.10 18.97 52.70 31.73 44.90 21.17

Ohio 56.47 25.98 57.04 18.92 58.08 34.89 55.91 23.86

Wisconsin 47.63 23.85 50.09 20.66 44.47 28.99 47.60 23.67

Dallas 63.99 41.85 63.79 30.87 66.21 49.77 60.69 33.72

Arkansas 68.21 37.88 66.57 31.71 70.59 47.87 68.21 37.43

Louisiana 70.00 46.75 70.64 36.62 71.85 54.55 66.16 34.51

New Mexico 50.79 24.70 58.75 17.55 52.57 31.02 48.13 20.83

Oklahoma 60.73 40.71 59.23 28.41 63.84 53.55 57.71 30.67

Texas 62.47 42.29 61.20 29.81 64.74 48.04 58.44 34.64

Kansas City 55.16 26.23 54.00 22.93 57.96 33.26 54.64 25.02

Iowa 50.71 24.89 50.89 24.39 50.79 31.85 50.57 24.52

Kansas 54.95 28.42 51.59 19.11 54.76 33.88 56.28 29.69

Missouri 57.32 26.51 58.51 23.38 59.53 33.11 56.14 24.29

Nebraska 52.63 24.30 56.66 18.84 49.51 37.15 52.33 24.19

Denver 54.06 33.23 53.06 24.95 58.46 49.33 52.74 29.57

Colorado 49.57 29.11 43.98 21.64 54.71 38.31 49.08 27.67

Montana 58.51 29.88 63.41 27.85 60.86 117.00 56.78 26.44

North Dakota 55.13 26.95 67.00 33.17 46.43 24.08 57.21 27.57

South Dakota 46.66 18.98 41.18 17.39 55.80 38.00 48.56 19.36

Utah 61.31 52.01 63.39 33.08 64.94 65.72 57.92 44.68

Wyoming 62.22 38.64 67.84 30.62 63.06 47.13 50.66 38.76

San Francisco 43.49 22.68 40.62 16.90 45.53 28.77 42.80 19.92

Arizona 46.71 29.27 46.24 23.04 47.82 36.91 46.01 24.74

California 42.98 21.53 40.59 16.52 45.09 27.15 42.22 19.18

Hawaii 44.65 18.71 27.27 8.80 48.49 23.12 47.19 18.83

Nevada 45.95 32.27 36.31 27.87 46.50 35.94 46.42 25.16

Seattle 51.43 24.88 53.05 24.43 55.76 35.70 50.21 22.54

Alaska 50.63 23.38 64.00 57.14 52.71 17.00 49.67 21.67

Idaho 61.10 31.91 69.65 33.17 62.88 36.67 54.63 26.82

Oregon 49.70 25.26 39.74 17.77 56.74 39.75 49.42 22.99

Washington 50.18 22.99 51.60 23.03 49.18 31.52 50.13 21.78

National Averages 54.86 32.14 56.12 25.84 59.70 43.43 52.14 27.49

(Figure notes on next page)

Page 41 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Page 42 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Figure III.3: Average Episode Length and Visits per Episode—Hypertension, 1992-93

 Hypertension

All HHAs Government Proprietary Voluntary

Average Average Average Average Average Average Average Average

Region State Length Visits Length Visits Length Visits Length Visits

Boston 56.42 31.85 47.02 26.98 59.90 48.93 56.29 29.67

Connecticut 49.00 32.16 39.03 22.69 55.02 43.69 47.89 29.61

Maine 57.45 29.33 36.00 7.00 59.99 28.19 57.10 29.55

Massachusetts 59.81 34.19 49.83 29.97 64.90 58.51 59.45 31.41

New Hampshire 53.27 22.36 67.17 27.33 57.76 35.21 52.52 21.27

Rhode Island 51.76 28.82 0.00 0.00 47.71 32.81 51.91 28.67

Vermont 63.77 20.95 0.00 0.00 24.50 20.50 64.74 20.96

New York 40.60 19.80 35.38 13.48 40.02 27.18 41.40 20.17

New Jersey 34.78 18.83 21.56 12.49 36.13 20.90 36.43 19.50

New York 39.60 22.74 36.88 15.09 41.17 29.51 39.92 23.38

Puerto Rico 47.67 15.19 46.41 9.71 45.33 21.75 47.79 15.67

Virgin Islands 58.06 18.67 55.38 8.85 69.25 46.50 48.00 35.00

Philadelphia 46.11 21.86 50.08 17.22 50.94 30.47 43.91 18.55

Delaware 35.39 19.58 0.00 0.00 27.67 35.08 35.73 18.91

D.C. 39.77 21.45 47.00 15.00 39.17 19.79 42.00 28.08

Maryland 36.85 18.58 38.16 14.97 38.08 19.56 35.53 18.41

Pennsylvania 44.89 21.28 32.00 14.67 50.40 33.19 43.34 17.90

Virginia 54.53 27.44 67.23 22.50 59.53 34.46 49.09 22.19

West Virginia 58.77 22.00 49.43 16.30 65.60 29.68 59.66 20.08

Atlanta 63.93 45.33 68.54 35.63 64.68 48.82 61.29 41.25

Alabama 72.79 57.47 69.66 47.99 75.08 64.86 70.65 50.02

Florida 49.10 40.40 49.35 35.59 47.84 39.74 50.73 41.35

Georgia 74.41 52.31 72.02 38.98 75.06 56.80 72.39 38.31

Kentucky 62.23 29.24 71.88 23.48 58.63 35.07 60.57 27.00

Mississippi 71.89 46.21 69.62 41.38 71.97 44.86 72.54 49.55

North Carolina 63.75 34.39 63.84 22.27 64.07 40.72 63.39 36.54

South Carolina 69.66 38.35 71.72 30.78 71.09 50.09 61.48 28.78

Tennessee 68.58 48.26 67.45 33.54 69.57 51.15 65.44 42.48

Chicago 55.21 25.57 58.65 20.16 56.56 32.84 54.00 22.66

Illinois 61.32 26.81 69.06 20.87 60.89 33.41 60.39 23.98

Indiana 65.61 34.34 64.61 25.74 65.87 44.81 65.76 29.71

MIchigan 44.14 22.31 52.25 21.97 46.63 27.03 41.80 19.33

Minnesota 41.52 18.43 36.60 15.09 51.70 29.13 40.29 16.55

Ohio 56.12 24.80 56.94 16.88 58.36 32.87 55.19 22.56

Wisconsin 44.56 18.58 45.80 16.14 41.59 24.37 44.77 18.17

Dallas 64.68 41.97 63.94 29.62 66.71 47.30 59.39 32.19

Arkansas 65.80 35.07 64.72 27.57 67.86 44.29 64.95 33.77

Louisiana 73.54 52.27 74.05 34.28 75.04 57.11 66.90 37.84

New Mexico 47.96 23.53 52.50 17.20 48.95 27.84 45.19 17.28

Oklahoma 59.21 39.35 59.34 30.17 60.69 46.04 55.86 28.34

Texas 60.92 38.22 59.33 28.95 62.77 41.71 56.24 31.12

Kansas City 52.78 23.51 51.89 19.27 55.50 29.63 51.64 21.64

Iowa 47.63 18.58 47.22 16.82 46.71 32.27 47.98 18.68

Kansas 53.42 26.22 49.49 18.38 54.49 32.68 53.69 23.63

Missouri 54.63 24.96 56.97 22.90 56.27 28.83 52.96 22.72

Nebraska 48.58 17.85 52.63 11.91 45.15 27.74 48.17 18.08

Denver 52.38 30.13 52.70 21.58 59.23 47.50 47.99 22.50

Colorado 45.23 25.02 44.20 19.57 48.80 32.68 43.55 22.17

Montana 55.41 20.86 56.83 20.27 70.77 33.69 52.40 19.78

North Dakota 44.59 22.04 32.13 13.88 49.71 32.02 43.56 19.23

South Dakota 44.95 17.04 31.13 8.49 70.67 57.50 49.01 16.94

Utah 63.22 48.06 56.99 31.16 68.59 62.48 56.84 30.96

Wyoming 64.72 35.56 74.28 28.18 58.73 46.53 55.80 21.50

San Francisco 44.24 24.42 39.22 15.22 47.83 31.30 40.92 18.19

Arizona 47.81 30.33 39.33 16.86 51.08 38.37 45.08 22.84

California 43.76 23.44 39.79 15.31 47.50 30.19 40.15 17.41

Hawaii 47.91 21.76 27.19 9.44 61.09 28.36 48.55 22.55

Nevada 46.46 33.63 19.48 11.43 47.16 36.53 49.60 27.57

Seattle 51.85 23.03 52.42 22.48 55.84 30.53 50.45 20.67

Alaska 45.25 18.00 81.00 27.00 80.50 35.25 38.17 15.10

Idaho 58.55 24.70 61.10 23.88 58.82 26.03 56.21 23.32

Oregon 49.84 24.19 48.24 20.59 53.69 37.24 48.69 20.09

Washington 50.96 21.86 46.91 22.16 53.93 28.24 51.01 20.79

National Averages 57.44 34.93 58.52 26.38 62.00 43.96 52.75 27.78

(Figure notes on next page)

Page 43 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Page 44 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Figure III.4: Average Episode Length and Visits per Episode—Hip Fracture, 1992-93

Hip Fracture

All HHAs Government Proprietary Voluntary

Average Average Average Average Average Average Average Average

Region State Length Visits Length Visits Length Visits Length Visits

Boston 51.75 40.00 45.36 30.53 52.04 47.72 51.89 38.67

Connecticut 45.70 42.21 43.12 29.98 47.01 52.16 45.38 39.19

Maine 49.07 29.09 51.00 21.00 39.99 27.26 50.79 29.45

Massachusetts 56.14 44.06 48.62 32.08 57.41 47.22 56.09 43.74

New Hampshire 49.91 30.52 29.00 6.00 67.33 51.29 49.30 29.80

Rhode Island 45.57 33.64 0.00 0.00 56.78 50.78 45.15 32.99

Vermont 57.66 26.60 28.75 13.50 22.50 13.00 58.23 26.85

New York 43.55 30.53 38.61 21.97 44.66 35.61 44.19 31.31

New Jersey 39.76 26.07 35.24 23.09 46.84 29.39 39.76 26.20

New York 45.08 33.09 39.78 21.50 43.98 38.47 46.13 34.41

Puerto Rico 46.38 25.80 49.61 22.25 37.62 19.24 46.57 26.17

Virgin Islands 77.33 29.00 55.50 7.00 121.00 73.00 0.00 0.00

Philadelphia 40.39 23.58 42.03 20.93 40.90 26.43 40.15 22.79

Delaware 35.63 25.65 31.00 26.00 41.92 31.33 34.70 24.79

D.C. 42.05 27.35 57.00 38.00 43.32 28.15 40.35 26.26

Maryland 37.58 22.19 39.16 18.67 38.31 23.28 36.78 22.13

Pennsylvania 41.63 24.45 26.50 16.40 41.15 28.52 41.75 23.72

Virginia 38.99 22.33 51.03 26.42 40.26 25.29 37.55 20.45

West Virginia 43.12 21.84 40.48 20.24 49.97 29.79 40.58 18.22

Atlanta 46.01 34.66 49.17 27.75 46.13 39.26 44.68 31.52

Alabama 45.45 34.92 50.28 37.04 44.23 35.06 44.00 33.22

Florida 42.49 37.59 41.60 27.55 43.37 41.10 41.50 33.98

Georgia 49.24 38.06 45.97 27.29 48.11 42.63 50.98 32.89

Kentucky 46.52 25.28 52.38 26.09 46.05 28.39 44.59 22.21

Mississippi 49.35 38.63 51.85 35.61 49.84 39.97 47.41 37.73

North Carolina 45.27 26.60 45.23 21.20 44.21 31.41 46.17 27.29

South Carolina 52.09 29.95 57.20 30.22 49.64 34.77 42.63 21.81

Tennessee 49.63 38.62 43.72 29.99 51.91 43.89 47.76 32.54

Chicago 43.93 25.90 42.12 21.79 45.16 32.47 43.47 23.91

Illinois 49.54 27.77 56.39 29.59 53.17 35.31 47.93 25.31

Indiana 48.38 31.77 41.05 22.09 51.46 45.22 48.20 26.44

MIchigan 41.01 25.99 38.99 24.56 43.87 32.39 40.24 23.86

Minnesota 35.66 22.42 37.45 22.05 38.17 26.32 34.25 21.22

Ohio 42.33 23.58 38.68 16.49 41.97 28.36 43.01 21.98

Wisconsin 39.06 22.78 40.83 18.37 37.50 25.13 38.95 23.47

Dallas 42.93 32.23 45.11 29.44 45.44 38.65 39.23 25.33

Arkansas 45.87 29.39 47.92 30.78 49.11 33.46 43.35 26.86

Louisiana 46.01 35.54 41.38 28.28 47.88 41.60 44.62 27.97

New Mexico 38.69 22.36 46.15 19.35 41.00 31.75 37.20 18.74

Oklahoma 45.96 35.08 47.72 28.07 50.16 45.01 40.48 26.20

Texas 41.24 32.70 42.93 30.13 43.92 37.68 36.72 25.32

Kansas City 45.19 27.50 46.47 24.62 47.02 36.27 44.38 25.82

Iowa 45.21 27.29 49.03 28.37 42.07 35.05 43.45 24.64

Kansas 45.31 29.89 39.26 14.74 51.76 44.85 44.39 28.09

Missouri 45.78 27.68 46.70 25.78 46.88 33.17 45.31 26.45

Nebraska 41.55 23.24 45.77 14.69 43.65 42.95 40.87 21.66

Denver 43.80 31.32 42.34 26.00 49.22 42.88 42.36 28.72

Colorado 41.15 29.04 37.58 24.03 48.89 39.97 39.87 27.23

Montana 44.36 26.29 45.04 22.08 58.00 57.52 42.88 24.86

North Dakota 40.78 28.58 19.00 12.60 46.29 45.98 39.39 22.33

South Dakota 41.15 24.49 35.84 17.88 50.00 45.67 41.80 24.65

Utah 50.79 40.41 52.60 41.38 50.46 42.83 50.76 38.77

Wyoming 45.08 36.41 49.11 29.36 45.13 47.08 38.44 32.28

San Francisco 35.75 21.64 32.72 17.50 38.76 26.65 34.38 19.18

Arizona 35.70 25.30 29.64 16.77 39.70 32.24 33.24 20.70

California 35.55 20.88 33.04 17.62 38.48 25.34 34.27 18.80

Hawaii 36.94 18.95 32.80 10.04 37.69 20.57 37.42 19.97

Nevada 40.76 30.47 29.74 19.94 40.90 34.02 42.76 26.56

Seattle 39.46 20.86 37.38 19.31 41.86 27.07 39.16 19.50

Alaska 42.17 25.35 26.00 11.00 35.68 25.50 45.23 25.56

Idaho 45.54 28.86 39.32 20.45 46.24 34.77 47.66 28.83

Oregon 37.03 18.98 35.05 17.16 35.37 22.98 37.66 18.39

Washington 40.18 20.82 38.55 20.59 45.16 27.76 39.16 19.13

National Averages 43.32 29.32 42.85 24.09 44.62 35.30 42.77 27.26

(Figure notes on next page)

Page 45 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Source: GAO analysis of data from the Medicare Standard Analytical File: Home Health Claims

History Database.

Page 46 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix III 

Episode-of-Care Analysis

Table III.1: Average Home Health

Services per Episode by Type of

Service, 1992-93

Government Proprietary Voluntary

Skilled nursing visits

Diabetes 16.70 30.79 19.14

Heart failure 12.74 19.53 14.54

Hypertension 12.14 18.41 13.54

Hip fracture 8.24 11.79 9.37

Home health aide visits

Diabetes 36.11 48.71 32.86

Heart failure 27.51 38.81 26.13

Hypertension 32.48 43.28 29.48

Hip fracture 18.78 24.81 19.78

Source: GAO analysis of the Medicare Standard Analytical File, National Claims History Data.

Page 47 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix IV 

HCFA Definition of Confined to the Home

§ 204.1: Medicare Home Health Intermediary Manual (HCFA Publication

11)

A. Patient Confined to His Home--In order for a beneficiary to be

eligible to receive covered home health services under both Part A

and Part B, the law requires that a physician certify in all cases

that the beneficiary is confined to his home. (See § 240.1.) An

individual does not have to be bedridden to be considered as

confined to his home. However, the condition of these patients

should be such that there exists a normal inability to leave home

and, consequently, leaving their homes would require a considerable

and taxing effort. If the patient does in fact leave the home, the

patient may nevertheless be considered homebound if the absences

from the home are infrequent or for periods of relatively short

duration, or are attributable to the need to receive medical

treatment. Absences attributable to the need to receive medical

treatment include attendance at adult day centers to receive

medical care, ongoing receipt of outpatient kidney dialysis, and

the receipt of outpatient chemotherapy or radiation therapy. It is

expected that in most instances absences from the home which occur

will be for the purpose of receiving medical treatment. However,

occasional absences from the home for nonmedical purposes, e.g., an

occasional trip to the barber, a walk around the block or a drive,

would not necessitate a finding that the individual is not

homebound so long as the absences are undertaken on an infrequent

basis or are of relatively short duration and do not indicate that

the patient has the capacity to obtain the health care provided

outside rather than in the home.

Generally speaking, a beneficiary will be considered to be

homebound if he has a condition due to an illness or injury which

restricts his ability to leave his place of residence except with

the aid of supportive devices such as crutches, canes, wheelchairs,

and walkers, the use of special transportation, or the assistance

of another person or if he has a condition which is such that

leaving his home is medically contraindicated. Some examples of

homebound patients which are illustrative of the factors to be

taken into account in determining whether a homebound condition

exists would be: (1) a beneficiary paralyzed from a stroke who is

confined to a wheelchair or who requires the aid of crutches in

order to walk; (2) a beneficiary who is blind or senile and

requires the assistance of another person in leaving his place of

residence; (3) a beneficiary who has lost the use of his upper

extremities and, therefore, is unable to open doors, use handrails

on stairways, etc., and, therefore, requires the assistance of

another individual in leaving his place of residence; (4) a patient

who has just returned from a hospital stay involving surgery who

may be suffering from resultant weakness and pain and, therefore,

his actions may be restricted by his physician to certain specified

and limited activities such as getting out of bed only for a

specified period of time, walking stairs only once a day, etc.; and

(5) a patient with arteriosclerotic heart disease of such severity

that he must avoid all stress and physical activity; and (6) a

patient with a psychiatric problem if his illness is manifested in

Page 48 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix IV 

HCFA Definition of Confined to the Home

part by a refusal to leave his home environment or is of such a

nature that it would not be considered safe for him to leave his

home unattended, even if he has no physical limitations.

The aged person who does not often travel from his home because of

feebleness and insecurity brought on by advanced age would not be

considered confined to his home for purposes of receiving home

health services unless he meets one of the above conditions. A

patient who requires speech therapy but does not require physical

therapy or nursing services must also meet one of the above

conditions in order to be considered as confined to his home.

Although a patient must be confined to his home to be eligible for

covered home health services, some services cannot be provided at

the patient's residence because equipment is required which cannot

be made available there. If the services required by an individual

involve the use of such equipment, the home health agency may make

arrangements with a hospital, [skilled nursing facility], or a

rehabilitation center to provide these services on an outpatient

basis. (See § 200.2 and § 206.5.) However, even in these

situations, for the services to be covered as home health services

the patient must be considered as confined to his home; and to

receive such outpatient services it may be expected that a

homebound patient will generally require the use of supportive

devices, special transportation, or the assistance of another

person to travel to the appropriate facility.

If for any reason a question is raised as to whether an individual

is confined to his home, the agency will be requested to furnish

the intermediary with the information necessary to establish that

the beneficiary is homebound as defined above.

B. Patient's Place of Residence--A patient's residence is

wherever he makes his home. This may be his own dwelling, an

apartment, a relative's home, a home for the aged, or some other

type of institution. However, an institution may not be considered

a patient's residence if it:

1. Meets at least the basic requirement in the definition of a

hospital, i.e., it is primarily engaged in providing by or

under the supervision of physicians, to inpatients, diagnostic

and therapeutic services for medical diagnosis, treatment, and

care of disabled, or sick persons, or rehabilitation services

for the rehabilitation of injured, disabled, or sick persons,

or

2. Meets at least the basic requirement in the definition of a

[skilled nursing facility], i.e., it is primarily engaged in

providing to inpatients skilled nursing care and related

services for patients who require medical or nursing care, or

rehabilitation services for the rehabilitation of injured,

disabled, or sick persons. All nursing homes that participate

in Medicare and/or Medicaid as skilled nursing facilities, and

most facilities that participate in Medicaid as intermediate

Page 49 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix IV 

HCFA Definition of Confined to the Home

care facilities meet this basic requirement. In addition,

many nursing homes which do not choose to participate in

Medicare or Medicaid meet this test. Check with your fiscal

intermediary or Medicare regional office before serving

nursing home patients.

Thus, if an individual is a patient in an institution or distinct

part of an institution which provides the services described in (A)

or (B) above, he is not entitled to have payment made for home

health services under either Part A or Part B since such an

institution may not be considered his residence.

When a patient remains in a participating [skilled nursing

facility] following his discharge from active care, the facility

may not be considered his residence for purposes of home health

coverage.

Page 50 GAO/HEHS-96-16 Medicare: Home Health Utilization
Appendix V 

GAO Contacts and Staff Acknowledgments

GAO Contacts Thomas G. Dowdal, Assistant Director, (202) 512-6588

Patricia A. Davis, Evaluator-in-Charge, (202) 512-3011

Staff

Acknowledgments

The following team members also contributed to this report: Adrienne S.

Friedman, Senior Evaluator; MaryEllen Fleischman, Computer Specialist;

and Mary W. Reich, Attorney Advisor.

Page 51 GAO/HEHS-96-16 Medicare: Home Health Utilization
Related GAO Products

Medicare: Allegations Against ABC Home Health Care (GAO/OSI-95-17,

July 19, 1995).

Medicare: Increased Denials of Home Health Claims During 1986 and 1987

(GAO/HRD-90-14BR, Jan. 24, 1990).

Medicare: Need to Strengthen Home Health Care Payment Controls and

Address Unmet Needs (GAO/HRD-87-9, Dec. 2, 1986).

Savings Possible by Modifying Medicare’s Waiver of Liability Rules

(GAO/HRD-83-38, Mar. 4, 1983).

The Elderly Should Benefit From Expanded Home Health Care but

Increasing These Services Will Not Insure Cost Reductions (GAO/IPE-83-1,

Dec. 7, 1982).

Response to the Senate Permanent Subcommittee on Investigations’

Queries on Abuses in the Home Health Care Industry (GAO/HRD-81-84,

Apr. 24, 1981).

Medicare Home Health Services: A Difficult Program to Control

(GAO/HRD-81-155, Sept. 25, 1981).

Home Health Care Services—Tighter Fiscal Controls Needed

(GAO/HRD-79-17, May 15, 1979).

(106422) Page 52 GAO/HEHS-96-16 Medicare: Home Health Utilization
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