Patients receive infusion therapy for a variety of conditions, and physicians may determine that the home is an appropriate venue for treatment based on a particular patient’s condition and circumstances. Medicare covers and pays for a range of health care services, equipment, and drugs, and uses various payment systems. Over the last three decades, Congress has taken steps to address coverage of home infusion therapy. Patients may receive home infusion therapy for acute conditions, such as infections unresponsive to oral antibiotics or pain management (cancer- related or postsurgical), or for chronic conditions such as multiple sclerosis or rheumatoid arthritis. Prior to initiating infusion therapy in the home, physicians and home infusion providers first assess the appropriateness of home treatment for the needed drug therapy and for the patient’s condition. They then determine whether the patient is able to understand and carry out therapy procedures, and if the patient has family or other caregivers available to provide assistance. For certain therapies, such as antibiotic therapy, the patient or a family member may be taught to administer the drug. In these cases, a nurse would generally visit once or twice at the beginning of treatment, and then once per week throughout the course of treatment. Other therapies may require more frequent nursing care. The home setting is not appropriate for all patients receiving infusion therapy, for all conditions, or for all drugs. Many patients receive home infusion therapy following a hospital stay. The home infusion provider may provide any necessary skilled nursing services directly or may contract with a home health agency to do so. Some patients receive home infusion therapy for chronic conditions that may not require hospitalization; in these cases, a patient’s physician may order the therapy to be delivered by a home infusion provider after diagnosis. Outside of the home, patients may also receive infusion therapy in an independent infusion center, a physician’s office, or a hospital-based infusion clinic. Since it was established in 1965, the structure of Medicare and the benefits covered by the program have evolved. Currently, Medicare consists of four parts, A through D: Medicare Part A: Covers inpatient hospital stays, as well as skilled nursing facility care, hospice care, and home health care. To be eligible for covered home health services—which include skilled nursing care, physical therapy, and occupational therapy—a beneficiary must be homebound and have a home health plan of care approved by his or her physician. In 2008, approximately 3.2 million, or about 7 percent of all Medicare beneficiaries, received home health services. Medicare pays home health agencies that provide these services using a prospective payment system under which they receive a predetermined rate for each 60-day episode of home health care. The payment amounts are generally based on patient condition and service use. Medicare Part B: Provides optional coverage for hospital outpatient, physician, and other services, such as laboratory services. It also covers durable medical equipment (DME) and supplies, including infusion pumps and other equipment needed for infusion therapy. Medicare pays for many Part B services and supplies using fee schedules, and beneficiaries enrolled in Part B are generally responsible for paying monthly premiums as well as coinsurance for services they receive. Certain specified outpatient prescription drugs also are covered under Part B, including drugs needed for the effective use of DME. Part B drugs are generally paid based on a fee schedule; infusion drugs covered under the DME benefit are paid based on a different fee schedule than other Part B drugs. Medicare Part C: Since the 1970s, most Medicare beneficiaries have had the option to receive their Medicare benefits through private health insurance plans—now known as MA plans—under Medicare Part C. In 2008, nearly one out of every four Medicare beneficiaries was enrolled in an MA plan. MA organizations enter into contracts with CMS that require plans to cover Medicare Part A and B services. These organizations have flexibility in designing their plan benefit packages and may offer additional benefits. Medicare pays MA plans a fixed amount per beneficiary per month—based in part on the projected expenditures for providing Medicare-covered services—and adjusts payments to account for beneficiary health status. Medicare Part D: First offered in 2006, Medicare Part D provides optional coverage of outpatient drugs, including infusion drugs, to beneficiaries who enroll in prescription drug plans offered by private entities. Medicare beneficiaries may receive Part D drug coverage through stand- alone prescription drug plans or through MA plans that include drug coverage. Each Part D plan maintains a list of drugs it will cover—a formulary—that must meet certain criteria, and may organize those drugs into pricing groups or tiers. Part D plans contract with pharmacies to create a network of participating providers. Medicare makes subsidy payments to Part D plans, and most beneficiaries pay applicable premiums and cost sharing. Plans negotiate drug prices with drug manufacturers and pharmacies. As such, payment for a drug covered under Part D could be different than payment for the same drug were it covered under Part B. In general, Part D does not cover drugs for which payment is available under Parts A or B. Both home-based services and outpatient infusion therapy have been areas of concern for Medicare program integrity. Recently, the Department of Health and Human Services (HHS) and the Department of Justice have renewed attempts to reduce inappropriate utilization and fraudulent activities in these areas. According to an HHS official, CMS has completed demonstrations that involve strengthening the initial provider and supplier enrollment processes to prevent unscrupulous DME and home health care providers from entering the program. The demonstrations also incorporated criminal background checks of providers, owners, and managing employees into the provider enrollment process. In addition, CMS has found instances of infusion clinics and office-based practitioners billing Medicare for infusion services that were not medically necessary or were not actually provided. Despite the lack of a distinct benefit for home infusion therapy, Medicare policies have played a significant role in the development of the home infusion industry. Specifically, Medicare’s coverage of certain therapies— enteral and total parenteral nutrition (TPN)—in the home beginning in the late 1970s, and the subsequent implementation of prospective payment for Medicare inpatient hospital services in 1983, contributed to the rapid growth of the home infusion industry during the 1980s. Over the last three decades, Congress has taken steps to address expanding Medicare coverage of home infusion therapy. The Medicare Catastrophic Coverage Act of 1988 created a home infusion therapy benefit for all Medicare beneficiaries. The benefit would have provided comprehensive coverage of all the components of home infusion therapy, including intravenous drugs, equipment and supplies, and skilled nursing services when needed. The act called for a per diem fee schedule to pay for the supplies and services used in home infusion therapy and set forth qualifications for infusion providers. Before the provision became effective, however, it was repealed. At the request of the Senate Committee on Finance, the Office of Technology Assessment (OTA) conducted an extensive study of home infusion therapy, released in 1992. The study examined trends in the industry, the safety and efficacy of the technology, and the implications for Medicare coverage, including various coverage and payment options available at the time. OTA found that additional Medicare coverage of home infusion therapy might lead to lower payments to hospitals in some cases because of shorter stays and lower costs. Yet, OTA concluded that Medicare coverage of home infusion therapy could increase overall Medicare spending. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 expanded coverage of home infusion therapy significantly, in that home infusion therapy drugs were covered for beneficiaries enrolled in Part D plans beginning in 2006. Subsequently, CMS released guidance for Part D plan sponsors on their responsibilities in covering home infusion therapy drugs, which may be more complicated to dispense than oral medications. One element of the guidance stated that Part D plan sponsors should ensure that home infusion drugs are dispensed by network pharmacies in a usable form that can be readily administered in beneficiaries’ homes. In January 2009, members of the House and Senate introduced bills that would create a home infusion therapy benefit that provides comprehensive coverage for all Medicare beneficiaries. The proposed legislation called for coverage of infusion-related services, supplies, and equipment under Medicare Part B. The legislation also called for supplies and equipment to be paid through a set fee per day of service, while nursing services would be paid separately based on a fee schedule. Coverage of the drugs used in home infusions would be consolidated under Medicare Part D. Supporters of the legislation have asserted that providing comprehensive coverage of infusion therapy in the home would generate cost savings for the Medicare program, and that beneficiaries who would prefer having treatments at home could not afford it without Medicare coverage. However, concerns have been raised that additional coverage could add to the Medicare program’s growth in spending. Medicare FFS covers components of home infusion therapy in some circumstances. The extent of coverage depends on whether the beneficiary is homebound, as well as factors related to the beneficiary’s condition and treatment needs. For some homebound beneficiaries, Medicare FFS covers all the components of home infusion therapy, while other homebound beneficiaries have limited coverage. Non-homebound beneficiaries who have certain conditions and who require certain drugs and equipment are covered by Medicare FFS for some components of home infusion therapy. Other non-homebound beneficiaries have little or no coverage for home infusion therapy under Medicare FFS. Some Medicare FFS beneficiaries who are homebound—that is, generally confined to their homes and in need of nursing care on an intermittent basis—have coverage for all components of home infusion therapy. (See fig. 1.) Because these beneficiaries qualify for Medicare’s home health benefit, the skilled nursing services—such as training, medication administration, and assessment of the patient’s condition—as well as certain equipment and supplies used at home are covered. These services, equipment, and supplies are provided by or arranged for by a home health agency according to a physician’s plan of care. Any care coordination or clinical monitoring services needed with home infusion therapy would be provided by the home health nurse assisting the beneficiary at home or by the physician who ordered the therapy.