The effects of predetermined payment rates for Medicare home healthcare.
OBJECTIVE
To assess the effects of an alternative method of paying home health agencies for services to Medicare beneficiaries, based on a demonstration program.


METHODS
Primary and secondary data collected on participating home health agencies in five states and their patients during the three-year demonstration period. Primary data included patient surveys at discharge and six months later, and two rounds of interviews with executive staff of the agencies. Secondary data included agencies' Medicare cost reports, quality assurance reviews, Medicare claims data, demonstration claims data, demonstration patient intake forms, and plan of treatment forms.


METHODS
The 47 agencies volunteering to participate in the demonstration were each randomly assigned to the treatment or control group. Treatment group agencies were paid a predetermined rate based on their inflation-adjusted cost per visit during the year preceding the demonstration; control group agencies were paid under Medicare's conventional cost reimbursement method. Demonstration impacts were estimated by comparing outcomes for the two groups of agencies and their respective patients, using regression models to control for any remaining differences.


RESULTS
Agencies paid under prospective rate setting were slightly better at holding per-visit cost increases below inflation than were control group agencies. The change in payment method had no effect on agencies' volume of Medicare visits or quality of care, nor on patients' use of Medicare services or other formal or informal care services.


CONCLUSIONS
Changing from cost-based reimbursement to predetermined payment rates for Medicare home healthcare visits would not lead to large savings for the Medicare program, but would not increase costs to Medicare or adversely affect patients or their caregivers.
Brown
R
R
Mathematica Policy Research, Inc., Princeton, NJ 08543-2393, USA.
Phillips
B
B
Bishop
C
C
Thornton
C
C
Ritter
G
G
Klein
A
A
Schochet
P
P
Skwara
K
K
D014487:Centers for Medicare and Medicaid Services, U.S.; D017046:Cost Savings / Q000191:economics / Q000706:statistics & numerical data; D017598:Efficiency, Organizational / Q000191:economics / Q000706:statistics & numerical data; D006699:Home Care Services / Q000191:economics* / Q000706:statistics & numerical data; D006801:Humans; D006278:Medicare / Q000706:statistics & numerical data*; D010865:Pilot Projects; D015397:Program Evaluation / Q000379:methods / Q000706:statistics & numerical data; D011445:Prospective Payment System; D012044:Regression Analysis; D012052:Reimbursement, Incentive / Q000191:economics / Q000706:statistics & numerical data; D014481:United States