Cost function analysis of Medicare policy: are reimbursement limits for rural home health agencies sufficient?
This paper estimates a hybrid total cost function to determine to what extent an urban/rural differential exists in home health agency expenditures in Wisconsin in 1987-1988. We find that costs are over $16 higher per visit in urban Milwaukee than in rural and small MSA counties, providing no evidence that Medicare reimbursement limits should be raised to reflect 'ruralness'. However, the cost of providing skilled nursing care exceeds both urban and rural reimbursement limits. Because rural agencies depend more on Medicare clients and provide disproportionately more skilled nursing visits, this might represent the source of any financial difficulty.
Nyman
J A
JA
Division of Health Services Research and Policy, University of Minnesota, Minneapolis 55455.
Dowd
B E
BE
D017048:Health Care Costs / Q000706:statistics & numerical data*; D006302:Health Services Research; D006699:Home Care Services / Q000191:economics*; D007349:Insurance, Health, Reimbursement / Q000592:standards; D006278:Medicare / Q000592:standards*; D017059:Models, Econometric; D011907:Rate Setting and Review / Q000592:standards*; D012424:Rural Population; D014481:United States; D014505:Urban Population; D014922:Wisconsin