Changes in the Medicare home health care market: the impact of reimbursement policy.
BACKGROUND
The Balanced Budget Act of 1997 introduced 2 new reimbursement structures, the Interim Payment System (IPS, 1997-2000) and the Prospective Payment System (PPS, begun October 2000) for Medicare home health agencies (HHAs) under the fee-for-service program.


OBJECTIVE
This article describes and compares the impact of these changes on the Medicare home health market from a period before the BBA through the IPS and PPS in relation to agency characteristics.


METHODS
A secondary analysis of 1996, 1999, and 2002 Provider of Services data was conducted on all Medicare-certified HHAs. Frequencies and rates of change were calculated by agency characteristics to describe changes in the number of active agencies through those years. Logistic regression models were used to compare factors associated with market exits under different payment systems.


RESULTS
The results indicate dramatic but disproportional changes in response to the IPS and the PPS among Medicare home health care agencies. Agency closures were greater and market entries fewer during the IPS, but more branch offices/subunits were closed during the PPS. Proprietary and freestanding agencies experienced greater volatility throughout, with the greatest number of closures seen in Region VI (Dallas).


CONCLUSIONS
These results demonstrate the direct impact of policy changes on the home health care market and highlight the need to evaluate policy changes to understand both intended and unintended impacts on health markets. Future research should analyze the effect of these policy changes on other healthcare providers and systems and their impact on health outcomes for Medicare beneficiaries.
Choi
Sunha
S
Department of Social Work, College of Community and Public Affairs, State University of New York at Binghamton, Binghamton, New York 13902-6000, USA. shchoi@binghamton.edu
Davitt
Joan K
JK
D002017:Budgets / Q000331:legislation & jurisprudence*; D014487:Centers for Medicare and Medicaid Services, U.S.; D003953:Diagnosis-Related Groups / Q000145:classification / Q000191:economics; D017050:Episode of Care; D018588:Fee-for-Service Plans / Q000191:economics / Q000331:legislation & jurisprudence*; D019981:Health Care Sector / Q000639:trends; D006291:Health Policy / Q000191:economics* / Q000639:trends; D006302:Health Services Research; D018574:Home Care Agencies / Q000145:classification / Q000191:economics* / Q000458:organization & administration / Q000706:statistics & numerical data; D006801:Humans; D006278:Medicare / Q000191:economics / Q000331:legislation & jurisprudence*; D009939:Organizations, Nonprofit; D017149:Private Sector; D011445:Prospective Payment System / Q000331:legislation & jurisprudence*; D017150:Public Sector; D012044:Regression Analysis; D012051:Reimbursement Mechanisms / Q000331:legislation & jurisprudence*; D014481:United States