Medicare Home Health

This testimony examines how the Balanced Budget Act of 1997 has addressed rapid cost growth in Medicare's home health benefit. This benefit is important to many beneficiaries recovering from illness or injury following hospitalization--the original purpose of the benefit. Of late, however, increasing numbers of beneficiaries have used the benefit for custodial-type care for chronic conditions. This change has helped to fuel growth in Medicare home health costs, which soared from about $2 billion in 1989 to nearly $18 billion in 1996. GAO's remarks focus on the following four areas: the reasons for the rapid growth of Medicare home health care costs in the 1990s, the interim changes in the act to Medicare's current payment system, establishment under the act of a prospective payment system for home health care, and efforts by Congress and the administration to strengthen program safeguards to prevent fraud and abuse in home health services.

GAO noted that: (1) changes in law and program guidelines have led to rapid growth in the number of beneficiaries using home health care and in the average number of visits per user; (2) in addition, more patients now receive home health services for longer periods of time; (3) these changes have not only resulted in accelerating cost but also marked a shift from an acute-care, short-term benefit toward a more chronic-care, longer-benefit; (4) the recently enacted BBA included a number of provisions designed to slow the growth in home health expenditures; (5) these include tightening payment limits immediately, requiring a PPS beginning in fiscal year 2000, prohibiting certain abusive billing practices, strengthening participation requirements for home health agencies, and authorizing the Secretary of Health and Human Services to develop normative guidelines for the frequency and duration of home health services; (6) all of these provisions should help control Medicare costs; (7) however, the Health Care Financing Administration (HCFA), the agency responsible for administering Medicare, has considerable discretion in implementing the law which, in turn, means the agency has much work to do within a limited time period; and (8) HCFA's actions, both in designing a PPS and in implementing enhanced program controls to assure that unscrupulous providers cannot readily game the system, will determine to large extent how successful the legislation will be in curbing past abusive billing practices and slowing the rapid growth in spending for this benefit.