Contemplating home health PPS: current patterns of Medicare service use - prospective payment system - Issues in Reforming Home Health Care

Health Care Financing Review, Fall, 1994 by Henry B. Goldberg, Robert J. Schmitz

File Construction

Using the full file, a total of approximately 38.5 million claims for services delivered during the period January 1989 through September 1993 were identified. Of these, approximately 13.1 million claims, made by 6,240 different provider agencies, were found to be associated with the 3.7 million episodes of care that began in 1992. Episodes containing no visits were dropped. A final cleaning step was to delete episodes delivered by providers who were either certified or terminated between January 1992 and July 1993 (because their data would definitely be truncated at one end or the other) and any episodes delivered by agencies who delivered a total of 50 visits or fewer during this period (because they were felt likely to be very unrepresentative of the general provider experience). This left a sample of 5,522 agencies that delivered a total of 2.3 million episodes of care that began in 1992.

For analyses of episodes, a 5-percent sample of beneficiaries was selected from those receiving care from these agencies, and all their episodes of care were assembled, yielding a sample of 113,306 episodes. At the outset, analyses with the full sample were also performed to validate the findings of the analyses conducted using the 5-percent sample. As the analysis proceeded and the results for the two samples were invariably found to be equivalent, the full-sample analyses were discontinued.

FINDINGS

Overall, we find that mean average length of the 1992 Medicare home health episode was 157.4 days (Table 1), a figure that must be interpreted in the context of the minimum length of an episode being set at 120 days. Further examination, however, shows that the actual period of receipt of service for more than 74 percent of all episodes was less than the 120 days established as the minimum length of an episode for payment purposes. For these shorter episodes, the average duration of service was actually only 42.2 days. On the other hand, for the minority (25.9 percent) of episodes where the span of service actually exceeds 120 days, the average duration of service was 264.6 days.

[TABULAR DATA 1 OMITTED]

Mean reimbursement per episode averaged $2,938 across all agencies. Of this amount, $1,952 (66 percent), on average, was for visits delivered during the first 120 days of the episode; the rest ($985) was for visits during the outlier period. This suggests that a per episode payment scheme based on the 120-day episode will likely result in a considerable proportion of services being paid for outside the per episode payment framework.

Agency location is often cited as a cause of variation in practice and costs. Medicare's home health cost caps recognize geographic differences in input costs and generally allow higher per visit payments to agencies in urban areas. However, we found that although rural agencies generally had significantly longer episodes of care (Table 2), mean reimbursement for these episodes was not significantly different from that for urban agencies. During the first 120 days of the episode, mean visits were virtually equal in urban and rural agencies, but mean reimbursement was 25 percent higher for urban agencies. In the outlier period, however, visits and reimbursement are significantly higher for the episodes provided by rural agencies.