Impact of Medicare payment policy on home health resources utilization

Health Care Financing Review, Wntr, 1991 by Audrey Irvine, Elayne Kornblatt Phillips, Patricia Cloonan, James C. Torner, Mary E. Fisher, Gary A. Chase

A second explanation may be related to the funding guidelines of the respective funding agencies. Medicare regulations select for patients who are acutely or terminally ill, denying payment for long-term chronic maintenance care. Non-Medicare sources (such as private insurance and Medicaid) will more often continue to fund care beyond the limits dictated by Medicare policy guidelines. This pattern of payment is reflected in the longer lengths of stay and the greater number of home health aide visits for the 65 or over non-Medicare sample.

Our data suggest that the more lenient funding available through non-Medicare sources seems to facilitate achievement of positive outcomes, particularly goals met. Having an outcome of goals met was related to being non-Medicare, being older, and having more home health aide visits. This supports the idea that there is an older, less acute subgroup of patients who are not covered by Medicare. However, an outcome of death was also related to being older and having more home health aide visits. Death outcomes initially appeared to be related to payment source (i.e. having Medicare); however, in subsequent analyses, requests for terminal illness care replaced payment source as a predictor. This suggests that there is a subset of older terminally ill Medicare patients for whom death may be an appropriate outcome.

These data strongly suggest that age and payment source co-vary such that, while both groups are elderly, the younger elderly are more likely to be Medicare and the older elderly are more likely to be non-Medicare. Despite this and despite the fact that age is a strong predictor of death, the relatively younger Medicare patients are more likely to have death as an outcome. This may reflect a selection bias whereby Medicare funds care for patients who are more acutely or terminally ill. A caveat must be inserted here regarding the 65 or over non-Medicare sample. We have relatively little data on this sample and so cannot comment on the generalizability of this group to the larger 65 or over non-Medicare population.

Our data also have important implications for the development of a prospective payment system in public home health. More specifically, they suggest that payment systems that are not sensitive to age differences, such as the use of group means by diagnosis, may not work effectively. There are three reasons for this. First, the diversity of care needs, particularly when comparing the 65 or over and under 65 age groups, are so great as to penalize the elderly who are less resilient and need longer lengths of care to achieve positive outcomes. Second, the less positive outcomes for the Medicare sample suggest that the assumption made under DRGs that less care will have no detrimental effect on patient outcomes may not be valid for the aged. And, finally, the incentives under prospective payment that push patients out of hospitals quicker and sicker will also be operating in home care, threatening to push these individuals into an environment where there are no service providers to provide needed care.