Who'll pay the bill when health care comes home? - Column

Business & Health, June, 1996 by Janet Gemignani

Last year, nearly 18,000 home health agencies served some 7 million U.S. patients. Annual expenditures exceeded $27 billion, with Medicare spending $14.5 billion of that total on home care for 3.5 million patients. In 1989, Medicare spent less than a fifth of that amount on half as many beneficiaries.

Reasons for this explosive growth are not hard to find: shrinking hospital stays, advances in high-tech equipment, the growing elderly population and--most of all--cost-consciousness.

Consider the patient on a ventilator, who a few years ago would have stayed in a hospital at a monthly cost (adjusted for inflation) of $21,500. Today, that same ventilator-dependent patient is far more likely to be cared for at home for about a third of the cost--and some $2,000 less than the $9,300 for a month-long stay at even the lowest-priced subacute care facility.

The standards of care need not be lowered with the change of location. Lewin-VHI reports that home health agencies specializing in high-tech services deliver more of what's considered "ideal" subacute care than most subacute facilities do. Like institutional care, they "develop written protocols, use outcomes measures, employ a highly trained staff, [and] do not exclusively involve physicians in directing patient care," according to Lewin.

Registered nurses, who provide most of the high-tech or skilled home care, routinely perform blood transfusions and administer IV drugs and feedings. A widening array of diagnostic procedures, including blood tests, ultrasound and some X-rays are done in the home for patients too debilitated to travel.

Managed care plans generally cover skilled nursing and therapies for home care, but may be less likely to assign home health aide visits than their indemnity counterparts, says Carol Schaffer, president of CCF Health Care Ventures, which offers an array of home services. A recent study found that Medicare beneficiaries under fee-for-service got more home care services than those in a capitated system--20 visits vs. 13 over the same 12-week period--and had demonstrably better outcomes. The researchers attributed the difference to the incentives built into capitated contracts, which are rapidly becoming the norm.

Emphasis on self-care and the help of family members are established norms in the field, but they can create financial burdens. A survey by the American Association of Retired Persons, for instance, found that 12 percent of women care givers had switched from a full-time to part-time job and another 12 percent had dropped out of the workforce.

Financial assistance is not common. Medicare covers home care (including the assistance of aides) only when skilled nursing or restorative therapy is required. Many elderly, debilitated beneficiaries without supplemental insurance can't afford the custodial Care they need. Usually delivered by aides or nursing assistants, this type of care runs $15 to $20 an hour, depending on the region. Round-the-clock custodial care can add up to $50,000 a year.

Long-term care insurance generally covers home care as well, but at last count only 3.5 million people had it. Only a fraction of those--about 440,000--are covered through group insurance policies offered by some 1,000 employers nationwide. Sales may get a boost if the pending health insurance reform bill, which includes a provision that would allow the Same tax deduction for LTC Coverage as for other health benefits, is signed into law.

Over 50 corporations in 16 states offer Caregivers on Call. Their employees can call a toll-free number to arrange for a home health aide or child care specialist to provide emergency care. Each employer specifies a maximum number of hours that will be paid per year. LifeCycle, a similar program, is being marketed by employee benefits firm Segal Company to major employers.

  Sizing up home care's growth
                                    1989          1995
Medicare-certified
 home health agencies              5,676         8,747
Medicare-certified hospices          597         1,795
Non-certified agencies
 and hospices                      4,824         7,019
Total                             11,097        17,561