The fastest growing segment of the health care industry combines cost-effective, high-quality care with the comforts of home - home health care - special edition: The State of Health Care in America 1995

Business & Health, Annual, 1995 by Geoffrey Leavenworth

Accelerated Growth

Regardless of the controversy about cost-effectiveness, in 1994, 3.3 million of the 37 million aged and disabled Americans enrolled in Medicare received home health services. Since 1989, Medicare expenditures for home health have grown from $2.5 billion to $13.8 billion in 1994. Much of that growth, says Vladeck, has come from additional claims resulting from the settlement of a 1987 lawsuit brought by a Medicare patient, about a dozen members of Congress, and others. The plaintiff,s challenged the terminology Medicare used to determine eligibility for home care benefits and alleged that benefit coverage was not consistently applied nationwide. The case was settled out of court after HCFA and the plaintiffs agreed to draft home care coverage revisions jointly, which became effective in July 1989. The effect of the revisions was to increase coverage. Medicare spending for home care increased accordingly, and claims have risen dramatically since then. In spite of the revisions, however, the vast majority of Medicare recipients still do not qualify for home care services - only about 9 percent of enrollees received Medicare-funded home health visits in 1994.

The number of home care clients served under Medicare grew from 1.7 million in 1989 to 3.3 million in 1994, and the total home care visits to beneficiaries has increased from 46.3 million to 218.6 million. Meanwhile, spending for home health under Medicaid in 1993 was $5.6 billion, or 5.5 percent of the program's total expenditures. Medicaid served 1.1 million home care clients and paid for 109.1 million home visits in 1993. According to the NAHC, there were 15,027 home care agencies in 1994, including 7,521 certified home health agencies, 1,459 certified hospices, and 6,047 agencies not certified by Medicare.

In a development that some experts say will accelerate the growth of home care, HCFA began paying a home care oversight fee to physicians in January. This provision reflects the increased activity of home care services and the resulting increased effort by doctors to develop and manage home care. The fee, an average of $55, reimburses doctors who spend 30 minutes or more within a 30-day period on oversight of a patient whose home care is covered by Medicare. Jeremy M. Jones, chief executive at Homedco Group Inc., a home care company in Fountain Valley, Calif., applauds the new policy. "I think it has the benefit of expanding the use of home care overall and will go a long way toward educating physicians on the value of home care services," says.

But industry growth remains uneven. In spite of technological advances that now make intravenous therapy possible at home, home infusion is not covered by Medicare. "HCFA has taken a step in the right direction," says Les Jacobson, director of communications at Caremark International, a home infusion company in Northbrook, Ill. "But it needs to go further. If HCFA is not encouraging doctors to participate in home infusion, then you might say doctors are being incentivized to keep patients in the hospital longer. Part of the problem is that the pay mechanisms go back to the 1960s and 1970s, but home infusion really got started in the 1980s. In our view, the law hasn't caught up with the technology."