NCPA - National Center for Policy Analysis


March 23, 2009

Health care reformers have long advocated providing more care to patients in their own homes or communities instead of treating them in costly institutions like hospitals and nursing homes.  So it is disturbing to learn that charges have risen well above reasonable levels in one segment of the home health care market -- short-term care provided to Medicare beneficiaries after, or sometimes instead of, hospitalization, says the New York Times.

According to the Medicare Payment Advisory Commission:

  • Home health agencies have been paid significantly more than their cost of providing the services in recent years.
  • Their average margins were about 16.5 percent a year between 2002 and 2007, and, even after some rate adjustments, are expected to exceed 12 percent this year in the midst of a recession.

This overpayment problem is exacerbated by fraud and manipulation, says the Government Accountability Office.  The GAO looked at seven states that experienced the highest growth rate in Medicare home health expenditures from 2002 through 2006 and found a substantial number of abuses, some of the worst in Texas and Florida:

  • In Houston, more than 90 percent of the beneficiaries reviewed in one audit had improperly been given the most severe clinical rating.
  • In Miami-Dade County, a disproportionately high number of diabetics were getting skilled nursing visits every day to administer their insulin shots despite lack of evidence that they needed any help; some were coached on how to lie about their need for assistance.

Federal officials are taking steps to reduce fraud, and Congress is pushing them to do more.  But home health care companies are already complaining that the cuts will hurt patients, but their industry is one of the most profitable parts of Medicare.  If the nation's health system is to move toward greater reliance on home care, it needs to be sure it is paying the right price, says the Times.

Source: Editorial, "Costly Home Health Care," New York Times, March 23, 2009.

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