5

Home Health Care

SUSAN L. HUGHES

PANKAJA DESAI

INTRODUCTION

HISTORICAL CONTEXT

Home care policy in the United States has developed in an incremental and disjointed way. The first formal home care programs began in the 1880s. Home health care programs emerged in significant numbers during the Progressive Era (1905–1915; Benjamin, 1993). At that time, knowledge about the role of bacteria, concerns about contagious disease and poor hygiene in crowded slums, and high infant mortality rates stimulated the development of public health nursing departments and Visiting Nurse Associations (VNAs) that still exist in many communities across the United States. For the most part, these agencies focused on maternal and child health and communicable disease.

Between 1915 and 1960, a number of hospitals began to provide postdischarge care at home, and occasionally a visionary provider advocated the expansion of care at home for chronically ill individuals. At the same time, social services agencies began providing homemaker services to families with young children whose mothers were incapacitated by illness. Finally, during the 1940s, the Joint Commission on Chronic Disease was established; it produced a groundbreaking report in 1956 (Benjamin, 1993).

Based on Commission members’ site visits to outstanding programs, the Commission Report emphasized the importance of physician involvement in home care and advocated an expanded role for formal paid homemakers (Benjamin, 1993). The Commission also called for the development of organized, full-service home care programs marked by centralized responsibility, coordinated care planning, and a team approach to care. However, when the Commission Report was released in 1956, after 10 years of deliberations, it was paid scant attention because of concerns over growing costs of hospital care for older Americans. Although Social Security Administration policy analysts were favorably impressed by Blue Cross reports of savings achieved by hospital-based home care programs, analysts were more concerned about potential excess demand for home care, especially if the benefits were broadly defined to include homemaker services (Benjamin, 1993).

As a result of this concern, when Medicare was passed in 1965, the Part A Medicare home care benefit was purposefully configured as an adjunct to acute hospital care. Eligibility criteria were so stringent that they limited use of the benefit. A similar Part B benefit was also created that did not require a prior hospitalization; however, a 20% copayment served as a deterrent to its use.

When first established, Medicaid identified home health care as an optional service that states could provide to poor and medically indigent persons of all ages, using a combination of state and federal funding. One year later, in 1967, home health care was moved from the optional to the mandatory category of Medicaid benefits. The benefit included skilled care, as well as selected support services.

In the early 1970s, Medicare coverage was extended to persons with end-stage renal disease and adults with permanent disabilities. Social services funding for home care also increased in 1974 with the passage of the Social Security Act Social Services Block Grant Amendments (Title XX). This legislation encouraged states to consolidate social services and expand homemaker coverage to chronically ill adults. Meanwhile, Title III of the Older Americans Act established a network of Area Agencies on Aging to provide information and referral and chore/housekeeping services to persons 60 and older. Title VII of the Act provided funding for home-delivered and congregate meals. Two other developments of the 1970s also contributed to the complex composition of home care. First, appalled at the increased technological intensity, invasiveness, and emotional sterility of acute care for terminally ill persons, advocates of hospice care succeeded in mandating a national hospice demonstration and then enacted a Medicare hospice benefit for palliative care in 1982 (see Chapter 12). This benefit promoted care at home for terminally ill people. Second, aided by space-age technology, infusion pumps made “high-tech” care at home possible for persons requiring enteral and parental nutrition and intravenous antibiotics and chemotherapies.

In 1981, states could apply for Medicaid 1915(c) waivers to provide home- and community-based services (HCBS) to specific categories of Medicaid recipients who otherwise would require nursing home care. Services that could be provided included homemaker and personal care as well as others that states wished to provide to specific waiver populations. Shortly thereafter, the Medicare Tax Equity and Financial Responsibility Act (TEFRA; 1983) attempted to rein in rapid increases in hospital costs by mandating the prospective payment of Medicare hospital charges. The hospital prospective payment system (PPS) is a reimbursement system based on service categories with set payment amounts; fees are set for hospitals in advance for costs associated with care for a specific diagnosis as opposed to the prior practice of reimbursing for days of care irrespective of patient diagnosis. Under PPS, hospitals were paid a flat fee for an average stay for a hip replacement, for example. If a given hospital was able to discharge the patient earlier, the hospital could retain the savings as an efficiency “bonus.” This new reimbursement system led hospitals to embark on systematic efforts to retain savings achieved by shortening patients’ length of stay. Thus, PPS provided strong incentives for hospitals to enter the skilled/post-acute portion of the home care enterprise themselves or to transfer patients as soon as possible to home care or nursing home care for postacute care.

Within 20 years (1966–1986) and fueled by four basic trends (i.e., growth in older and disabled populations, increased technological capacity, popular demand, and federal funding), home care unintentionally evolved and became differentiated into four different models of care with multiple funding sources and differing eligibility criteria:

Three of these models are discussed in this chapter and the fourth, hospice care, is considered in Chapter 12.

Home health care is defined as services that are usually medical or clinical and are provided in the home, including various therapies and skilled nursing care. Some home health care services may also be classified as home care (non-medical services that are provided in the home, such as light housekeeping, meal preparation, and medication reminders). The primary philosophy of home health care today is to increase autonomy while improving functioning and quality of life and preventing hospital or nursing home admission (Ellenbecker et al., 2008). Benjamin (1999) describes goals of the Medicaid HCBS program. The goals are divided into client- and system-level goals. Client-level goals focus on enhancing the health, well-being, functioning, and independence of patients while helping them to remain in a safe home environment and to prevent health problems from occurring or detecting them early. Goals at the system level focus on providing effective and efficient access to comprehensive, affordable, and quality services to as many individuals as possible who are in need, while providing choice, tailoring services, and reinforcing informal networks. It is important to note that in many cases the home care option is only possible for persons having family members who can supplement these formal services with informal care. A whole body of literature has been devoted to understanding the impact of care provision on family members. This topic is addressed in Chapter 3.

NATIONAL PROFILE

In 2007, 2.6 million Americans were actively using some home health care or hospice care at any given time. This care was provided by approximately 14,500 home health and hospice agencies then reported in the United States (Park-Lee & Decker, 2010).

CLIENTS

On any given day in 2007, the year of the most recent National Home and Hospice Care Survey, part of an ongoing series of national surveys conducted by the Centers for Disease Control (CDC) with hospice and home health agencies, 1.46 million persons used home health care agencies (CDC, 2013). Home health care agencies included in the survey were certified by either Medicare or Medicaid or were licensed by a state to provide services to home health care users. Agencies were excluded if they provided only homemaker or housekeeping services, assistance with instrumental activities of daily living (IADLs), or durable medical equipment (DME) and supplies. Users of agencies surveyed tended to be aged 65 and older (69%), female (64%), and white (82%). More than one tenth (13%) had used care options in the 60 days before the survey interview, and more than one fifth (21%) of current home health care patients had at least one overnight hospital stay since admission to the home health care agency (NCHS, 2007a). On average, agencies served 178 current patients (NCHS, 2007b), 29% of whom had at least one advance directive on file.

AGENCIES

The number of home care organizations has grown markedly. In 1963 there were 1,100 home care agencies of record in the nation. By 1997, the U.S. Bureau of the Census estimated that this number had reached 19,690. The Census Bureau defined home care agencies as “firms that provide skilled nursing services exclusively or in combination with other services” (National Association for Home Care [NAHC], 2001). Because many private agencies do not provide skilled services but do provide homemaker/home health aide (HHA) services, this number substantially underestimates the total number of home care providers in the United States. Most recent numbers from the National Association for Home Care indicate that 33,000 organizations provide home care of some type (NAHC, 2010). The same National Home and Hospice Care Survey found that 14,500 agencies in the United States provided home health and/or hospice care. The majority (75%) provided home health care only. Of the home health only agencies, 76% were proprietary, 76% were located in a metropolitan area, 80% were certified by Medicare, and 79% were certified by Medicaid (NCHS, 2007b).

SERVICES

Largely as a result of funding streams and regulations, home care has evolved into four distinct models. The characteristics of each model differ. Exhibit 5.1 shows the services provided by the different home care models, which span a severity-of-need continuum. Although some health care services provide the full continuum of services, these are generally the exception, as multiple billing and regulatory mechanisms now in place discourage agencies from being full-service home care providers.

EXHIBIT 5.1 Home Services by Degree of Skill Intensity

Most people with chronic disabilities need flexible combinations of, and timely access to, the 21 services shown in Exhibit 5.1, especially as their conditions change over time. However, the organization and funding of these services in the United States has been fragmented, with no accountability across providers for the coordination and efficient management of care.

FUNDING

Home health care, very narrowly defined as free-standing programs (excluding hospital-based programs), was the fastest growing component of national health care expenditures during the last 40 years of the 20th century, increasing from $0.2 billion in 1970 to $34.5 billion in 1997 and then dropping to $32.4 billion in 2000, following the passage of the Balanced Budget Act of 1997 (BBA 97; Levit, Smith, Cowan, & Martin, 2002). Home care expenditures accounted for 0.3% of total health expenditures in 1970 but grew to account for 3.2% of expenditures in 1997 (Levit et al., 2002). The rate of growth was quickly reined in by BBA and the PPS for Medicare home health care that was implemented in 2000.

The magnitude of home care expenditures in 2009 ($68.3 billion) ranks far below expenditures for hospital, physician, and nursing home care, which accounted for 36%, 24%, and 9% of personal health care expenditures, respectively, in that same year (Martin, Lassman, Whittle, Catlin, & The National Health Expenditure Accounts Team, 2011). Between 2005 and 2009, home health expenditures increased on average by 8.8% per year, compared to average annual increases of 6.2% and 5.4% for hospital and physician services, respectively (see Chapter 17).

The major sources of payment for home care are public. Medicare and Medicaid paid for 65% of all formal home care services in 2009. Other public programs paying for home care include the Older Americans Act, Title XX Social Services block grants, the Department of Veterans Affairs, and the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). Ten percent of home care services are paid for out of pocket by care recipients and their families, and 8% is reimbursed by private insurance (NAHC, 2010).

Managed care plans provide health insurance by contracting with providers and facilities to develop a network that offers less expensive care to enrollees. There are three main kinds of managed care plans, which include health maintenance organizations (HMO), preferred provider organizations (PPO), and point of service plans (POS; Medline Plus, 2013a). Commercial insurance and managed care plans also pay for home care services. Although some may require home care agencies to be Medicare certified, others do not and are willing to cover care on an individual basis or to contract with an agency for coverage of eligible patients. A detailed description follows of agencies, users, and reimbursements associated with Medicare-certified skilled home care, private non-Medicare-certified home care, and high-tech home care.

MEDICARE-CERTIFIED HOME HEALTH AGENCIES

Medicare has been a driving force in the development of home health care. The 1965 legislation that established Medicare (Title XVIII of the Social Security Act) created two sources of payment for home care, one under Medicare Part A and another under Part B. Both were designed to provide skilled care for those recovering from an acute episode of illness. Medicare does not pay for home care on an indefinite basis or for those whose major problem is chronic illness or functional disability. The Medicare legislation also specified criteria with which home care agencies must comply to be “certified” to receive Medicare payment. These conditions of participation (COPs) specify staffing, reporting requirements, quality-assurance obligations, and structural characteristics, among other conditions. Compliance is expensive and requires strict adherence by all staff to Medicare policies and processes. Not all home care agencies choose to participate. As a result, a companion group of “non-Medicare-certified” home care agencies has emerged, which is described in the following section.

Data on Medicare-certified agencies are relatively good because they are maintained by the federal government, and agencies must submit information to be certified and be paid.

Traditionally, use of the Medicare home health care benefit was constrained by the review of claims done by designated regional fiscal intermediaries. These intermediaries were instructed to interpret the Medicare regulations regarding eligibility and benefits strictly in order to control use and cost. In 1989, a class action lawsuit protesting this practice (Duggan v. Bowen) was brought on behalf of beneficiaries, who argued that the practice violated the original intent of the Medicare legislation. The court found for the plaintiffs and mandated a broader interpretation of the definition of homebound and a broader limit on the number of covered visits. As a result, use of the Medicare home care benefit exploded, and the number of visits and reimbursements began increasing at an annual rate of 30%. In an effort to staunch this fiscal hemorrhage, Congress passed the Balanced Budget Act of 1997. BBA 97 mandated development of a case-mix-based PPS and an interim payment system (IPS) for use while the prospective system was in development. It is important to note that the IPS contained new per-beneficiary reimbursement limits that had a major negative effect on the number of agencies participating in the Medicare program and on home health care payments. The new PPS for Medicare home health care was implemented in October 2000, which served to stabilize the industry.

CLIENTS

To be eligible for Medicare payment of home care, a person must be enrolled in Medicare, be homebound (i.e., unable to leave the house as certified by a physician), require skilled nursing care or physical therapy, and need intermittent as opposed to continuous care. Although criteria have been modified somewhat over the years, they remain focused on recovery from acute illness, not long-term maintenance or assistance with functional disability.

In 1996, the number of clients served per year peaked at roughly 3.6 million; it declined to 2.4 million in 2001 shortly after the implementation of prospective payment (NAHC, 2010), a decline of 1.2 million users or 33%. However, by 2008, the number of persons served per year rebounded to 3.4 million, reflecting the longer term impact of more stable funding under PPS.

Home health care is also a mandatory benefit that states must provide under Medicaid. States establish their own criteria for acceptance as a Medicaid provider. States typically accept home health agencies certified to participate in Medicare as providers for Medicaid as well. Persons who receive care must be eligible for Medicaid because of low income or because they have met their state’s spend-down requirements. Between 1999 and 2007, clients served by Medicaid home health increased from 680,000 to 814,000, an increase of 20% (Kaiser Commission on Medicaid and the Uninsured, 2011). In 2007, 826,000 persons were served by the Medicaid personal care benefit, which is optional on the part of the states. Close to 1.2 million were served through the HCBS waiver, discussed later in this chapter.

The top three principal diagnoses among Medicare home health care users in 2008 were diseases of the circulatory system (about 26%), heart disease (12.6%), and diseases of the musculoskeletal system (12.6%; NAHC, 2010).

The early Medicare home care reimbursement regulations attempted to ensure that the benefit would be used only by persons recovering from an acute bout of illness who required skilled care. Beneficiaries were required to undergo a 3-day hospitalization prior to referral to home care. Although this requirement was discontinued, the majority of users of Medicare-certified home health services are people who are discharged from the hospital.

AGENCIES

The number of Medicare-certified home health agencies grew from 1,753 in 1967, one year after the implementation of Medicare, to an all-time high of 10,444 in 1997 (NAHC, 1999). BBA 97 resulted in the closure of roughly one third of all Medicare-certified agencies, with the number declining to 7,152 in 2000, a reduction of 31.5% (NAHC, 2001). With the implementation of prospective payment, the number of agencies has recovered to reach 10,581 in 2009 (NAHC, 2010).

In addition to their numbers, the organizational auspices of home health care agencies have changed markedly. Figure 5.1 contrasts the prevalence of organizational arrangements over time. In 1966, the VNA and public health departments accounted for 90% of all certified home health agencies. The Omnibus Reconciliation Act of 1980 changed the Medicare COPs to permit proprietary providers in states without home care licensure requirements to provide Medicare-reimbursed care. Then, in 1983, Medicare prospective payment for hospital care encouraged hospitals to develop their own hospital-based or linked programs in order to streamline discharge planning and maximize patient care revenues. As a result, by 2000, VNA and public health providers dropped to 19.2% of total home care providers, whereas proprietary agencies increased from 0% to 40%, and hospital-based providers rose from 6% to 30% of all Medicare-certified providers (NAHC, 2001). By 2009, this trend continued to accelerate such that more than 62% of providers were freestanding proprietary agencies, and an additional 12% were hospital based. This shift meant that far fewer providers were willing to accept patients whose eligibility for reimbursement was unclear and far fewer providers were willing to provide care beyond the episodes covered by payers. It is unclear whether these shifts were accompanied by simultaneous growth in the use of Medicaid home health care by persons of low income or those who are medically indigent.

FIGURE 5.1 Number of Medicare-certified home care agencies, by auspice, by selected years, 1967–2009.

Sources: National Association of Home Care (2001, 2010).

SERVICES

Services provided by skilled home health agencies include skilled nursing, skilled therapies (physical, occupational, and speech), medical social work, and HHA. Three services constituted 97% of total reimbursable visits in 1996: skilled nursing (41%), HHA (49%), and physical therapy (7%; U.S. Department of Health and Human Services, 1998). To be eligible for Medicare reimbursement, Medicare clients must be certified by a physician as needing skilled nursing or physical therapy. Other skilled services and HHA care are then also allowable. Because of federal regulations, Medicare-certified agencies tend to offer only those services paid for by Medicare. Noncertified private agencies may offer skilled as well as support services.

Skilled personnel coordinate with staff of other organizations providing care to the client. The nurse, for example, may function as a case manager and contact a company providing DME and a community agency providing Meals on Wheels. Coordination is usually informal rather than formal.

The total number of visits provided by Medicare-certified home health agencies by year is shown in Figure 5.2. Annual visits rose precipitously, especially among those receiving 100 or more visits, reflecting a significant expansion in eligibility and coverage of persons with chronic care needs.

This growth occurred after Duggan v. Bowen (1986), which forced the Health Care Financing Administration (HCFA) to interpret part-time/intermittent Medicare eligibility criteria more generously and to allow eligibility for enrollees who required skilled nursing judgment, in addition to skilled nursing care. Between 1989 and 1996, the average number of visits per year tripled, from 27 to 76. Following passage of BBA 97, under the new IPS, the number of visits dropped dramatically. Between 1996 and 1998, the median length of stay on Medicare home health care decreased by 16 days, the decrease being especially pronounced among proprietary providers (Murkofsky, Phillips, McCarthy, Davis, & Hamel, 2003). Up to this point in time Medicare home health care was reimbursed on a retrospective cost-per-visit basis. Therefore, participating agencies had no incentives to economize on number of visits provided and every incentive to do the reverse. The new PPS implemented in October 2000 attempted to remove this incentive by reimbursing prospectively for a case-mix-based episode of care. As data in Figure 5.2 demonstrate, the number of visits has rebounded somewhat from a nadir of 73,698 visits in 2001 to 121,026 visits in 2008. However, 2008 visits still constituted only 46% of visits provided in 1996. Although few studies have examined the impact of PPS on client outcomes, research examining the impact of the IPS indicates that access to home health care services was constrained among the poorest Medicare beneficiaries, especially among those who were not eligible for Medicaid-reimbursed services (McCall, Komisar, Petersons, & Moore, 2001; Zhu, 2004). The Medicare Payment Advisory Commission (MedPAC) calculated a total reduction of 1.3 million beneficiaries between 1997 and 2001 and in June 2003 issued a report indicating that skilled nursing facility (SNF) care is now substituting for home health care for some patients, most likely at a much higher cost to Medicare (Medicare Payment Advisory Commission, 2003; NAHC, 2010).

FIGURE 5.2 Medicare home care visits, 1984–2008.

Sources: National Association of Home Care (2001, 2010).

To further constrain rapidly increasing Medicare home health care costs, BBA 97 also mandated that, as of January 1, 1998, home health coverage under Medicare Part A would be limited to a maximum of 100 visits during an illness, after a hospitalization, or after receiving covered services in an SNF. All other home health coverage would be rendered under Part B. This shift was phased in gradually over time, at the rate of one sixth of beneficiaries per year through January 1, 2002.

STAFFING

Of 290,000 full-time equivalent (FTE) Medicare home health workers in 2009, 92,113 (32%) were registered nurses (RNs), 44,646 (15%) were licensed practical nurses (LPNs), and 65,146 (23%) were home care aides (NAHC, 2010). Social workers, occupational and speech therapists, and homemakers also may be on staff. By Medicare regulation, the majority of staff are salaried employees, although some professional staff may be on contract for a specified number of hours per month.

Home health agencies depend heavily on the availability of RNs and, to a growing degree, LPNs, in addition to HHAs. At present, the industry is highly regulated. Thus, opportunities for experiments involving the substitution of less skilled personnel for more skilled personnel are limited, unless care is provided through a Medicare Advantage (Medicare-managed care) plan. These plans are provided by organizations that contract with Centers for Medicare & Medicaid Services (CMS) to provide health insurance in the form of coordinated care plans or traditional managed care plans, medical savings account plans, private fee-for-service plans, and religious fraternal benefit plans (CMS, 2011).

Although the medical complexity of Medicare home care clients is increasing, the physician’s role in home health care has been limited, with the notable exception of the Veterans Affairs (VA) Home Based Primary Care (HBPC) program, in which physicians work closely with a home care team as primary care managers. Until the early 1990s, physician visits were reimbursed at a lower rate than HHAs. A randomized study of the VA home care model found that home health teams that included active physician participation reduced hospital readmission costs by 29% (Cummings et al., 1990). The issue of physician involvement in home care is being reconsidered at present. An American Academy of Home Care Physicians has been established and the American Medical Association (AMA) has developed physician home care practice guidelines. In 1995 the HCFA increased the reimbursement for physician home visits and allowed physicians to bill for case management functions on behalf of clients. However, a national survey of 600 physicians who signed Medicare home health care plans of care in 2000 found that less than 3% of total home health claims were submitted for this service, because physicians reported that the reimbursement provided was too low to offset the costs of completing the paperwork required for billing (Office of the Inspector General, 2001).

Recent studies have examined rehospitalizations among patients in the Medicare fee-for-service program and found that almost one fifth (19.6%) of beneficiaries who had been discharged from a hospital were rehospitalized within 30 days and 34.0% were rehospitalized within 90 days (Jencks, Williams, & Coleman, 2009). The annual cost of Medicare hospital readmissions, 80% of which are potentially avoidable, is $415 billion (Miller, Ramsland, & Harrington, 1999). As of October 1, 2012, for the first time hospitals were held accountable for the quality of their discharge planning when Medicare began reducing payments to hospitals with high readmission rates for three high-volume, high-cost conditions. At present, the conditions targeted include heart attack, pneumonia, and heart failure that together account for 18% of 30-day readmissions (Thorpe & Ogden, 2010). It is important to note that several initiatives of the Patient Protection and Affordable Care Act (ACA) address preventable hospital readmissions. These include the Community Care Transitions Program, which targets improved discharge planning and follow-up care in the community for persons at high risk of readmission and the Medicare Independence at Home Demonstration Program, which will test the use of interdisciplinary teams in the home for persons with chronic conditions and disabilities. Other reimbursement reforms under the ACA that address this issue include the accountable care organizations, which seek to integrate the care of enrollees across all providers and the bundling of acute and postacute care payments into one overall rate to a pre-established group of providers (Thorpe & Ogden, 2010).

Medicare home health care agencies have the potential to play a very important role by partnering with hospitals to prevent readmissions. For example, a randomized trial by Naylor and colleagues has shown that Medicare patients hospitalized for congestive heart failure who received advanced practice nurse–directed discharge planning and a home care follow-up protocol experienced an increased length of time between hospital discharge and readmission that was accompanied by a reduction in the total number of rehospitalizations and decreased cost (Naylor et al., 2004), indicating substantial potential to improve clinical and economic outcomes for this group of patients.

FUNDING

Total reimbursements for Medicare-certified home health agencies expanded gradually between 1974 and 1989. As regulatory restraints on the number of visits were relaxed, the number of visits and concomitant reimbursements expanded markedly before peaking in 1997 and then dropping precipitously following the passage of BBA 97 (Figure 5.3). It is important to note that trend data through 2008 now indicate that reimbursement under PPS has returned to the same high seen in 1996.

FIGURE 5.3 Medicare home care reimbursement, 1984–2008.

Sources: National Association of Home Care (2001, 2010).

In dollar terms, expenditures for Medicare-certified home care increased from $2.5 billion in 1989 to $16.7 billion in 1997 (an annual rate of increase of 33%). As described earlier, BBA 97 attempted to mitigate this rate of increase by mandating a change from fee-for-service/retrospective reimbursement based on cost to prospective payment based on per-beneficiary episodes of care. While the new PPS was being developed, agencies were reimbursed under an IPS that precipitously reduced expenditures to $14 billion in 2000—a decrease of 16.2% between 1997 and 2000.

The goal of the PPS is to reward efficient providers and to encourage inefficient providers to change their behaviors. Although PPS decreased the use of the home health benefit among beneficiaries age 85 and older (McCall, Petersons, Moore, & Korb, 2003), the impact of PPS reimbursement is not yet known. The PPS system relies on a 153-category case-mix adjuster to set payment rates based on patient characteristics, including clinical severity, functional status, and use of rehabilitative services; it includes payment for unexpectedly high-use cases through an outlier adjustment, as well as adjustment for area wages indices. In this system, agencies are reimbursed based on a 60-day episode of care for a specific condition. The agency has the latitude to decide when to discharge a patient within each 60-day episode, but is held accountable for care outcomes. A review of PPS by the General Accounting Office (GAO) identified several areas of concern, including the 60-day episode for payment, which may be too long for some clients; the impact of payment on different types of providers in different geographic locations; and the adequacy of the case-mix adjustment method with respect to accurate assessments of resource needs. As a result of these concerns, GAO urged that the impact of the new system be carefully studied by the Centers for Medicare and Medicaid Services (CMS; GAO, 2000). Meanwhile, it is important to note that the dollar value of reimbursements ($17 million in 2008) was very similar to the $16.8 million figure seen in 1996 (NAHC, 2010). Provisions of the 2010 Affordable Care Act (ACA) may reverse this trend. Because Congress perceived that home health care agencies and skilled nursing facilities experienced high profit margins in the recent past (estimated by the MedPAC to be 10.3% in 2008 for nursing homes and 17.4% for home health), they wrote into law that ACA will achieve health reform savings by reducing the annual update for inflation for these providers. Specifically, provisions of the Act project that savings of $61.1 billion will be generated across skilled nursing facilities, home health, and hospice providers through 2019 (Wiener, 2010). The impact of reduced inflation adjustments on providers, access, and outcomes is currently unknown.

Medicaid also reimburses for skilled home health care. In 1975, hospital and nursing home payments combined to account for 62% of national Medicaid expenditures. By 2007, these payments had dropped to 34% of total expenditures, whereas home health payments increased from 0.6% of Medicaid to 20.2% ($55.9 million), reflecting the same trends toward shortened hospital length of stay, reduction of hospital admissions, and increased capacity to provide technologically complex care in the home as well as growing expenditures under the Medicaid HCBS waiver programs.

Commercial insurance companies and managed health plans typically provide a benefit for skilled home care in conjunction with an acute episode of illness. Private insurance paid for 12.3% of home care provided in 2007, compared to 55.7% of payments from Medicare and 22.4% from Medicaid (Park-Lee & Decker, 2010). Although these payers can establish their own policies, they tend to mirror federal Medicare policies. Thus, the services covered and the rates allowed are usually quite similar to those of Medicare. Since 1994, Medicare payments to managed care plans do not distinguish home care. As a result, CMS utilization and expenditures data do not reflect home care used by managed care enrollees.

LICENSURE, CERTIFICATION, AND ACCREDITATION

Licensure

Most states license a Medicare-certified home health agency as a health provider. This is typically done under the jurisdiction of the state’s health department.

Certification

Home health care agencies must be certified if they are to obtain Medicare reimbursement. Similarly, most states certify agencies as eligible to participate in Medicaid based on their certification by Medicare. Certification for Medicare is based on compliance with the federally mandated COPs, which, until the late 1990s, relied mainly on compliance with structure and process standards.

The Omnibus Budget Reconciliation Act of 1989 (OBRA ‘89) mandated the development and testing of client outcomes for home health care and the inclusion of client home visits in the quality-assurance survey conducted by state licensing agencies. Beginning in January 1999, CMS (formerly HCFA) required all Medicare-certified providers to implement the Outcome Assessment and Information Set (OASIS) system. OASIS is a uniform set of indicators of client outcomes. OASIS data are collected at multiple points in time during the course of each patient’s treatment, including admission, follow-up, or recertification; when a patient is admitted to a hospital for any reason; when a patient returns to an agency following a hospitalization; upon discharge; or if the patient dies at home. Different pieces of data are collected at specified time points by either a staff nurse or a therapist. CMS requires that data be gathered and submitted electronically on all Medicare, Medicaid, managed care, private pay, and personal care–only patients. Data are then forwarded at regular intervals to a designated state agency, where they are further processed, forwarded to the state home care regulatory agency, and sent to CMS. In 2003, CMS established a website called Home Health Compare: www.medicare.gov/homehealthcompare/search.html that provides information directly to consumers. The website is searchable and provides rankings for all home care agencies serving a specific zip code. Rankings are shown for the agency and compared to the average ranking on the same item for the state and also for the country.

Accreditation

Home health agencies can seek accreditation from either The Joint Commission (TJC; www.joint commission.org) or the Community Health Accreditation Partner (CHAP; www.chapinc.org). TJC and CHAP have also developed voluntary quality-assurance programs for home health care providers that incorporate the OASIS data set. Participation in TJC’s ORYX^® program is mandatory for home care programs that are hospital based or owned and have an average monthly census of 10 or more patients. Participating agencies select measures from listed performance measurement systems, apply the measures, and submit the data regularly to TJC, which uses controls and comparison charts to identify performance trends and patterns that are then discussed during on-site surveys (www.jointcommission.org/). Although participation in these voluntary programs can be expensive, if providers meet certification requirements of either of these programs, they are “deemed” to comply with the Medicare COPs and are exempt from state-sponsored regulatory surveys.

PRIVATE OR NON-MEDICARE HOME CARE AGENCIES

Private home care agencies offer a broad range of home care services, from skilled services available through Medicare-certified agencies to personal support provided by paraprofessionals, including personal care and homemaker/chore services. Services can be provided separately or in conjunction with any of the other models of home care. Home care is provided to persons with chronic functional disabilities who wish to remain in their homes, rather than enter an institution, as well as to those recovering from an acute illness.

AGENCIES

Skilled nursing and therapies can be provided by home care agencies that are licensed by the state but not certified to receive reimbursements from Medicare or Medicaid. Because providers are not required to be certified, no complete listing is currently available at the national level; however, data are available in each of the states. NAHC reports that there were over 33,000 home care providers in the United States in 2010 (NAHC, 2010). This number also may substantially underestimate the true supply, because not all providers are known.

CLIENTS

Clients receiving care from noncertified agencies have a wider range of needs than those who are eligible for Medicare reimbursement. Clients’ needs may range from around-the-clock skilled nursing to a weekly “bathe and shave” service. Those using homemaker and chore services tend to be people with functional disabilities who need assistance with activities of daily living (ADLs) and/or IADLs rather than skilled nursing care or therapies. Medicaid Section 2176 Community Care Waiver and Medicaid Section 1915(c) waivers can be applied to older adults, to younger persons with physical disabilities, to persons with AIDS, and to persons with developmental disabilities who have impairment levels that would render them eligible for nursing home care if community-based care were not available. Currently, federal regulations mandate that the average cost of Medicaid waiver services not exceed average Medicaid reimbursements for nursing home care.

Services

Services provided vary but may include case management, homemaker/chore services, and personal care, as well as the full range of skilled home care services provided by nurses and therapists. Capital funding, start-up, and operating costs for noncertified home care services are less than for Medicare-certified agencies because the agencies do not need to meet Medicare requirements for personnel or financial solvency. However, because of the low rates paid by the Medicaid waiver programs in many states, many noncertified programs have found that the best way to survive in this segment of the home care field is by building volume, which entails the development of a multiunit, if not multistate, chain capacity. Private home care agencies may also exist in parallel with a Medicare-certified agency, with an exchange of appropriate referrals. Under Medicare regulations, the two agencies must be operated by the same corporation or health care delivery system.

STAFFING

In contrast to Medicare-certified agencies, noncertified agencies typically do not employ staff on a full-time basis. Rather, they maintain a registry of people who are willing to work on an on-call basis for an hourly fee. Skilled personnel, such as RNs and therapists, work on an hourly, rather than salaried basis as they do for Medicare-certified agencies. Functional support services are primarily provided by paraprofessional workers: nurse’s aides (NAs), HHAs, and licensed vocational or practical nurses (LVNs, LPNs). In 2008, approximately 800,000 direct care workers did not have health care coverage. Many workers are paid less than workers in the fast-food industry and have less than full-time employment, with minimal, if any, benefits prior to 2011. With the passage of ACA, employers with more than 50 workers will have to pay a penalty if any employee receives a premium tax credit; the fee is higher if the employer does not offer health insurance. Persons for whom health insurance is too expensive will be required to obtain health insurance through Medicaid or through new health insurance exchanges (Wiener, 2010). These reforms may help reduce staff turnover in this sector of the home care industry.

Home care workers value autonomy in their jobs and enjoy their caregiving roles. However, they want to have more input into client care plans. They need opportunities for further training and career advancement, as well as better pay and benefits. Thus, the main challenge facing noncertified home care providers is the recruitment and retention of trained personnel. At present, noncompetitive wages, low benefits, and the challenging nature of the work are believed to be the cause of high staff turnover rates in this sector of the home care industry. Ensuring quality is difficult when staff are parttime and on the registry of several agencies.

One possible solution to this urgent manpower issue is consumer-directed home care, a new model of care that was recently tested by researchers at Mathematica Policy Research, Inc. As its name implies, consumer-directed care (also known as cash and counseling) enables home care consumers to recruit and manage their personal care helpers, who may be paid family members (Benjamin, 2001). This model of care has been the standard for younger persons with disability who are accustomed to directing their own personal care attendants. It has only recently been tested with an elderly population. Findings from a multisite randomized test of the model in three states indicate that older adults who participate in the model receive services promptly and report greater satisfaction with care. Because clients receive services rather than languishing on waiting lists, the initial costs of their care is higher. However, this cost is offset by reduced rates of nursing home admission (Doty, Mahoney, & Sciegaj, 2010). The Medicaid Deficit Reduction Act of 2005 allowed all states to offer consumer-directed care and currently 12 “second generation” states are implementing it, having served 15,000 participants by 2009 (Doty et al., 2010).

FUNDING

Charges for home care services are roughly equivalent to those for Medicare services. Charges are typically per hour rather than per visit. Some services may establish a minimum or flat rate. Although private home care agencies cannot receive payment from Medicare, they may be authorized providers for other public programs, particularly those offered by states and counties. Hence, private home care services are reimbursed by a variety of sources, including Medicaid 2176 Community Care Waivers, state block grants (Title XX), Older Americans Act Title III funds, state and local revenues, and private out-of-pocket payment. Although Title XX and OAA funding remained relatively constant during the 1990s, substantial growth has occurred in Medicaid and state funding of home care services.

The Medicaid Section 2176 Home and Community-Based Care Waiver (HCBCW) was created by the Omnibus Budget Reconciliation Act of 1981 (OBRA ‘81) in an attempt to decrease the use of nursing homes by Medicaid-eligible and low-income older adults and persons with physical or developmental disabilities. A modification of Social Security Act Title XIX, Section 2176, allows states to apply for and receive a waiver from the federal government to modify the benefits required for Medicaid. States may expand the services covered, the eligibility criteria, or the geographic area of eligibility for increased benefits. In 1982, six states participated in the waiver, with expenditures of $3.8 million. The program has since grown to encompass all but two states, with expenditures of $42 billion in 2007, representing a doubling from 1999 (Kaiser Commission on Medicaid and the Uninsured, 2011).

FIGURE 5.4 Medicaid 1915(c) home and community-based services waiver enrollees and expenditures by enrollment group, 2007.

Source: Kaiser Commission on Medicaid and the Uninsured (2011).

Medicaid waiver spending for individuals with developmental disabilities has accounted for the majority of expenditures, accounting for about 73% of total waiver expenditures in 2007 (Figure 5.4), mainly because many people with developmental disabilities receive 24-hour support (Coleman, Fox-Grage, & Folkemer, 2003). In the past, Medicaid programs in most states preferentially funded institutional rather than HCBS long-term care services. In an effort to rebalance their efforts, states are now redirecting funding to HCBS. As a result, the national percentage of Medicaid spending on HCBS has more than doubled from 19% in 1995 to 42% in 2008 (Kaiser Commission on Medicaid and the Uninsured, 2011). However, the generosity of the waivers varies greatly within states, depending on the population targeted as well as among states. The number of participants in each waiver is capped by states at a level they can afford. Because of participant caps, many states have long waiting lists for approval if available participant slots are filled. Specifically in 2009, 39 states reported waiting lists with a national average wait time of 21 months (Kaiser Commission on Medicaid and the Uninsured, 2011). Finally, approved service plans are also capped by case managers to ensure that the cost of the care provided remains comparable to the cost of nursing home care in each state. Both participant and service caps increase the predictability of expenses that states incur in offering the waiver programs.

It is important to note that the new ACA includes additional options that states can pursue to enhance their waiver programs. Under a State Balancing Incentive Payments Program, a time-limited increase in federal match can be provided to states that currently spend less than 50% of Medicaid long-term care dollars on HCBS. States that apply to exercise this option must agree to provide a single point of entry to care and standardized needs assessments.

The Community First Choice State Plan Option for Attendant Services and Supports removes the current mandate that expenditures for community care be less than what Medicaid spends on institutional care. States cannot set ceilings on the number of persons served nor limit geographic areas of the state served. In return, services provided will receive 6% increase in federal matching funds.

Under the Medicare Deficit Reduction Act of 2005, states were invited to participate in a Money Follows the Person Rebalancing Demonstration. This demonstration provides substantially enhanced federal Medicaid match dollars for states to transition persons in nursing homes back to the community. Originally, nursing home residents targeted by this demonstration had to have been in the home a minimum of 6 months prior to transitioning; this requirement has now been shortened to 3 months, with enhanced federal match for services provided during the client’s first year in the community (Reinhard, 2010).

LICENSURE, CERTIFICATION, AND ACCREDITATION

Licensure

Very few states license non-Medicare-certified providers, except for business licenses. However, most states have developed mandatory quality-assurance/improvement programs for private providers who participate in waiver and state-revenue-funded community care programs. In most cases, structure standards are used to assess quality and process, and outcome measures are conspicuously absent.

Certification

Private home care agencies may be certified by public programs other than Medicare to be authorized providers. Certification criteria are determined by the specific program. Examples include state or county mental health departments, Veterans Affairs Medical Centers, and Older American Act providers selected by the local Area Agency on Aging. An agency that meets certification requirements is entitled to bill for the care provided but must also comply with the operating regulations of the funder.

Accreditation

The Accreditation Commission for Health Care (ACHC) currently accredits many private home care providers, including high-tech providers. In addition, many national home care chains have developed their own internal quality-assurance systems, including the initiation of continuous quality-improvement programs. In large part, participation in quality-assurance programs across providers is voluntary and variable. Moreover, findings are not made available to consumers. Proponents of the cash and counseling model of HCBS believe that the client’s ability to hire and fire homemakers and personal care aides has injected direct consumer quality control over that segment of the industry (Simon-Rusinowitz, Loughlin, Ruben, & Mahoney, 2010).

HIGH-TECH HOME CARE

High-tech home therapy combines skilled home care professionals, advanced technology medical equipment, and pharmaceuticals. In 1968, patients without functioning digestive organs were sustained for the first time through total parenteral nutrition (TPN) provided intravenously. TPN is now prescribed routinely for those who are unable to or should not obtain nutrition through eating or drinking. TPN usually consists of carbohydrates and sugars, proteins, lipids, electrolytes, and trace elements that are administered by needle or through a catheter (Medline Plus, 2013b). Initially, these treatments required 24-hour-a-day hospital care. The invention of pumps in the early 1970s permitted more rapid infusion of solutions, freeing patients from tubes and bottles for up to 16 hours a day. High-tech home care has expanded to include respirator/ventilation therapy, intravenous (IV) antibiotics, chemotherapy treatments, and home-based renal dialysis, in addition to enteral and parenteral nutrition. As a result of advances in this technology, this care is now provided in the home, where it enables people to maintain normal lives, including resumption of work or school.

Original projections of growth in high-tech home care were glowing. The American Society for Parental and Enteral Nutrition estimated in 1983 that 150,000 to 200,000 home parental patients alone would be treated in 1990, at expenditures of up to $1.6 billion per year (Donlan, 1983). Current data indicate that these projections for growth in numbers of users and expenditures were not too far from the mark. For example:

Stay updated, free articles. Join our Telegram channel

Join