Summary

Use of the Medicare home health benefit has increased dramatically, with spending rising from $2.7 billion in 1989 to $12.7 billion in 1994. Costs are projected to reach $21 billion by the year 2000. In earlier reports (GAO/HRD-81-155 and GAO/HRD-87-9), GAO cited lax controls over the use of the home health benefit and recommended measures to improve Medicare's ability to detect claims that were not medically necessary or did not meet the coverage criteria. Medicare's escalating home health outlays continue to raise concerns about the extent of benefit abuse. This report examines the factors underlying the growth in the use of the home health benefit. GAO discusses (1) changes in the composition of the home health industry, (2) changes in the composition of Medicare home health users, (3) differences in utilization patterns across geographic areas, (4) incentives to overuse services, and (5) the effectiveness of payment controls in preventing payments for services not covered by Medicare.

GAO noted that: (1) the growth in Medicare's home health benefits resulted from less restrictive Health Care Financing Administration (HCFA) guidelines issued in 1989; (2) 2.8 million Medicare beneficiaries received home health services in 1993, up from 1.7 million in 1989; (3) during the same period, the average number of home health care visits doubled from 26 visits per year in 1989 to 57 visits per year in 1993; (4) more than 25 percent of home health beneficiaries received at least 60 visits per year; (5) between 1989 and 1994, the number of Medicare-certified home health agencies grew from 5,692 to 7,864; (6) proprietary home health agencies provided beneficiaries with 78 visits per year, while voluntary and government agencies provided beneficiaries with 46 visits per year; (7) home health beneficiaries with the same diagnosis received more visits from proprietary agencies than from non-profit agencies; and (8) Medicare's home health services can be improved by subjecting claims to medical review and audit, requiring visits from intermediaries and physicians to beneficiaries, and determining whether beneficiaries are qualified for such service, and actually need or receive the service billed to Medicare.