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. The problem is compounded by fraud.
In its annual report to Congress this month, the Medicare Payment Advisory Commission, a group of independent experts, concluded that 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. Experts say there is room to reduce payments substantially without harming the provision of such services as skilled nursing care, physical or occupational therapy, speech therapy and medical social work.
The overpayment problem is exacerbated by fraud and manipulation, according to a report issued recently by the Government Accountability Office. The G.A.O. 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. These included overstating a beneficiary’s condition to get an improperly high reimbursement, billing for patients who were not homebound and thus not eligible for home health care, and making unnecessary visits.
Some of the worst abuses were in Texas and Florida, where spending growth was highest. 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. The bigger cost issue — paying too much across the board for home health services to Medicare beneficiaries — would largely be solved by President Obama’s budget proposals. His budget plan calls for saving a hefty $37 billion over the next decade by reducing Medicare’s projected home health care expenditures in order to help finance his broader health care reforms.
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; it needs to do its fair share to curb the relentless surge in Medicare spending. 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.
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