CHAPTER 1

INTRODUCTION

In an August 6, 1976, letter, the Chairman, Subcommittee on Health and Long-Term Care, House Select Committee on Aging, asked us to analyze certain aspects of federally assisted home health care programs. He asked us to (1) determine when home health care costs were less than institutional care considering all relevant costs, (2) analyze the Federal cost of certain changes to the Medicare and Medicaid programs, (3) determine the actions taken on recommendations in our report "Home Health Care Benefits under Medicare and Medicaid" (B-164031(3), July 9, 1974), and (4) review the coordination efforts of the many programs which offer home health care benefits.

The Chairman requested that our report be issued to the Congress rather than to him. (See app. I.).

FEDERAL HOME HEALTH CARE PROGRAMS

The Department of Health, Education, and Welfare (HEW) administers the principal Federal programs which provide for home health care. The home health care programs that are medically oriented are Medicare and Medicaid. HEW is also responsible for administering home care or in-home service grant programs under title XX of the Social Security Act (42 U.S.c. 1397) and titles III, IV, and VII of the Older Americans Act (42 U.S.C. 3021, 3031, 3045).

MEDICARE AND MEDICAID

Titles XVIII and XIX of the Social Security Act established the Medicare and Medicaid programs to help eligible persons meet the costs of health-care services.

Under Medicare eligible persons, generally 65 and over or disabled, may receive two basic forms of protection.

--Part A, hospital insurance benefits, generally financed by special social security taxes, covers inpatient hospital services and certain posthospital care in skilled nursing facilities and patients' homes.

--Part B, supplementary medical insurance benefits, is
a voluntary program, financed by premiums of enrollees

and Federal contributions covering physician services and many other medical and health benefits.

During fiscal year 1976, 1/ Medicare paid $16.6 billion on behalf of eligible beneficiaries ($12 billion was paid under part A and $4.6 billion under part B).

Under Medicaid, a grant-in-aid program, the Federal Government and the States share the costs of providing medical assistance to persons--regardless of age--whose income and resources are inadequate to pay for health care. Medicaid (Federal and State) paid about $15 billion for about 24 million recipients in fiscal year 1976.

Two groups of people can be covered by Medicaid. The first group, known as the categorically needy, are people who can or do receive public assistance under one of the cash assistance programs. The categorically needy must be covered by the State's Medicaid program. In addition, States may elect to pay for medical care to medically needy persons and their families (individuals whose income exceeds the standard under the appropriate cash assistance plan but is insufficient to meet their medical costs).

ADMINISTRATION OF THE MEDICARE
AND MEDICAID PROGRAMS

On March 8, 1977, the Secretary of HEW announced the establishment of the Health Care Financing Administration to administer Medicare and Medicaid. Before this reorganization, the Bureau of Health Insurance (BHI) in the Social Security Administration administered Medicare. The Medical Services Administration of the Social and Rehabilitation Service (SRS) administered Medicaid at the Federal level. Many of the events discussed in this report occurred before the reorganization.

To help administer Medicare benefits, HEW has contracted with public and private organizations called intermediaries and carriers. Intermediaries generally make payments under parts A and B on the basis of "reasonable cost to institutional providers, such as hospitals, skilled nursing facilities, and home health agencies. Carriers make payments

1/All Federal cost data for fiscal year 1976 referred to in this report covers the period July 1, 1975, to June 30, 1976. It does not include the transition quarter.

under part B on the basis of reasonable charges for the services of doctors and suppliers. HEW has contracts with about 50 carriers and about 80 intermediaries. HEW reimburses intermediaries and carriers for administrative costs.

A State is responsible for administering its Medicaid program. The State plan contains the nature and scope of its Medicaid program and provides, after HEW approval, the basis for Federal grants.

The State may contract with private organizations to help administer its program. The responsibilities assigned to the contractors--referred to as fiscal agents--vary depending on the State's contractual arrangements. Some States administer the entire program through their State agencies.

Home health care is generally defined as health care prescribed by a physician and provided to a person in his own home. Although home health care benefits are provided under both Medicare and Medicaid, the philosophies, coverages, and administrations differ.

Medicare home health care

The Medicare home health care benefits are, by law, skilled care oriented. They were not designed to provide coverage for care related to helping with activities of daily living unless the patient required skilled nursing care or physical or speech therapy.

Home health services, as defined by the Social Security Act, include

--part-time or intermittent nursing care provided by
or under the supervision of a registered professional
nurse;

--physical, occupational, or speech therapy;

--medical social services 1/ under the direction of a physician;

1/Medical social services are services necessary to assist the patient and his family in adjusting to social and emotional conditions related to the patient's health problem.

25-122 O 78 pt. 2 15

--to the extent permitted in regulations, part-time
or intermittent services of a home health aide; 1/

--medical supplies (other than drugs and medications including serums and vaccines), and the use of medical appliances, and

--in the case of a home health agency which is affiliated or under common control with a hospital, medical services provided by an intern or resident-in-training of such hospital under a teaching program of such hospital.

The act specifies that these services can be furnished to individuals under the care of a physician, by a home health agency, or by others under contractual arrangements with home health agencies under a plan established and periodically reviewed by a physician. These services are to be provided generally on a visiting basis in the individual's home. Under certain circumstances these services can be provided also on an outpatient basis at a hospital, skilled nursing facility, or a rehabilitation center.

To participate in the program, home health agencies must meet specific requirements of the act. The act defines a home health agency as a public agency or private organization which is primarily engaged in providing skilled nursing services and other therapeutic services.

To be eligible for home health care under Medicare, a person must be confined to his residence (homebound), be under the care of a physician, and need part-time or intermittent skilled nursing service and/or physical or speech therapy. A physician must prescribe the need for such care. If these requirements are met, a person is eligible to receive other covered home health services.

To qualify for home health care benefits under hospital insurance (part A of Medicare), a person must have been in a hospital for at least 3 consecutive days prior to entry

1/Home health aide services include, among other things, helping the patient with bathing and care of the mouth, skin, and hair; helping the patient to the bathroom and in and out of bed; helping the patient to take selfadministered medications ordered by a physician; and helping the patient to exercise.

into home care. The care to be provided must be for an illness for which the person received services as a bed patient in the hospital and must be provided within the year following hospitalization or after a covered stay in a skilled nursing home following such hospitalization. Under part A, a person's coverage is limited to 100 home care visits a year after the start of one spell of illness and before the beginning of another. 1/ A person may qualify for home health care benefits under medical insurance (part B of Medicare), without prior hospitalization provided certain conditions are met. In such cases a person is limited to 100 home care visits in any one calendar year.

Medicare intermediaries are responsible for (1) paying for services provided, (2) sending information or instructions furnished by HEW to home health agencies and serving as a channel of communication between home health agencies and HEW, and (3) assisting home health agencies in establishing and applying safeguards against unnecessary use of services under the program.

Medicare home health care outlays were, or were estimated to be, $199 million for fiscal year 1975, $287 million for fiscal year 1976, $433 million for fiscal year 1977, and $563 million for fiscal year 1978. In fiscal year 1978, it is estimated that home health care costs will exceed the Medicare costs for skilled nursing facilities by $100 million. Medicaid home health care

Home health care became a required service for the categorically needy under Medicaid on July 1, 1970. Home health agencies which are qualified to participate in Medicare are also qualified to participate in Medicaid.

The 1967 Amendments to the Social Security Act required coverage of home health services as a step toward requiring States to provide a comprehensive program of services to Medicaid beneficiaries. Although home health services were optional under the Medicaid program until July 1, 1970, States now are required to provide home health services, which have been defined as part-time and intermittent services by a certified home health agency. Home health

1/A new spell of illness begins if a beneficiary is rehospitalized after having been out of a hospital or a skilled nursing home for at least 60 consecutive days.