REMOVING THE REQUIREMENT THAT A beneficiary who needs intermittent skilled nursing care, or physical or speech therapy, and who meets certain other conditions, can also receive a variety of additional services, including home health aides, occupational therapists, and medical social workers, as well as coverage of medical appliances and supplies. SSA actuaries estimate an increased cost of $1,250 million ($938 million for part A and $312 million in part B) in fiscal year 1978 if only the skilled care requirement were removed. If The estimate of $1,250 million as a first year cost assumes that only care by currently approved home health agencies is reimbursed. It was also assumed, Medicare pays 40 percent of the cost of approved home health agencies. Almost all services are provided to Medicare eligibles. no expansion of providers occurred, the increased services alone would cost $842 million. The remaining $408 million would allow for a 50-percent increase in the current level of staffing. ELIMINATION OF PRIOR HOSPITALIZATION REQUIREMENT To receive home health benefits under part A, a beneficiary has to be an inpatient in a hospital for at least 3 consecutive days (not counting the day of discharge). An SSA actuary estimated the elimination of this requirement alone would cost about $12.5 million in fiscal year 1978. The estimate also considered that this elimination would remove the requirement that treatment received by beneficiaries be related to a post hospital or skilled nursing facility stay. About $6.2 million of the estimated increased cost would be expected to result because 1.1 million part A beneficiaries who have not purchased part B coverage would have access to home health coverage under part A without being hospitalized. However, because home health care is limited to individuals under the care of a physician whose services are covered under part B--access to home health services under part A (with or without the prior hospitalization requirement) without part B coverage seems to us to be of limited value. The remaining increased costs would result because nonhospitalized beneficiaries entitled to both parts A and B would have 200 visits per year instead of 100. The data available does not allow for a very precise determination of the cost of this effect but it is estimated to be $6.3 million. Because the entire part A benefit structure is built around a benefit period which can only start when a person is hospitalized, this estimate also assumes that the part A limits without prior hospitalization would be 100 visits a year instead of 100 visits a year after the beginning of one benefit period and before the beginning of the next. We believe that individuals are not encouraged, under present law, to be hospitalized in order to qualify for home health benefits. While HEW has not specifically studied this, SSA did make studies in 1968, 1970, and 1973 to find out if the 3-day hospitalization requirement had caused additional use of hospital admissions merely to provide coverage for skilled nursing facility stays. These studies showed no evidence of any general practice of the use of inpatient hospital stays to qualify patients for skilled nursing benefits. Also, about 97 percent of Medicare beneficiaries are covered by part B which provides home health benefits with no prior hospitalization requirement. Unless part B benefits are exhausted (which is rare), an individual is not encouraged to seek a hospital admission to qualify for home health care under part A because the part A inpatient hospital deductible is twice as high as the part B deductible. ELIMINATION OF THE HOMEBOUND REQUIREMENT To be eligible for home health care, a physician must certify that the patient is confined to his or her home. A homebound person is permitted infrequent or brief absences. SSA's actuaries estimated that the removal of the homebound requirement would expand benefits to a new category of patients and cost about $92.5 million in fiscal year 1978 if all other requirements remained unchanged. This would represent a 17 percent increase in the cost of home health benefits. HEW officials said they believed the primary reason people want the homebound requirement eliminated is to cover home dialysis for beneficiaries with kidney failures. Of the $92.5 million, about $36 million would apply to people receiving home dialysis but who are not homebound. According to the SSA actuary, approximately 9,500 people, each of whom dialysizes about 150 times a year, could use a home health aide to assist in the time-consuming process. 1/ The estimate assumes that an average visit (about $37) would be reimbursed and that each patient would use the 100 visits maximum. The remaining $56.5 million would allow for home health services to those individuals who are in need of skilled care but are currently not homebound. SSA's actuary estimated that about 10 percent of Medicare beneficiaries would benefit from this change. The estimate, however, did not consider whether individuals in need of skilled care were receiving it from another source. For example, receiving skilled care on an ambulatory basis, in a doctor's office, or in a health clinic. On September 12, 1977, the House of Representatives passed a bill (H.R. 8423) to make improvements in the end stage renal disease program. One objective of the bill is to provide incentives for the use of lower cost, medically appropriate self-dialysis (particularly home dialysis) as an alternative to high cost institutional dialysis. The Ways and Means Committee report (Report No. 95-549 dated July 29, 1977), noted that the annual cost of facility dialysis (ranging from $15,000 to $30,000) was generally twice the annual cost of home dialysis (ranging from $8,000 to $12,000). But the percent of patients on home dialysis had declined steadily since Medicare had started providing universal coverage for such services. To provide incentives for home dialysis, the bill would provide coverage for periodic home dialysis support services including visits by a qualified provider. The bill would also provide for the implementation of an incentive reimbursement system with respect to the payment for the dialysis of patients dialyzing at home under the supervision of a dialysis facility. Under the bill, HEW would be authorized to, on the basis of a target reimbursement rate, for home dialysis and all necessary home dialysis medical supplies, equipment, and supportive services--including the services of qualified home dialysis aides. We could find nothing in the bill which would require renal disease beneficiaries to be "homebound" to receive such benefits. Thus, for about 40 percent of the $92.5 million in additional cost of eliminating the homebound requirement, there is House approved legislation which would eliminate or 1/Other HEW data showed that as of June 1977 about 5,000 people were on home dialysis. significantly dilute the homebound requirement and would reduce costs for a specific class of Medicare beneficiaries.1/ In this connection, the House Ways and Means Committee report on the bill (H.R. 8423) also stated that HEW had informed the Committee that it "anticipates that the accrued savings that will be realized as a result of increased dialysis in the home setting will offset the cost of incentives included in the bill." We believe that a similar argument to provide disincentives for institutionalization could be made for the Medicare beneficiaries requiring skilled care, but who are not "homebound" and, thus, are ineligible for home health services under Medicare. This assumes that the difficulties in obtaining treatment on an ambulatory basis makes the alternative of institutionalization more appealing. ADDITION OF HOMEMAKER SERVICES HEW is currently conducting experiments to determine the cost effectiveness of providing homemaker services (see app. III), and until these experiments are completed we were told that it would be difficult to accurately determine the cost of adding homemaker services, particularly with respect to Medicaid. For Medicare, SSA's actuaries said that assuming an individual is homebound, in need of skilled care, and that homemaker services are provided only while skilled care was required, additional homemaker services would cost Medicare $75 million in fiscal year 1978. According to SSA's actuary, the homemaker benefits currently perceived are very restrictive and a broader definition would result in higher costs. SSA's actuary estimated that about 50 percent of those receiving skilled care would be eligible for homemaker services. We obtained the following data on the cost of homemaker/ chore services from State officials in California and Georgia. California provides homemaker/chore services through its title XX program. In its plan the State estimated that about 1/The bill would not amend the part B home health benefit as such. Thus the 20 percent coinsurance charge would be applicable to these proposed new benefits whereas no coinsurance charge would continue to apply to the regular part B home health benefit. 113,000 aged, blind, and disabled individuals would benefit from the program during the period July 1, 1976, through June 30, 1977. The State estimated the Federal and State costs for homemaker/chore services in California would be $80 million. The State did not estimate any savings on institutionalization resulting from benefits provided under the program. Georgia's title XX administration is currently evaluating the use and measuring the effectiveness of homemaker/ chore services as an alternative to institutional care for the aged, blind or disabled, and mentally retarded adults who are eligible for title XX benefits. An interim report from Georgia's homemaker demonstration project indicates it was preventing institutionalization and reducing.overall health care costs. The report showed that during the first 3 months of the project, homemaker services prevented over 2,300 months of institutional care and saved $278,231. The project's 60 homemakers--at a cost of $456,471--enabled more than 900 people to stay home avoiding 851 months of foster care, 1,246 months of intermediate nursing care, 170 months of skilled nursing care, and 114 months of other placements, such as mental institutions all of which would have cost about $735,000. We did not validate the data supporting this report, but it tends to support the findings in our Cleveland study (discussed in the previous chapter) to the effect that greatly or extremely impaired people require more than nursing services to be maintained in their homes. ADDITION OF HOME HEALTH CARE BENEFITS Federal law and HEW regulations require that home health care benefits be provided to all aged, blind, and disabled categorically needy individuals 21 years of age and older. Home health care benefits to the medically needy is technically not a required service under the law. However, 32 States and jurisdictions covering the medically needy are already offering this service--thus, we assume that the cost of this change would be minimal. CONCLUSIONS In summary, we believe that the elimination of the limitation on the number of visits under Medicare would not be costly because few people presently exhaust such benefits. The elimination of the prior hospitalization requirement also would not be costly, but the use of institutional services |