In addition, HCFA guidance states that the HMO is allowed to direct the delivery of care. Role of Home Health Services Varies Between HMO and Fee-for-Service Providers

Contrasting financial incentives and different interpretations of the Medicare home health benefit have led to some divergence in the way home health services are used by HMO and fee-for-service providers. HMOs Emphasize Different Goals for Home Health Services

Home health agency staff described HMOs as having a somewhat different approach to home health than fee-for-service providers. To do so, they establish specific rehabilitation goals focused on a patient’s needs. In contrast, HMOs tend to focus on the specific condition that initiated the home health episode. The director for admissions at another home health agency said that there are always gray areas in the coverage guidelines and that fee-for-service providers tend to provide more services, while HMOs tend to provide fewer. In general, the Medicare HMOs we visited reported that they occasionally covered more benefits than patients are entitled to in the Medicare fee-for-service program. These differences in utilization likely stem from HMOs’ more active management of home health services and greater emphasis on rehabilitation and acute care, along with a lack of controls in the fee-for-service program and reported problems with overutilization. One study, which compared the use of home health services by frail elderly Medicare patients in HMOs and fee-for-service, found that—after adjusting for differences in demographic, physical, mental, and functional status—HMO patients were just as likely to have home health episodes as fee-for-service patients but received 71 percent fewer visits. Greater differences, especially in the use of aides, were found for patients with longer episodes of home health care. The remaining two-thirds received more visits over a longer period. The other half were medically stable but functionally impaired and used home health care, especially aide services, to meet long-term care needs. Home health agency and HCFA staff told us that it is difficult to evaluate the significance of home health care utilization differences between managed care and fee-for-service settings without comparative data on patient outcomes—information that links the care provided to the patient’s health status. HCFA has initiatives under way to collect some information on patient outcomes from home health services, but that data will not be available for some time. Still, without such data, it is difficult to determine to what extent utilization differences are appropriate or represent unnecessary services provided in fee-for-service or insufficient services provided by HMOs. While we did note some differences in the provision of home health services by HMO and fee-for-service providers, we did not collect information that would allow us to comment on the appropriateness of care offered to the two groups of patients. Scope and Methodology

To collect information on how Medicare HMOs manage home health services, we visited six Medicare HMOs, conducted phone interviews with home health agencies that contracted with these HMOs to provide home health services, and reviewed appeals from Medicare HMO enrollees who were denied home health services.
Why GAO Did This Study

GAO provided information on home health services provided by Medicare health maintenance organizations (HMO), focusing on: (1) how Medicare HMOs provide and manage home health services, as compared to fee-for-service providers; and (2) what is known about the appropriateness of home health services provided to HMO enrollees, especially to vulnerable populations.

What GAO Found

GAO noted that: (1) since the late 1980s, when the Congress and the courts liberalized Medicare coverage of home health services, the contrasting financial incentives of HMO and fee-for-service providers have led to some divergence in the use of these services; (2) fee-for-service providers generally have responded to the increased latitude in the home health benefit by providing more patients with more services for longer periods, in some cases providing excessive services; (3) in contrast, home health agencies and HMOs tend to emphasize shorter-term recuperation and rehabilitation goals--much as fee-for-service provider did prior to the changes in coverage guidelines; (4) differences between HMO and fee-for-service providers are most apparent in the use of home health aides; (5) in the fee-for-service program, the use of home health aides to provide long-term care for patients with chronic conditions is growing, whereas the six HMOs GAO visited report that they do not provide aide services on a long-term basis; (6) typically, Medicare HMOs manage home health care much more actively than the fee-for-service program; (7) in contrast, the fee-for-service program has less effective controls for preventing unnecessary and noncovered services; (8) home health utilization differs between HMO and fee-for-service patients; (9) the greater emphasis on short-term goals and the more active management of care by HMOs likely contribute to shorter episodes of care and the use of fewer home health visits, especially by home health aides; (10) in addition, data from one managed care market suggest utilization differences are more pronounced for longer-term home health patients; (11) given the approach to home health care by some Medicare HMOs, including a greater focus on post-acute needs, Medicare beneficiaries with long-term care needs and chronic illnesses enrolled in HMOs may not receive the same services as they would in fee-for-service Medicare; (12) although there are these differences in utilization, the Health Care Financing Administration (HCFA) does not have the information it needs to evaluate the home health care patients receive in either the HMO or fee-for-service program; (13) HCFA does not review home health care during monitoring visits to HMOs; and (14) HCFA plans to collect some outcomes information, but it will not be available for some time.