Medicare Home Health Co-Pays & LTC

One detail of President Obama’s proposal released yesterday is the creation of a Medicare Home Health co-pay of $100 per episode if it includes more than 5 visits (p. 39).

This would apply to new beneficiaries beginning in 2017. This proposal is consistent with a MedPAC recommendation to establish a per episode copayment. MedPAC noted that “beneficiaries without a prior hospitalization account for a rising share of episodes” and that “adding beneficiary cost sharing for home health care could be an additional measure to encourage appropriate use of home health services.”

This is a tiny aspect of the overall package, and would reduce Medicare spending by $400 million over 10 years. However, it caught my eye because I think it is consistent with something that a Medicare official told me at a meeting a few years back: there is a strong institutional fear (at CMS) of any aspect of its benefit package becoming a “back door” long term care benefit.

After expansion of Medicare home health in the early the 1990s, there has been a general move to medicalize the benefit and reduce its use for personal long term care. McCall et al. (2001) noted the changes to the home health benefit brought about by the Balanced Budget Act of 1997

Eligibility for Medicare home health is limited to beneficiaries who are “homebound,” need “intermittent” skilled nursing or therapy services, and are under the care of a physician who prescribes their plan of care. A beneficiary needing only personal care does not qualify (emphasis mine)

These changes greatly reduced the use of home health; according to MEDPAC, total Medicare home health spending in 1997 was $17.7 billion, fell to $8.5 billion in 2000, and was $18.9 billion in 2009 (p. 177 of March 2011 report).

Further, I think that at least some of the discussion by MEDPAC of changes to the Medicare hospice benefit per diem payment and increased efforts to address very long lengths of hospice use for patients with non cancer diagnoses could be viewed in a similar light (such policies are not a part of the President’s proposal but remain a MEDPAC priority). From the MEDPAC March 2011 report (p. 267):

…between 1998 and 2008, the number of hospice users with debility increased from just over 8,500 to nearly 107,000, and the number with either Alzheimer’s disease or non-Alzheimer’s dementia grew from about 28,000 to 174,000…

It should be noted that outreach to patients with diagnoses other than cancer had been an earlier priority, but this success may feed worries that hospice is being inappropriately used for long term care.

Long term care represents a tremendous burden to Medicare beneficiaries, and under our current system the responsibility for such care falls initially on individuals and families. The cost of informal caregiving (family members caring for loved ones) is enormous, and could be understood as individuals self insuring against needed long term care, but many choose this by default due to lack of options. Private long term care insurance is rare, and Medicaid stands as the default payer of nursing home care–the most expensive care setting we have.

The question remains how will we insure long term care? Certainly not by repealing the CLASS provisions of the ACA and replacing them with nothing. As Howard Gleckman says

Aging Baby Boomers and their families would all be far better off if congressional critics of CLASS sat down with the White House to design a national long-term care insurance program that does work.

We could reduce the pressure for a “back door” LTC benefit by developing a coherent strategy for insuring the LTC needs of our aging population.

Update: for clarity, the type of care CMS has tried to decrease in the Medicare home health benefit over time is custodial care (help bathing, dressing, cooking, shopping), based on the argument the benefit is for skilled care, such as wound care.

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