Academic journal article Health Care Financing Review

Home Health and Skilled Nursing Facility Use: 1982-1990

Academic journal article Health Care Financing Review

Home Health and Skilled Nursing Facility Use: 1982-1990

Article excerpt

INTRODUCTION

There have been large recent increases in home health agency (HHA) and SNF use by elderly Medicare beneficiaries. The increases can be due to changes in the size and structure of the U.S. elderly Medicare-eligible population, changes in its health and functional status, or in its service use. In evaluating changes, it is important to determine if increased HHA and SNF use is due to persons substituting HHA and SNF use for other services (e.g., short-stay hospitals) or to increased use by persons with specific health problems.

For the period analyzed (1982-90), Medicare changes occurred that affected HHA use by groups with different health and functional problems. In 1983, the prospective payment system (PPS) was instituted to control the growth of Medicare hospital reimbursement. Initially, PPS controlled both the duration and rate of hospitalization. There was concern whether HHA or SNF services would buffer potentially adverse effects of changes in hospital use--e.g., for vulnerable groups such as the oldest-old (persons 85 years of age or over) or persons with multiple chronic diseases or disabilities. Anticipated increases in HHA use in the mid-1980s did not materialize because of U.S. General Accounting Office studies (1981, 1986) that critiqued HHA accounting and management practices. Findings of these studies were confirmed by a 1984 HCFA evaluation (Helbing, Sangl, and Silverman, 1992). Denial rates for HHA services increased because of intensified review in 1986 and 1987 (i.e., denial rates of 6.0 percent and 7.9 percent, respectively [Helbing, Sangl, and Silverman, 1992!). Steps began in 1987 to return denial rates to pre-1986 levels: 2.5 percent in 1984 and 3.4 percent in 1985 (Health Care Financing Administration, 1990). Use increased from 1987 to 1990 (and beyond) because of the settlement of litigation on HHA coverage (Duggan vs. Bowen, 1988), which had two effects: (1) a broadening of the definition of part-time or intermittent care (effective November 1988) and (2) revision of manuals clarifying definitions of benefit eligibility (effective July 1, 1989).

A factor affecting SNF use was the Medicare Catastrophic Coverage Act (MCCA) of 1988. Through the MCCA, SNF provisions (removal of the 3-day prior hospital stay criterion; an increase in covered SNF days from 100 to 150; elimination of the episode-of-illness concept, providing a renewed 150-day eligibility in each year; changed copayment structure) were repealed in 1989. The provisions yielded a quadrupling of SNF use from 1988 to 1989. After MCCA's repeal, SNF eligibility criteria returned to 1988 standards. However, because of national nursing home changes (e.g., 1,624 new SNFs became Medicare-certified between December 1988 and December 1990; they contained 75,000 Medicare SNF beds [Helbing, 1992]) and changes in the definition of nursing home services in the 1987 Omnibus Budget Reconciliation Act (OBRA 1987), SNF use remained higher in 1990 than in 1988. It is likely to continue to increase because: (1) many SNFs invested in staff, equipment, and training; (2) nursing homes that had avoided Medicare participation were attracted by higher financial rewards; (3) a better geographic distribution of SNFs was achieved, especially in rural areas (also, many States required nursing homes to participate in Medicare to remain Medicaid-eligible); and (4) OBRA 1987 required Medicaid nursing homes to meet Medicare SNF standards (Office of Inspector General, 1991).

Although Medicare changes affected HHA and SNF use, we do not here examine how those changes affected use (Helbing and Cornelius, 1992; Helbing, Sangl, and Silverman, 1992), but rather how changes in use are distributed among persons with specific health and functional characteristics identified from a nationally representative longitudinal survey and how service changes relate to health and functional changes in the Medicare-eligible U.S. elderly population. …

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