Home health care post-PPS: some California data

Area of Science:

• Health Services Research
• Healthcare Policy Analysis
• Gerontology

Background:

• The Prospective Payment System (PPS) was implemented in 1983, altering Medicare reimbursement for healthcare services.
• Home health agencies experienced significant changes in operational and financial landscapes following policy shifts.
• Increased denial rates for Medicare-reimbursed home care emerged in late 1985, posing further challenges.

Purpose of the Study:

• To analyze the impact of the 1983 PPS implementation on California home health agencies.
• To assess the effects of increased Medicare denial rates in late 1985 on the home health sector.
• To identify trends in agency operations, patient care, and reimbursement within California from 1982 to 1987.

Main Methods:

• Analysis of California home health agency data spanning 1982-1987.
• Examination of trends before and after the 1983 PPS implementation.
• Evaluation of data in relation to the 1985 increase in Medicare denial rates.

Main Results:

• Post-1983, a decline was observed in average patients per agency, visits per patient, freestanding agencies, and Medicare reimbursement percentage.
• Following 1985, further decreases were noted in served patients, total visits, average visits per aged client, and reporting agencies (proprietary and non-profit).

Conclusions:

• The PPS implementation and subsequent Medicare policy changes led to a contraction in the California home health care market.
• These policy shifts resulted in reduced patient access, decreased service utilization, and a decline in the number of home health agencies.
• The findings highlight the sensitivity of home health services to Medicare reimbursement policies and denial rates.