The impact of Medicare home health policy changes on Medicare beneficiaries

This brief presents results from an analysis of how a new payment system -- the Interim Payment System (IPS) - mandated by the 1997 Balanced Budget Act (BBA) affected Medicare home health service use and beneficiary outcomes. The study found that the IPS had a considerable impact on home health utilization, causing reductions in the overall proportion of Medicare beneficiaries who received the service; the number of home health visits per home health user; the average length of a home health episode of care; and overall Medicare home health expenditures. The study also examined the impact of these reductions on outcomes experienced by Medicare beneficiaries. Evidence presented in this brief shows that, overall, the impact of the IPS on beneficiary outcomes was minimal. Moreover, it appears that service reductions did not cause significant increases in the use of other types of post-acute care.