Home Health Care: Fine Idea That’s Poorly Implemented

The federal government’s foray into home health care is a case study in how a good idea, carelessly implemented, can go awry. The good idea was changing Medicare’s payment system to favor more health care in people’s homes, with the intent of reducing their stays in hospitals. The reform called for everything from skilled nursing for cancer patients to aides who could help the frail elderly bathe.

The changes were made in the late 1980s after studies showed that home health care would be better and more economical for ailing or infirm old people--and in many cases it was. A boom followed: Federal payments for home health care mushroomed from $2.1 billion in 1988 to $19 billion in 1996.

But we now know that a lot of the money was not well-spent, for Washington failed to draft tight regulations and pay for adequate oversight. In congressional testimony last week, federal investigators explained the consequences: More than one-third of the government’s payments to home health care services were without documentation, duplicative or for services never delivered.

Investigators cited the case of Jeanette Garrison, the since-convicted owner of a home health care company whose revenues grew from $10 million in 1987 to $121 million in 1993. In the absence of audits or other checks, Garrison was able to set up businesses that supplied goods and services to her home health care company at exorbitant prices.

Medicare officials are implementing a quick fix to thwart future Jeanette Garrisons: Home health company managers must supply information about any related businesses they own. Two more fundamental reforms, however, are urgently needed:

* Improved oversight. A decade ago, the government reviewed 60% of home health care claims; it reviewed 2% of those filed last year. As a recent report by the Government Accounting Office put it, “Controls . . . remain essentially nonexistent. Few home health claims are subject to medical review and most claims are paid without question.” The Clinton administration has proposed auditing 4% rather than 2% of home health care claims, but that is not an adequate increase.

* Clearer definitions of coverage. Patients are currently eligible for home health care if they are “homebound.” But Medicare officials have yet to define this word. In practice, patients are considered homebound if they go to church or the doctor on their own but not to the market or, say, a bingo game. This fuzziness invites abuse. The GAO cited a physician who complained that home health operators told his patients they were homebound because they did not own a car.

A larger solution will have to begin with the current payment system, which pays home health care providers a certain amount for each injection, bath or bandage change that they deem necessary. Instead, Medicare could pay a flat fee for a week’s or a month’s care of patients with specific conditions. An otherwise healthy person recovering from a broken leg would warrant lower payments than a patient with severe arthritis and a broken leg. This “prospective payment system” is used for Medicare hospitalizations and has kept costs down.

Medicare officials agree that such a system is needed but say it would take them two years to implement it because of a need for “research and infrastructure development.” While we wait for a translation of that excuse, Congress will have to at least watch more closely how the money is spent. Every year, the elderly population is larger. The home health industry’s growth is both assured and warranted, but abuses of Medicare funds have to stop.