Medicare Home Health Reimbursement Alternatives

Abstract

This paper presents a conceptual analysis of access, quality, and cost containment incentives created by several current and potential Medicare reimbursement methodologies. The alternatives examined are methods used by health maintenance organizations (HMOs) and three options receiving national policy consideration: prospective per-visit and per-episode payment, and "bundling." The analysis found better incentives (from a policy perspective) for HMOs with integral home health units than for HMOs using outside contractors. Of the other options, per-episode payment appeared most promising, but requires accurate case mix adjustments. All approaches also require quality assurance tailored to reimbursement incentives. Topics for further research and demonstrations are suggested.