State entry regulation and home health agency quality ratings

Robert L Ohsfeldt,Pengxiang Li

doi:10.1007/s11149-018-9351-4

Robert L Ohsfeldt, Pengxiang Li

Open Access

https://doi.org/10.1007/s11149-018-9351-4

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Abstract

There is a substantial literature assessing the impact of entry restrictions created by state certificate-of-need (CON) programs on hospital and nursing home markets, but comparatively little research has focused on CON for home health agencies (HHAs). We assessed the impact of state CON programs for HHAs, and for potential substitute service providers, on quality ratings for HHAs. HHA quality ratings were obtained from the Home Health Compare database developed by the Centers for Medicare and Medicaid Services (CMS) for the last quarter of 2010 through the last quarter of 2013. The HHA-level data were augmented with county-level area characteristics for each HHA in the CMS database. An ordered logit model was used to estimate the association between state CON restrictions and Low, Medium, and High quality categories, adjusted for HHA and area characteristics. The results indicated that HHAs in states with CON for HHAs were less likely to have High quality ratings, and more likely to have Medium quality ratings, compared to agencies in states without CON for home health. Additional research is needed to assess whether the apparent adverse impact of CON on HHA quality is related to diminished competition among HHAs in states with CON.

Highlights

In the United States, there has been a trend over the past several decades toward moving the provision of health care services associated with long-term or short-term disability from institutional settings to patients’ homes, provided by home health service providers through home health service agencies (David and Polsky 2014)
The results indicated that health agencies (HHAs) in states with CON for HHAs were less likely to have High quality ratings, and more likely to have Medium quality ratings, compared to agencies in states without CON for home health
The rapid growth in Medicaid spending stressed state government budgets, which led them to adopt various initiatives to attempt to control Medicaid spending growth (Tudor 1995; Wiener et al 1999). Among these initiatives was the expansion of state “certificate-of-need” (CON) regulations, which traditionally had focused on controlling expansions in hospital capacity, to target types of service providers accounting for substantial shares of Medicaid spending, such as nursing home services

Summary

Introduction

In the United States, there has been a trend over the past several decades toward moving the provision of health care services associated with long-term or short-term disability from institutional settings to patients’ homes, provided by home health service providers through home health service agencies (David and Polsky 2014). Expenditures on home health services in the United States, which were $15.1 billion in 1991, grew to $88.8 billion in 2015 (CMS 2017) This represents an annual growth rate of 7.3%; substantially greater than the 5.8% annual growth in total healthcare expenditures over the same period. The rapid growth in Medicaid spending stressed state government budgets, which led them to adopt various initiatives to attempt to control Medicaid spending growth (Tudor 1995; Wiener et al 1999) Among these initiatives was the expansion of state “certificate-of-need” (CON) regulations, which traditionally had focused on controlling expansions in hospital capacity, to target types of service providers accounting for substantial shares of Medicaid spending, such as nursing home services. Several states—mainly those with above-average population growth—eliminated hospital CON, but most states retained nursing home CON (see Ohsfeldt and Schneider 2006, Ch. 2)

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