The Differential Impact of Medicare Home Health Care Policy on Impaired Beneficiaries

The Balanced Budget Act of 1997 (BBA'97) dramatically decreased reimbursements in the Medicare home health program. The first phase of BBA'97, the Interim Payment System (IPS), slashed reimbursements to 1993 levels and established a new capitated reimbursement. To identify potential moderating influences of these changes on the relationship between patient impairment and home care use, we compared 1996 and 1998 Medicare Current Beneficiary Survey data. Using multivariate regressions controlling for health/functional, predisposing and enabling characteristics, we demonstrate dramatic decreases in home health use post IPS by persons with ADL, health, and memory impairments. The IPS encouraged agencies to cut services to more impaired patients who might exhaust the per- beneficiary cap. Similar policies may be adopted for other health systems. Thus, it is critical to understand the differential impact of sweeping changes on vulnerable populations.