The Impact of Medicare's Rural Add-on Payments in Home Health on Access to Care and Home Health Markets

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Project Summary Medicare’s home health benefit covers skilled nursing care, rehabilitation therapy, medical social work, and aide services for qualified beneficiaries in their own homes. Home health agencies provide care to more Medicare beneficiaries than skilled nursing facilities and inpatient rehabilitation hospitals combined. Reimbursement for home health has included varying levels of add-on payments for agencies when they serve rural beneficiaries to help meet the challenges of delivering care in rural areas. Between 2001 and the present, the amount of rural add-on payments as a percent of standard reimbursement has varied, though in some years no add-on payments were made. It is unclear what impact the varying rural add-on payments have had on access to home health for rural beneficiaries and how agencies have responded to changing incentives to serve rural markets. Therefore the aims of this study are to: 1) Examine the impact of rural add-on payments on access to care for rural beneficiaries in terms of the number of home health agencies serving rural areas, the types of home health services that are available in rural areas, and the quality of care provided by agencies who serve rural areas. 2) Analyze the response of home health agencies to rural add-on payments in terms of entry into and exit from rural markets and financial performance and service provision of agencies serving rural markets. Combining publicly available data from 2002 to 2014 from Medicare Home Health Compare, Healthcare Cost Report Information Systems, Provider of Services File, and Geographic Variation Public Use File, this retrospective analysis will employ descriptive and multi-level regression modeling approaches to provide the first comprehensive assessment of the impact of rural add-on payments on access to care for rural beneficiaries and home health markets. This study has critical implications for Medicare payment policy and addresses services for several vulnerable populations, including individuals living in rural areas, the elderly, women, and individuals with disabilities and/or chronic conditions. Results will help inform policymakers and Medicare on the impact and value of rural add-on payments in home health.