The Impact of the Medicare Home Health Rural Add-on payment on Beneficiary Access and Health Outcomes

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PROJECT SUMMARY Rural, elderly and chronically ill Americans face significant challenges to accessing high quality health care. To help maintain access to health care for the 1 in 5 Medicare beneficiaries who live in rural areas, Medicare spends $4 billion on special payments to rural health care providers above traditional payments. One such policy, known as the rural payment add-on, has been a temporary program under the Affordable Care Act that reimburses an additional 3% for home health (HH) episodes in rural counties. Despite an annual cost of $100 million, and a scheduled phase out by 2022, there is little evidence about whether this payment add-on impacts beneficiaries’ access or patient outcomes. Our long term goal is to understand how Medicare can best incentivize the provision of high quality health care for rural beneficiaries. The first step to achieving this goal and the overall objective of this study is to examine whether the rural payment add-on increases HH utilization and improves patient outcomes. Our central hypothesis is that HHAs responded to the rural payment add-on by increasing the volume of patients served in rural areas and/or increasing the number of visits to patients in rural areas and that these additional services may improve outcomes. To evaluate our hypothesis, we propose a project with the following specific aims: 1) Investigate the effect of the rural payment add-on on HH utilization following an inpatient hospitalization, and 2) Examine the effect of the rural payment add-on on rural HH patient outcomes. To achieve these objectives, we propose to study Medicare fee-for-service beneficiaries, who received HH care following a hospitalization between 2007 and 2014 using Medicare claims and Home Health Outcomes and Assessment Information Set data. The first aim will use a difference-in-differences approach to investigate if the rural payment add-on had an impact on if and where rural patients received post- acute care compared to urban patients. Among beneficiaries discharged home with HH, we will also examine the number of HH visits per episode. Aim 2 will employ cross-temporal matching to identify a similar group of rural beneficiaries who received HH in both study periods and use logistic regression to examine the probability of functional improvement and re-hospitalization/emergency department visits after the payment add-on. The proposed work is innovative because it is the first study to evaluate the impact of the rural payment add-on on patient access and outcomes with rigorous methods. This work is significant because understanding whether the rural payment add-on impacts patient access and outcomes will be important in assessing what possible negative outcomes the phase out of the add-on will have on the health of rural beneficiaries. Insights gained through this work may inform policymakers regarding future payment policies for HH for rural beneficiaries.