January, 2004

Medicare Home Health Care in Rural America

By Sheila J. Franco

"The past decade has brought many changes to the home health care industry, largely as a result of Medicare policy changes. These policy reforms include a new payment system, eligibility restrictions, and stringent fraud and abuse enforcement. In addition, Medicare now pays for home health care based on the location of the beneficiary, not the agency. To examine the impact of these changes on access to care, we evaluated the degree to which beneficiaries are served by agencies outside of their county. We constructed an analytical file by linking the 1997 five percent Medicare Standard Analytical File home health claims file to the Provider of Services file to obtain the characteristics of the beneficiaries' primary agency. This beneficiary-level analytical file included information on 162,241 Medicare home health users including 43,488 rural residents of 9,410 home health agencies. We examined the characteristics of rural beneficiaries served by urban agencies as compared with those served by rural agencies. Our findings demonstrate that urban agencies either directly or through their branch offices play an important role in providing home health care to rural Medicare beneficiaries."