Mathematica Policy Research, Inc. 

Striking a Balance in Home Health Payment Reforms

Recently, the federal government has attempted to more closely synchronize health care providers reimbursements with their costs, to ensure fiscal discipline while maintaining access and quality of care. This brief is based on Mathematicas study of the Interim Payment System (IPS), which limited the average amount that Medicare could reimburse a home health agency per beneficiary. IPS temporarily modified the cost reimbursement system while the government developed a prospective payment system that is now operational. Initially, we collected client data from agencies participating in a demonstration launched by the Centers for Medicare & Medicaid Services (CMS) to test an alternative to the existing system. For this analysis of IPS, our data sources included (1) administrative data on client outcomes at the same set of agencies after IPS was implemented, and (2) survey data on client outcomes 120 days after admission. We used a pre-post analysis to compare outcomes of beneficiaries in agencies operating under the cost reimbursement system with those of beneficiaries of the same agencies under IPS.