Forbes: Co-Pays for Home Health Care Yield Unintended Consequences

One goal of President Obama’s fiscal year 2014 budget proposal, submitted last week to Congress, is to reduce the nation’s debt deficit, but the home health care industry may suffer as a result, according to  two Forbes columnists

In order to achieve deficit reduction while simultaneously increasing discretionary spending by about $1.4 billion, the budget has many cost-cutting provisions to various programs—including one that would introduce co-payments for Medicare beneficiaries using home health care. 

The provision is expected to produce $730 million in savings by instituting $100 co-pays that would apply to episodes of care requiring five or more visits in a 60 day (or less) timeframe that don’t immediately follow a hospital stay, says the article. 


Robert Book, Ph.D., senior research director of Health System Innovation Network LLC and Douglas Holtz-Eakin, president of the American Action Forum, write for Forbes: 

In 2008, this would have applied to about 63 percent of episodes. One might think the goal to save tax dollars by replacing government spending with patient spending. But that’s not the case, as the average spending in a home health “episode” is $3,000, so the co-payment would represent only about 3 percent of total spending. Instead, the primary goal is, in the words of the Medicare Payment Advisory Commission (MedPAC), “ensuring appropriate use of home health care.”

In other words, the President’s budget doesn’t target the 3 percent that would become the patient’s copayment; it’s targeting the 97 percent that won’t be spent if patients can’t, or won’t, come up with the copayment. The administration predicts that “savings” from the non-use of home health services will add up to $730 million. This is consistent with MedPAC’s belief that a significant fraction of home health care is used by patients who could replace it with standard outpatient care, and that they are getting care at home only because it’s “free.”


The problem is, this fails to take into account that a significant fraction is also used by patients who would otherwise be using standard inpatient care – that is, they would be in the hospital instead of at home. If patients do indeed forgo care as the administration intends, many would see their condition deteriorate, and they would end up requiring hospital care to fix a problem that could have been prevented in the first place.

Co-pays for Medicare home health beneficiaries were eliminated 1972 with the express reason of preventing that issue, the Forbes columnists write.

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Written by Alyssa Gerace