GAO says beneficiary access not impaired by IPS

HHBR Washington Correspondent

The MedPAC report issued last week follows a General Accounting Office (GAO; Washington) report a week earlier that already had the home care industry up in arms.

"Although approximately 14% of agencies have closed and the number of visits provided to Medicare beneficiaries has declined since 1997, we found little evidence that appropriate access to Medicare’s home health benefit has been impaired," the report stated.

According to the GAO, roughly 14% of existing home health agencies closed between October 1997 and January 1999. However, the GAO said, many of them shared the characteristics of agencies that opened in the 1990s. "They were disproportionately urban, freestanding, and for-profit," said the GAO. "Agencies that closed also tended to be newer, treated a smaller number of beneficiaries, and provide more services per user than agencies that remained open.

"Such agencies are the types of agencies that would have difficulty adjusting to the revenue caps in the IPS, suggesting that the system is reducing the number of high-utilization, low-volume agencies," the GAO added.

Like MedPAC, the GAO cast these closures in view of the explosive growth that preceded this period. "The home health industry experienced tremendous growth from 1990 through 1997," said the GAO. "During this period, the number of Medicare certified agencies almost doubled to 10,524." During this same period, the number of freestanding and urban agencies doubled, while the number of proprietary agencies tripled.

The GAO estimated that even after the 14% reduction, there are still more than 9,000 agencies or "approximately the same number that were available in 1996." About 40% of the closures were concentrated in three states. "The recent spate of closures has been concentrated in a few states that had the most growth in agencies and that had utilization experience above the national average," said the GAO.

The GAO pegged the exact number of Medicare-certified agency closures between Oct. 1, 1997, and Jan. 1, 1999, at 1,436. "However, because of growth in the industry since 1990, there were still 9,263 Medicare-certified agencies in January 1999." The GAO conceded that recent closures are now being accompanied by "relatively few" openings.

"The pattern of HHA closures suggests a response to the IPS," especially among agencies that provided more visits per user, the GAO said. "Although we found that agency closures had accelerated, the rapid growth in the number of agencies of the past several years overshadowed the recent retrenchments. Furthermore, the number of Medicare-certified agencies alone is a poor measure of capacity."

The industry has seen a substantial decline in use nationwide since 1996, the GAO said. "Visits per beneficiary have now returned to about the same level as 1994, the base year for the IPS revenue caps. The decline in visits per user between 1996 and 1998 is consistent with IPS incentives and does not necessarily imply a beneficiary access problem."

The GAO reported that most of the state survey agency representatives interviewed responded that "adequate capacity exists despite agency closures." There have been almost no complaints registered by consumers, and a few state survey agencies went so far as to characterize the closures as a market correction.

Access is not a problem even in rural areas, the GAO said. "Closures in rural areas can be a major concern because of the smaller number of agencies located there. Interviews in 34 primarily rural counties, however, generated little evidence that access had been impaired by closures."

The GAO report is among the issues expected to be addressed at a hearing this week before the Permanent Subcommittee on Investigations of the Senate Governmental Affairs Committee.