Do special payments for rural home health care increase access for Medicare Beneficiaries?

Medicare spends $4 billion on special payments to rural health care providers above traditional payments. Despite the large investment in such payments, evidence on the impact of these funds on patient access to health care in rural areas is limited. One program implemented under the Patient Protection and Affordable Care Act, the rural home health (HH) payment add-on, provides a 3% increase in reimbursement for HH episodes in rural counties beginning in April 2010. The average reimbursement for a HH episode is about $3000, so this payment provides $90 additional reimbursement, adding up to $100 million annually. Ensuring adequate access to HH is important because it is a lower-intensity and lower-cost post-acute care alternative to skilled nursing care (SNF). It is particularly important for rural areas where high travel costs and shortage of health care providers are barriers to ensuring equitable access to post-acute care. This payment is scheduled to expire in 2020, with little evaluation of its impact on access to HH.

In this paper, we investigate the impact of the HH payment add-on on access to HH for rural Medicare beneficiaries. We use Medicare claims and assessment data from 2007-2014 for all fee-for-service beneficiaries who are discharged from the hospital, did not have any HH in the previous year, and were discharged to either home with HH or to a SNF. We use difference-in-differences to compare the post-acute care location for Medicare beneficiaries in rural and urban areas, before and after the payment was introduced. We include beneficiary demographics (e.g. age, sex, race, Medicaid eligibility) and chronic conditions (e.g. asthma, stroke, heart failure) as controls. Sensitivity analysis among rural beneficiaries was conducted to examine whether the payments had a differential impact on rural counties that were adjacent to urban counties compared to non-adjacent, as defined by Urban Influence Codes.

The sample included over 10.3 million fee-for-service Medicare beneficiary inpatient hospitalizations that were discharged to a post-acute care setting from 2007-2014. In the pre-period (January 2007-March 2010), unadjusted rates of HH use among rural and urban beneficiaries receiving post-acute care was similar: 54.7% in urban and 55.1% in rural. In the post-period (April 2010-December 2014), rates of HH use decreased to 46.2% for both urban and rural beneficiaries. In adjusted logistic regression, we find no differences in HH use between rural and urban areas after the payment add-on. There are also no differences in HH use among rural beneficiaries between adjacent and non-adjacent counties.

During this time period, Medicare implemented cuts to the base reimbursement rate of HH episodes. Our analysis suggests that the decrease in reimbursement for all HH episodes impacted access to HH more than the additional payments for rural HH episodes. With an additional $950 million in cuts to HH reimbursement scheduled for 2019, policy makers should reconsider whether lowering rates for an already lower-cost substitute compared to SNF will be cost-saving in the long-run. Furthermore, to ensure access to HH for rural beneficiaries, these special payments need to be large enough to offset reductions.