In summary, shifting home health care payments from part A to part B should not directly affect coverage of services under the home health benefit, the amount of Medicare expenditures for these services, or the way in which the benefit is administered. It would, however, change the financing source for the benefit from Social Security payroll taxes, which fund part A, to beneficiary premiums and general revenues, which fund part B. Many of NAHC's concerns relate to the potential political consequences of such a funding source change. The Medicare Program Medicare, authorized by title XVIII of the Social Security Act, is a health insurance program that helps almost all Americans age 65 or over and some disabled persons pay for needed health services. Medicare consists of two parts: Part A, Hospital Insurance for the Aged and Disabled, covers inpatient hospital services, skilled nursing facility services after a hospitalization, hospice services, and home health services. Part A is financed primarily by Social Security taxes on wages. To be eligible for part A, a person must (1) be 65 years of age or older and eligible for payments under Social Security's old age retirement and survivors program, (2) have received Social Security disability benefits for 24 months, or (3) suffer from end stage renal disease and be fully or currently insured under title II of the act. In fiscal year 1987, part A expenditures totaled about $50.8 billion. Part B, Supplementary Medical Insurance for the Aged and Disabled, is a voluntary program that covers physician services and a number of other health services, such as laboratory, outpatient hospital, and home Page 1 GAO/HRD-88-79 Medicare Home Health Benefit health services. Part B is financed by enrollee premiums (currently set by law at an amount necessary to cover 25 percent of total costs) and federal general revenues. Any citizen, or legal alien who has resided in the United States for at least 5 years, age 65 or older, is eligible for part B. In addition, disabled persons and end stage renal disease patients eligible for part A are also eligible for part B. In fiscal year 1987, part B expenditures totaled about $30.8 billion. The Health Care Financing Administration (HCFA), within the Department of Health and Human Services (HHS), administers Medicare. HCFA is assisted by insurance companies that contract with it to process and pay claims. Part A contractors are called intermediaries, and part B contractors are called carriers. Home Health Services Home health services consist of skilled nursing services; physical, speech, and occupational therapy services; and medical social services provided in a patient's home. If the patient requires skilled nursing or therapy services, home health aide services, which are more of a personal care nature, are also covered. The home health benefit is designed to provide the health services that beneficiaries who are confined to their homes need for an acute condition that would otherwise require institutional care. Most home health care services paid by Medicare are provided during the recovery period after a hospitalization. Medicare's deductibles and coinsurance do not apply to home health services,1 and no limit is placed on the number of visits. Home health services are covered under both part A and part B. However, payment for such services is always made under part A unless the beneficiary is only covered by part B. Home health agencies are paid on the basis of their reasonable costs of providing covered services. All home health claims are processed and paid by the intermediaries regardless of whether they are covered under part A or part B. Medicare uses 10 regional intermediaries to pay claims from home health agencies not associated with a hospital. Hospitalbased home health agencies can use the same intermediary that the hospital uses. The only exception is that beneficiaries are required to pay a 20-percent coinsurance for durable medical equipment, such as hospital beds and oxygen equipment, furnished by home health agencies. Page 2 GAO/HRD-88-79 Medicare Home Health Benefit |