Honors Study

The Anticipated Impact of Medicare's Home Health Prospective Payment System 2008 Refinements on Home Health Agencies

Ali Van Horn

Ali Van Horn
HPA Schreyer Scholar


Home health is a facet of geriatric care that provides clinical therapy visits to seniors. Medicare is the primary payer of home health services and regulates the payment system for the industry. The Medicare Prospective Payment System uses a clinical assessment tool to calculate the number of therapy visits necessary in a standardized episode which determines patients’ reimbursement amounts. From the system’s implementation in 2000 through 2007, home health agencies began to capitalize on financial advantages within the system’s structure. In response, payment system refinements were implemented on January 1, 2008. This study interviewed eight stakeholders in the home health industry to assess their anticipated impact of the payment refinements.

Respondents anticipated wide variation in impacts on profitability and sustainability across agencies. The difference was attributed to disparity in agencies characteristics such as size, location, and proprietary status. Additionally, the average number of therapy visits administered prior to the refinements emerged as the primary predictor of agency impact. Agencies’ responses to the rule change were also assessed to investigate the impact of staff education, agency marketing, and staffing changes. Future research should analyze the financial impact of the rule change after one year of implementation to call attention to home health agencies experiencing viability difficulties. Additionally, research should assess which agency responses resulted in the most successful transitions and suggest these methods in the next rule change.