Analysis: Home Health Copays Could Cost Medicare $16.7 Billion

Home health leaders shared concerns with lawmakers Tuesday on Capitol Hill regarding the cost-sharing requirement in the Medicare home health benefit and its potential negative implications on many of the nation’s 3.5 million home health beneficiaries.

The requirement could adversely affect future Medicare costs as well, says the Partnership for Quality Home Healthcare, a trade group for home health providers that opposes the re-imposition of a cost-sharing requirement in the Medicare home health benefit.

In 1972, Congress repealed a Medicare home health copay on the grounds it was ineffective in reducing costs, and was found to create a financial burden to many seniors living on fixed incomes. The copayment served to limit patient access to in-home care, and even led to some patients being forced to seek care in more expensive institutional settings, the Partnership says.

“Increasing the burden on America’s seniors, particularly those who are most vulnerable, has proven to be counterproductive,” said Eric Berger, CEO of the Partnership, in a statement. “In fact, Avalere Health estimates that the re-imposition of out-of-pocket costs on Medicare home health beneficiaries could have the opposite effect of what Congress intends, potentially costing Medicare and taxpayers billions in increased healthcare costs.”

Nearly 40% of home health users who are not dually eligible for Medicaid and Medicare and don’t have other supplemental insurance would likely have to foot the out-of-pocket bill associated with the cost-sharing requirement, found new analysis from Avalere Health.

Almost four in ten (38%) of Medicare beneficiaries have an annual income below the federal poverty line, while 73% of Medicare home health beneficiaries fall below that line.

The low-income senior population is generally older, sicker, and more likely to have severe disabilities compared to Medicare beneficiaries as a whole, the analysis also found. For example, 86% of home health patients have three or more chronic conditions, compared to 69% of all Medicare beneficiaries. Similarl,y nearly 26% of home health beneficiaries are 85 or older, more than double the number of Medicare beneficiaries in that age demographic (11.8%).

“These factors increase the risk that patients will forgo low-cost home-based care and instead seek care in facility settings,” says the Partnership.

Medicare could incur as much as $16.7 billion in additional costs in other settings in the next 10 years if a home health copayment is required, Avalere says.

Rather than increasing out-of-pocket costs to seniors, the Partnership recommends solutions that combat waste, fraud, and abuse.

“We encourage lawmakers to advance pro-patient solutions that achieve significant savings through program integrity reforms,” said Berger. “These positive solutions strengthen the integrity of the Medicare program and deliver billions in savings without negatively impact seniors citizens, compliant providers, or taxpayers.”

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