Explaining area variation in the use of medicare home health services

This study examines the determinants of area-level variation in Medicare home health use in 1985 for the entire United States, using data from Medicare Home Health Bills, the Medicare/Medicaid Automated Certification System, the Medicare Provider Analysis and Review Files, and other sources. Weighted two-stage least squares regression was used to analyze variation in the number of home health users per 1,000 enrollees and the average number of visits received per user. The data were aggregated to the Metropolitan Statistical Area and the rural part of the state, resulting in 343 units of analysis. According to the study’s results, higher proportions of Medicare enrollees use home health services in areas with fewer nursing home beds per enrollee, higher hospital discharge rates, and shorter mean lengths of stay, higher Medicare reimbursement ceilings for skilled nursing home health visits, and more home health agencies per enrollee. Other things being equal, beneficiaries in New England are 40% more likely to use home health services than their counterparts in other regions with similar climates. The average number of visits received by home health users appears to be higher in areas where there are more agencies per enrollee and a higher share of agencies that are proprietary. There also appear to be large regional differences in the number of visits received per user. Our results imply that constrained access to nursing home beds is leading to higher levels of Medicare home health use and that there may be further savings from the substitution of home health services for hospital days. The study shows that Medicare reimbursement ceilings may constrain use and that access may be a problem for beneficiaries in areas with fewer agencies per enrollee. This study also points to significant regional variation in the proportion of beneficiaries who use home health services, even with controls for many different explanatory variables. Overall, our results suggest the possibility of serious limitations in access to Medicare home health services.