Medicare Home Health: Clarifying the Homebound Definition Is	 
Likely to Have Little Effect on Costs and Access (26-APR-02,	 
GAO-02-555R).							 
                                                                 
Medicare's home health benefit provides skilled nursing and other
services to beneficiaries who are homebound. The Department of	 
Health and Human Services (HHS) had a long-standing policy that  
beneficiaries who regularly attend adult day care were not	 
considered homebound, particularly if the purpose of attending	 
was to receive nonmedical or custodial care. In 2000, Congress	 
indicated that Medicare beneficiaries who attended adult day care
could still be considered homebound if they still met the other  
homebound requirements. GAO found that clarifying the Medicare	 
definition of homebound to allow home health beneficiaries to	 
participate in adult day care will have little effect on program 
costs or access to services because the number of affected	 
individuals is small. On the basis of National Long Term Care	 
Survey data, GAO estimates that 0.2 percent of elderly Medicare  
beneficiaries who attended adult day care had mobility or	 
cognitive impairments that might make some eligible for Medicare 
home health services.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-555R					        
    ACCNO:   A03191						        
  TITLE:     Medicare Home Health: Clarifying the Homebound Definition
Is Likely to Have Little Effect on Costs and Access		 
     DATE:   04/26/2002 
  SUBJECT:   Health care costs					 
	     Home health care services				 
	     Managed health care				 
	     Eligibility criteria				 
	     Medicare Program					 
	     Medicare Home Health Care Program			 


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GAO-02-555R
     
GAO- 02- 555R Medicare Homebound Definition United States General Accounting
Office

Washington, DC 20548

April 26, 2002 Congressional Committees Subject: Medicare Home Health:
Clarifying the Homebound Definition Is

Likely to Have Little Effect on Costs and Access

About 2.5 million Medicare beneficiaries used home health services in 2000
at a cost of $8.7 billion- about 4 percent of Medicare expenditures that
year. Medicare?s home health benefit provides skilled nursing and other
services to beneficiaries who are ?homebound,? that is, able to leave home
only with great difficulty and for absences that are infrequent and of short
duration. 1 Based on this statutory requirement, the Department of Health
and Human Services (HHS) had a long- standing policy that beneficiaries who
regularly attended adult day care were not considered homebound,
particularly if the purpose of attending was to receive nonmedical or
custodial care. Adult day care centers offer a range of social, medical, and
other services to enrollees in a group setting. 2 This policy created
uncertainty about Medicare home health eligibility for individuals receiving
medical services at adult day care centers because of HHS?s premise that a
homebound beneficiary was unlikely to be able to leave home on a regular
basis to seek necessary medical treatment from a center. 3

In December 2000, the Congress specified that attending adult day care would
not disqualify Medicare beneficiaries from being considered homebound if
they still met the other homebound requirements. 4 Specifically, the change
provided that a beneficiary?s eligibility for home health was not affected
by absences from the home

1 Permitted absences include obtaining necessary medical care such as
physician visits and treatment at a hospital, extended care facility, or
rehabilitation center when the required medical equipment is too cumbersome
to bring to the beneficiary?s home.

2 Adult day care is not a Medicare- covered service and Medicare will not
pay home health agencies for services delivered in an adult day care center.
However, a small amount of Medicare funding supports adult day care through
programs such as the Program for All- Inclusive Care for the Elderly, known
as PACE. See U. S. General Accounting Office, Medicare and Medicaid:
Implementing State Demonstrations for Dual Eligibles Has Proven Challenging,
GAO/ HEHS- 00- 94 (Washington, D. C.: Aug. 18, 2000).

3 HHS, Homebound: A Criterion for Eligibility for Medicare Home Health Care
(Washington, D. C.: Apr. 1999). 4 Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act, P. L. 106- 554, sect.507 114 STAT. 2763A- 532,
2763A- 533 (Dec. 21, 2000). The change became effective on December 21,
2000.

2 GAO- 02- 555R Medicare Homebound Definition

to attend adult day care, regardless of whether the beneficiary obtained
medical treatment or therapeutic and psychosocial services at the center.
With this change, however, there was some concern about a potential
associated increase in Medicare expenditures resulting from additional
numbers of individuals being able to access the home health benefit. Thus,
at the same time, the Congress directed us to evaluate the effect of
clarifying the homebound definition on the cost of and access to Medicare
home health services.

To respond to this mandate, we attempted to identify national data on the
numbers and costs of Medicare beneficiaries participating in adult day care
and receiving home health care both before and after the effective date of
the homebound definition clarification. Because such data were not
available, we used the 1999 National Long Term Care Survey (NLTCS) to
estimate the number of elderly Medicare beneficiaries (65 years of age or
older) who attended adult day care and had mobility or cognitive impairments
that could potentially make them

?homebound? and thus eligible for home health care. NLTCS is the most
current, nationally representative data available with information on the
number of elderly Medicare beneficiaries who (1) ?regularly? attend adult
day care, (2) report mobility or cognitive impairments, and (3) live in the
community. (See enclosure 1 for a more detailed discussion of the 1999 NLTCS
and the methodology for developing our estimates.) We also interviewed
officials at (1) HHS, including the Centers for Medicare and Medicaid
Services (CMS), the agency responsible for managing Medicare, and the Office
of the Assistant Secretary for Planning and Evaluation; (2) groups that
advocated the inclusion of language in the statute permitting Medicare
beneficiaries to attend adult day care without losing eligibility for home
health care, including the Alzheimer?s Association, the National Adult Day
Services Association (NADSA), the National Association for Home Care and a
state affiliate, and the National Council on the Aging; (3) the Center for
Medicare Advocacy, which has represented beneficiaries who were deemed
ineligible for home health because of their attendance at adult day care; 5
and (4) Easter Seals, which operates the largest nonprofit adult day care
chain. We did our work from December 2001 through April 2002 in accordance
with generally accepted government auditing standards.

In summary, clarifying the Medicare definition of homebound to allow home
health beneficiaries to participate in adult day care will likely have
little effect on overall program costs or access to services because the
number of affected individuals is probably small. On the basis of NLTCS
data, we estimate that, as of 1999, 0.2 percent of elderly Medicare
beneficiaries (61,000 to 72,000 individuals) attended adult day care and had
mobility or cognitive impairments that might have made some eligible for
Medicare home health services. Our estimate does not include Medicare
beneficiaries under age 65. In the view of officials at CMS, advocacy
groups, and other cognizant associations we contacted, prior to the change,
beneficiaries who

5 The center is a nonprofit organization that represents individual Medicare
beneficiaries in Connecticut and serves as an advocate for Medicare
beneficiaries throughout the country.

3 GAO- 02- 555R Medicare Homebound Definition

were told that their participation in adult day care would render them
ineligible for Medicare home health services were likely to have forgone
adult day care in order to avoid jeopardizing their eligibility for home
health services. Although some adult day care centers may offer both health
and personal care services, such services are not covered by Medicare and
are generally not a substitute for and do not include the individualized
care available from a home health agency. Thus, officials from advocacy
groups and associations suggested that the homebound clarification was more
likely to increase the use of adult day care than the use of Medicare home
health services. In reviewing a draft of this correspondence, CMS concurred
with our findings.

BACKGROUND Medicare?s home health benefit enables certain beneficiaries with
post- acute- care needs (such as recovery from joint replacement) and
chronic conditions (such as congestive heart failure) to receive care in
their homes rather than in other settings. To qualify for home health care,
a beneficiary must be homebound and require intermittent skilled nursing
care, physical therapy, or speech therapy. In addition, the beneficiary must
be under the care of a physician, and the home health services must be
furnished under a plan of care ordered and periodically reviewed by a
physician. If these conditions are met, Medicare will pay for part- time or
intermittent skilled nursing; physical, occupational, and speech therapy;
medical social services; and home health aide visits. 6 A beneficiary who
does not need skilled care and requires only custodial or personal care does
not qualify for the benefit. There are no annual or lifetime limits on home
health care coverage as long as the beneficiary continues to meet the
eligibility criteria. According to the most recent data available, about 6
percent of Medicare?s nearly 40 million beneficiaries used home health
services in 2000. Historically, most beneficiaries have received home health
services for short periods of time, but according to 1999 data about 6
percent were long- term users. 7 Over 80 percent of home health users have
one or more mobility limitations, such as difficulty transferring from bed
to chair or walking more than two or three blocks.

Adult day care provides community- based social and health services to
adults of all ages who have physical or cognitive impairments. It can also
provide respite support for caregivers, allowing them to work or pursue
other activities. Services provided at adult day care centers may include
social services, counseling, personal care, meals, transportation, nursing
care, therapeutic activities, and rehabilitation therapies- including
speech, occupational, and physical therapy. Even though some centers

6 Skilled nursing and home health aide services may only be provided on a
part- time or intermittent basis, that is, the services must be furnished
fewer than 8 hours each day and for 28 or fewer hours each week. However,
subject to review on a case- by- case basis, a beneficiary may receive up to
35 hours of care per week, or up to and including 8 hours per day, 7 days
per week, for temporary periods up to 21 days or longer in exceptional
circumstances.

7 U. S. General Accounting Office, Medicare Home Health Care: Prospective
Payment System Could Reverse Recent Declines in Spending, GAO/ HEHS- 00- 176
(Washington, D. C.: Sept. 8, 2000).

4 GAO- 02- 555R Medicare Homebound Definition

have nursing staff, they generally do not provide the level of skilled care
available through a home health agency. Services may be provided during any
part of the day for fewer than 24 hours, but most centers operate during
normal business hours 5 days a week. According to preliminary findings from
ongoing research, approximately 3,500 centers exist nationwide. 8 The most
current information on adult day care participants, a 1997 survey conducted
by NADSA, found that their average age was 76, two- thirds were women, and
one- quarter lived alone. 9 One- half of the participants surveyed were
cognitively impaired, one- third required nursing services at least weekly,
and over half required assistance with two or more activities of daily
living (ADL). 10 Funding for adult day care services comes from a variety of
sources. While Medicare does not pay for adult day care, federal support is
available through Medicaid and other sources, such as programs funded by HHS
or the Department of Veterans Affairs. 11 Additional funding sources include
state and local governments, philanthropic organizations, participant
contributions, and private longterm care insurance. Adult day care centers
are not required to meet any federal standards but many states either
license or certify centers.

NUMBER OF MEDICARE BENEFICIARIES WHO REGULARLY ATTEND ADULT DAY CARE AND MAY
MEET THE HOMEBOUND DEFINITION IS PROBABLY VERY SMALL

Based on our analysis of NLTCS data, the impact of the homebound definition
clarification on Medicare home health costs and access is likely to be very
small. We estimate that, as of 1999, 0.2 percent (between 61,000 and 72,000)
of the 34 million elderly Medicare beneficiaries regularly attended adult
day care and were potentially

?homebound? because of mobility or cognitive impairments. (See table 1;
enclosure 1 describes the mobility and cognitive impairments we analyzed.)
These potentially homebound individuals were about one- third of the
estimated 208,000 elderly Medicare beneficiaries who regularly attended
adult day care and about 2 to 3 percent of all beneficiaries who received
Medicare home health care in 2000.

8 Under contract with the Robert Wood Johnson Foundation, Wake Forest
University is collecting comprehensive data on the characteristics of adult
day care centers and the individuals they serve. The final census of adult
day care centers, including characteristics of participants and financing
sources, will be available later in 2002.

9 Because the survey had a response rate of about 45 percent, these figures
may not reflect the characteristics of all adult day care participants. 10
ADLs are self- care activities, including bathing, dressing, eating, getting
around inside, getting in and out of bed, and toileting. 11 Medicaid,
jointly funded by states and the federal government, provides health care
for certain lowincome individuals. With approval from CMS, states can
provide a variety of social services and supports to elderly and disabled
individuals under Medicaid waivers. See U. S. General Accounting Office,
Adults With Severe Disabilities: Federal and State Approaches for Personal
Care and Other Services, GAO/ HEHS- 99- 101 (Washington, D. C.: May 14,
1999).

5 GAO- 02- 555R Medicare Homebound Definition

Table 1: Estimate of Elderly Medicare Beneficiaries Who Regularly Attended
Adult Day Care and Who Were Potentially Homebound, 1999

Estimate of elderly Medicare beneficiaries Category Number Percentage (of 34

million)

Regularly attended adult day care 208,000 a 0.6 Potentially homebound:
regularly attended adult day care and had at least one mobility or cognitive
impairment

61,000 b to 72,000 c 0.2 a The 95 percent confidence interval ranges from
108,000 (0. 3 percent) to 307,000 (0. 9 percent). b The 95 percent
confidence interval ranges from 39,000 (0. 1 percent) to 83, 000 (0. 2
percent). c The 95 percent confidence interval ranges from 48,000 (0. 1
percent) to 97,000 (0. 3 percent).

Source: GAO analysis of 1999 NLTCS. The proportion of elderly Medicare
beneficiaries with mobility or cognitive impairments who attended adult day
care and who actually qualified for home health might be lower than 0.2
percent. Adult day care attendance might indicate that their impairments
were not severe enough at the time to confine such beneficiaries to their
homes. In fact, officials from advocacy groups and associations told us that
the homebound clarification is more likely to increase the use of adult day
care than the use of Medicare home health services. When faced with the
choice between adult day care or home health services before the homebound
definition clarification, we were told consistently that beneficiaries were
likely to have forgone adult day care in order to qualify for Medicare-
covered home health services. In addition, adult day care often does not
provide the individualized skilled care typically available through home
health, and beneficiaries may have to pay for adult day care, which is not
covered by Medicare. Medicare home health services, on the other hand, have
no associated out- of- pocket costs. However, there might have been a small
group of beneficiaries that chose adult day care over home health services.
An official with a state home health association suggested that some of the
potential new home health users might be beneficiaries with limited skilled-
care needs who had been unwilling to give up adult day care because of the
perceived value to themselves or their caregivers and because it was
available for the entire day. Now such beneficiaries may receive home health
services in addition to attending adult day care.

Our estimate does not include nonelderly disabled Medicare beneficiaries who
might qualify for home health care. Nonelderly Medicare beneficiaries number
about 5 million or 13 percent of the total Medicare population. No data
source on adult day care participation by this group of Medicare
beneficiaries could be identified.

6 GAO- 02- 555R Medicare Homebound Definition

AGENCY COMMENTS CMS reviewed a draft of this correspondence and concurred
with our approach to identifying the beneficiaries affected by the homebound
definition clarification and with our finding that the impact on Medicare
costs and access is likely limited because this group of beneficiaries is
probably very small. CMS?s comments are included in enclosure 2.

- - - - - - - - - We are sending copies of this letter to the Administrator
of CMS and interested congressional committees. This letter is also
available on GAO?s home page at http:// www. gao. gov.

If you or your staffs have any questions, please call me at (202) 512- 7118
or Walter Ochinko at (202) 512- 7157. Other major contributors to this
correspondence include Connie Peebles Barrow, Beth Cameron Feldpush, Dean
Mohs, and Jeffrey Schmerling.

Kathryn G. Allen Director, Health Care- Medicaid and

Private Health Insurance Issues Enclosures

7 GAO- 02- 555R Medicare Homebound Definition

List of Committees The Honorable Max Baucus Chairman The Honorable Charles
E. Grassley Ranking Minority Member Committee on Finance United States
Senate

The Honorable W. J. ?Billy? Tauzin Chairman The Honorable John D. Dingell
Ranking Minority Member Committee on Energy and Commerce House of
Representatives

The Honorable William M. Thomas Chairman The Honorable Charles B. Rangel
Ranking Minority Member Committee on Ways and Means House of Representatives

Enclosure 1 Enclosure 1 8 GAO- 02- 555R Medicare Homebound Definition

METHODOLOGY FOR ESTIMATING IMPACT OF HOMEBOUND DEFINITION CLARIFICATION
USING THE 1999 NLTCS

NLTCS, a nationally representative survey of elderly Medicare beneficiaries,
is conducted every 5 years by Duke University?s Center for Demographic
Studies under sponsorship by HHS?s Office of the Assistant Secretary for
Planning and Evaluation and the National Institute on Aging of the National
Institutes of Health. The 1999 survey included 19,907 Medicare beneficiaries
aged 65 or older. 12 All beneficiaries were screened to identify those who
were functionally impaired. Beneficiaries were considered impaired if they
had difficulty with at least one ADL or instrumental activity of daily
living (IADL). 13 The 6,183 beneficiaries identified as functionally
impaired were asked to complete a detailed survey that included questions on
topics such as their health, functional status, social activities,
nutrition, health insurance, housing characteristics, and demographic
characteristics. Among those identified as impaired, 1,036 resided in
nursing homes and the remaining 5,147 lived in the community. Beneficiaries
in this last group were asked if they regularly attended adult day care. Of
the 5,147 beneficiaries who lived in the community, 52 indicated that they
regularly attended adult day care.

We used mobility and cognitive impairments to identify the potentially
homebound subset of 52 beneficiaries who reported that they regularly
attended adult day care. Many Medicare home health users have mobility
impairments that may lead to an individual?s becoming homebound. In
addition, cognitive and mental conditions may confine beneficiaries to the
home. First, we determined how many of the 52 beneficiaries had mobility
impairments and then separately examined how many had either mobility or
cognitive impairments. The mobility impairments we selected included three
ADLs (getting in or out of bed, getting around inside, and getting to the
bathroom and using the toilet) and one IADL (getting around outside) that
also measures mobility. 14 Inclusion of the IADL raised the threshold of
impairment, as 37 (71.2 percent) of the 52 adult day care respondents had an
impairment in at least one of the four mobility ADLs and the IADL, while
only 28 (53.8 percent) had at least one impairment when the IADL was
excluded (see table 2). We selected three IADLs that may indicate cognitive
limitations- managing money, making telephone calls, and taking medication.
As shown in table 2, including these three IADLs in our analysis increased
to 43 (82.7 percent) the number of adult day care users who had at least one
of seven mobility or cognitive impairments. We used the range of 37 to 43
beneficiaries as the upper threshold to estimate that about 61,000 to 72,000
elderly

12 Younger beneficiaries who qualify for Medicare because of disabilities or
because they have end- stage renal disease are not included in the survey.
13 The ability to carry out more complex self- care tasks involving higher
levels of physical and cognitive functioning are assessed by IADLs- getting
around outside; going places outside of walking distance; doing housework or
laundry; making phone calls; managing money; preparing meals; shopping for
groceries; and taking medicine.

14 Other ADLs, such as dressing, are much less likely to result in an
individual?s being homebound.

Enclosure 1 Enclosure 1 9 GAO- 02- 555R Medicare Homebound Definition

Medicare beneficiaries who regularly attended adult day care in 1999 were
potentially

?homebound? and thus might have been eligible for Medicare home health.
Table 2: Mobility and Cognitive Impairment of the 52 Adult Day Care Users
from the 1999 NLTCS

Category Number Percentage (of 52)

At least one of three mobility impairments a 28 53.8 At least one of four
mobility impairments b 37 71.2 At least one of seven mobility or cognitive
impairments c 43 82.7 a Getting in and out of bed, getting around inside,
and getting to the bathroom and using the toilet.

b Getting in and out of bed, getting around inside, getting to the bathroom
and using the toilet, and getting around outside. c The measures of
cognitive impairment were managing money, making telephone calls, and taking
medication. We used the same four mobility impairments described in the
preceding text.

Source: GAO analysis of 1999 NLTCS.

Enclosure 2 Enclosure 2 10 GAO- 02- 555R Medicare Homebound Definition

COMMENTS FROM THE CENTERS FOR MEDICARE AND MEDICAID SERVICES

(290161)
*** End of document. ***