Medicare's Cost Reimbursement Procedures for Home Health Care

A review of medicare's cost reimbursement procedures for home health care identified the following major issues: the wide variances in the cost of providing home health services, the allowability of certain costs claimed for reimbursement, and the creation of nonprofit home health agencies by for-profit organizations. Expenditures for home health services under Medicare have risen from $287 million in fiscal year 1976 to a projected $786 million in fiscal year 1979. The problem of wide variances in costs of services reimbursed by medicare is closely related to program regulations defining "reasonable costs" for reimbursement. Problems relating to the allowability of certain home health care costs for medicare reimbursement involve: promotional or advertising costs incurred by home health agencies, salaries and fringe benefits, and costs which are undocumented as to how they relate to patient care. The establishment of nonprofit home health agencies by for-profit organizations creates a high potential for program abuse.