To estimate the effect of the 10 percent cap introduced to Medicare home health care on treatment intensity and patient discharge status.
Medicare Denominator, Medicare Home Health Claims, and Medicare Provider of Services Files from 2008 through 2010.
We used agency‐level variation in the proportion of outlier payments prior to the implementation of the 10 percent cap to identify how home health agencies adjusted the number of home health visits and patient discharge status under the new law.
Under the 10 percent cap, agencies dramatically decreased the number of service visits. Agencies also dropped relatively healthy patients and sent sicker patients to nursing homes.
The drastic reduction in the number of service visits and discontinuation of relatively healthy patients from home health care suggest that the 10 percent cap improved the efficiency of home health services as intended. However, the 10 percent cap increased other types of health care expenditures by pushing sicker patients to use more expensive health services.
