Understanding the State Variation in Medicare Home Health Care: The Impact of Medicaid Program Characteristics, State Policy, and Provider Attributes

OBJECTIVES. During the past 7 years there has been a significant increase in the use of the Medicare home health benefit. In this article, the authors document trends in the use of the benefit and develop multivariate models to identify the factors that explain state variation in its use. METHODS. To develop quantitative models, the authors collected state information on all variables for each of 3 years: 1991, 1992, and 1993. The authors chose to focus on those variables that had been found to be significant in other research as well as those that we posited would likely influence utilization. The authors tested similar sets of explanatory variables for each year of the analysis. The unit of analysis is the "state" and depending on data availability, the number of states included in the analyses range from between 46 to 49. (Arizona does not have a state Medicaid program.) RESULTS. The authors' analysis shows that interaction exists between state policies and use of the benefit. Utilization is higher in states that face greater fiscal pressure concerning their Medicaid budgets; the lack of state personal care programs increases Medicare use, and, when Medicaid home health expenditures decline, the number of Medicare home health care users increases. There is also an inverse relationship between the number of long-term care and skilled nursing facilities in a state and the use of the benefit. Thus, for some, the benefit serves as a substitute for long-term care needs and, for others, for postacute care needs. CONCLUSIONS. The overlap between the population served and the services provided by state programs and Medicare has given states and providers an opportunity to leverage Federal dollars in lieu of state program dollars. As the Federal government attempts to control expenditure growth, policy-makers must be mindful of how state actions can influence the level and type of Federal expenditures.