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Date: February 14, 1995
FOR IMMEDIATE RELEASE 
Contact:  Ann Verano, HCFA    202-690-6145

New Home Health Cost Limits Delayed

Medicare savings estimated at $560 million over three fiscal years will result from a legislated freeze on home health agency cost limits, HHS Secretary Donna E. Shalala announced today in a notice published in the Federal Register.

Limits in effect for cost-reporting periods beginning on or after July 1, 1993, and before July 1, 1994, will remain in place until July 1, 1996. The notice implements provisions of the Omnibus Budget Reconciliation Act of 1993.

Medicare pays home health agencies on a "reasonable cost" basis. By delaying a scheduled update in the cost limits, the legislation will save an estimated $130 million in fiscal year 1995, $330 million in FY 1996 and $100 million in FY 1997.

Bruce C. Vladeck, administrator of the Health Care Financing Administration, said that "expenditures for home health care services are the fastest growing area of the Medicare budget, increasing more than 30 percent in the 1994 fiscal year to reach $13 billion.

"That rate of growth is not sustainable," Vladeck said. "Every sector of the American health care system must share responsibility for achieving greater efficiency and containing costs."

HCFA is conducting demonstration projects for development of a prospective payment system that would provide home health agencies with greater incentives for efficiency.

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