homes throughout the country, but particularly in my district where I find so many families taking care of their elderly parents, and most of the time it falls on the shoulders of a woman. I have been interested in the last few years in the problems of Alzheimer's disease, and find case after case after case all over my district and all over the country of people that have someone at home with Alzheimer's.

I followed a particular family in my own district and see their plight, the great need for home care, the great need for individuals that provide the home care that are well-trained and that are dedicated. Most of these people, I believe, are dedicated, but again, if something better shows up as far as salary is concerned, that dedication starts to wane a little bit, to disappear all together, and then they go somewhere else.

I agree with your analysis of the problem, and we sincerely hope that we can make recommendations that will bring about the kind of legislation that will remedy the situation. I thank you for your testimony.

Mrs. KERKEY. Thank you, Chairman Roybal.

The CHAIRMAN. Our second witness is Dr. Marilyn Moon, director, Public Policy Institute, American Association of Retired Persons. Let me, first of all, begin by complimenting you, Dr. Moon, on your recent move to AARP and on your previous good work with the Urban Institute.

Dr. Moon will present the findings of the AARP study on the growth of the home care industry and the increase in public expenditures for home care. I wish to compliment the AARP, and the study's primary author who I understand is in the audience today. I would like to have Dr. Shelah Leader please stand. I would like to know who you are. Thank you very much.

Will you please proceed, then, Dr. Moon, with your presentation, and make the presentation in any manner that you may desire.

STATEMENT OF MARILYN MOON, DIRECTOR, PUBLIC POLICY INSTITUTE, AMERICAN ASSOCIATION OF RETIRED PERSONS Ms. MOON. Thank you, Mr. Chairman. On behalf of the American Association of Retired Persons I want to thank you for the opportunity to present this overview of home health care. AARP is the Nation's largest organization of older Americans, representing over 22 million persons aged 50 and above. I'm Marilyn Moon, and I am the director of the Public Policy Institute at AARP. My remarks today will draw heavily from a recently completed paper on home health care by Shelah Leader that represents one of the first products of our newly created Public Policy Institute.

Home health care represents a vital and increasingly important component of medical services. It allows persons to receive at home, care that enhances the quality of their lives, and in some cases helps avoid institutionalization or hospitalization. Home care can be primarily medical in nature or it can consist of services aimed at enabling the individual to live independently in the community.

Although the focus of my remarks today will be on the medical portion of home care, and in particular that portion covered by

Medicare, many of the issues of quality and access to care are similar for other important services such as homemaking aides.

Although the emphasis of this hearing is on the quality of care received, a second issue, access to care, is also of vital importance to consumers, for without access, even good quality care will not reach those in need of help.

Medicare beneficiaries who are confined to their homes and who need skilled nursing care on a part-time basis are eligible to receive Medicare home health care service. Covered services include skilled nursing, physical therapy, speech therapy, and equipment. The emphasis is on acute care needs; frail and chronically ill elderly are often not covered.

Nonetheless, home health care is one of the fastest growing elements of the Medicare Program, albeit from a relatively small base. Between 1974 and 1983, Medicare reimbursements grew at an average annual rate of 25 percent. Surprisingly, however, the rate of growth has declined substantially since 1983 to a rate of under 15 percent in 1985. Just when the new prospective payment system for hospital care has provided incentives for earlier hospital discharges and for more reliance on home health care, we have seen a decline in the growth of that benefit.

Evidence suggests that regulations for eligibility have been more diligently applied by Medicare, both through increased denials of claims and reinterpretations of regulations such as intermittency and homebound status. Denials of claims increased 133 percent from the first quarter of 1984 to the first quarter of 1986. Moreover, there is great variability across the fiscal intermediaries in these denial rates.

The dual requirements of intermittency and homebound status can act as a catch-22 for patients, particularly those newly discharged from the hospital. To be eligible, Medicare patients must be largely confined to their homes and require skilled care. On the other hand, if that care is required on a daily basis for more than 2 to 3 weeks, the patient is not considered to need intermittent care and will be denied eligibility. Even informal care provided by family members may be counted against the patient in determining intermittency. Such strict limitations severely affect the ability of Medicare patients to receive needed care.

For those who are lucky enough to receive home health care, quality concerns immediately arise. In contrast to its efforts to constrain eligibility, Medicare does little to assure quality or to regulate home care providers. The mechanisms that the Health Care Financing Administration uses are weak, and since 1980, only 20 providers have been dropped from participating in Medicare. Other evidence suggests that in at least several regions, numerous deficiencies have been found.

Quality problems, moreover, are likely to be even more severe for services that are less closely regulated than Medicare home health care.

The AARP applauds the efforts of the committee to raise the important issue of quality of home care services. We should not allow current drives to contain the costs of medical care to override equally valid efforts to maintain quality and access to care by those in need of services. Rather, we need to keep beneficiaries as our

main focus in adjusting public policy to balance the goals of containing costs, assuring access to services and providing quality care. Thank you, Mr. Chairman.

[See appendix C for the report by Shelah Leader.]

The CHAIRMAN. Thank you, Doctor. I was very much interested in some of these statistics that you quoted and the fact that Medicare reimbursement grew at an annual rate of 25 percent between 1974 and 1983; that approximately $2 billion is spent by Medicare, but at the same time, $2 million is also spent by the recipients, or those people who are under care.

In other words, the elderly spent $2 billion out-of-pocket for home care and durable medical equipment in 1982. Is there any prediction as to what the cost would be, let's say, in 1990?

Ms. MOON. That is very difficult to project. Prices of home health care are going up, more individuals are using care and the use of services by each person is also growing. I expect that we will continue to see growth in that program over time, and I think we will see individuals paying more out-of-pocket over time as well.

The CHAIRMAN. Well, I definitely believe that the cost is going to increase tremendously, and that by 1990 and beyond, the cost of medical care in general is going to increase, and that the elderly, if something isn't done, will have to make more of a contribution. My question is, where is it coming from? One thing that may happen is a decline in the quality of care.

Now you said that the mechanisms that the Health Care Finance Administration uses for quality assurance are weak, and that since 1980, only 20 providers have been dropped from Medicare. Can you explain that?

Ms. MOON. Medicare's quality controls are essentially limited to paper accreditation of home health agencies; and in any single year, not all home health agencies are even asked to fill out those accreditation forms. We believe that more is needed in terms of Medicare to strengthen those kinds of evaluations.

For example, clients ought to be routinely interviewed and/or independently assessed to determine the quality of care provided. That is not now done. Moreover, because there are no intermediate sanctions under Medicare, it is unlikely that Medicare is going to be willing to drop a provider when there are few of them, in an area. Intermediate sanctions could be used in such a case.

The fact that so few home health agencies have been dropped from medicare doesn't indicate that there is not a problem with quality of care. Rather, there may be a problem with the supply of services in an area so that Medicare is reluctant to drop agencies from the program. Intermediate sanctions or other alternative responses to assure quality of care while keeping home health services available are needed.

The CHAIRMAN. Dr. Moon, I would like for you to also explain for the record what is meant by intermittent care.

Ms. MOON. You are not alone in being confused about this. We believe that the interpretation of intermittency has changed over time. Intermittency essentially means that a home health benefit is supposed to be provided only to people who do not require daily

care.

As the rules are now interpreted, patients can get daily care for a short period of time, perhaps 2 to 3 weeks. If daily care is needed beyond that period of time, the patient is not classified as requiring only intermittent care, and will no longer be eligible for Medicare coverage. This requirement holds even if, for example, skilled nursing facilities which offer daily care are not available to the patient. The CHAIRMAN. Doctor, I would like to ask you one more question, then I will ask my colleagues if they have any questions that they want to ask. My question is in regard to a survey that was conducted by HCFA, and that survey uncovered significant patterns of noncompliance in one region of the country. I suppose if they had gone throughout every region of the country, they would come out with the same answer. Now, what should be done to insure that home health agencies comply with Medicare conditions of participation?

Ms. MOON. I think that we need to have graduated or intermediate sanctions available when there are problems with home health care agencies so it that is not a question of either doing nothing or dropping programs from participation. There need to be clear timetables for improvement when deficiencies are found to which people are held accountable. Moreover, beneficiary interviews and outcome-oriented information ought to be used to help evaluate the quality of care that is being received, rather than merely assessing the structural conditions or examining the paper accreditation of a home health agency.

The CHAIRMAN. Thank you. Mr. Rinaldo.

Mr. RINALDO. Thank you, Mr. Chairman.

Dr. Moon, you stated that home health care providers are not effectively regulated, and quality control and consumer protections are weak. How would you change this, and what would you regard as a model system for quality control?

Ms. MOON. I do not have a model system to offer, but we do not believe that current sanctions are effective. There ought to be some intermediate efforts.

If deficiencies are found, for example, rather than deciding whether simply to ignore them or to drop the program from participation, there ought to be intermediate steps that can be taken. Home health agencies could be asked to correct those problems and be held to certain timetables where additional reviews and perhaps on site visits could be made to validate that progress is being made. In this way home health agencies can continue to provide care that is needed by individuals, while assuring quality and access.

Mr. RINALDO. Are you familiar with what is being done in my home State of New Jersey that I described earlier in the opening statement?

Ms. Moon. I'm sorry, I'm not familiar with the specifics of the New Jersey program.

Mr. RINALDO. What they really do is they have the department of health licensing and regulating all Medicare certified home health agencies. In addition, of course, all Medicaid personal care and homemaker providers must either be accredited or licensed. Now do you think that is a step in the right direction? Do you think that is sufficient? Do you think more needs to be done?

Ms. MOON. Certainly accreditation is a step in the right direction. But Medicare accreditation, for example, is done through an assessment of paper compliance with the standards that Medicare establishes. We do not believe this is enough. It is necessary to go further.

On the other hand, to the extent that agencies not normally accredited are brought into the accreditation process in New Jersey, that is certainly a step in the right direction.

Mr. RINALDO. Thank you. I have no further questions.

The CHAIRMAN. Thank you. Mr. Stallings.

Mr. STALLINGS. No questions.

The CHAIRMAN. Mr. Saxton.

Mr. SAXTON. Thank you, Mr. Chairman. Let me first support what was just indicated by Mr. Rinaldo. Perhaps it is because of the system in New Jersey that we have seemingly less problem with the quality of home health care. I don't get so many complaints about the quality of home health care, I guess, as I do about the availability of home health care as financed through Medicare, and that is the question that I would like to ask you.

What is it, in your opinion, about the system? Is it the regulations that Medicare works within? Is it the insurance company that actually provides the benefit? What motivation is there to preclude people from receiving home health care which I think is intended as our national policy?

It seems to me that the discussions that I have with constituents when I am in my district center on their inability to be able to qualify. What is there about the system that makes that happen?

Ms. MOON. The first limitation on home health care under Medicare of concern is that Medicare is an acute care program, and when patients instead need care for chronic conditions or the frailty of old age, they may be largely uncovered. That is the first, and probably by far the largest requirement that will keep individuals from being covered by home health agencies.

The other is, a catch-22 between the intermittency requirement that says you can't have care very often, while at the same time you must be homebound and in need of skilled nursing care. In many ways, patients are caught in the double bind of being required to stay at home, but without the support of daily care.

Mr. SAXTON. I had an opportunity to spend a day with a home health care agency, and one of the gentlemen who was a patient that we visited was completely paralyzed, and my understanding was that he did qualify for Medicare and that he had been receiving home health care through this agency, reimbursed by Medicare for quite some time. Is that a normal circumstance?

Ms. MOON. To my knowledge, it is not a normal circumstance for such an individual to receive daily care. The regulations on intermittency suggest that daily care should occur for only 2 to 3 weeks, after which only intermitent care would be covered. Certainly there may be exceptions.

Mr. SAXTON. That kind of leads to my second question. And that is, have you seen any evidence that would lead you to believe that with a broader, wider use of home health care, that the system could operate as efficiently perhaps at the same cost level? Or perhaps the system could operate at a lower cost because of the lower