Who Pays for Home Care Services?

Home care services can be paid for directly by the patient and his or her family members or through a variety of public and private sources. Hospice care generally is provided regardless of the patient's and/or family's ability to pay. Public third-party payors include Medicare, Medicaid, the Older Americans Act, the Veterans Administration, and Social Services block grant programs. Some community organizations, such as local chapters of the American Cancer Society, the Alzheimer's Association, and the National Easter Seal Society, also provide funding to help pay for home care services. Private third-party payors include commercial health insurance companies, managed care organizations, CHAMPUS, and workers' compensation.

Self-pay
Home care services that fail to meet the criteria of third-party payors must be paid for "out of pocket" by the patient or other party. The patient and home care provider negotiate the fees.

Public Third-party Payors
Medicare: Most Americans older than 65 are eligible for the federal Medicare program. If an individual is homebound, under a physician's care, and requires medically necessary skilled nursing or therapy services, he or she may be eligible for services provided by a Medicare-certified home health agency. Depending on the patient's condition, Medicare may pay for intermittent skilled nursing; physical, occupational, and speech therapies; medical social work; HCA services; and medical equipment and supplies. The referring physician must authorize and periodically review the patient's plan of care. With the exception of hospice care, the services the patient receives must be intermittent or part time and provided through a Medicare-certified home health agency for reimbursement.

Hospice services are available to individuals who are terminally ill and have a life expectancy of six months or less; there is no requirement for the patient to be homebound or in need of skilled nursing care. A physician's certification is required to qualify an individual for the Medicare Hospice Benefit. The physician also must re-certify the individual at the beginning of each six-month benefit period. In turn, the patient is required to sign a statement indicating that he or she understands the nature of the illness and of hospice care. By signing this statement, the patient surrenders his or her rights to other Medicare benefits related to terminal illness.

Medicaid: Administered by the states, Medicaid is a joint federal-state medical assistance program for low-income individuals. Each state has its own set of eligibility requirements; however, states are only mandated to provide home health services to individuals who receive federally assisted income maintenance payments, such as Social Security Income and Aid to Families with Dependent Children (AFDC), and individuals who are "categorically needy." Categorically needy recipients include certain aged, blind, and/or disabled individuals who have incomes that are too high to qualify for mandatory coverage but below federal poverty levels. Individuals younger than 21 who meet income and resources requirements for AFDC, yet otherwise are ineligible for AFDC, also qualify as categorically needy. Under federal Medicaid rules, coverage of home health services must include part-time nursing, HCA services, and medical supplies and equipment. At the state's option, Medicaid also may cover audiology; physical, occupational, and speech therapies; and medical social services. Hospice is a Medicaid-covered benefit in 38 states. The Medicaid hospice benefit covers the same range of services that Medicare does.

Older Americans Act (OAA): Enacted by Congress in 1965, the OAA provides federal funds for state and local social service programs that enable frail and disabled older individuals to remain independent in their communities. This funding covers HCA, personal care, chore, escort, meal delivery, and shopping services for individuals with the greatest social and financial need who are 60 years of age and older. Increasingly, individuals who can afford to pay for some of these services are being asked to contribute in proportion to their income. Individuals often request the services they need through an Area Agency on Aging, which will provide them directly or in cooperation with local organizations.

Veterans Administration: Veterans who are at least 50% disabled due to a service-related condition are eligible for home health care coverage provided by the Veterans Administration (VA). A physician must authorize these services, which must be delivered through the VA's network of hospital-based home care units. The VA does not cover nonmedical services provided by HCAs.

Social Services Block Grant Programs:Each year states receive federal social services block grants for state-identified service needs. The government allocates these funds on the basis of the state's population and within a federal limit. Portions of the funding often are directed into programs providing HCA and homemaker or chore worker services. Individuals should contact their state health departments and local offices on aging for additional information.

Community Organizations: Some community organizations, along with state and local governments, provide funds for home health and supportive care. Depending on an individual's eligibility and financial circumstances, these organizations may pay for all or a portion of the needed services. Hospital discharge planners, social workers, local offices on aging, and the United Way are excellent sources for information about community resources.

Private Third-party Payors
Commercial Health Insurance Companies: Commercial health insurance policies typically cover some home care services for acute needs, but benefits for long-term services vary from plan to plan. Commercial insurers, including Blue Cross and Blue Shield and others, generally pay for skilled professional home care services with a cost-sharing provision. Such policies occasionally cover personal care services. Most commercial and private insurance plans will cover comprehensive hospice services, including nursing, social work, therapies, personal care, medications, and medical supplies and equipment. Cost-sharing varies with individual policies, but often is not required.

Individuals sometimes find it necessary to purchase Medigap insurance or long-term care insurance policies, for additional home care coverage.

Medigap insurance is designed to bridge some of the gaps in Medicare coverage. Some Medigap policies offer at-home recovery benefits, which pay for some personal care services when the policyholder is receiving Medicare-covered skilled home health services. The policyholder's physician must order this personal care in conjunction with the skilled services. Home care coverage in Medigap policies is not designed to cover extended long-term care. This type of coverage is most helpful to individuals recovering from acute illness, injuries, or surgery.

Long-term care insurance primarily was intended to protect individuals from the catastrophic expense of a lengthy stay in a nursing home. However, as the public need and preference for home care has grown, private long-term care insurance policies have expanded their coverage of personal care, companionship, and other in-home services. Considerable care should be taken in selecting a long-term care insurance policy, as home care benefits vary greatly among plans. Consumers should be aware of limitations on coverage, such as prior hospitalization requirements, and pre-existing condition exclusions. Some policies may only pay for services that are already covered by Medicare.

Managed Care Organizations: Managed care organizations (MCOs) and other group health plans sometimes include coverage for home care services. MCOs contracting with Medicare must provide the full range of Medicare-covered home health services available in a particular geographic area. Medicare beneficiaries who are enrolled with an MCO may elect their hospice benefit from the hospice of their choice. These organizations only pay for services that are pre-approved.

CHAMPUS: On a cost-shared basis the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) covers skilled nursing care and other professional medical home care services for dependents of active military personnel and military retirees and their dependents and survivors. CHAMPUS offers a comprehensive hospice benefit to its terminally ill beneficiaries, which covers nursing, social work and counseling services, therapies, personal care, medications, and medical supplies and equipment.

Workers' Compensation: Any individual requiring medically necessary home care services as a result of injury on the job is eligible to receive coverage through workers' compensation.