Cost function analysis of Medicare policy: Are reimbursement limits for rural home health agencies sufficient?

John A. Nyman, Bryan E. Dowd

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

This paper estimates a hybrid total cost function to determine to what extent an urban/rural differential exists in home health agency expenditures in Wisconsin in 1987-1988. We find that costs are over $16 higher per visit in urban Milwaukee than in rural and small MSA counties, providing no evidence that Medicare reimbursement limits should be raised to reflect 'ruralness'. However, the cost of providing skilled nursing care exceeds both urban and rural reimbursement limits. Because rural agencies depend more on Medicare clients and provide disproportionately more skilled nursing visits, this might represent the source of any financial difficulty.

Original languageEnglish (US)
Pages (from-to)313-327
Number of pages15
JournalJournal of Health Economics
Volume10
Issue number3
DOIs
StatePublished - Oct 1991

Bibliographical note

Funding Information:
*The authors wish to thank Anindya Sen and Paul Commins for their excellent research assistance. We also wish to thank Roger Feldman, Mike Finch, Terry Moore, Judy Sangl, John Geweke, Joseph Newhouse, and two anonymous referees for helpful comments. Any remaining errors or oversights, however, are the authors’ sole responsibility. This research was funded by the Health Care Financing Administration under HCFA Cooperative Agreement No. 99-C-99169/S-01. The conclusions are those of the authors and should not necessarily be attributed to HCFA.

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