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Effects of State Medicaid Home Care Medicare Maximization Programs on Medicare Expenditures

ABSTRACT Some state Medicaid programs have attempted to shift home health care costs to Medicare by using retrospective Medicare maximization billing practices. We used a two-part model with random effects to analyze whether retrospective billing practices increase Medicare expenditures for dual eligibles by analyzing primary data collected from 47 state Medicaid offices supplemented with Medicare Current Beneficiary Survey (MCBS) data from 1992–1997. Retrospective billing practices were projected to increase Medicare home health care expenditures by $73.8 million over six years, although this was not statistically significant. We also found significantly higher Medicare spending in states with lower Medicaid spending levels, suggesting that states with high Medicaid utilization have potential to shift some of these expenditures to Medicare.