Is Medicare Home Health Care Utilization Substituting for Long‐Term Care? Evidence From Dual Eligible Beneficiaries

OBJECTIVE: To examine the plausibly causal effect of Medicaid home- and community-based services (HCBS) use on Medicare community-initiated home health care (CIHHC) utilization among dual-eligible older adults and to provide evidence on whether access to home-based long-term care (LTC) reduces use of Medicare home health care, with potential implications for whether Medicare home health care is used as a substitute for LTC services when they are not or less accessible. STUDY SETTING AND DESIGN: To address the endogeneity of Medicaid HCBS use, we employ an instrumental variable, the proportion of Medicaid HCBS enrollment in other counties within the same state in the previous quarter, in conjunction with a state-border design in estimating the effect of Medicaid HCBS use on Medicare CIHHC and its heterogeneity. DATA SOURCES AND ANALYTIC SAMPLE: We use national Medicare and Medicaid claims data along with home health and nursing home assessment data from 2016 to 2019. Our sample consists of 36,955,226 beneficiary-quarter-level observations of older adults (65+) dually enrolled in Medicaid and Medicare and residing in contiguous state-border counties. PRINCIPAL FINDINGS: Medicaid HCBS use reduces Medicare CIHHC utilization by approximately 1.02 percentage points (95% CI: -1.73 to -0.32), representing about 44% of the sample mean. This effect is concentrated among beneficiaries enrolled in Medicare-Medicaid integrated care plans and those living in urban counties. Moreover, the reduction is most pronounced among older adults who live alone and have around-the-clock assistance needs. CONCLUSIONS: Our findings suggest a substitution between Medicaid HCBS and Medicare CIHHC among dual-eligible older adults at the margin of using Medicaid HCBS, a relationship that should be taken into account when evaluating either program. These findings also align with the hypothesis that Medicare CIHHC is being used as a substitute for LTC, and the availability of home-based LTC may help to alleviate this potentially inefficient use.