Home health care was developed with the benevolent intention of providing a cost-effective alternative to existing forms of long-term health care, while permitting beneficiaries to receive needed short-term, posthospitalization, acute care in their own homes. However, the home health care segment of Medicare recently sustained an unprecedented and explosive growth in program cost. As a result of this alarming expansion, home health care has become the fastest growing expense of the overwhelmingly complex Medicare program and is in danger of spiraling out of control.

This article begins with a review of the current structure and administration of the home health care program under the Health Care Finance Administration (HCFA). Mr. Davis details the requirements of Home Health Agencies and their patients to qualify for full Medicare reimbursement under the home health care program. Current practices, based on lenient administrative and judicial interpretations of these qualifications, have resulted in growing demand for home health services and the resulting increase in program cost. Mr. Davis explores the primary limitations on the home health care program, including the overemphasized potential for fraud and abuse, billing and budget inefficiencies, the overavailability of services, the ease of entry into the home health care market, the lack of meaningful physician or patient involvement, and the lack of any insurance copayment or deductible.

Mr. Davis critiques contemporary solutions offered to cure the program's incredible cost growth, including Medicare amendments from the Balance Budget Act of 1997 and new HCFA initiatives. Mr. Davis, wary of the effectiveness of these solutions, argues that other solutions which have eluded Congress and HCFA are more promising. These solutions include a revision of the prospective payment system, the imposition of an