Michael T. Caracci and Cindy W. Caracci, et al. - Page 18




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          the Medicare program.  Cost shifting was possible because:                  
          (1) The purchased home health care agencies had room under their            
          cost cap because they had sought less than the maximum                      
          reimbursement allowed by Medicare and (2) Medicare reimbursed               
          home health care providers for costs, such as overhead, that were           
          not directly related to home visits.  Hospitals and nursing homes           
          could benefit by acquiring a home health care agency and shifting           
          some of their overhead costs to that agency to the extent that              
          there was room under its cost cap.                                          
               During 1994 and 1995, a number of home health agencies in              
          Mississippi were sold.  The State Board of Health identified 11             
          such acquisitions.  Seven were by hospitals; two were by home               
          health care agencies; one was by an individual from a bankruptcy            
          trustee, and one was a corporate reorganization.  All of the                
          acquisitions by hospitals involved home health agencies in or               
          near Mississippi, although on occasion the corporate headquarters           
          of the acquiring corporations were located outside Mississippi.             
          In 1995, the Deaconess Hospital Corp. of Cincinnati, Ohio,                  
          acquired the stock of Southern Mississippi Home Health, Inc., a             
          Mississippi corporation.                                                    
               Home health agencies remained under a cost reimbursement               
          system until September 30, 1999, when legislation passed by                 
          Congress in 1997 providing a PPS for home health agencies took              








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