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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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