How the United States funds and delivers care at home

Introduction

This explainer sets out how the United States (US) funds and delivers clinical care and personal care in people’s homes. It draws on published information about the US system together with first-hand insight from practitioners working in US home health, and is written for a United Kingdom (UK) audience, drawing read-across to NHS and social care equivalents throughout. Two terms matter from the outset, because Americans use them precisely: ‘home health’ means clinical, skilled care at home (nursing, therapy, rehabilitation); ‘homecare’ or ‘personal care’ means ongoing non-clinical support with daily living. The two are funded, regulated and delivered quite differently.

The overall architecture: no single system

The US has no single health and care system. Most working-age Americans are insured through their employer, with premiums shared between employer and employee. A typical employee contribution varies greatly, but a reasonable average is around $800 per month for family cover. Co-payments apply on top, for example around $300 for an emergency department visit. Figures of this kind reflect generous plans, however; most people hold high-deductible plans, under which out-of-pocket costs for this sort of care are considerably higher. People without employer cover can buy plans in the general marketplace, or through the insurance agencies themselves, though these often carry very high deductibles that must be paid before cover begins. About 8% of Americans have no health insurance (8.3% in 2025), a figure expected to rise following recent federal changes to Medicaid and marketplace subsidies. Hospitals must treat anyone in a genuine emergency regardless of ability to pay, and many are not-for-profit organisations that set aside funds to assist, and even forgive bills for, those who cannot afford them. In one practitioner’s account, a relative’s bill of around US$30,000 for pneumonia treatment was written off in full on this basis. Alongside the private market sit two large public programmes, Medicare and Medicaid, both administered federally by the Centers for Medicare and Medicaid Services (CMS). They are routinely confused, but they are fundamentally different in design.

Medicare: universal at 65, national, not means-tested

Medicare is the federal programme for people aged 65 and over, together with younger people with long-term disabilities and certain conditions. Eligibility is based on age and contribution record, not income or assets: there is no means test for Medicare. It is funded through a dedicated payroll tax levied on earnings throughout working life, alongside general taxation and premiums. Eligibility begins at 65. This once coincided with the state pension, but the Social Security full retirement age has since risen to 67, with reduced benefits available from 62, so the two ages no longer align exactly. Because Americans feel they have paid in, Medicare enjoys political protection comparable to that of the NHS.

Medicare has several parts. Part A covers hospital care and is premium-free for most people. Part B covers physicians and outpatient care, with a monthly premium. Part D covers prescription drugs. Under Part C, known as Medicare Advantage, beneficiaries can opt to have a private insurer administer their Medicare benefits, sometimes with supplementary extras; around half of beneficiaries now choose this route. Preventative care is generally covered in full; some tests and services carry modest co-payments of $50 to $150, with provisions for those who cannot afford them.

Medicaid: means-tested, state-administered, and America’s long-term care payer

Medicaid is the means-tested programme for people on low incomes, of any age. It is jointly funded by federal and state governments, with federal matching money, and administered by the states, which set eligibility rules and payment rates within federal minimums, so coverage varies considerably across the country. For those who qualify it is comprehensive, usually with no co-payments. Around 12 million older and poorer Americans are ‘dual eligibles’, covered by both programmes.

Crucially for our purposes, Medicaid, not Medicare, is America’s public payer for long-term care. To qualify, people must be poor, and the system requires those with assets to ‘spend down’ before the state will pay. For example, a person owning a $300,000 home outright would typically be expected to draw down their assets before Medicaid funded a place in a skilled nursing facility (care home). In practice, the primary home is often treated as exempt while the person is alive, with the state recovering costs from the estate afterwards. The dynamic is directly analogous to means-testing and asset depletion in England.

Clinical care at home: how Medicare home health works

This is the part of the US system with the most instructive architecture for a UK reader. It is best understood not as social care but as the equivalent of NHS community nursing and therapy services plus reablement, delivered by independent providers under national rules.

Eligibility and entry

To qualify, a person must be ‘homebound’, meaning that leaving home must require a significant and taxing effort, and must have a skilled need for nursing or therapy. If they qualify under Medicare, home health is covered at 100%, with no means test and no co-payment, regardless of the level of need. Referral comes from a physician or hospital discharge team, accompanied by referral documentation (medical history, recent imaging), and the person must have a face-to-face visit with a physician within 60 days before or 30 days after care starts, at which the reason for homecare is addressed. Under CMS conditions of participation, hospitals are required to offer patients a choice of providers serving their area, informed by publicly reported outcomes and star ratings. Self-referral and referral via social services are also possible, but a physician must authorise the care.

Speed is regulated. Care must normally start within 48 hours of referral, the physician-specified start date or hospital discharge. ‘Timely initiation of care’ is a measured metric on which agencies are penalised if they fail. The first visit must be made by a registered nurse or physical therapist (or speech therapist), who becomes the case manager for that person.

Assessment: the OASIS

Assessment uses a standardised national item set called the OASIS (Outcome and Assessment Information Set), completed electronically and submitted to CMS. The assessing nurse scores the person across many domains, including functional ability, mental health (depression is specifically assessed), medication management and more, and must physically observe the person performing tasks rather than simply asking questions. The care plan built from this assessment, with goals agreed with the person and signed off by their physician, defines both the service and the funding. One of the first questions asked in the home is ‘What is your goal?’. In one case, a woman whose sole goal was to bake a cake again had her entire therapy programme designed around it, successfully. Person-defined goals are recorded, reviewed at every visit, and feed the outcome measures described below.

Funding: a needs-based envelope, not payment by the minute

Funding flows as a needs-based envelope, sized by the assessed needs recorded in the OASIS and the associated coding. Certification periods run for 60 days, though payment is now calculated in 30-day periods. As an illustration, a complex wound-care patient might attract an envelope of roughly $3,000 across a 60-day episode. Within the envelope, the provider deploys its multidisciplinary team as the care plan requires; CMS auditors do not dictate how the money is spent, but check that the assessment justifies the care planned and delivered. Under an earlier system, providers received half the payment up front and half at the end; that episode-based structure was replaced in 2020 by the Patient-Driven Groupings Model, which pays in 30-day periods, with a separate value-based purchasing scheme (described below) adjusting payments up or down according to measured outcomes. The essential point for UK read-across is that no one is buying minutes: the provider has a guaranteed income for the episode and is accountable for what it achieves with it.

Accountability: outcomes, surveys and penalties with teeth

When the OASIS is submitted, CMS generates a ‘discharge function score’, an expected outcome for that person measured against their own prior baseline (someone independent before a hip operation is expected to return to independence). At discharge, the OASIS is completed again, and actual outcomes are compared with expected. Payment is then adjusted annually and retrospectively: outcomes achieved in one year set the payment rate for the next. Providers that consistently outperform receive additional percentages; agencies that underperform must pay money back. The value-based purchasing scheme can move a provider's Medicare payment by up to 5% in either direction; the adjustments currently seen are of the order of 2 to 3%, sums which, across a provider’s caseload, are material enough to change behaviour. Practitioners report that the incentive works, particularly in driving rigorous documentation.

Four components determine how a provider is judged and paid: the clinical documentation itself; claims-based measures over which providers have limited control, of which re-hospitalisation is the most important; the measured outcomes (ambulation, breathlessness, medication management and similar); and the HHCAHPS surveys (the Home Health Consumer Assessment of Healthcare Providers and Systems), which are mandatory questionnaires sent to patients and families after care ends and feed directly into quality scores. Results are publicly reported as star ratings out of five; five stars is rare and most providers sit at around three, and the ratings directly inform the choices people make at referral. National benchmarking services (for example SHP, Strategic Healthcare Partners) let providers compare their outcomes against state and national averages. Alongside this, providers are audited annually by CMS contractors, who review a 10% sample of records looking for justification of the care planned, and surveyed by state bodies that can accompany clinicians into homes and can ultimately remove a provider’s licence. All data flows through state systems to CMS and payers.

Workforce: professionalised and registered at every level

The workforce is strikingly more professionalised than in UK homecare. Registered nurses act as case managers, responsible for the whole episode; licensed practical (or vocational) nurses work alongside them; physical, occupational and speech therapists, with their certified assistants, provide rehabilitation; and certified nursing assistants and home health aides provide personal care (bathing, meals, homemaking) as part of the skilled episode. Certification for nursing assistants involves a governing body, courses, and an examination, though some states permit uncertified ‘techs’ in the purely personal-care lines of business. Nurse practitioners, as in the UK, can undertake most physician functions, and could relieve GP-equivalent bottlenecks in ordering homecare. Because clinicians work alone in people’s homes, the role demands and develops autonomy. Pay reflects the funding model: home health nurses average roughly $27 to $40 per hour, rising to $50 to $60 in some markets, with mileage paid separately. This is possible because providers hold a guaranteed income envelope rather than being paid for contact minutes.

Providers, technology and hospice

The provider market ranges from single-nurse owner-operators (‘mom and pops’) to organisations running some 300 care centres across 47 states. The requirements of the model, being multidisciplinary teams, electronic assessment and outcome accountability, favour organisations of some scale. Record-keeping is electronic and purpose-built around the OASIS, with AI now entering practice (ambient listening to draft documentation, under strict health-privacy rules). Remote monitoring is long-established. One practitioner described heart-failure monitoring, in place fifteen years ago, that triggered a same-day nurse visit on a two-pound weight gain. Because the provider is paid for outcomes rather than minutes, technology that prevents deterioration increases margin rather than destroying income, the exact inversion of UK incentives.

Hospice is a separate Medicare benefit, which anyone entitled to Medicare Part A can elect. To qualify, a person must be certified as terminally ill, with a life expectancy of six months or less, and must choose comfort care over curative treatment. The benefit can also be elected under Medicaid and most private insurance, and is fully covered under all three. For those on low incomes or without insurance, hospice programmes operate free of charge or on sliding-scale fees. Hospice uses its own assessment tool, HOPE (Hospice Outcomes and Patient Evaluation), which replaces the OASIS for that population.

Personal care at home: the fragmented side of the system

For ongoing personal care without a skilled need (help with washing, dressing, meals, supervision and companionship), the picture inverts. Medicare does not generally cover it. Home health aides are funded only as part of a skilled episode; when the episode ends, so does the care. What we would recognise as homecare is funded through four routes. First, private pay: a very large market of providers, including franchises, typically charging $25 to $35 per hour, with national referral businesses (A Place for Mom and similar) channelling demand. Second, Medicaid: the largest public funder of long-term services and supports, through state personal-care benefits and ‘Home and Community-Based Services’ waivers, but only for those poor enough to qualify, with wide state variation and waiting lists in many states. Many state programmes offer self-direction, under which the person holds a budget and employs their own carer, often including family members. This is the closest US analogue to our direct payments. Third, a small long-term care insurance market. Fourth, and the largest of all, unpaid family care. Workforce standards on this side are looser, with the personal-care tier unlicensed in some states, and migrant labour plays a significant role, with the language and exploitation risks familiar from our own market. Grants and other forms of assistance are also available to individuals who need this support, though they are notoriously difficult to navigate.

Read-across for the UK

The US has, in effect, our two-tier problem writ large. For those who qualify, Medicare home health is nationally consistent, fully funded, outcome-accountable and free at the point of use, a public programme demonstrating that standardised assessment, needs-based funding envelopes, mandated citizen choice, payment for outcomes and public quality ratings can operate together at national scale. For ongoing personal care, by contrast, the US offers a means-tested, state-variable, fragmented system in which a middle class is caught between Medicare (which will not pay) and Medicaid (for which they are not poor enough), and families fill the gap.

Three cautions bear repeating when drawing lessons from the US. First, it is the architecture of Medicare home health that transfers, not its coverage rules: it is clinically led, time-limited and gated by the ‘homebound’ criterion, and is closer to NHS community services plus reablement than to ongoing social care. Second, the argument must not be caricatured as importing ‘American-style care’: the force of the evidence is precisely that a public, taxpayer-funded programme runs on this architecture. Third, the personal-care side of the US system is a cautionary tale, not a model: it shows what happens when a country builds the clinical layer but never creates an entitlement to long-term support. No developed country has solved that except through social insurance or a tax-funded universal entitlement, which is, of course, the National Care Service question.