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OBJECTIVE. We compare case mix of Medicare home health patients under HMO and FFS payment. STUDY DESIGN. A pseudo-experimental design was employed to study case mix using three types of Medicare-certified home health agencies (HHAs): HMO-owned agencies, pure FFS agencies that admit few Medicare HMO patients (less than 5 percent of admissions are Medicare HMO patients), and mixed (or contractual) agencies that admit at least 15 Medicare FFS patients and 15 Medicare HMO patients per month. SAMPLES OF PROVIDERS AND PATIENTS. Random samples of Medicare-aged patients (> or = 65 years) were selected at admission between June 1989 and November 1991 from the 38 study HHAs. Sample sizes by agency type were: 308 patients from 9 HMO-owned agencies; 529 patients from 15 pure FFS agencies; and 381 HMO patients and 414 FFS patients from 14 contractual agencies. DATA. Primary longitudinal data were prospectively collected at admission for all patients on health status indicators, demographics, admission source, and home environment. MEASURES. The most important case-mix measures were functional and physiologic indicators of health status, including (instrumental) activities of daily living ([I]ADLs). Selected indicators of demographic variables, prior location, living situation, characteristics of informal caregivers, mental/behavioral factors, and resource needs were also used. PRINCIPAL FINDINGS. (a) The case mix of Medicare FFS patients compared with Medicare HMO patients was more intense in terms of impairments in ADLs, IADLs, and various physiologic conditions. Pressure ulcers as well as neurological and orthopedic impairments requiring rehabilitation care were also more prevalent among FFS patients. (b) Relative to HMO patients admitted to contractual agencies, HMO patients admitted to HMO-owned agencies were moderately more dependent in ADLs and IADLs. However, only 62 percent of HMO patients admitted to HMO-owned agencies, in contrast to 77 percent of HMO patients admitted to contractual agencies, had been hospitalized during the 30 days prior to home health admission. (c) In all, the case mix of patients receiving care from HMO-owned agencies is more heterogeneous than the case mix of HMO patients receiving care from contractual agencies. CONCLUSIONS. The case-mix (and selected utilization) findings indicate that HMOs use home health care differently than does the FFS sector. The greater diversity of case mix for HMO-owned agencies and the narrower or less diverse case mix that characterizes HMO patients receiving home care on a contractual basis point to the likelihood of cost differences among the two types of HMO patients and FFS patients, and raise the question of possible outcome differences.