Medicare spending for home health care rose from $3.7 billion in 1990 to $17.8 billion in 1997, making it one of the fastest growing components of the program. To control spending, Congress passed an act which required HHS to develop a prospective pay. system (PPS) to replace cost-based pay. for home health agencies (HHA). This report: documents the objectives, findings, & costs of the research & demonstration projects the Health Care Fin. Admin. has funded that were related to the design of the PPS; & assesses how these projects contributed to the proposed PPS design & determines which design decisions were based on incomplete info.