New Study Shows Better Transitioning Following Discharge Could Save Medicare Billions

Last week, the Alliance for Home Health Quality and Innovation announced the release of a report entitled "Clinically Appropriate and Cost-Effective Placement" (CACEP), which suggested that directing Medicare beneficiaries into the most cost-efficient setting possible after a hospital stay could save the program $35 billion to $100 billion over the next decade.

The CACEP project focused on reducing post-acute spending by improving the process of transitioning patients following hospital discharge. The purpose of the report, completed by Dobson DaVanzo & Associates, was to obtain a better understanding of how episodes of care are currently provided and to model uses of the home health benefit that are potentially more effective within the Medicare program.

"Every day in the United States, more than 10,000 Americans turn 65, and here in Pennsylvania our aging population is growing exponentially. We all know that our nation's healthcare system is struggling to adequately address a bulging infrastructure that is in dire need of reform in order to survive," said Vicki Hoak, PHA CEO. "I hope our members will study this report and use it as a tool when their agencies are approaching hospitals and other healthcare providers to form partnerships and develop innovative ways to bring care home."

The report, which examined claims for a representative 5% sample of Medicare beneficiaries from 2007 to 2009, found that post-acute care settings have very different costs, with home health being the lowest, followed by skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals.

The report also notes that hospital readmissions increase costs for care. For instance, an average hospital episode that did not include a readmission cost Medicare $15,335, compared with $33,926 for an episode that included readmission to the hospital.

The final CACEP report builds upon a series of working papers assessing the volume, payments, patient pathways, and readmissions of various types of post-acute care episodes. The analysis also presents analytic models indicating Medicare savings. Modeling suggests the utilization of a clinically appropriate and cost-effective care model, which shifts patient care settings under the current delivery structure with payment incentives for clinically-appropriate placement, could reduce Medicare spending by $34.7 billion over a 10-year period (2014-2023).

Click here to download the full report.

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