Home Health Care Saves Medicare Money in Post Acute Setting says Study

When home healthcare is used as the first setting for post acute care, Medicare saves money according to a new study commissioned by the Alliance for Home Health Quality and Innovation.

The research is detailed in two workings papers of the Clinically Appropriate and Cost-Effective Placement (CACEP) Project. These findings, among others in the papers, suggest that home healthcare is an efficient post-acute care provider, and that it can be leveraged to significantly reduce healthcare costs.

“In examining the beneficiary claims data, we identified consistent patterns in Medicare payment across multiple post-acute care settings that show where individuals seek care for clinical conditions, and how much the cost of care varies based on care setting,” stated Allen Dobson, Ph.D., CACEP lead researcher and President of Dobson DaVanzo & Associates, LLC.   “The data provide unique insight into how home healthcare is being utilized in comparison to other sites of care and how Medicare payments compare across settings, which can be an invaluable tool in developing new Medicare payment policies.”

The CACEP Project examines home healthcare in the context of three episode types, 60 days following hospital discharge, 60 days prior to hospital admission and nine months following community referred home health discharge to show the value of home care to Medicare Beneficiaries.

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As an example, the report shows that when comparing average payments across all settings, home health is often the most cost effective. First setting Medicare payments for MS-DRG 470 (major joint replacement) are $3,267 to home health providers, while skilled nursing payments are $8,981, inpatient rehab facilities are $13,073 and as high as $27,399 for long term care hospitals.

For the study, conducted by Dobson DaVanzo and Associates, investigators studied Medicare claims data for 24,239,080 total post-acute episodes and a total of $472.8 billion in Medicare payments. Post-acute settings included skilled nursing facilities, inpatient rehab facilities and long-term care hospitals.

Written by John Yedinak

John Yedinak