Surging Functional Impairment Costs Could Mean Big Business for Home Care

Functional impairment is, perhaps, far more costly to the U.S. health care system than previously thought.

Functional impairment is broadly defined as a condition or status that interferes with one or more basic life activities, such as bathing, eating or dressing. To help carry out these activities, individuals living with functional impairments often turn to home care providers and personal care aides.

Roughly 39.5 million adults have some degree of difficulty when it comes to physical functioning, according to the U.S. Centers for Disease Control and Prevention. Of adults aged 75 and over, nearly 11% need assistance with personal care specifically.


Medicare beneficiaries with both multiple chronic conditions and functional impairments are twice as expensive to the Medicare program than individuals who have multiple chronic conditions alone, new data from Anne Tumlinson Innovations (ATI) has found. The findings suggest that the Centers for Medicare & Medicaid Services — and even Medicare Advantage (MA) plans — will fail to reduce health care spending if they don’t prioritize functional ability.

“This data analysis shows that the population most likely to be receiving long-term services and supports — that is, people who have difficulty with basic life activities — are the ones who are also using the most health care,” Anne Tumlinson, ATI CEO and founder, told Home Health Care News.” Health plans need help identifying this population, assessing them and determining which interventions will have the greatest impact on costs and outcomes.”

In general, home care agencies are in the best position to care for individuals with functional impairments and multiple chronic conditions, Tumlinson said. It’s a value proposition that many home care agency leaders have touted in the past — and one that traditional home health providers have been widely pursing as well.


ATI is a Washington, D.C.-based research and advisory services firm that specializes in businesses, communities and public programs focus on older, frail adults.

“The very reason someone needs to hire a home care provider is the very same reason that person is using a lot of health care,” Tumlinson said.

Medicare spends, on average, half as much annually on beneficiaries with multiple chronic conditions as the program does on individuals who dually have multiple chronic conditions and functional impairment, according to the ATI data. Comparatively, that ends up being about $11,600 annually compared to nearly $27,000.

Additionally, health care utilization and spending also increases as the level of functional impairment increases, ATI data suggest. Indeed, individuals with the highest level of need — people who require help with two or more activities of daily living — use inpatient hospital services much more frequently, with Medicare spending nearly three times as much on them as the overall Medicare population.

“In-home care, together with care coordination, support for family caregivers and the involvement of primary care providers can make a big difference in reducing functional decline, avoiding unnecessary hospitalizations and addressing the underlying chronic conditions,” Tumlinson said.

To tackle these spending trends, functional ability should be included in the eligibility criteria for non-medical supplemental benefits available under the CHRONIC Care Act of 2018, ATI maintains. Among its provisions, the CHRONIC Care Ac gives MA plans more flexibility to target non-medical benefits to eligible Medicare beneficiaries.

CMS announced in April that non-skilled in-home care services will — for the first time — be allowed as supplemental benefits in MA plans starting next year.

Previous research has highlighted the cost of functional impairment as well.

A 2017 study published in the Journal of the American Geriatrics Society, for example, determined that functional impairment is associated with greater Medicare costs for post-acute care and may be an unmeasured but important marker of long-term costs that cuts across conditions. In the study, researchers found that the most severely impaired participants cost 77% more than those with no impairment.

Considering costs attributable to co-morbidities, only three conditions were more expensive than severe functional impairment, according to the 2017 study: lymphoma, metastatic cancer and paralysis.

Written by Robert Holly

Companies featured in this article: