‘This Is What Patients Want’: Home-Based Care Model Lowers Total Cost of Care by 44%

A new report from Washington, D.C.-based health care consulting firm Avalere Health is shining a brighter light on home-based care and its ability to drastically lower total cost of care.

Released Tuesday, the report takes a comprehensive look at Hartford, Connecticut-based CareCentrix, a health-at-home solutions company that manages care for 17.5 million members through its network of more than 7,400 locations in over two dozen states. As part of their work, Avalere researchers specifically compared a Medicare Advantage population managed by CareCentrix to a statistically similar non-CareCentrix MA cohort.

Among its key takeaways, the report found that the total cost of care for MA beneficiaries was 44% lower in the CareCentrix population during the initial 90 days following a hospital discharge. That statistic is a clear positive for CareCentrix, but it also reflects the overall value of an in-home care approach, according to Dan Mendelson, founder and former CEO of Avalere.

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“There’s no question that being smarter about how to manage home care results in substantial savings,” Mendelson told Home Health Care News.

Avalere’s findings come from a review of de-identified Medicare claims data linked to more than 24,000 people.

The consulting firm landed on that number after filtering for several factors, such as making sure individuals were enrolled in an MA plan and came from one of CareCentrix’s operating regions. Individuals included in the analysis additionally all had at least one discharge between March 24 and Oct. 31 of 2019. 

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“We used Medicare Advantage data because patients are best managed in Medicare Advantage to begin with,” Mendelson said. “MA plans have every incentive to keep costs low and to improve quality because they get paid on the basis of the star ratings.”

Broadly, CareCentrix was able to lower total cost of care compared to the non-CareCentrix cohort by reducing trips to the emergency room, lowering hospital utilization and avoiding readmissions whenever possible.

Total cost of care savings went beyond a 90-day window, too. A year after hospital discharge, CareCentrix’s post-acute care management program was 27% less expensive than the non-CareCentrix cohort, according to the Avalere report.

“CareCentrix saves money not by limiting access, but through empowering patients and caregivers, addressing clinical and non-clinical needs and making [sure] certain patients get the help they need through coordinated, tech-enabled post-acute care,” the health-at-home provider’s CEO, John Driscoll, said in a statement . 

Curbing readmissions, ER utilization

Backed by PE firm Summit Partners, CareCentrix has built its business around coordinating all kinds of services in the home. It most recently added palliative care to its mix after acquiring palliative care company Turn-Key Health last May.

The company currently does about $2 billion in annual revenues, with its sights set on further growth in 2021, Driscoll told HHCN in December.

“Today, we serve Medicare, Medicaid and commercial populations,” the CEO said. “We’re starting to work largely with health plans. That’s where the dollars are. We’re increasingly working in palliative care, plus our post-acute risk business in Medicare and Medicaid, with hospitals and doctors who own risk themselves.”

When it comes to unwanted return trips to the hospital, CareCentrix was able to lower readmission rates anywhere from 15% to 22% over 30, 60 and 90 days compared to the non-CareCentrix population.

As for trips to the ER, CareCentrix was able to achieve a 21% reduction in visits compared to baseline pre-discharge ER visits. That was greater than the 10% reduction in broader MA compare-group, according to Avalere.

CareCentrix’s model similarly resulted in a 71% reduction in skilled nursing facility (SNF) expenditures following discharge compared with a 47% cost reduction in the non-CareCentrix cohort.

“The thing about having a CareCentrix population is that it is a clearly identified program that we can use to compare to what else is going on in the broader Medicare Advantage population,” Mendelson said. “So from a research perspective, it’s valuable to us. They have a methodology that is unique and proprietary.”

While CareCentrix was able to lower total cost of care overall compared to the non-CareCentrix group, it particularly stood out when managing costs associated with the musculoskeletal disease category. Total cost of care for CareCentrix musculoskeletal patients was around $1,460 during the full follow-up period, which was 47% lower than the compare-group’s $2,775 price tag.

Generally, it’s this level of innovation from the private sector that is needed to solve “the broader dysfunction of health care in the United States,” Mendelson noted.

“I think what we’re seeing is that the private-sector care centers and other companies are coming in, finding these weak points and putting in place more rational care protocols that incent the right behavior, which is lower-intensity care,” he said. “And patients tend to want to be cared for at home instead of an institution. Shocking that, right, especially in the middle of a pandemic?”

Medicare Advantage in 2021

The deep dive into CareCentrix comes almost six months after rumors began swirling around a possible sale of the company, with PE Hub identifying Anthem Inc. (NYSE: ANTM) as one potential buyer.

“The COVID crisis has underscored how important home health is to the future of health care,” a CareCentrix spokesperson told HHCN at the time. “Based on that and the strength of our business, we have received many interesting inquiries, but we are focused on delivering better health for the thousands of patients who rely on us for care.”

Avalere’s report could give CareCentrix added support in any potential dealmaking conversations in the works. 

The report is also timely due to other MA conversations taking place, however. During a recent meeting, the Medicare Payment Advisory Commission (MedPAC) suggested that MA plans don’t save as much money as they’re designed to, partly because of the extra supplemental benefits they’re allowed to offer, including non-medical home care support.

Medicare Advantage plan bids typically come in at about 87% of fee-for-service (FFS) Medicare payments for in-patient and outpatient services, according to MedPAC. Supplemental benefits then eliminate the cost savings those plans create through greater efficiency, the advisory commission argues.

“These extra benefits are being paid for by taxpayers — all the taxpayers,” MedPAC commissioner Marjorie Ginsburg said during a recent presentation. “If the MA plans can figure out a way to maintain the extra benefits and still bring money back into the coffers, great. But if the extra benefits are what’s causing the total cost of MA plans to continue to be above the cost of fee for service, I think there’s a philosophical problem I have with that.”

America’s Health Insurance Plans (AHIP) refuted those claims in a blog post, which MedPAC then responded to on March 3.

“A fair comparison of MA and the traditional Medicare program … , clearly shows that spending in MA is lower than spending in the FFS program and a better value for Americans,” AHIP wrote in its post.

Facing more scrutiny, Medicare Advantage plans may increasingly turn to home-based care organizations to better manage costs, especially if those organizations can prove their cost-saving capabilities.

“Look, MedPAC is asking the right question. You want to know that MA is achieving cost savings for the Medicare population,” Mendelson said. “That is necessary. Personally, I think the MedPAC work suffers from some methodological flaws and that the book hasn’t really been written on this yet.”

As it relates to the ongoing shift of health care into the home, Mendelson believes that trend will continue for the foreseeable future.

“There are some shifts in health care that, I think, get mitigated after the pandemic,” he said. “For example, we’re already seeing rates of telemedicine consults come down a little bit from a pandemic highs.”

That makes sense, considering many health care consumers are no longer afraid to go to the doctor.

“There can be a benefit to seeing a physician face to face,” Mendelson said. “But I think that when it comes to home care, this is what the patients want. They want to be treated at home. They do not want to have to be institutionalized.”

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