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Home Care Report: Medicare Could Save Up To $100B By Shifting To Less Costly Post-Acute Settings

Published by Inside Health Policy
John Wilkerson
October 10, 2012

Placing patients in lower cost, yet appropriate, facilities following hospital discharge and cutting post-discharge spending 7.5 percent could save Medicare could up to $100 billion over a decade and add two and a half years to the Medicare Part A Trust Fund, according to a home care industry-funded report by Dobson DaVanzo & Associates.

This is the fourth and final report in the Clinically Appropriate and Cost-Effective Placement project by the Alliance for Home Health Quality and Innovation. One model in the report would shift patient to lower-cost care facilities when there is overlap in the types of facilities to which patients with similar conditions are discharged from hospitals. That model, which includes incentives for clinically appropriate placement, puts savings at $34.7 billion over 10 years. The report also projects the savings from more aggressive payment reforms. "Models indicate that moving Medicare away from a siloed fee-for-service payment system to one that better aligns incentives by adding an explicit policy to reduce Medicare fee-for-service post-discharge spending by 7.5 percent would yield Medicare savings of $100 billion over 10 years," a release on the report states.

Allen Dobson, president of Dobson DaVanzo, said the study found a significant amount of patient overlap among the types of facilities to which patients are discharged. Medicare pay varies widely among those settings so if the same type of patient is being discharged to multiple facilities, placing those at the higher-cost facilities in lower-cost settings would reduce spending, Dobson said.

Among the four post-acute care settings -- long-term care hospitals, inpatient rehabilitation facilities, nursing homes and home care -- home care is the least expensive, the report says.

Payments for an episode of care more than doubles when an episode includes a readmission, Dobson said. Reducing readmissions when home health is the first setting could save Medicare up to $12.5 billion over 10 years, the analysis found. -- John Wilkerson (jwilkerson@iwpnews.com)

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