Serving the home health, home care and hospice industry since 1999.

You do not need to hear the demographics speech again. You know all about the 76 million Baby Boomers who are turning 65 at the rate of just over 10,000 per day. Suddenly, however, that familiar trope takes on new meaning.

Thanks to research published in NIH's National Center for Biotechnology Information, Baby Boomer aging demographics can be seen in the specific context of their impact on post acute care (PAC). The study declares that post-acute care is one of the fastest growing areas of U.S. healthcare, with a reported 40 percent of older Americans discharged from a hospital utilizing home health, skilled nursing facility, inpatient and outpatient rehabilitation, but that is not what will make this a landmark study.

The authors have determined that the use of post acute care in itself is the primary determining factor of total per capita Medicare spending. How much is spent during post-acute care is far less significant. The entire study (see link, above) is worth reading. Here is how the authors* summarize their findings:

"Episode-based payment models are increasing in popularity for surgery. We evaluated how much variation in post-acute care spending after surgery is explained by: PAC choice (i.e., choice of home health, outpatient rehabilitation, skilled nursing, or inpatient rehabilitation) versus PAC intensity (amount of spending in a chosen setting).

PAC spending varied widely between hospitals in low versus high PAC spending quintiles:

  • total hip replacement: $5,112 to $11,708, or 129% difference
  • coronary bypass grafting: $4,143 to $8,403, or 103% difference
  • colectomy: $3,345 to $6,104, or 82% difference.

This variation persisted after adjusting for PAC intensity, but diminished considerably after adjusting for choice of PAC setting (THR 109% vs. 16% difference; CABG 108% vs. 4% difference; colectomy 62% vs. 21% difference). Health systems aiming to improve surgical episode efficiency should focus on working with patients to choose the highest value PAC setting."

For those interested in statistics, a complete read of the report helps understand how the research was conducted and which statistical models were used. The exclamations points, however, show up in the discussion paragraphs at the end. The authors point out obvious things, such as that Inpatient Rehab Facilities cost more than Skilled Nursing Facilities, which cost more than Home Health. But they emphasize that, once in a PAC facility, variations of costs have little impact on overall Medicare expenditures.

In other words, to personalize the discussion, it is Home Health vs. No Home Health that matters. HHAs that overcharge or undercharge make no measurable difference on total Medicare spending. The authors strongly recommend that hospitals change their way of thinking after they become responsible for PAC spending under bundled payment systems.

To paraphrase: "Always discharge to PAC but pick the lowest-cost PAC setting appropriate for each patient and don't quibble over pennies once the patient gets there." Here is how the authors actually say it, with emphasis added to point out their veiled chastisement of federal policy makers:

"For payers and policymakers, our findings regarding the importance of choice of PAC setting suggest that episodes of care aimed at reducing PAC spending should include the transition from hospital to PAC setting. Episodes of care that include both the index hospital stay and PAC have the best potential to reduce wide variation in PAC spending; episodes of care that include only PAC settings may be less effective. In addition, uniform measures of functional status on hospital discharge and PAC discharge will become increasingly important as patients and providers seek to make high-value PAC choices.

CMS has taken the first step in this work by testing the Continuity Assessment Record and Evaluation (CARE) Item Set, a uniform measure set. Given differences in length of stay across PAC providers and settings, fixed time points for measurement would be useful. Finally, patients play an important role in the choice of PAC setting and claims data do not capture the myriad factors that may influence patient preference (e.g., social support, availability of high-quality PAC settings). Thus, policymakers should monitor the effects of efforts to reduce PAC utilization, in order to prevent unintended consequences for vulnerable populations, whose need for PAC may not be fully accounted for in existing risk-adjusted measures of PAC utilization."


*Lena M. Chen, MD, MS; Edward C. Norton, PhD; Mousumi Banerjee, PhD; Scott Regenbogen, MD; Anne Cain-Nielsen, MS; John D. Birkmeyer, MD

©2018 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Tim Rowan's Home Care Technology Report. One copy may be printed for personal use; further reproduction by permission only.