Home Healthcare cuts Costs, Readmissions

Home Health Care Results in Fewer Hospitalizations for Patients with Chronic Diseases Compared to Other Post-Hospital/Post-Acute

Washington, D.C. June 24, 2011 — Home health care – after an initial hospital visit for patients with diabetes, chronic obstructive pulmonary disease (COPD) or congestive heart failure (CHF) – resulted in an estimated 20,426 fewer hospital readmissions compared to patients with these same conditions receiving other post-acute services, according to a new analysis by Avalere Health LLC. The fewer readmissions saved Medicare an estimated $670 million from October 2006-September 2009.

The new analysis also revealed that home health use after an initial hospital visit resulted in a $2.81 billion reduction in post-hospital Medicare Part A spending over the October 2006-September 2009 time period, compared to patients receiving other post-acute services. If the beneficiaries who received other post-acute services after the initial hospitalization had used home health instead, Medicare Part A spending over the same period could have been further reduced by $2.07 billion.

“This study clearly shows that providing home health care to chronically ill Medicare beneficiaries after they leave the hospital can in many cases result in fewer hospitalizations while reducing overall Medicare spending,” said Emil Parker, director, Avalere Health.

The study compared beneficiaries with diabetes, chronic obstructive pulmonary disease or congestive heart failure who received home health care after leaving the hospital to similar beneficiaries who received other post-hospital/post-acute care services. It examined total Medicare Part A spending after the initial hospital visits, including costs associated with readmissions, from October 2006-September 2009.  Three outcome measures were analyzed: total post-hospital Medicare Part A payments, readmission rates, and Medicare Part A payments associated with readmissions. The study was conducted using Medicare Standard Analytic Files (SAFs) for 2006-2009.

Savings per beneficiary for each disease varied by the severity of the illness. For diabetes, from October 2006-March 2008, savings per beneficiary ranged from $6,281-$12, 267. From April 2008-September 2009, savings ranged from $7,383-$9,225. For COPD, from October 2006-March 2008, savings per beneficiary ranged from $6,098-$11,928. From April 2008-September 2009, savings ranged from $7,106-$11,441. For CHF, savings per beneficiary ranged from $5,020-$7,879 from October 2006-March 2008. Savings ranged from $5,514-$8,883 from April 2008-September 2009.

The results have important implications for a program that has labored to better care for patients with chronic illness.

“Our study shows that in this population, provision of home health care is cost effective and benefits patients by improving the continuity of their care,” said Parker.

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Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere’s experts span 140 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information.