The Centers for Medicare and Medicaid Services (CMS) recent decision on home healthcare services, if implemented, will increase overall healthcare expenditures and decrease the quality of services received by patients.
CMS’ overarching goal is praiseworthy – the agency is trying to maintain budget neutrality while changing its payment system rates. A more praiseworthy goal would be to reduce expenditures but that is a different question, the larger problem is that CMS’ proposed expenditure reductions will more likely increase spending over time.
At issue, CMS issued a proposed rule on June 17th “which would update Medicare payment policies and rates for home health agencies.” According to the agency, the rule would decrease spending on home healthcare services by $810 million compared to 2022 levels. The problem is that the spending reductions are based on CMS’ assumed “behavioral assumptions” that are simply inconsistent with the evidence.
A 2017 study by the Cleveland Clinic, for instance, found that “patients who receive home health care after a hospital discharge save the system about $6,500 over the course of a year. Plus, home health care ‘independently decreased the hazard of follow-up readmission and death.’”
A 2018 study found that the costs for adults admitted via the emergency department with heart failure, chronic obstructive pulmonary disease, or asthma were 52% less for the patients who received home health care compared to the costs associated with the adults treated in the usual hospital setting.
CMS’ claim that cutting home healthcare expenditures will lead to lower overall healthcare expenditures simply contradicts this growing body of evidence that home healthcare treatment options are less expensive. Unless CMS’ budget estimates presume that Medicare will save money by rationing care.
If so, rationing care has even worse consequences for patients that include increased numbers of adverse events and deaths among Medicare patients. Assuming that care will not be rationed, then any savings that CMS documents in the home healthcare line item will be more than offset by increased expenditures elsewhere in the system.
Beyond the budgeting impacts, there is also the issue of patients’ healthcare quality. The evidence demonstrates that home healthcare services increase patients’ quality of care – further reason to transfer patients to home healthcare where possible.
For instance, the aforementioned Cleveland Clinic study found, “home healthcare also resulted in noticeable decreases in follow-up readmissions and death. Patients discharged from the Digestive Disease, Heart & Vascular, Medicine, Neurological, and Urology & Kidney Institutes benefited most from home health care.”
In an analysis published in the American Journal of Accountable Care, the authors examined the records of 5% of the total Medicare fee-for-service beneficiaries who visited an emergency department between January 2012 and December 2013. The study compared the costs and readmission rates for the patients who were treated in the hospital following the emergency department visit (e.g., received inpatient treatment) and patients treated at home following the visit (e.g., received home healthcare).
Not only were costs lower for the patients treated at home, consistent with the studies cited above, the patients who were treated at home were readmitted to the hospital at a significantly lower rate. These results support the notion that in-home patients received higher quality care that keeps them from returning to the hospital.
Consequently, denying patients access to home healthcare options will reduce patients’ quality of care. The reduced quality of care will also cause hospital re-admissions to increase, which will then have secondary impacts that will further increase overall healthcare spending.
These impacts demonstrate that the reduced spending on home healthcare will likely increase overall healthcare spending directly – by keeping more patients in the hospital – and indirectly – by increasing the overall amount of healthcare services used. Clearly, CMS’ budget models do not account for any of these impacts.
Nor does the decision reflect the desires of patients. According to a poll conducted by Morning Consult, “over nine in ten Medicare beneficiaries (94%) say they would prefer to receive post-hospital short-term health care at home. Only 3% say they would prefer a nursing home.” One of the glaring flaws of our healthcare system, and there are many, is patients’ lack of control over their own healthcare decisions. CMS’ restrictions on home healthcare exemplify this troubling reality.
While CMS’s goal of maintaining budget neutrality makes sense, its budgetary tactics demonstrate why reforms that empower seniors to control their own healthcare decisions are desperately needed. With respect to its home healthcare decisions, the evidence demonstrates that this care model is less expensive, provides higher quality services, and is preferred by patients. CMS should rely on this evidence, not its budget modelling assumptions, to inform its current payment reforms.
Reducing Access To Home Healthcare Services Will Raise Costs And Worsen Outcomes
Wayne Winegarden
The Centers for Medicare and Medicaid Services (CMS) recent decision on home healthcare services, if implemented, will increase overall healthcare expenditures and decrease the quality of services received by patients.
CMS’ overarching goal is praiseworthy – the agency is trying to maintain budget neutrality while changing its payment system rates. A more praiseworthy goal would be to reduce expenditures but that is a different question, the larger problem is that CMS’ proposed expenditure reductions will more likely increase spending over time.
At issue, CMS issued a proposed rule on June 17th “which would update Medicare payment policies and rates for home health agencies.” According to the agency, the rule would decrease spending on home healthcare services by $810 million compared to 2022 levels. The problem is that the spending reductions are based on CMS’ assumed “behavioral assumptions” that are simply inconsistent with the evidence.
A 2017 study by the Cleveland Clinic, for instance, found that “patients who receive home health care after a hospital discharge save the system about $6,500 over the course of a year. Plus, home health care ‘independently decreased the hazard of follow-up readmission and death.’”
A 2018 study found that the costs for adults admitted via the emergency department with heart failure, chronic obstructive pulmonary disease, or asthma were 52% less for the patients who received home health care compared to the costs associated with the adults treated in the usual hospital setting.
CMS’ claim that cutting home healthcare expenditures will lead to lower overall healthcare expenditures simply contradicts this growing body of evidence that home healthcare treatment options are less expensive. Unless CMS’ budget estimates presume that Medicare will save money by rationing care.
If so, rationing care has even worse consequences for patients that include increased numbers of adverse events and deaths among Medicare patients. Assuming that care will not be rationed, then any savings that CMS documents in the home healthcare line item will be more than offset by increased expenditures elsewhere in the system.
Beyond the budgeting impacts, there is also the issue of patients’ healthcare quality. The evidence demonstrates that home healthcare services increase patients’ quality of care – further reason to transfer patients to home healthcare where possible.
For instance, the aforementioned Cleveland Clinic study found, “home healthcare also resulted in noticeable decreases in follow-up readmissions and death. Patients discharged from the Digestive Disease, Heart & Vascular, Medicine, Neurological, and Urology & Kidney Institutes benefited most from home health care.”
In an analysis published in the American Journal of Accountable Care, the authors examined the records of 5% of the total Medicare fee-for-service beneficiaries who visited an emergency department between January 2012 and December 2013. The study compared the costs and readmission rates for the patients who were treated in the hospital following the emergency department visit (e.g., received inpatient treatment) and patients treated at home following the visit (e.g., received home healthcare).
Not only were costs lower for the patients treated at home, consistent with the studies cited above, the patients who were treated at home were readmitted to the hospital at a significantly lower rate. These results support the notion that in-home patients received higher quality care that keeps them from returning to the hospital.
Consequently, denying patients access to home healthcare options will reduce patients’ quality of care. The reduced quality of care will also cause hospital re-admissions to increase, which will then have secondary impacts that will further increase overall healthcare spending.
These impacts demonstrate that the reduced spending on home healthcare will likely increase overall healthcare spending directly – by keeping more patients in the hospital – and indirectly – by increasing the overall amount of healthcare services used. Clearly, CMS’ budget models do not account for any of these impacts.
Nor does the decision reflect the desires of patients. According to a poll conducted by Morning Consult, “over nine in ten Medicare beneficiaries (94%) say they would prefer to receive post-hospital short-term health care at home. Only 3% say they would prefer a nursing home.” One of the glaring flaws of our healthcare system, and there are many, is patients’ lack of control over their own healthcare decisions. CMS’ restrictions on home healthcare exemplify this troubling reality.
While CMS’s goal of maintaining budget neutrality makes sense, its budgetary tactics demonstrate why reforms that empower seniors to control their own healthcare decisions are desperately needed. With respect to its home healthcare decisions, the evidence demonstrates that this care model is less expensive, provides higher quality services, and is preferred by patients. CMS should rely on this evidence, not its budget modelling assumptions, to inform its current payment reforms.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.