Analysis projects billions in Medicare savings via post-acute care options

A newly released report concludes that the restructuring of care models to utilize post-acute settings when clinically appropriate could yield billions in savings from Medicare over 10 years.

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The Alliance for Home Health Quality & Innovation (the Alliance), a nonprofit, national consortium of home healthcare organizations, commissioned Dobson DaVanzo & Associates, a healthcare economics consulting firm, to conduct the Clinically Appropriate and Cost-Effective Placement (CACEP) project. The project, begun in 2010, was an in-depth analysis of Medicare claims data that set out to find opportunities for improving efficiency and lowering costs in the Medicare program and to determine how post-acute care settings, like home care, can serve as an option in clinically appropriate, cost-effective care structures.

“The CACEP project presents compelling data for restructuring post-acute care with innovative payment models that have the potential to significantly reduce spending, increase efficiencies and facilitate improved patient care,” said Allen Dobson, PhD, president of Dobson DaVanzo and lead researcher on the project, in a statement about the project’s results.

The CACEP report indicates that if patient care settings were shifted away from current delivery structures to clinically appropriate, cost-effective care structures aligned with payment incentives, Medicare spending could be reduced by $34.7 billion over 10 years (2014 to 2023) and the life of the Medicare Part A trust fund could be extended by 2.5 years.

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Additionally, specific analytic models in the project suggest care structures with more aggressive payment reforms featuring explicit policies for reducing post-discharge payments by 7.5 percent could save Medicare $100 billion over 10 years.

Dobson DaVanzo’s analysis also found that the more complex the patient pathway – the number of sequence “stops” a patient makes across various providers once the patient leaves an acute care hospital – the higher the Medicare payments, and that Medicare payments doubled when a readmission is involved.

The analysis also found that there is considerable overlap in comparable patients across post-acute care settings, which suggests that a certain percentage of those patients could be safely treated in lower intensity -- and lower cost -- settings.

“With this research, we are identifying areas for strengthening the Medicare program, which we hope the health policy community will find useful for future policy-making decisions to ensure patients receive care in the setting that offers the most clinically-appropriate level of care at the lowest cost,” said Teresa Lee, the Alliance’s executive director, in a statement.

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