Limited Information on the Value of Home Health Can Lead to Lower Utilization

By Elizabeth Hamlett, BS
August 30, 2021

Home healthcare (HH) is an important part of the care continuum and can uniquely address the needs of aging and chronically ill Americans. By allowing patients to receive skilled care in their homes rather than an institutional setting, HH can satisfy a patient’s general preference to remain in their residence. During the earliest waves of the COVID-19 pandemic, it offered an alternative care setting for patients who needed skilled health care or therapy. In addition, prior research has found HH utilization after a hospital or an institutional post-acute care stay to be associated with better outcomes (readmissions and mortality) and lower healthcare spending.

Prior literature suggests that utilization of HH is lower in Medicare Advantage (MA) relative to Traditional Medicare (TM). Several studies that investigated the access HH among MA enrollees found that MA enrollees may be more limited in accessing HH, in general, and in accessing high-quality HHs. Both quantitative and qualitative studies have found that MA benefit design elements, such as cost-sharing, pre-authorization, and referral requirements, are associated with lower use of HH among MA enrollees.

However, this lower utilization appears, on the surface, paradoxical. Unlike in TM, MA plans receive a capitated payment from CMS for each of their Medicare enrollees to cover the cost of care, and as a result are motivated by financial incentives to lower cost. So, why wouldn’t there be a clear substitution, of HH for costlier institutionalized post-acute care settings among MA beneficiaries and higher utilization than in TM?

Based on interviews conducted with a group of HH providers and researchers, the answer seems to be “a lack of understanding.” One interviewee indicated that MA plans are not aware of the full spectrum of services offered by HH and consider HH to consist of community-based care or non-skilled care rather than skilled nursing or therapeutic services. Others indicated that MA plans do not view HH as a way to improve patient outcomes or as a lower-cost alternative to more costly settings, but, rather, as an additional cost. One of the interviewees, however, did concede that there were a lot of questions about HH that have yet to be answered, including questions about the benefits of HH (e.g., what is the effect of HH on readmission rates?) and about the most effective ways to administer HH (e.g. what is the most effective timing, duration, and frequency of services? Does it vary based on clinical conditions and home supports, ability?).

With the introduction of new supplemental benefits in MA in 2020, MA plans can offer access to home-based services, such as in-home support services and in-home palliative care, which were previously unavailable to Medicare Advantage enrollees. As MA enrollees utilize these in-home services, MA plan administrators may develop a better understanding of the benefits of home-based care in improving outcomes and lowering costs.

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