No matter which side of the political divide you sit within, it seems apparent there will be changes to how the United States delivers healthcare after the 2020 Presidential election. Besides proposals for new healthcare models, or modifications to the existing model, Medicare, and its responsibility as a good steward of taxpayer’s money has become a topic of conversation at a recent Townhall meeting. By their own admission, The Centers for Medicare and Medicaid Services (CMS) believes there has been an estimated $50B in billing fraud. One of the ways CMS is fighting fraud is by implementing regulations in the home healthcare market to ensure suspect billings are eliminated. I’ve written about these changes, known as Patient Driven Grouping Models (PDGM) both (here) and (here), and we are welcoming the changes, especially if it ensures home healthcare agencies are using above board business practices. This article won’t delve into the benefits of any specific proposal made by a candidate running for political office but will instead make the case for why home healthcare can and should lead the conversation for better patient outcomes and more effective use of everyone’s money.
Medicare’s Impact: The Taxpayer
As you likely know, Medicare was established in 1966 to provide health insurance for Americans over the age of 65, as well as for some younger individuals who qualify because of disability status determined by the Social Security Administration. Medicare is funded by a combination of a payroll tax, beneficiary premiums and surtaxes from beneficiaries, and general U.S. Treasury revenue. In other words, if you are an American taxpayer, you are paying into the Medicare fund and will presumably have a need for the fund when you reach retirement age.
For the calendar 2018, CMS claims that nearly 60M Americans were covered by Medicare.1 An accepted estimate within the home healthcare industry is that 80% of home healthcare patients are over the age of 65, and thus they are covered by Medicare.
Here is what growth in the over 65 market looks like:
- Roughly 10,000 Americans turn 65 each day 2
- By 2026, 21% of the US population will be over 65. That is up from 14% in 2012 3
- By 2030, 72M Americans will be over 65, nearly doubling the 2009 number of 36.9M 4
Hence, it is clear that Medicare, and thus the American people, are the largest insurer of home healthcare services in the United States. And the need for these healthcare services will continue to grow at an astounding rate.
Will we be overwhelmed by rising Medicare costs?
Clearly, there is now and will continue to be, growing need for Medicare and thus, home healthcare services. Does that mean for taxpayers concerned about rising healthcare costs? Is there a way we can get our arms around these costs and properly manage them before they manage us? I believe the answer to those questions can be found n a recent study published within The American Journal of Accountable Care. The researchers studied patients who received home health care in-home immediately after going to the emergency room and the subsequent 90-day cost. Why the researchers studied this subset of patients is because emergency room visit rates are comparable among those treated for surgery and then released to home care. In other words, patients who received care at home immediately following an ER trip were just as likely to end up back in the ER compared to those who stayed in the hospital following a health care crisis. This ending up back in the emergency room, otherwise known as “readmittance” is important to study because readmittance is very expensive and substantially drives up the costs of healthcare. Patients in the study who received home health care in-home immediately after going to the ER had a total 90-day cost of $13,012, compared to $20,325 for patients who were treated in the hospital. This is a 35% savings, and a substantial financial impact. Additionally, home health patients were less likely to be admitted to the hospital, at 23.7%, compared to a 33% readmission rate. “If acute home-based care options were available to all emergency physicians across the nation for just these 5 conditions (Five conditions measured were congestive heart failure, chronic obstructive pulmonary disease (COPD), urinary tract infection, pneumonia and cellulitis) , this could account for an annual savings of $3.7 billion in total costs, $3 billion in Medicare savings, and $520 million inpatient OOP expenses,” the researchers said.
In part two of this article, I will explore the cost saving of home healthcare versus hospital stays, and why in some states, we need more home health care and not less in order to better manage our healthcare costs.
- The Centers for Medicare and Medicaid Services “CMS Fast Facts” January 2019
- S. Census Bureau
Sheri Yarbray is a CEO, the founder of Your Therapy Source LLC a home healthcare staffing company, a STEM entrepreneur, and proud mom. Sheri is passionate about delivering high quality home healthcare to patients, inspiring young women to move into STEM careers, and sharing ideas about managing a balance between a work and a home life. You can follow Sheri on LinkedIn @Sheri Yarbray