Evaluation of Home Health Expenditures in a Medicare-Eligible Population
The findings in a new report published by RubyWell and Wakely Actuarial won't be surprising to anyone in the home health space: Medicare beneficiaries using home health services cost Medicare 42% less than beneficiaries with similar health conditions who didn’t use home health services.
What may be surprising to some is that home health aide usage brought total cost of care down 22-25% compared to beneficiaries who don't use any Home Health services. And the higher the home health aide dosage, the lower those costs.
Download the full report for details
Executive Summary
Wakely was retained by RubyWell to evaluate the potential financial implications resulting from providing access to all Medicare beneficiaries who meet criteria for home health services under the current law. To accomplish this, we compared various HH utilizing cohorts to a non-utilizing population that was considered to be eligible for Home Health services. We also evaluated the impact of Home Health Aide services, unskilled support delivered alongside skilled home health, on both total cost of care (TCOC) and outcomes.
We observed that there was a material difference in medical TCOC for those utilizing HH services relative to their non-utilizing counterparts. In particular, we make the following key observations:
- HH utilizers had approximately $3,600 lower expenses on a per member per month basis than the identified non-utilizing population. This amounts to comparatively 42% lower expenditures. When costs are normalized via risk score to a comparable morbidity as the non-utilizers, we still observe roughly $1,500 lower per member per month (PMPM) expenses which amounts to about 17% lower expenditures.
- When we organized non-utilizing and utilizing populations into comparable risk score cohorts, we observe PMPM total cost of care between $2,700 and $3,300 lower (34%- 43% lower) at each level of risk morbidity.
- Increasing dosage of home health aide utilization appears to contribute to lower overall expenditures compared to lower home health aide utilization as patients seem to rely on these services more than expensive inpatient and skilled nursing facilities. More readily employing the use of Home Health Aides may help redirect care from institutional settings to the home, contributing to lower overall expenditures.
- The majority of the expense differential between cohorts is attributed to lower inpatient expenses for HH utilizers. We note that this may in part be due to the definition of non- utilizers which relies on having multiple inpatient stays. Although that definition is imperfect, it is a characteristic that is consistent with the majority of HH utilizers and thus an important criterion for appropriately identifying the non-HH utilizing population who would be eligible for HH services.
In summary, these cohort-level comparisons suggest that Home Health utilizers tend to have lower expenditures than non-utilizers indicating that ensuring access to Home Health services may contribute to material savings in the Medicare program by reducing inpatient visits and/or lengths of stay.
The remainder of this report is used to provide further discussion around the results and to document data, assumptions, methodology, and limitations of the study.