How Reducing Hospitalizations Affects Medicare Spending

December 18, 2017 2:28 pm Published by

A recent experiment conducted by the CMS sought to reduce hospitalizations among nursing home residents. The results of this three-year experiment showed a 17 percent drop in avoidable hospitalizations and savings of almost $50 million in Medicare spending.

Rethinking Hospitalizations for Seniors

During 2011, one out of four Medicare beneficiaries living in nursing homes were hospitalized. This cost the CMS $14.3 billion. Yet another study found that 47 percent of these hospitalizations could have been avoided.

If a patient is hospitalized for 3 days or more, they qualify for Medicare payments for post-acute care in their nursing home. These payments are up to four times the amount normally paid by Medicaid per day. But this can backfire on hospitals because they can be subject to a Medicare penalty when readmission rates are high. It is expected that hospitals will be subject to $564 million in these penalties in the coming year.

Reducing Medicare Payments

Many of the readmissions to hospitals are nursing home residents with chronic illnesses that would be better served being treated out of the hospital. The experiment is now in its second phase and focusing on paying nursing homes Medicare rates for treating patients onsite for one of six specific conditions, including:

  • Asthma
  • Congestive heart failure
  • Dehydration
  • Pneumonia
  • Skin Ulcers
  • Urinary Tract Infection

While reducing hospitalizations helps lower Medicare spending, it also benefits the health and well-being of patients. The stress of moving them can exacerbate their conditions, which can lead to more time spent in the hospital.

These concepts can also be applied to home care clients. The preventative care that can be administered at home, either by home care workers or home health aides depending on the patient’s level of need, keeps people out of the hospital. Simple services like medication management, guided exercise, and fall prevention improve health and safety while reducing costs.

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