ACA’s Home Care Pilot Shows Strong Results Out the Gate

“This bipartisan bill will help coordinate care and lower costs for Medicare beneficiaries with multiple debilitating diseases, including Alzheimer’s, ALS, congestive heart failure, diabetes and other chronic conditions.” — Rep. Edward Markey (D-Mass.), May 2009.

That bill — called the Independence at Home Act — aimed to provide primary care services to Medicare beneficiaries with chronic illnesses in their home setting. At-home care was not a revolutionary idea in 2009, but it had faded into the background in the U.S.

“[Home care] is a 100-year-old or more health care delivery model that grew in this country and then for various reasons became less well known, as things moved to an institution and office-based setting,”  Gary Swartz, associate executive director at American Academy of Home Care Medicine, said.

Home care advocates have long championed the financial and health benefits of treating elderly patients with chronic illnesses in their homes, rather than having them come to a medical office. The Independence at Home Act was quickly supported by several health care groups — including AARP, the National Family Caregivers Association and the Visiting Nurse Associations of America — as a way to reduce health care spending and improve the quality of care. 

The bill eventually was added as a provision to the Affordable Care Act legislation and enacted in 2010 by President Obama. In 2012, the Independence at Home Demonstration project launched at 17 medical practices serving more than 8,400 Medicare beneficiaries. 

High-Cost Beneficiaries

According to the International Business Times, the demonstration project addresses what some ACA critics have said is a missing component of the law, “an effort to rein in costs.”

A USA Today analysis of Medicare data shows more than 94% of the $324 billion spent on traditional Medicare was spent on beneficiaries ages 65 and older with two or more chronic illnesses. The 2012 data show that about 15% of beneficiaries — more than four million people — have at least six chronic conditions and account for more than 41% of Medicare spending.

Meanwhile, CMS actuaries expect about 19.1 million additional people to enroll in Medicare over the next 11 years, spurring an increase in health care spending. For example, the latest projections from CMS estimate that health spending growth will rise to an average of 6.2% annually between 2019 and 2024, while Medicare spending is projected to increase to an average of 7.9% over the same period. The report attributes the growth in part to population aging as more baby boomers become eligible for the program.  

Further, the health of seniors seems to be worsening over time, according to the USA Today analysis. The number of U.S. counties where 75% of senior Medicare beneficiaries have multiple chronic illnesses has risen by 20% since 2008.

Swartz, whose organization has worked closely with CMS on the demonstration project, said, “House calls will become even more important as the Medicare population is on an accelerated growth curve,” and the number of beneficiaries with comorbidities is rising.

How Health Care at Home Can Help

Advocates, including the bill sponsors, have pointed to successful home health care programs across the U.S. that have contributed to reductions in expenditures for high-cost patients, such as those in:

• Boston;
• New York;
• Richmond, Va.;
• San Diego; and
• Washington, D.C.

In addition, the pilot project was modeled after the Department of Veterans Affairs’ Home-Based Primary Care program, which has been operating since 1972. The program, which provides comprehensive services in the home to veterans with high-cost chronic illnesses, has long been cited as an efficient and effective way to lower costs, reduce hospitalizations and improve care quality. Through the program, care teams — made up of doctors, nurses, pharmacists, psychologists, rehabilitative therapists and social workers — coordinate patient treatments, visiting a patient an average of three times per month.

A 2012 analysis by the American Action Forum showed the program resulted in a 24% reduction in health care costs and a 69% reduction in hospital inpatient days. The analysis stated, “Because patients with complex chronic conditions served by Medicare as well as those dually eligible for Medicaid and Medicare have similar care needs to the VA’s HBPC enrollees, it raises the possibility that the use of an HBPC-modeled program could similarly reduce hospital and nursing home stays within entitlement programs.”

The pilot program is putting that hypothesis under the microscope by testing the effectiveness of providing comprehensive primary care to costly, high-risk seniors who have limited mobility and have been diagnosed with at least two chronic illnesses. The program’s 17 participants include several major hospitals, such as:

• Boston Medical Center;
• Cleveland Clinic Home Care Services;
• North Shore Long Island Jewish Health Care System; and
• Visiting Physicians Association in Florida, Michigan, Texas and Wisconsin.

Keith Lind, a senior strategic policy adviser at AARP’s Public Policy Institute, noted that qualifying providers already have established house call delivery programs. The demonstration project requires them to perform home visits and report on quality metrics and patient satisfaction, and they receive no federal grants upfront. Those who meet certain quality standards and savings receive a share of government savings. 

Under the program, practices must meet minimum savings requirements, which are calculated based on practice size, to be eligible to share in the savings. The first 5% of savings are allocated to Medicare and the remainder are shared with CMS based on quality performance. The percentage of savings the provider would receive as an incentive payment is determined by the number of quality measures it achieves.

The Independence at Home demonstration project by design is all risk to the practices and zero risk to Medicare and taxpayers, which is great for country, Swartz said. He noted that the 5% savings requirement for CMS “is unique among the ACA Innovation Center programs.”

Preliminary Results Are In

After three years, CMS released the first round of data from the demonstration program, revealing total savings of more than $25 million in the first performance year, with CMS receiving $13.3 million and practices receiving $11.7 million.

CMS said the project saved an average of $3,070 per beneficiary. Of the 17 programs, 12 generated savings and nine met first-year spending targets, which made them eligible to receive bonus payments. The payments ranged from about $275,000 to about $2.9 million.

Data from the American Academy of Home Care Medicine show that 1.5 million Americans would be eligible for the program if it were implemented at the national level, generating $4.5 billion in savings annually.

Future Expansions?

The promising start prompted Congress to approve (SB 971) a two-year extension of the project, which Obama signed into law July 30.

Swartz said his organization is pushing to expand the program to become a permanent Medicare benefit. He said, “We learned you can build it, staff it, organize it and deliver care in this model. It is doable and replicable” at the national level.

Lind also praised the initial results and favors expanding the program. However, he noted that the sustainability of the program will be clearer after the results for year two and three are released. 

However, he expressed some reservations about the program’s restrictive criteria, noting, “[The participating practices] could be doing a lot more for people and have a bigger impact” if they didn’t have to meet the program’s strict savings targets.

Around the Nation

New contractor in town. CMS has awarded Booz Allen Hamilton a $202 million contract to oversee the federal health insurance exchange, which is currently being managed by Optum, Modern Healthcare reports.

Nurses favor Sanders. Politico reports that National Nurses United, a 185,000-member nurses’ union, has endorsed Sen. Bernie Sanders (I-Vt.) for president, citing among other things his support for a single-payer health system, which was not included as an option in the ACA.

ACA legal battles continue. The Pacific Legal Foundation says it will appeal to the U.S. Supreme Court after the full U.S. Court of Appeals for the District of Columbia Circuit declined to rehear its case challenging the constitutionality of the ACA, the Washington Times reports. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.