Trends in Medicare Post-Acute Care

The Commonwealth Fund issues a brief on Medicare post-acute care spending trends.  (Commonwealth Brief)   Post-acute care has been fingered as one of the larger sources of spending growth and has been targeted for both payment reductions and better utilization controls.  The brief looked at spending from 2007 to 2015.  Per beneficiary spending increased from $1248 to $1424 over that time period, which is actually very moderate growth.  (Remember this is all fee-for-service, not Medicare Advantage.)  But breaking the time period into pieces; from 2007 to 2011 spending rose to a high of $1541 per beneficiary and actually declined for the rest of the study period.  Skilled nursing facility spending for 54% of all PAC spending in 2015, followed by home health care at 33% and inpatient rehabilitation facility at 13%.  SNF spending had the largest decline over the later part of the study period, followed by home health, while IRF spending rose modestly.  Looking only at beneficiaries who had an inpatient stay, the decline in spending for SNF, for example, is more limited at .4% from 2012 to 2015, compared to 2.8% among all beneficiaries.

The decline in spending is due in part to limits on increases in post-acute care payments imposed by Congress and CMS.  But it also stems from a decline in inpatient hospital admissions, which appears to have led to a corresponding reduction in post-acute care use, although it was possible that it might lead to more of such care, as a substitute for inpatient care. The proportion of beneficiaries who had any inpatient use declined by 3.3% annually from 2012 to 2015, while those with any SNF use declined by 2% per year and for home health the percent of lower use per year was 1.3%.  It is notable that the number of home health days per beneficiary with a hospital stay rose in the early part of the period, then grew much more slowly, probably linked to some regulatory changes.  So utilization changes were the primary driver for the dramatic slowdown in per beneficiary spending.  Post-acute care continues to deserve close attention by CMS and private payers, as it is clear that providers respond to payment methods by attempting to maximize reimbursement.  But it appears that better control of spending in this category has already been achieved.