Post-acute Savings: For Profits or Reinvestment? 

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Medicare coverage for services shortly after hospitalization includes a great deal of waste, low-value care, and services that stretch Medicare coverage rules. If reforms save a great deal of money in “post-acute” care, where should those savings go?

A recent Institute of Medicine (IOM) report showed tremendous variation in “post-acute” care, and the U.S. Department of Veterans Affairs and a score of small projects have shown that hospitalization and after-hospital costs can be cut. Various initiatives are hustling to scale up such approaches, aiming to save millions of dollars, too. Mostly, these endeavors improve care and deserve support on that score, but one should also pay attention to what happens to the savings. When private companies contract to manage a population through the post-hospital period, the managed care or Accountable Care Organization (ACO) giving the contract and their efficiency contractor share the savings, with a little also going back to the Medicare Trust Fund from ACOs. What if policy were changed to ensure that some of the savings will pay for the social services and supports that elderly people require if they are to live (and flourish) at home, cared for by family and friends?

The questions we have been asking at the Center here — as old people in training, as people who love old people, and as advocates for better policies — are whether and how the public can rally to act in its own best interests? It is not enough to insist that we save money. We also need to decide what to do with what we save.

Where Will the Elders Go? And the Money?

One likely effect of dramatically trimming services available to elders after hospitalization will be to increase the demands on families. We will expect them to provide ever more care to people who would once have still been in the hospital or nursing home. Most just-discharged elders will have ongoing needs for supplemental services at home. Since many will not meet current Medicare requirements for such care, they and their families will have to pay even more out of pocket. They will spend down to Medicaid more quickly.

Also, the effective arrangements for follow-up that many hospital-based practitioners have had will be disrupted. The orthopedist who could count on the skilled nursing facility or inpatient rehabilitation facility to implement shared protocols will now have patients going home more quickly and to family caregivers who cannot reliably follow instructions or report issues.

Many very old people will not have homes and families able to take them in or to drop everything to provide care. Many of the essential services (e.g., personal care, housing, food, transportation, caregiver support and training) will have to be paid for privately or by Medicaid. If, in the end, Medicaid pays more and families are more depleted, have we really saved money? Did we get what we really wanted?

Investing Shared Savings to Build Medicare 2030

What if we invested much of the projected savings to support frail elders better in their communities? Doing so would slow the rate of spending to Medicaid and buttress family caregiving by providing, for example, stipends, respite care, and training. Very old people could feel more confident and avoid being plagued by fears of burdening families, going without food, or living in inadequate or overly expensive housing.

For now, we could allow the efficiency contractors to implement the changes broadly enough to create irrevocable change and then build a new system on their success, or we could aim to build the new system that generates the efficiencies and reinvests the savings from the start. Both strategies would keep public funds working in the public interest, at least eventually.

What’s your role in all of this? Write to your elected officials or talk with them when they hold a forum. Express your concerns as an old person in training and as a citizen. We are building the system into which our parents, our spouses, and we ourselves will age. Surely, in protecting our own future, we can craft a better one for us all.

Make a comment below and let us know how you see things.

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