To Keep Medicare Solvent, Head on Home

Published February 28, 2017

America is getting old… fast. In 1965 when Congress created Medicare, the Baby Boom was ending and the median age in the US was only 28.  By 2015, the median age had risen to 38, and Baby Boomers had started to retire. Medicare enrollment has surged to 10,000 people per day, and the number of older Americans hoping to age at home has ballooned.

The rise in the number of elderly is reflected by the growth in Medicare spending. According to the Centers for Medicare and Medicaid Services (CMS), in 2015 Medicare spent $646.2 billion, or 15% of total federal outlays. This represents an increase of 4.5% over the previous year. The rate of growth is projected to double over the next 10 years. By comparison, the rate of growth of private health insurance spending is projected to remain stable at just under 5% in the near future.

It is unlikely that the well-intentioned legislators of the mid-1960s imagined the program would grow to such an extent. Now that the aging of America appears to be a fact we will have to contend with, legislators are under considerable pressure to spend those hundreds of billions wisely.

Medicare Spending: Where is it Going?

There are several drivers of the increase in Medicare spending, most notably prescription drug prices, or Medicare Part D. According to AARP, four out of five seniors live with chronic conditions that require at least one medication. Coming in a close second to prescription drug costs is Medicare Part B, which covers, among other things, outpatient care and durable medical equipment. The least powerful driver of the rise in Medicare costs is Part A, which covers hospitalizations and, notably, limited home health services.

Medicare pays for a number of home health services, most of which apply to qualified seniors after they are discharged from a hospital or other acute care facility following an illness or surgery. Medicare covers skilled nursing and home health services provided up to seven days a week for no more than eight hours per day and 28 hours per week The program may pay for up to 35 hours per week in rare cases. The plan of care and certification will last up to sixty days. If you still need more care after that, the plan of care and certification can be renewed for as many 60-day periods as you need as long as your doctor signs them. A face-to-face meeting is not required for re-certification

The Benefits of Care at Home

Congress, to its credit, has recognized the relative cost-effectiveness of home care in the Medicare population. The Medicare Home Health Flexibility Act of 2015 represents an effort to expand access to home care services, by permitting occupational therapists to perform initial evaluations of seniors eligible to receive home care services. As seniors continue to occupy a growing segment of the voting demographic population, we may expect more such legislation in coming years.  There are other proposed bills related to expanding home care like the Chronic Care Act and Removing Barriers to Patient Centered Care Act.

Another demographic statistic has not been keeping pace with the rise in number of seniors: the number of doctors to care for them. According to Dr. Bill Thomas, we are already experiencing a shortage of geriatricians, who specialize in the care of the elderly. And the shortage is likely to worsen as the senior population grows. Thomas says one geriatrician can serve approximately 300 seniors, but the current ratio is closer to 1:870. (By comparison, there is a relative glut of pediatricians in the US). Geriatricians, who understand the particular medical needs of the elderly, are likely to appreciate the value seniors place on remaining at home.

Making Home a Safer Place for Seniors

Many seniors have a difficult time leaving their homes on their own, even if they are not strictly-speaking home-bound. Whereas some geriatricians perform house calls, the majority of specialized care at home is provided by nurses, physical and occupational therapists. There are several advantages to care at home for seniors that are not available in the context of office visits.

A big issue for seniors is safety. A home health visit can check for the presence of fall hazards. According to the CDC, one in four elderly people fall every year, resulting in 2.8 million emergency room visits and 800,000 hospitalizations per year.

Another source of hazard for the frail elderly is medication error. A 1997 study by the American Geriatrics Society revealed that 35% of older adults experience at least one adverse medication event and 29% of seniors experience events that are severe enough to necessitate medical attention. Home health visitors are particularly well-positioned to help ensure that seniors medication use is appropriate.

It seems clear that the Medicare cost savings from a good home risk-assessment and intervention can be substantial. The federal budget could certainly use some relief; however, the well-being of our seniors remains the most important reason to expand the role of home health in the Medicare framework.