Article | Cost Effectiveness of Health

Why health systems may find an acute care at home strategy attractive

Article | Cost Effectiveness of Health

Why health systems may find an acute care at home strategy attractive


K. Michael Nichols, FHFMA, CPA

Martie Ross, JD

The potential for improved outcomes is just one important reason to consider pursuing such a strategy.

The concept of acute care at home, also commonly referred to as hospital at home care, has been heralded as having the potential to reshape U.S. healthcare delivery.a As a result, many hospital leaders are assessing their organizations’ readiness to deliver acute care services in patients’ homes rather than the traditional hospital setting.

Not to be confused with home health, acute care at home is an alternative for patients who would otherwise qualify for inpatient admission. The biggest obstacle to its widespread adoption is that, with few exceptions (discussed later in this article), it is not currently recognized as a reimbursable service. Some components may be separately reimbursable (e.g., home visits, remote physiologic monitoring), but in general, payment is not at the level to cover the costs of delivering acute level care in a patient’s home.

Nonetheless, there are compelling reasons for health systems to assess the viability of an acute care at home strategy, including the need to be prepared for a shift in industry payment policies around this model.

Such an assessment should consider the following questions:

  • What is the optimal patient type for such services?
  • What are the staffing requirements?
  • What is required for effective monitoring?
  • What ancillary services are required?
  • What quality assurance, legal and compliance issues need to be addressed?
  • How will we be paid?

CMS payment as a response to the PHE

The most notable payment exception is CMS’s Acute Hospital Care at Home (AHCH) program, which the agency launched in November 2020 as part of its Hospitals Without Walls initiative to address hospital capacity issues during the public health emergency (PHE). With this move, CMS’s acute care at home initiative made the jump from pilot program to large-scale deployment.

Under the program, a hospital approved for participation may receive its standard DRG payment for delivering inpatient-level care in a beneficiary’s home, provided it delivers these services in compliance with program requirements. (See the sidebar “Program requirements for AHCH” at the end of this article for additional information about the program.)

In creating the AHCH program, CMS relied on its authority under Section 1135 of the Social Security Act, which is granted only for presidentially declared disasters and emergencies. The program therefore will terminate at the end of the PHE. CMS has not made any announcements regarding any future acute care at home programs, presumably waiting to fully evaluate the experience with the AHCH program. Other than a limited number of pilot programs, no other payers have announced plans to reimburse for acute care at home services.

Despite an uncertain future, increasing provider interest in acute care at home is evidenced by the rapid growth of the Hospital at Home Users Group™, which bills itself as “a dynamic collaborative of Hospital at Home programs across the United States and Canada.” The group includes 86 full members (all of which have provided or are providing acute care at home to at least one patient) and roughly another 250 affiliate members (organizations in the planning stages of a program and others supporting such programs). It provides resources to help members build programs and is working to develop program and policy standards to inform regulatory and reimbursement policies.

To read about the emerging interest in this approach, see the sidebar “Interest in acute care at home spurred by research and advocacy” below.

Readiness starts with developing the right competencies

Even if an organization decides it is not ready to commit to a formal acute care at home program, it is in its best interest to develop or enhance three key competencies that provide the groundwork for the success of a future program.

1 Transitional care management. Developing a formal program to provide direct support for patients meeting specific criteria during the 30-day period following inpatient discharge is a logical first step in providing care outside the four walls of the facility. Such programs are proven to reduce readmissions and are reimbursed by many payers.

2 Remote patient monitoring. Selecting appropriate devices and data transmission platforms and implementing workflows for remote monitoring programs for post-discharge patients and those with chronic conditions will support the more comprehensive monitoring required for acute care services. And new payment policies developed for these services help sustain these programs.

3 Screening for SDoH. Developing and implementing processes to screen for social determinants of health (SDoH) best prepares an organization to provide appropriate services in the home based on patients’ specific circumstances.

The ‘6 s’ approach to prepare for investing in acute care at home

Many health systems may be motivated to seize the opportunity presented by acute care at home because they can perceive the benefit of being an industry leader in this strategy. Health systems that are prepared to invest in such a program should consider the following six key points as they develop their strategies.

1 System. Although a single champion may lead the charge, successfully implementing and operating an acute care at home program requires a systematic team approach, with engagement and buy-in from governance, management, medical staff, hospital patient care staff and operational support (including finance and IT). To assess system readiness, leaders should evaluate stakeholders knowledge of and willingness to engage with an acute care at home initiative. They should also consider the organization’s current capacity to develop and manage a program requiring such systemwide coordination and cooperation.

2 Strategy. To make sure the program aligns with the organization’s current strategic imperatives, leaders should consider:

  • Organizational capacity (time, talent and treasury) to pursue the program amid other priorities, especially given the lack of payment
  • Assets and relationships currently available and deployable to support such a program (e.g., skilled nursing facility, home health)
  • Hospital capacity issues that may require capital replacement or expansion
  • Capacity issues preventing acceptance of higher-acuity patients
  • Current and future market demand for acute care at home services
  • Potential impact of the program on the organization’s reputation/market position
  • Whether the program would present an opportunity to expand an organization’s traditional service area

3 Service. The organization must define the population that the acute care at home program will serve in order to calculate a demonstrable ROI for the program. With a clearly defined population, it is possible to calculate ROI using an enrollment algorithm that addresses the following:

  • Origin of patients admitted to the program (e.g., the community, the ED, an inpatient stay)b
  • Admitting diagnoses
  • Disqualifying medical conditions or complications
  • Home environment requirements (e.g., distance from hospital, full-time caregiver, internet access)
  • Patient financial class

The next step is to estimate the number of patients the program will likely serve. How best to garner medical staff buy-in and pursue patient recruitment to maximize enrollment is important to consider, especially given that existing programs have struggled with the issue.

4 Staffing. A staffing model should be developed based on preliminary volume projections. A good starting point is to use CMS’s AHCH waiver requirements regarding level and frequency of service (e.g., daily nursing visits). The following questions should be considered:

  • Can existing patient care team members be trained and redeployed to deliver the services?
  • Will third-party contractors be needed to meet staffing needs?
  • Will physician service agreements need to be renegotiated? Will new physicians and/or practitioners need to be recruited? What training will they require?
  • What is the appropriate compensation and incentive model for the program's providers?
  • Will work rules or any union contracts need to be modified?

5 Savings. The direct financial ROI for an acute care at homeprogram is derived from reductions in variable costs for acute hospital services furnished in the home versus the hospital, assuming no difference in payment. An organization can obtain savings beyond those derived from reducing the in-facility portion of patients’ total length of stay (LOS) only if:

  • Payers are paying for the acute care at home services directly
  • The organization is bearing full risk for a specific population

After accounting for acute care at home program start-up costs (including electronic health record configuration and staffing), savings are calculated by comparing the per diem direct variable costs of such a program with per diem facility costs.c Facility per diem costs can be calculated using any of the following four methods:

  • Develop an adjusted cost per diem based on historical financial statement data.
  • Apply a cost-to-charge ratio to billed charges to calculate encounter-level cost.
  • Use average direct variable cost per day based on the facility-derived DRG-level in the organization’s cost accounting system.
  • Divide the Medicare base operating DRG payment by average LOS to calculate a DRG-specific per diem.

6 Sustainability. Even absent substantial savings, an acute care at home program still may be sustainable based on indirect financial impacts, such as from:

  • Future participation in risk-based arrangements
  • Existing payment (e.g., available fee-for-service payment for specific services furnished through an acute care at home program, such as remote patient monitoring)
  • Relief of capacity issues from a reduced LOS for lower-acuity patients, thereby enabling the hospital to care for a greater number of higher acuity patients)
  • Competitive advantage from a more favorable view of the hospital by payer and the public and payers promoted by a well-publicized acute care at home program

An individual decision

Although acute care at home may be a concept whose time has come, it is difficult to predict how quickly such programs will become mainstream. Hospitals have long been organized to deliver care within a facility, and adapting to new sites of care is one of today’s great challenges for them. Each organization’s decision to invest resources in an acute care at home program, therefore, should be made based on careful consideration of its specific circumstances — not simply to follow the crowd. 

Footnotes

a. Reese, E.C., “Hospital-at-home care promises to reshape healthcare delivery in the United States,” hfm, October 2021).

b. For example, a hospital may initially focus on reducing inpatient length of stay by transitioning patients to home earlier, given the present lack of payment for other admissions.Program requirements for AHCH

c.  The reliability of this cost comparison depends on how accurately underlying costing data reflects the facts and circumstances of care provided under this model.

Program requirements for AHCH

For hospitals participating in CMS’s Acute Hospital Care at Home (AHCH) program, payment is available only for patients originating in the hospital’s emergency department and hospital inpatients who meet hospital-developed eligibility criteria. The hospital must provide the following for each patient: 

  • Initial in-person evaluation by medical staff member
  • At least once/daily visit by medical staff member (remote or in-person)
  • At least two in-person daily visits by a registered nurse or mobile integrated healthcare/community paramedic (MIH/CP)a
  • Arrangements for home delivery of services required during inpatient hospitalization (including twice daily monitoring of patient vitals, pharmacy, infusion, respiratory, diagnostics, transportation, dietary, durable medical equipment, therapies, social work and care coordination)
  • Immediate, on-demand remote audio connection with AHCH team member who can immediately connect with appropriate RN or medical staff member
  • Appropriate emergency personnel response to patient’s home within 30 minutes, if needed
  • All documentation completed in the hospital’s electronic health record accessible to all clinicians/contracted services, including those who would treat a patient in event of escalation

A participating hospital must report volume, escalation rate and unanticipated mortality to CMS on a regular basis. Also, a hospital must establish a local safety committee to review the reported metrics. As of May 13, 2022, CMS approved 223 hospitals to participate in the AHCH program, less than 4% of all community hospitals.b During the first 11 months of the program (November 2020 through October 2021), 1,878 patients received care, an average of 10 patients per hospital.c Even with committed resources and reimbursement (and in the face of PHE-related capacity issues), participating hospitals identified only a few patients for whom acute care at home was appropriate.

Footnotes

a. If both in-person visits are by the MIH/CP, additional daily remote RN visits are needed to develop a nursing plan.

b.  CMS.gov, “Acute hospital at home resources,” page accessed May 13, 2022.

c.  Clarke, D., et al., “Acute hospital care at home: The CMS waiver experience,” NEJM Catalyst, Dec. 7, 2021.

 

Interest in acute care at home spurred by recent research and advocacy 

Healthcare in the home has a long history, going back to long before the emergence of hospitals as we know them today. But only recently have researches meaningfully explored the idea of making acute care at home a standard practice in the U.S. healthcare system as it exists today.

In 2005, a goundbreaking study reported results from testing an acute care at home model for pneumonia, congestive heart failure, chronic obstructive pulmonary disease and cellulitis.a The study, which involved 455 patients across three sites, found statistically significant shorter lengths of stay (3.2 versus 4.9 days), lower costs ($5,081 versus $7,480) and fewer complications. This first major U.S. study of an acute care at home model stirred interest among providers, but apparently did not capture payers’ attention.

Between 2014 and 2017, the Icahn School of Medicine at Mount Sinai in New York City tested a mobile acute care team care delivery and payment model with funding from the Center for Medicare & Medicaid Innovation’s Health Care Innovation Award.b While providers reported positive impacts on the delivery of care and patient outcomes, the evaluators were unable to determine the program’s financial impacts. 

Several other pilot projects and clinical trials have reported favorable results, including lower readmission rates, lower rates of adverse events, lower costs and higher patient satisfaction. The research, however, tends to involve small samples of highly selected patients, raising questions regarding generalization.c

In 2017, the Physician-Focused Payment Model Technical Advisory Committee (PTAC) (an independent federal advisory committee that makes recommendations to the U.S. Department of Health and Human Services [HHS]) recommended a refined version of Mount Sinai’s acute care at home model, concluding it satisfied PTAC’s 10-point criteria.d  A few months later, PTAC recommended another acute care at home model championed by Marshfield Clinic and Contessa Health.e HHS, however, rejected both models, citing concerns with specific design aspects and noting it was “exploring a model that allows beneficiaries with certain acute illnesses or exacerbated chronic diseases to receive hospital-level services in their homes.”

Footnotes 

a. Leff, B., et al, “Hospital at home: Feasibility and outcomes of a program to provide hospital-level care at home for acutely ill older patients,” Annals of Internal Medicine, Dec. 6, 2005.

b. Gilman, B., et al., Evaluation of the health care innovation awards, Round 2: Final report, Mathematica, submitted to Center for Medicare & Medicaid Innovation, September 2020

c. Clarke, D., et al, “Acute hospital care at home: The CMS waiver experience,” NEJM Catalyst, Dec. 7, 2021.

d. Physician-Focused Payment Model Technical Advisory Committee, ‘HaH-Plus’ (Hospital at Home Plus) provider-focused payment model, Oct. 20, 2017). 

e. Physician-Focused Payment Model Technical Advisory Committee, Home hospitalization: An alternative payment model for delivering acute care in the home, May 7, 2018. 

f. Azar, A., Response to PTAC comments and recommendations, June 13, 2018. 

 

 

 

 

About the Authors

K. Michael Nichols, FHFMA, CPA,

is a consulting principal with PYA, PC, Knoxville, Tenn. He is a current member and past president of the First Illinois HFMA Chapter and a recipient of the HFMA Medal of Honor.

Martie Ross, JD,

is a principal with PYA, Knoxville, Tenn., and director of PYA’s Center for Rural Health Advancement.

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