In 2015, Medicare spent nearly $60 billion on institutional postacute care, an amount that has rapidly increased in recent years. In fact, nearly three-quarters of the geographic variation in total Medicare spending is driven by the variation in postacute care spending alone. Taken together, these patterns call into question the value of postacute care and especially its return on investment for patients.   

Given its growing contribution to US health care costs, postacute care has become a common target for efforts to reduce costs under alternative payment models, such as bundled payments and accountable care organizations (ACOs). These models are increasingly holding hospitals responsible for the costs of care provided during the post-hospitalization period. Recent evaluations have found that cost savings achieved under alternative payment models are driven almost entirely by a decrease in the use of inpatient postacute care. This trend is largely the result of a compensatory increase in the number of patients who are being discharged directly home, and thus bypassing the postacute care setting altogether. 

The push to discharge more patients directly home after hospitalization may seem preferable in some circumstances. In addition to being financially sensible by decreasing spending on postacute care, patients might prefer to be discharged home rather than to an institutional setting. In this way, getting patients home may represent a rare opportunity to align goals across patients, payers, and health systems. However, these gains must be viewed in the context of the costs borne by those who care for patients once they are discharged home—informal caregivers. 

Informal Caregivers In The US 

An estimated 34.2 million US adults report serving as an informal caregiver, providing unpaid care to an adult age 50 or older in the prior year. The economic valuation of informal caregiving for older adults, based on hours spent caregiving, is estimated to be nearly $522 billion annually. However, this value likely underestimates the true cost of caregiving in that it does not account for the physical, emotional, economic, and health-associated burdens associated with these roles. Informal caregivers are more likely to take leave from a job, take out a loan or mortgage, spend savings; hold multiple jobs, or retire early; suffer harm to intimate relationships, family conflict, worsened health, decreased geographic mobility, and an inability to pursue life goals. These effects are more common among women; tend to be more severe among those with low educational attainment, depression, and social isolation; and can contribute to a cycle of household poverty. As a result, the potential spillover effects of payment policies designed to get patients home may cause particular harm to already vulnerable populations.  

Do Existing Payment Policies Offer Support For Informal Caregivers? 

Payment policies designed to reduce institutional postacute care do little to support home-based care when patients are more quickly discharged than before. Medicare’s home health benefit provides limited home-based support, with at most one visit per day from a home health provider. Although Medicare Advantage expanded this benefit in 2019 to cover non-skilled needs such as help with daily activities, in the postacute period, when patients frequently need significant support in their activities of daily living, a once-daily visit is unlikely to alleviate caregiver burden. Other alternative payment models that encourage home-based care also do little to support home-based care. There have been a number of recent reforms that focus on improving support for caregivers. Various policies, such as the Caregiver Advise, Record, Enable (CARE) Act, have attempted to provide better supports for caregivers, but they fall short in addressing the true burden and insecurity caregivers face. 

How Could Payment Policies Be Changed? 

Changes in payment policies could begin to address this burden. Strategies that directly fund informal caregivers who provide postacute care could begin to fill this gap. This approach is not untested. State Medicaid agencies pay for home-based custodial care for older adults who might otherwise need nursing home–based care, and in some states, family members can be the paid caregivers. Medicare policies could similarly support home-based informal caregivers in the postacute period. Bundled payments could redirect funds that were previously dedicated to institutional postacute care settings to compensate caregiving in home-based settings, including flexible funding to pay for caregiving, transportation, respite care, or compensation for a family caregiver. 

Alternative payment models could similarly incorporate innovative approaches to support informal caregivers. The Next Generation ACO model currently waives the direct supervision requirement for post-discharge home visits, in effect allowing payment for home visits by a licensed clinical staff member without a physician’s direct involvement. This waiver provides some flexibility to tailor home visits to meet patients’ needs and could be extended to include payments to informal caregivers who provide the bulk of daily care. Given their central tenet of care coordination, a logical next step could be for ACOs to incorporate informal caregivers into the care management team responsible for monitoring and treating patients and developing strategies for broader population health management. 

An alternative solution is to indirectly provide funding to informal caregivers through paid leave from work to care for family members requiring help in the postacute period. Several states have pursued a policy of paid family leave, including California, New Jersey, New York, Rhode Island, and Washington. A national policy of paid family leave could help offset the financial burden associated with needing to take leave from work to provide caregiving, especially when caregiving is temporary as it most often is in the postacute period. 

Finally, alternative payment models should balance incentives to control costs of care with incentives to measure and maintain good outcomes, both for patients and for family members during the postacute period. These outcomes might include perceived support and satisfaction with the care plan in the postacute period. Including such outcomes in financial incentives could motivate providers to invest in supporting caregivers and other in-home supports that benefit patients in the postacute period. 

Supporting The Unsung Heroes 

The push to discharge more patients directly home presents an opportunity to align the goals of clinicians, patients, and their friends and families during the postacute period. If support for caregiving is not addressed, however, payment reform will likely result in the unintended consequence of increasing caregiver burden. While hospitals and health systems work to reap the savings associated with alternative payment models, we must ensure that families do not ultimately bear the costs. Future policies must mitigate the burdens, inequities, and economic insecurities that result for families and friends who provide post-discharge care—these are the societal costs of caring for patients at home.

[Reposted: Paula Chatterjee, Allison K. Hoffman, Rachel M. Werner.  Shifting the Burden? Consequences Of Postacute Care Payment Reform On Informal Caregivers, Health Affairs Blog, September 5, 2019. https://www.healthaffairs.org/do/10.1377/hblog20190828.894278/full/: Copyright ©2019 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.]