According to the study, Medicare spending on post-acute care totaled $59 billion in 2014, care traditionally provided by SNFs or home health agencies. However, a regulatory carve-out for several dozen specialty hospitals gave rise to an LTCH industry with more than 400 hospitals and $5.4 billion in Medicare spending by 2014, according to Healthcare Dive.
CMS has tried repeatedly to close the loopholes that allow LTCHs, typically large for-profit chains, to reap substantially larger Medicare payments than other post-acute care providers and to curtail growth in the segment, with little success.
Of the $5.4 billion spend on LTCHs in 2014, about 85% was incremental spending, the authors note. "This suggests that the elimination of LTCHs would reduce Medicare spending by about $4.6 billion per year, with no measurable adverse impact on patient welfare," they said.
Eliminating LTCHs, which account for just 1% of Medicare spending, "would remove 13% of the residual variance, in the absence of a behavioral response, and about 10% given the substitution to SNFs," the authors added.
Providers, payers and policy wonks are all looking for ways to rein in healthcare spending. In a report published earlier this year, low-value healthcare services — e.g., overprescribing antibiotics and ordering unnecessary tests for lower back pain — cost Washington state $282 million between July 2015 and June 2016. The Washington Health Alliance based its analysis on the national "Choosing Wisely" campaign's definition of low-value healthcare services.
Read the full story at Healthcare Dive.