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Why Medicare is Rethinking Elderly Post-Hospital Care Spending

After focusing on the reduction of hospital spending for years, the federal government is turning its head to Medicare, hoping to take control of their budget and reduce what they see as excessive amounts of spending on post hospital care for elderly patients. These post hospital expenditures include the conventional patient care provided to older patients upon discharge such as nursing homes and home health aides.

Also known as post-acute care, post-hospital care has been increasing their spending by 5% a year, every year, in almost 2/3 of the United States. According to a study conducted by a congressional advisory panel, in 2012 17% of the entire Medicare budget went toward post-hospital care.

Elderly Care SpendingEnormous post-hospital Medicare spending discrepancies have been discovered in different regions around the country. Researchers found lacunas such as the one existing between Louisiana and Arizona: In Louisiana an elderly patient receives $8,800 worth of post hospital care. In the southwest, the same elderly patient would receive less than half of that amount.

Interestingly enough, physicians have very little to do with decisions regarding hospital discharge or post hospital care. The amount of care a patient receives after leaving the hospital depends almost entirely on the availability of staff in the immediate area.

Medicare is rethinking the way money exchanges take place, proposing that each patient be funded with the same amount of money no matter their condition, giving the hospitals more incentive to continue providing care.

Although Medicare advisors believe this method will be the key to improving efficiency of spending and patient care, healthcare economists foresee a very difficult transition into the next phase of Medicare’s plan. Stephen Parente of University of Minnesota predicts that, “it’s going to be a fairly ugly transition to get to a more efficient, streamlined system. It’s going to be a consultant’s bonanza.”

But things are not easy now, either. It is common practice for post hospital care facilities to turn down incoming patients because so many of them do not meet the Medicare criteria that the hospital staff claimed they did upon discharge. And a study done by the Institute of Medicine sees post hospital care services as the reason for Medicare’s disproportionate spending per patient in different states around the country. In fact, they claim that uneven spending in post hospital care facilities is the source of 73% of Medicare’s uneven spending overall.

To counter these imbalances, a new industry of impartial evaluators has formed. These businesses come into the hospitals and evaluate patients before they are discharged then make a recommendation as to what type of post hospital facility they would be best suited for.

Some believe that it is physicians who are responsible for exorbitant post hospital Medicare spending, as many of them make a significant amount of money through the “hodgepodge” of payment methods utilized by Medicare. Critics argue that this is a waste of taxpayers’ money and invites fraud. Still, these same critics see the new proposed plans as enabling irresponsible post hospital care, and urge administrators to continue strategizing.

Tom Prose

CEO at General Medicine, P.C.
As founder and CEO of General Medicine PC, the nation’s premier post-hospitalist care company,Tom Prose leads an exceptional team of internal medicine, geriatrics and healthcare administration specialists.