Why Payers and Hospitals Don’t View Hospital-at-Home Programs as a Home Run

In The Wizard of Oz, when Dorothy is ready to return home to Kansas, Glinda, the good witch, gives her simple instructions: close your eyes, tap your heels together three times, and think to yourself, “there’s no place like home.” For those who are fortunate, home can be a comfortable and safe environment. It is important to acknowledge that too many people are homeless and too many homes are anything but comfortable and safe environments.

For most of human history, the home served as our first and final resting place; in between, it was where care was delivered. Paul Starr’s The Social Transformation of American Medicine notes that even in the early 19th century, people avoided hospitals, viewing them as dangerous places; sick people were considered safer at home. Back then, those seeking care at hospitals generally lacked familial assistance (e.g., travelers or those without any means of support).

Today, hospitals provide a significant amount of care and represent about 30% of health expenditures. In stark contrast, home health care represents only 3% of health expenditures. Much of the care delivered by hospitals requires highly specialized teams and equipment only available in a hospital setting. Recent evidence from CMS’s Acute Hospital Care at Home (AHCAH) initiative, as well as evidence from earlier programs (e.g., the Johns Hopkins HaH program and programs included in a Cochrane Review), suggests that hospital-at-home (HaH) programs can deliver some hospital-level care to some patients effectively, safely, and cost-effectively. So, why don’t U.S. payers and hospitals view HaH programs as a home run?

Selecting the right patients

Some patients (e.g., those requiring emergency care and trauma services, major surgeries, intensive care unit services, or high-risk deliveries) should receive care in the hospital. Some others may successfully be cared for at home.

For the AHCAH program, patients had to meet eligibility criteria, including:

• Clinical criteria (e.g., hemodynamically stable, demonstrate medical decision-making competency, have a low risk of complications, and be able to complete activities of daily living with or without assistance)
• Diagnostic criteria (e.g., acute asthma or COPD exacerbation, newly diagnosed or decompensated congestive heart failure, deep venous thrombosis, pulmonary embolism, bronchitis, pneumonia, acute COVID-19, acute kidney injury, urinary tract infections)
• Social and environmental criteria (e.g., the home must have running water, a functioning bathroom, electricity, refrigeration, climate control, a smartphone, internet, and sufficient data plan; a reliable caregiver must be present; and the home must be safe and conducive to providing acute care)
• Patient-engagement and technology criteria (e.g., patients need to be willing and able to engage in virtual and in-home visits, use technology for monitoring, communication, and delivering care)

Payers and hospitals may question whether there are enough eligible patients to justify investment in a HaH program, leading to concerns about an insufficient ROI. These stakeholders would benefit from a tool that helps quantify the number of hospital patients who could be treated successfully at home and adjusts for patient-population and health-system differences.

Some payers may be concerned that some hospitals may inappropriately attempt to game the system to increase reimbursement by referring patients who only require sub-acute care to HaH programs. To mitigate this risk, payers may want a utilization management tool that efficiently ensures that hospitals are referring patients who require hospital-level care to HaH programs.

Quantifying necessary investments

HaH is enabled by remote-monitoring technology and by motivated staff willing and trained to screen patients, make referrals, and coordinate and deliver hospital-level care remotely and in home settings.

Hospitals may think the implementation costs of a HaH program are too high. To help handle this objection, a calculator helping hospitals estimate their implementation costs given their current staffing and equipment resources and state of readiness should be developed.

Measuring the cost savings

Do HaH programs help to bring home the bacon? The evidence is inconclusive. While the AHCAH initiative found lower Medicare spending for participants in the 30 days after hospital discharge, the lack of a control group means we can’t definitively conclude that home-based hospital care explains this difference. Importantly, the CMS analysis of the AHCAH initiative measured only Medicare spending and did not measure hospital costs. And of the 12 admission avoidance studies reviewed by Cochrane that reported cost data, the HaH programs appeared less costly than hospital care, but the results are inconclusive because of differences among the studies, including different methods used to calculate costs and different follow-up times.

Hospitals will likely need evidence of cost savings to justify investments in HaH programs. Ideally, in the future, evidence will be based on a large randomized controlled trial that measures hospital costs (e.g., staffing, equipment, supplies) for at least 12 months.

Forecasting reimbursement

Even if HaH programs prove to save hospitals money, their embrace of this site-of-care shift will depend on coverage and the level of reimbursement by payers. Most payers currently do not cover hospital-level care in home settings.

If reimbursement for hospital-level care at home were at parity with hospital-based care, then any cost savings from HaH programs would improve hospital margins, and this could encourage adoption. Recall that telehealth adoption was in direct response to payment parity. But if payers try to capture some of the cost savings by reimbursing HaH programs at a lower rate, it could discourage hospital adoption. Alternatively, it is possible that payers may benefit from HaH programs even if reimbursement for hospital-level care at home were lower than hospital care if other real or perceived benefits were large enough and part of the calculus (e.g., lower readmission rate beyond the 30-day post-discharge period, lower mortality rates, higher rates of living at home versus living in skilled nursing facilities).

Predicting the impacts of unfilled beds

When demand for bed capacity exceeds supply (as it did during the COVID-19 crisis), hospitals were more interested in HaH programs. But hospitals may be less interested in HaH programs when demand for bed capacity approximately matches or falls short of supply. Even if HaH programs seemingly improve margins, there are several reasons why hospitals may not embrace this site-of-care shift. Unfilled beds could:

• Shrink margins for inpatient stays given fixed overhead costs
• Lower staff morale or lead to layoffs
• Decrease revenue associated with inpatient stays (e.g., cafeteria, parking, gift shop)
• Damage hospital reputation and competitive standing based in part on the number of inpatient beds and volume of patients served
• Reduce the number of licensed beds
• Limit or block approval for future expansion plans

Weighing public health objectives

The AHCAH initiative was in response to the COVID-19 pandemic to increase hospital capacity. If the success of HaH ultimately reduces bed capacity, then hospitals may have less surge capacity for emergencies or unexpected demand due to pandemics or mass-casualty events. Then again, if hospital systems embrace HaH programs, they may be better prepared to deal with emergencies or unexpected demand. And for future outbreaks, HaH may help reduce hospital-acquired infections (although the AHCAH reduction was not statistically significant).

Bringing it home

For many fortunate individuals, there’s no place like home. Wealthier patients and patients with rich coverage may increasingly receive hospital-level care at home, and this may help drive innovation and acceptance which, in turn could lead to greater adoption. But one thing is for sure: Adoption of HaH, unfortunately, will not be equitable. By definition, hospital-level care at home requires a home. So, the homeless will be excluded. And those too poor to afford a home meeting the requirements for HaH will also be shut out. 

The dream of bringing hospital-level care home resonates with our innate desire for comfort and healing in familiar surroundings. But there are significant obstacles in the Yellow Brick Road from hospital to home. Hospitals and payers will need the brains (evidence), heart (compassion), and courage (will) to work through challenges of selecting patients, quantifying investments, measuring savings, forecasting reimbursement, predicting the impacts of unfilled beds, and making these programs as equitable as possible. Only then can we more successfully follow the path from hospital care to hospital-level care at home.