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Avalere Analysis Shows Home Care Services Reduce Medicare Spending

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Avalere analysis determined that Medicare Fee-for-Service (FFS) patients receiving home-based care services experienced a decrease in Medicare spending over time when compared to a statistically balanced, matched control group who do not appear to have received home care services. The spending differential was also found to be higher among Medicare beneficiaries with functional limitations and multiple chronic conditions.

As the US population ages, the demand for services and supports to enable individuals to live independently has steadily grown.  Home care—including support with activities of daily living (e.g., bathing, dressing, eating)—are an essential to helping elderly Americans “age in place.”

Home care organizations have asserted that personal care services can generate savings to the Medicare program by preventing unnecessary emergency department visits, hospitalizations, and readmissions—especially among frail elderly populations. However, the impact of home care on health care costs and utilization remains unclear.

Recognizing the paucity of data from large-scale studies, Avalere recently analyzed the comprehensive effect of home care interventions on Medicare spending. To conduct this analysis, Avalere utilized a retrospective study design to:

  • gauge the impact of frailty-related indicators and chronic conditions on spending in a sub-population of Medicare beneficiaries
  • understand the influence of home care support on Medicare utilization and spending

The study compared Medicare beneficiaries enrolled between 2012 and 2017 who do not appear to have received home care services based on our data.

Avalere’s analysis also delineated these populations based on frailty status, using factors such as adult failure to thrive, difficulty walking, and a history of falls. The change in per-beneficiary-per-month (PBPM) spending was then calculated as the difference in total incurred costs between the baseline and follow-up periods. Specifically, spending for each patient was estimated for a 12-month period prior to (baseline) and after (follow-up) the intervention of home care services.

As shown in Figure 1, beneficiaries who received home care support experienced a reduction in Medicare spending over time, whereas spending in the comparison population increased. Although Avalere did not evaluate the specific home care interventions as part of this analysis, the results suggest that delivery of home care services may contribute to lower spend over time.

Figure 1. Average Medicare FFS Total Cost PBPM, Frail Population With and Without Home Care Services
Figure 1. Average Medicare FFS Total Cost PBPM, Frail Population With and Without Home Care Services

Avalere then conducted a similar analysis focused on condition-specific sub-populations. As demonstrated by Table 1 below, PBPM spending generally decreased for patients receiving home care services, while spending increased for the comparison population who had no record of home care services.

Table 1. Average Change in Medicare FFS Total Cost PBPM, by Condition for Population With and Without Home Care Services*
Change in PBPM (Pre- to Post-Intervention)
Frail Population With Home Care Services Frail Population Without Home Care Services*
Diabetes with Chronic Complications -$227 $324
Chronic Heart Failure -$175 $432
Chronic Obstructive Pulmonary Disease -$155 $410

* The “Population Without Home Care Services” did not have any home care claims in the data accessed by Avalere, but they may have received services not captured in the database.

This Avalere analysis shows a correlation between the delivery of home care services and reduced spending on frail Medicare beneficiaries over time. While the nature of specific interventions are not evaluated in this study, it suggests that home care services may be an efficient mean to manage frail beneficiaries with chronic conditions who would otherwise experience a significant decline in their health and require high-cost healthcare services.

The analysis only points to a correlation, however, and additional research will be required to:

  • more concretely determine which home care services are causally linked to lower spending
  • account for unmeasured baseline variation in clinical and social factors that could impact spending among frail Medicare beneficiaries


Avalere conducted a retrospective cohort study using Medicare FFS data (100% sample; Parts A, B, and D) from 2009 to 2018 accessed under a research-focused data-use agreement with the Center for Medicare & Medicaid Servoces. Avalere pulled the enrollment and claims data of approximately 31,000 beneficiaries who received home care services between 2012 and 2017. A claims-based algorithm was used to separate this beneficiary pool into 2 sub-populations based on frailty status. Frailty was defined by factors such as a history of abnormal weight loss or gait, adult failure to thrive, difficulty walking, history of falls, use of durable medical equipment, and muscle atrophy.

Avalere replicated the Medicare data pull and assignment of frailty status for a random sample of Medicare beneficiaries who had no record of being managed by the client between 2012 and 2017. This “unmanaged” population was also split into frail and non-frail sub-groups in a similar manner.

Upon finalization of the research cohorts, Avalere pulled claims history for each cohort in aggregate, including all medical and pharmacy costs that were incurred during the 12-month periods before (baseline) and after (follow-up) the index date.

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