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Home Care Services Reduce Medicare Spending for 30 Chronic Conditions

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An Avalere analysis determined that Medicare Fee-for-Service (FFS) patients who received personal care services experienced a decrease in Medicare expenditures over time when compared to a statistically comparable control group comprising patients who did not receive the same level of personalized care. The reduction in spend was specific to a subset of chronic conditions that were targeted operationally for intervention and case management.

Demonstrating a positive impact on clinical and economic outcomes has been a long-standing challenge for the home care industry due to fragmented care standards across states, the lack of standardized measures in personal care, and limited access to claims data that would enable home health agencies that support patients with activities of daily living (e.g., medication management, meal preparation, patient education) to track and measure the impact of service delivery on patient utilization and outcomes.

To address this knowledge gap, Avalere evaluated the impact of home care interventions on utilization of emergency department visits, skilled nursing facilities, and home health care, and on overall healthcare expenditures in a cohort of Medicare FFS beneficiaries who were enrolled between 2007 and 2021. The overall cohort was divided into 2 sub-groups: 1 that received targeted home care and a statistically similar control group that did not.

Medical and pharmacy claims were then pulled from Avalere’s in-house datasets, and utilization and spend were tracked during the 12 months prior to (baseline) and after (follow-up) home care service delivery had been initiated. For each outcome of interest, the difference between the baseline and follow-up periods was estimated, and the differences were compared between the intervention and control groups.

As illustrated by Table 1, a key finding of the analysis was that, although the change (baseline vs. follow-up) in overall spend favored the non-intervention group, the total cost of care was significantly lower for patients who received targeted home-based care and were previously diagnosed with 1 or more chronic conditions of interest.

Table 1. Average Change in Medicare FFS Total Cost by Condition for Populations With and Without Home Care Services
Chronic Conditions Population with Home Care Services Population without Home Care Services Mean Difference Over Time
Quadriplegia $12,807 $42,709 $29,902
Traumatic Amputations and Complications $1,363 $31,143 $29,780
Multiple Sclerosis $19,760 $48,449 $28,690
Atherosclerosis of the Extremities with Ulceration or Gangrene $10,424 $37,165 $26,741
Lung and Other Severe Cancers $17,452 $39,858 $22,406
Reactive and Unspecified Psychosis $5,368 $27,763 $22,395
Artificial Openings for Feeding or Elimination $20,481 $41,655 $21,175
Bone/Joint/Muscle Infections/Necrosis $18,843 $38,676 $19,833
Seizure Disorders and Convulsions $6,736 $25,105 $18,369
Intestinal Obstruction/Perforation $18,915 $36,653 $17,738

Note: 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. Only the top-10 chronic conditions are listed.

For example, the cost increase experienced by quadriplegia patients who received home-based care was, on average, $29,902 lower than the increase observed for quadriplegia patients who did not receive home-based care. A similar trend was observed for other chronic conditions that may benefit from home-based support, including multiple sclerosis, traumatic amputations, lung cancer, and seizure disorders.

The results point toward a potential positive impact of types or components of home-based care on the management of specific chronic conditions. However, additional research will be required to better understand how patients should be prioritized relative to clinical and social factors that influence responsiveness to service delivery in the home and to identify which interventions drive lower utilization and spending.

Funding for this analysis was provided by BrightStar Care. Avalere retained editorial control.

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Avalere Health is an Inovalon company, a leading provider of cloud-based platforms empowering data-driven healthcare. We believe in the power of data, informing actionable insights, delivering meaningful impact, and driving stronger patient outcomes and business economics.


Avalere conducted a retrospective cohort study using Medicare FFS data (100% sample; Parts A, B, and D) from 2007–2021 that were accessed under a research-focused data use agreement with the Centers for Medicare & Medicaid Services. As noted above, Avalere pulled the enrollment and claims data of approximately 3,603 patients (intervention group) who received targeted home care services between 2012 and 2017 and a large, random sample of beneficiaries who were enrolled in Medicare during the same timeframe and had no history of being exposed to the vendor’s service offerings.

Next, a regression-based matching algorithm was used to identify a subset of non-intervention beneficiaries who were, on average, statistically comparable to the intervention group with respect to baseline demographic and clinical characteristics, including age, gender, frailty status, dual eligibility status, low income status, clinical risk, and recent home health utilization. Upon finalization of the research cohort, Avalere derived utilization and cost metrics from the claims data and conducted a between-group difference-in-differences analysis to quantify the impact of targeted home-based care.

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