How Research Can Influence Payment Policy

Abstract:

Decades of research have demonstrated that Hospital at Home (HaH) safely delivers hospital-level care in a patient’s home. More recently, research has informed the development of a value-based payment model to disseminate HaH. The COVID-19 pandemic enabled regulatory changes leading to the enactment of a payment for HaH in the Medicare program, the Acute Hospital Care at Home (AHCAH) waiver. This article highlights the crucial role of health policy research in advancing HaH and its role in enabling AHCAH before discussing ongoing research that will guide the future of HaH.

Key Words:

Hospital at Home (HaH), Acute Hospital Care at Home (AHCAH), payment policy

The Hospital at Home (HaH) Model

Within weeks of the declaration of the COVID-19 pandemic, the Centers for Medicare & Medicaid Services (CMS) instituted a set of regulatory relief measures expanding where and how hospitals could care for acutely ill patients (CMS, 2020a). By November 2020, CMS expanded the scope of these measures to allow hospital-level care to be provided in a patient’s home (CMS, 2020b). This initiative, Acute Hospital Care at Home (AHCAH; Clark et al., 2021), was a deft response to the urgency of the pandemic. Since the enactment of AHCAH, thousands of patients nationwide have received safe, high-quality Hospital at Home (HaH) care (Levine et al., 2024).

HaH provides hospital-level care in a patient’s home as a substitute for traditional inpatient treatment. The model was developed by geriatricians concerned about the iatrogenic harms of inpatient hospitalization (e.g., falls, delirium, etc.), hypothesizing that providing care in patients’ usual environment would improve outcomes. All HaH models provide core inpatient services and cover patients 24/7: physician and nurse practitioner care (in-person or virtual), in-person nursing care, on-demand care team support, pharmacy, and allied services (e.g., physical and occupational therapy), in-home therapeutics (e.g., intravenous medications and fluids, respiratory therapies), diagnostics (e.g., X-rays), and established protocols for transferring to an inpatient facility if needed.

To be clear, AHCAH did not create HaH. Decades of health services research preceding the COVID-19 pandemic produced a robust evidence base supporting HaH. However, no CMS reimbursement mechanism existed to support broad HaH implementation. Regulatory and payment barriers for HaH were overcome when mitigating COVID-19 pressures (e.g., increasing hospital capacity while delivering high-quality, reliable acute care) became essential. But AHCAH would not have been possible without decades of effort to build the evidence base showing that HaH could deliver such care.

This article identifies how research informed the development, validation, and iteration of the clinical HaH model and played an integral role in informing payment policy. A brief review of nearly 30 years of clinical research—and nearly a decade dedicated to elaborating a payment model—demonstrates that at every step, research has and can continue to inform policy.

The Evidence Base

The first HaH pilot in the United States was published in 1999, building on foundational research to identify appropriate patients for HaH (Leff et al., 1997) and understand whether patients would accept HaH care (Burton et al., 1998). A case series feasibility study at an academic medical center of 17 patients demonstrated that HaH care could be provided safely and was acceptable to patients. This pilot also achieved high patient satisfaction and cost less than traditional inpatient care (Leff et al., 1999).

Subsequent studies included multisite, prospective trials focused on beneficiaries of managed Medicare insurance plans and beneficiaries of the Veterans Affairs (VA) health system. Studies demonstrated HaH delivered high-quality care, acceptable to patients and family members, again with significantly lower costs (Leff et al., 2005). These findings were replicated in a regional health system for Medicare Advantage and Medicaid patients (Cryer et al., 2012). The VA has replicated these findings across other sites (Cai et al., 2017, 2018). Studies across multiple systems have continued to re-demonstrate findings that home-based acute care is high-quality, lower-cost, and satisfactory to patients (Arsenault-Lapierre et al., 2021; Caplan et al., 2012; Shepperd et al., 2016). Subsequent randomized controlled trials of HaH demonstrated similar positive findings associated with HaH care (Levine et al., 2019, 2021; Moss et al., 2024).

Payment Policy

Reimbursement for HaH has been debated since its emergence in the United States. Early demonstrations were grant-funded or operated in the Medicare managed care setting or the VA, whose capitated model allowed for investments in cost-saving programs. Despite international examples of favorable returns on investment for reimbursing HaH care the same as inpatient care (Montalto, 2010), no fee-for-service payment mechanism for home-based acute care existed in the United States. Questions about benchmarking HaH episode payments to traditional Diagnostic-Related Group (DRG) rates, which incorporate overhead costs into reimbursements, remained open without a U.S.-specific evidence base.

In 2014, researchers, in conjunction with the Center for Medicare and Medicaid Innovation (CMMI), sought to change this. Researchers at the Icahn School of Medicine at Mount Sinai had been awarded a Health Care Innovation Award from CMMI to study the implementation of HaH in a multi-hospital health system. The work focused on advancing the HaH clinical model and developing data to inform future payment models for HaH in fee-for-service Medicare. In addition to tracking health utilization outcomes, researchers also set parameters to prevent potentially lower-cost cases (e.g., uncomplicated pneumonia) from being “cherry-picked” into the HaH arm of the study, proactively addressing a payment policy interest. The findings supported pursuing policy change that would enable HaH implementation broadly (Federman et al., 2018).

Researchers also understood that study outcomes could inform the development of a value-based payment model acceptable to providers and payors. The Medicare Modernization Act of 2015 created the Physician-Focused Payment Model Technical Advisory Committee (PTAC), an advisory committee to the Secretary of the Department of Health and Human Services focused on the evaluation of innovative payment models for potential adoption in the Medicare program. Seeking to advance HaH payment policy, the research team engaged with actuaries to design a payment model that would satisfy the interests of patients, providers, and payors (e.g., high-quality care, with appropriate compensation to support operation, at a lower total cost than traditional inpatient care). Importantly, any model would need to be translatable to the Medicare context for health systems to rationalize health systems investing in the upstart of HaH programs.

The outcome of this actuarial process was a DRG-based bundled payment for acute care at home plus 30-day post-acute follow-up care (CMS, n.d.). To address questions of appropriate reimbursement, the payment model design included both a 5% reduction in the prospective DRG payment, as well as inclusion of a 30-day, post-acute transition episode composed of in-person and telehealth follow-up into the “bundled” payment. Supported by the evidence of improved outcomes for patients and a favorable assessment of the DRG-based payment model, PTAC (2017) recommended full implementation of the alternate payment model for HaH across the United States in the fall of 2017.

Starting the Conversation

The PTAC recommendation for nationwide implementation did not automatically translate into Medicare adoption. First referred by PTAC to the Secretary of Health and Human Services, the recommendation was then shared with CMS for determination of how to proceed. Both the body of research and the PTAC-approved alternate payment model proposal started a conversation with CMS about numerous practical considerations for implementing HaH.

Discussions with CMS involved examining the specific diagnoses treated and services rendered during the Mount Sinai trial to inform which payment rates would be appropriate. Regulators were weighing the costs of delivering HaH care against potential savings to Medicare. At the same time, HaH programs negotiated contracts with commercial payors to maintain patient volume to justify its existence.

Discussions with CMS stalled, only to be accelerated by the exigency of the pandemic. AHCAH is, truly, the product of years of discussion and problem-solving with policymakers, from PTAC approval in the fall of 2017 through the waiver announcement in November 2020.

Looking Forward

A growing body of literature analyzing the AHCAH waiver program has underscored the safety of disseminating HaH to hundreds of hospitals nationally without unforeseen consequences. ACHAH-participating health systems have achieved low mortality, low rates of escalation to facility-based inpatient care, and low admission rates to skilled nursing facilities following HaH discharge (Adams et al., 2023). The AHCAH program was reviewed by the Medicare Payment Advisory Commission (MedPAC) in the spring of 2024 with recommendations pending (MedPAC, 2024).

To be sure, there is more research that must be conducted to answer further clinical and policy-related questions (Leff et al., 2022). Importantly, research to date has demonstrated that HaH has been able to provide person-centered care for socially vulnerable populations, including patients of minority racial or ethnic backgrounds, persons with dementia, and dually eligible beneficiaries (Levine et al., 2024). This builds on prior research examining the equitable provision of HaH to patients of lower socioeconomic status (Augustine et al., 2021; Baim-Lance et al., 2023; Siu et al., 2022). Further research should assess equitable provision in a variety of clinical contexts, to allay policymaker concerns related to health equity.

Although prior research demonstrates that the care experience of family caregivers of HaH patients is better and less stressful than traditional hospital care, additional research is needed to determine how to optimize the experience of family caregivers in the context of HaH. Under AHCAH, HaH programs cannot enlist family members to perform medical duties.

Additional work on developing technical assistance tools to enhance the experience of family caregivers is needed to ensure family members are appropriately prepared for having a loved one cared for in HaH. Furthermore, the many permutations of HaH care that developed during the AHCAH waiver program should be evaluated side-by-side, including an assessment of telehealth’s role in creating optimally safe and efficient models of care (Levine et al., 2022).

Outstanding research questions about payment policy remain, too. The PTAC-recommended HaH alternate payment model included both a DRG discount and the inclusion of 30-day post-acute transitional care. The AHCAH waiver included neither of these provisions, instead reimbursing HaH care at inpatient DRG rates. Economic evaluations must evenhandedly compare these approaches to determine future directions.

The AHCAH waiver is set to expire Dec. 31, 2024, and will require Congressional action to be extended. While hospitals continue to obtain AHCAH waivers from CMS, the rate of uptake has slowed in the face of policy uncertainty and as the worst of pandemic-related pressures on hospital beds have eased. Policymakers should once again look to the research that underpins the Hospital Without Walls program—as well as the evidence emerging from the waiver program showing a safe and effective rollout nationally.

Robert M. Zimbroff, MD, is an assistant professor of Medicine at UCSF’s School of Medicine in San Francisco, and an affiliated scholar at Stanford University, working with their Clinical Excellence Research Center. Bruce Leff, MD, is a professor of medicine at the Johns Hopkins University School of Medicine and holds a joint appointment in the department of health policy and management in the John Hopkins Bloomberg School of Public Health in Baltimore. Albert L. Siu, MD, is a professor and Chair Emeritus of the Brookdale Department of Geriatrics and Palliative Medicine at the Icahn School of Medicine at Mount Sinai in New York, NY, and director of Geriatric Research, Education and Clinical Center (GRECC) at the James J. Peters Veterans Affairs Medical Center in the Bronx.

Photo credit: Shutterstock/Ground Picture

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