Integrated care organizations: Medicare financing for care at home

As the boomer population ages, there is a growing need for integrated care organizations (ICOs) that can integrate both medical care and long-term services and supports in the home. This paper presents a policy proposal to support the creation of ICOs, redesign care, and provide financing for home- and community-based services (HCBS), with the goal of enhancing financial protection for beneficiaries, coordinating care, and preventing costly hospital and nursing home use.

This study used the 2012 Medicare Current Beneficiary Survey (MCBS) Cost and Use File, inflated to 2016 figures, to describe the characteristics of Medicare beneficiaries and their healthcare utilization and spending. The costs of covering up to 20 hours of personal care services a week were estimated using MCBS population counts, participation assumptions based on the literature, and financing design parameters.

A targeted HCBS benefit could be added to Medicare and financed with income-related cost sharing ranging from 5% to 50%, a premium paid by Medicare beneficiaries of approximately $42 a month, and payroll taxes estimated at around 0.4% of earnings on employers and employees.

Adoption of an HCBS benefit in Medicare would improve financial protection for beneficiaries with physical and/or cognitive impairment and provide the financing for health organizations to better integrate medical and social services. ICOs and delivery models of care emphasizing care at home would improve accessibility of care and avoid costly institutionalization; additionally, it would also reduce beneficiary reliance on Medicaid.