Spending On Postacute Care After Hospitalization In Commercial Insurance And Medicare Around Age Sixty-Five

Area of Science:

• Health Economics
• Healthcare Policy
• Comparative Effectiveness Research

Background:

• Postacute care spending significantly influences overall healthcare episode costs.
• Evidence linking increased postacute care spending to improved patient outcomes (readmissions, functional recovery) is limited.
• Medicare payment reforms indicate postacute care spending is sensitive to financial incentives.

Purpose of the Study:

• To compare postacute care spending between Medicare and commercially insured patients.
• To determine if Medicare payment policies contribute to excess postacute care spending compared to commercial payers.
• To assess the impact of differential spending on patient readmission rates.

Main Methods:

• Population-based study using a statewide hospital collaborative in Michigan.
• Regression discontinuity design applied to propensity-weighted, age-adjusted cohorts.
• Comparison of postacute care spending and readmission rates for Medicare vs. commercially insured patients around age 65.

Main Results:

• Fee-for-service Medicare beneficiaries exhibited 68-230% higher postacute care spending than similar commercially insured individuals.
• Spending disparities were observed across diverse medical and surgical conditions.
• No significant differences in readmission rates were found between the two payer groups despite spending variations.

Conclusions:

• Postacute care utilization patterns are strongly influenced by payer type and associated financial incentives.
• Significant opportunities for cost savings within the Medicare program may exist without negatively impacting quality of care.
• Further investigation into payer-specific utilization drivers is warranted to optimize healthcare spending.