May 18th 2020

Hot Trends to Watch for in Post-Acute Care

The post-acute care market has grown during the past few years and is projected to keep expanding, driven by factors such as an aging population, the increasing prevalence of chronic diseases, and rising healthcare expenditures. The number of Americans over the age of 65 is projected to double by 2060, from 50 to 100 million, while the number of patients needing post-acute care is expected to jump from 8 million today to 27 million by 2060. 

So what is post-acute care management? As the name suggests, it is the healthcare management that is often needed following hospitalization for a major illness or injury. The post-acute care continuum involves facilities that can provide care in a less intensive setting for patients who are still not fully recovered, but no longer need to remain in an acute-care hospital. Post-acute care can take place in a variety of settings, including the patient's residence with home health assistance, a hospice, a skilled nursing facility (SNF), or an inpatient rehabilitation center. A large percentage of patients needing these services are covered under Medicaid and Medicare insurance, so post-acute care reimbursement often falls under the auspices of government-run programs.

Trends to Watch For

As for much of healthcare, the post-acute care sector is rapidly evolving. One emerging trend is that the current aging population, often referred to as “boomers," are more likely to remain independent. This in turn will increase the demand for home-based interventions. Many people in this age group will defer retirement and remain in the labor force, or will stay active in other endeavors such as travel or volunteer work if they have retired. They are also more likely to be actively engaged in the healthcare system, expect consumer-level care, and decide to age at home rather than enter some type of facility. As many older adults are now single or without children, more at-home caregiver resources will be needed.

Another trend is the steadily rising use of prescription medication, which puts a greater burden on providers to manage side effects appropriately and avoid adverse interactions. It is estimated that by age 65, at least 80% of people will have at least one chronic condition and 25% will have four or more; about a third of individuals in this age range currently take five or more medications. This suggests that additional resources will be needed across all healthcare settings, exacerbating existing shortages of healthcare professionals and potentially straining the sustainability and structure of federal programs such as Medicare and Medicaid.

Accountable Care Organizations (ACOs) and the use of value-based payments that reward providers for delivering better health outcomes at optimal total cost of care have also made inroads into post-acute care coordination. ACOs are beginning to initiate strategies that include moving appropriate patients to lower-cost settings when feasible, thereby reducing unnecessary higher-cost facility-based care spending. For example, some ACOs have already formed preferred skilled nursing facility (SNF) networks which, among other interventions, apply a comprehensive focus on transitioning care that begins at the time of hospital admission.

A fourth trend is the higher acuity in the patient populations that are being cared for in SNFs. Hospitals may be discharging patients who are still quite ill earlier, and SNFs will need to redesign their model to accept more of these higher acuity patients. The substantial cost involved with the care of many of these patients can strain resources, as reimbursement to the SNF may not fully cover these expenses. It may therefore be challenging to hire and retain skilled staff and remain financially viable under the Medicare Part A Payment model.

Finally, Medicare payment changes will fundamentally alter post-acute care management and post-acute care reimbursement. Last October, Medicare reimbursement for SNFs began a new era when the Patient-Driven Payment Model (PDPM) took effect. This new payment system essentially shifted reimbursement to SNFs from a model that was largely based on the volume of therapy provided to one based on the patient's individual characteristics, clinical condition, and needs. These changes are expected to better align assessment with the patient's actual care and needs, and increase reimbursement for more medically complex patients. A similar reimbursement approach, the Patient-Driven Grouping Model—designed for home-health providers—went into effect on January 1, 2020.

The post-acute care sector will continue to evolve, as new regulatory and reimbursement changes area adopted. As the population ages, increasing numbers of individuals will need rehabilitative, short-term and long term care.