Reduce Elder Care Spending by Helping Seniors to Avoid Hospitals

The Obama Administration’s comprehensive health care reform law tackles the nation’s health care spending crisis in several ways. It also addresses spending on Medicare, one of the nation’s costliest programs, in several ways.

One way that Affordable Care Act doesn’t attempt to reduce spending is by significantly changing existing Medicare benefits. This means that the law doesn’t directly call upon beneficiaries to influence Medicare spending because, theoretically, the government guarantees that it will pay for their health care needs.

More responsibility is going to fall on hospitals to reduce spending in the coming years as the government eliminates more than $700 billion in funding for Medicare between 2013 and 2022. Providers will see minor reductions in reimbursement, and they’ll also be penalized when patients are readmitted to the system after a recent hospitalization.

In the two years since the law was passed in 2010 some companies, including startups, in the health care technology scene have spotted an opportunity to help hospitals deal with penalties and declining reimbursements: keep people out of the hospital who don’t need to be there.

In an effort to deal with a provider problem, companies have turned to consumers for help. There’s an early but noticeable effort to come up with technologies that help seniors better take care of themselves at home. It’s a promising opportunity because it affects two groups that want the same thing; hospitals want to to keep costly Medicare patients out of the system, and patients want to avoid landing in the hospital.

The goal is to help patients and their caregivers handle non acute care in a low cost setting, as opposed to at an urgent care center or an emergency room, and whenever possible, ensure that medical issues don’t turn into issues that require hospitalization.

Companies are putting out products that allow for remote patient monitoring, telecare and better patient education on medical conditions and treatments. Seniors are likely to adopt these tools that help them get care at home because that’s where they want to be.

“Aging is not a problem.”

“Aging is not a crisis, aging is a success,” CEO of Intel-GE Care Innovations Louis Burns said at The Center for Business Innovation’s Healthcare Unbound Conference last month. His own mother lived to be 90, and Burns said that people in the health care field should take credit for enabling people to live so long.

It’s a positive and needed spin on elder care. But pick up any paper today, and it’s easy to see that the program that finances most of this care is in deep trouble.

Medicare expenditures increase each year, and more and more people continue to enroll in the program. In 2010, Medicare covered 46.6 million people. The first baby boomers are just starting to turn 65 ― the full eligibility age — and by 2030, when the youngest boomers turn 65, there are expected to be 78 million people on Medicare.

A 2010 Medicare Trustees report said that the trust fund for hospital insurance, called Medicare Part A, will be depleted in 2029. Some health policy experts predict it could happen sooner.

After presumed Republican presidential nominee Mitt Romney announced that Representative Paul Ryan is his running mate, the media have paid new attention to Ryan’s past proposal on Medicare reform. It’s assumed that Romney will adopt most of Ryan’s ideas, which will give the nation two main plans on Medicare system changes. There are many differences between President Obama’s and Ryan’s proposals. The biggest difference is that Ryan wants to write into law provisions that directly call for greater patient responsibility.

Under the Ryan plan, beneficiaries will get a voucher that they can either spend on private insurance or put toward traditional Medicare insurance. Whatever care the voucher doesn’t cover, the patient will have to pay for out of pocket.

Many health policy experts say that health care spending won’t significantly decrease without the help of patients who have more skin in the game. In other words, until patients have more financial stake in their health care, they’re not going to think twice about using a benefit that’s promised to them.

That’s probably true. However, the ACA has already indirectly led to thinking about ways to get patients to take greater responsibility for their health. In the tech space, companies are coming up with patient-facing products that ultimately aim to keep patients out of the hospital. The LeadingAge Center for Aging Services Technologies (CAST) has a great report on the state of technology in aging services.

Here’s a short list of some companies and what they’re doing in this area:

· American Well is a software technology company that provides Web-based telehealth. Providers can check in with patients in their homes to make sure that all is well or to identify and correct problems before they become big problems.

· Independa is releasing Artemis, a system that uses sensors to monitor vital signs. Providers can use an app to track their patients’ health remotely.

· Honeywell HomMed Genesis Touch is a tablet app that walks patients through a vitals assessment and sends the information to their provider. The app also allows patients to video conference with doctors.

· Axial Exchange aims to make sure that when patients leave the hospital, they don’t come back. An application focuses on educating patients about their conditions and making sure they understand their followup care.

These solutions have a chance at seeing patient adoption, not because any law directly creates a demand for them, but because seniors don’t want to end up in the hospital if they and their caregivers can help it. Even before changes to Medicare were signed into law in 2010, patients would have been open to using these products because they can help people avoid hospitalization.

The impact that this kind of technology is having right now is small, if at all existent. But no matter what changes to Medicare are made in the coming decade, the ACA got the ball rolling, prompting companies to create new patient tools that potentially enable better and less costly senior care. Over time solutions like these could have incremental positive effects on spending by keeping people who don’t need to be in the hospital out.

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