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Post Acute Care Market and Providers 11/30/11

November 30, 2011 News 16 Comments

I am a long-time reader of HIStalk. Even though I do not work in the acute care space, I find that monitoring what is going on in hospital and physician practice IT helps in planning for what might be coming down the road for post acute care.

A while back, there was a request for information about providers in the post acute care market, and I thought, “Hey, I know about that.” So, like the “long-time listener, first-time caller” that you hear on radio talk shows, I contacted Mr. H about a journalistic opportunity. He agreed, so here we go.

This article is the first of a two-part series about providers and technologies in the post acute care market. This is not meant to be an exhaustive analysis, but more of an overview to give you a bit more insight in to this part of the health care continuum.

Home Health

The term home health includes several types of providers, which can be quite confusing for consumers and healthcare practitioners alike. For purposes of this discussion, home health means a Medicare-certified agency that provides skilled care services. In 2009, 3.3 million Medicare beneficiaries received care from 11,400 home health agencies, for which Medicare paid $19 billion.

Population served

People who are under the care of a physician who require intermittent (less than eight hours per day), skilled (nursing, physical therapy, occupational, or speech therapy) home health aide, or medical social services. Almost exclusively, the payer is Medicare. Other payers include Medicare HMO, Medicaid, and commercial insurers. Home health eligibility is not dependent on a hospital stay; however, hospitals are by far the majority referral source for home health.

Special rules and regulations

The “patients” must be confined to their home in order to receive services. “Confined to home” is a misunderstood regulation in home health, even amongst the providers themselves. Essentially, what Medicare says is: the patient should leave the home only infrequently, and, when they do, it is a significant and taxing effort, usually because of medical reasons.

Medicare-reimbursed home health services are not for long-term custodial care. The services are focused on helping the patient become independent as soon as possible. The average number of visits (all disciplines) per patient for a 60-day episode of care in 2008 was 37.

Reimbursement structure

In 2000, Medicare changed from “we will pay you what it costs you” per-visit reimbursement to the Prospective Payment System. Patient acuity (clinical and functional) is measured at specific points in a patient’s episode of care. These skilled assessments are performed using the OASIS assessment tool. The result of the assessments is a Case Mix Weight (acuity) that determines how much money the home health agency will receive for a 60-day episode of care. Patients do not pay a co-payment or deductible to receive home health services.

Regulatory environment

Post acute care is highly regulated, with regular on-site surveys by state and federal regulators. Many home health agencies have achieved accreditation through the Joint Commission or other accrediting bodies.


Home health agencies can be affiliated with a hospital, free-standing, for-profit, or not-for-profit.

Private Duty

Private duty home care agencies provide home care aides, companion care, homemaker services, and possibly nursing services in the client’s home or place of residence.

Population served

This varies tremendously from agency to agency—from newborns to seniors. Some agencies provide only unskilled (aide and companion care) and some provide highly skilled nursing (infusion, ventilator) services.

When compared to the costs associated with a retirement community, private duty home care can be an affordable option for many seniors. The average annual cost for a nursing home is $69,715. The average annual cost for an assisted living facility resident is $36,372. (Source: MetLife Market Survey of Nursing Home & Assisted Living Costs). Seniors who want to remain in their homes can often do so cost effectively with a few hours of care a week. For example, 20 hours of companionship home care a week costs approximately $1,500 a month, or an average annual cost of $18,000.

Reimbursement structure

Many services are paid directly by the “client”. Some insurance models will pay for some private duty services — Medicaid, long term care insurance, worker’s compensation, and commercial payers.

Regulatory environment

This is all service dependent. If only companion services are provided, depending on the state, only a business license may be required. If personal care (home care aide) or skilled nursing services are provided, then state department of health services (or equivalent) regulations will apply.


There are some national chains, but many are privately owned by individuals who tend to be active in their local communities.

Home Health Registries

The reason I specifically chose to discuss registries is because they many times are confused with home health agencies since their name or advertising may include “home health.” These businesses are essentially a referral agency. They are the middleman between certified nursing assistants, home health aides, companions, etc. and an individual looking for services.

Population served

No particular population—newborns to seniors.

Special rules and regulations

None, since they are only a placement resource.

Reimbursement structure

Cash. They take a percentage from the person that is able to gain employment from their referral.

Regulatory environment

Business license. May having a bonding requirement.




Population served

Individuals who are terminally ill, their families and friends, and the communities in which they are located. Most hospices accept payment from Medicare, Medicaid, and commercial payers. Some with excellent funding may not require the individual to pay and will not bill insurance.

Hospice services may be provided in the client’s place of residence (home, assisted living facility, and skilled nursing facility) or a dedicated hospice facility, many times referred to as a “Hospice House.”

Special rules and regulations

Specifically, I will discuss the regulations for a hospice that is reimbursed by Medicare. All of the “clients” must have a “Certification of Terminal Illness” signed by a physician that states that it is reasonable to believe that the individual has less than six months to live due to their terminal illness. When the individual elects the Medicare Hospice benefit, they are stating that they no longer will seek curative treatment for that specific ailment. This election may be revoked by the person at any time during their care in hospice if they decide to receive potentially curative treatments for the terminal illness.

A significant percentage of the services hospices provide must be performed by volunteers. The agencies are responsible for supporting their local communities with education about terminal illness and will provide counseling services to the community — for example, in a high school where a tragedy has taken place. Hospices must provide bereavement services for 13 months after the person has died to any person designated to be a member of the client’s “family.”

Reimbursement structure

Paid on a per diem basis for as long as the client is under Medicare-reimbursed hospice care. Medicaid and commercial insurers will pay differently depending on the state and the client’s policy.

Regulatory environment

Medicare regulations state that the care provided to the client is done by an “interdisciplinary team” made up of nurses, social workers, spiritual support, aides, counselors, and the hospice medical director.


National chains, hospitals, foundations, and communities,

Skilled Nursing Facilities, Nursing Homes, Long-Term Care

A nursing home or skilled nursing facility (SNF) is normally the highest level of care for older adults outside of a hospital. Nursing homes provide what is called custodial care, including getting in and out of bed, and providing assistance with feeding, bathing, and dressing.

However, nursing homes differ from other senior housing facilities in that they also provide a high level of medical care. Each resident’s care is supervised by a physician, with skilled nursing care and rehabilitation services available on site. Some facilities specialize in stroke care, dementia and cognitive services, neurological disorders, etc. Many folks who have had orthopedic surgery (total joint replacements) will go to the skilled nursing facility to get rehabilitation services after their acute care hospitalization.

2011 statistics: 15,682 facilities serving 1.4 million residents. The average facility size is 109 beds at 80% of capacity.

Population served

Mostly frail seniors, the severely disabled, and individuals with cognitive disorders.

Special rules and regulations

It is said that outside of the nuclear industry, long-term care providers are the most regulated. There are local, state, and federal regulations. Under the federal Older Americans Act, every state is required to have an Ombudsman Program that addresses resident and family complaints and advocates for improvements in the long-term care system.

Like home health, a standardized clinical and functional assessment called the MDS must be performed at regular intervals to determine the resident’s acuity and the services they require, which drives reimbursement.

Medicare residents must have a qualifying hospital stay prior to admission in to the SNF. Medicare will cover 100 days of service for that “spell of illness.” If the resident is discharged from the facility prior to the 100th day, either to the community or the hospital, they can return to the facility within 30 days and continue that same 100 days of coverage. If they do not, they must wait for 60 days and have another three-day hospital stay in order for Medicare to cover another episode of care. So if they return to the facility between Day 30 and 60, Medicare is not paying.

Reimbursement structure

Medicare 14.2 %, Medicaid 63.6%, other/government 22.2%. There are some commercial payers, workers compensation, and long term care insurers.


National chains, regional companies, private, for-profit, not-for-profit. About 6% are hospital owned.

Assisted Living Facility

Assisted living is a retirement housing facility that provides independent living while offering extra help where needed. Some common services are help with getting dressed, laundry assistance, transportation, housekeeping, cooking and preparing meals, and medication assistance.

Assisted living facilities can stand alone,or be a component of a senior living facility which includes independent living, assisted living, and skilled nursing facilities all on one campus. Many assisted living facilities have special secured (locked) dementia or “memory” units.

Population served

Individuals of retirement age.

Special rules and regulations

Have to meet many of the same regulations as a skilled nursing facility with regard to building, safety, personnel requirements, etc. Nursing oversight is required for personal care services and medication assistance. Ombudsman oversight occurs in this environment as well.

Reimbursement structure

Mostly reimbursed by the individual. Some long-term care insurers will cover.

Regulatory environment

Highly regulated, oversight by the state where the facility is located.


National chains dominate the market, some affiliated with religious organizations.

Durable Medical Equipment

Durable medical equipment is special equipment for home use that provides therapeutic benefits or helps patients perform tasks they would otherwise not be able to accomplish. Durable medical equipment is defined as equipment that can withstand repeated use, serves a recognized medical purpose, generally is not useful to an individual without an illness or injury, is appropriate for home use, and is prescribed by a physician as medically necessary.

Typical equipment supplied: wheelchairs, hospital beds, lift chairs, scooters, diabetic supplies, canes, crutches, walkers, commodes, home oxygen, and traction. Many vendors will have a retail store front and equipment warehouse with home delivery service.

Population served

Newborns to seniors.

Special rules and regulations

Depends on the payer source and whether or not they are accredited. Medicare reimbursement brings special requirements.

Reimbursement structure

Cash, commercial payers, Medicaid, Medicare.

Regulatory environment

Recent changes to the DME landscape has turned the industry upside down. Section 302 of the Medicare Modernization Act of 2003 (MMA) established requirements for a new Competitive Bidding Program for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas, and the Centers for Medicare & Medicaid Services awards contracts to enough suppliers to meet beneficiary demand for the bid items. The new, lower payment amounts resulting from the competition replace the Medicare DMEPOS fee schedule amounts for the bid items in these areas. All contract suppliers must comply with Medicare enrollment rules, be licensed and accredited, and meet financial standards.


Some national chains, many private.

I hope this information helps you understand these post-acute health care services and providers. Part Two of this series will cover the information systems typically found in these environments, who the major players are, and what things to consider if looking to partner with these entities in shared payment arrangements, or ACOs.

Cindy Gagnon, RN, FNP has worked as a provider of post acute care services as well as a functional / clinical designer, implementation specialist, and manager of support services within the post-acute care information technology community. You may contact Cindy at: cindy.gagnon@comcast.net.

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Currently there are "16 comments" on this Article:

  1. I would be interested to know the sources for the market data you show. In particular, I’m looking for acute care discharge destination data broken out by total discharges and discharges by destination (SNF ST/LT, HHealth, other). As well, I’m looking for averge length of stay or episode (for HHealth) so that I can get a fix on throughput for post acute settings.


  2. Great summary – thank you! We co-developed a referral application with a 20+ hospital system that enables electronic referrals to be sent from the hospitals to hundreds of the types agencies you have listed. The information collected on the referral forms has created ‘gold mine’ of a database, covering myriad clinical data for the entire length of stay.The data, in general, reflects your stats.

  3. This is a great summary! Thank you! We will use again!

    Wish it went a little more in-depth (e.g. where does ACO apply and not?) and maybe a break down of how this extends to clinics…physician-owned, extensions of larger organizations and how some of the ownership/reimbursement models apply there (e.g. ambulatory surgical vs. general), but…just great!

  4. Great, Cindy! I was looking for a nice overview of the post acute care market, specifically Home Health, Hospice, and SNFs. This is a great start! Do you have any suggestions of other sites/sources of info that would give a nice layout of rules/regs specific to each of the three above?

    The Home Care industry seems to have many unique requirements and rules.

    Great job! Thank you!

  5. Fantastic write-up! Comprehensive and well organized – looking forward to part 2.

    @Peter Gelpi –
    We just looked at 2010 Medicare Claims data to get a feel for discharge destinations from Hospital settings and the top 5 (which account for 90% of discharges) broke down as follows:

    Home/Self 49.59%
    SNF 18.52%
    Home Health 16.42%
    Expired 3.26%
    Inpatient Rehab 2.92%

  6. Thanks so much for all of your kind comments–I am so glad that this information has been helpful. I will be doing a part 2, and will include the requests posted. Some of you had questions about helpful sites. For the most recent statistics, try the various trade organizations for the providers, they tend to have the most current information. CMS is always the best bet for comprehensive information, but the stats tend to be dated.

    Some helpful sites:
    Home Health: http://www.nahc.org
    Hospice: http://www.nhpco.org
    Long Term Care: http://www.ahca.org
    Assisted Living: http://www.ncal.org

    CMS is your best bet for regulations–I know the hospital regs are crazy complicated–but you should really try Home Health, Hospice and Long Term Care–enough to make your head spin.

  7. Other sites for very up to date information on the each of the providers is by Medpac. Search “Medpac Home Health”, “Medpac Hospice”, and Medpac Long term care Hospitals”

  8. Well done and very comprehensive! When this idea was first mentioned earlier this year, I had thought it might include the HIT related issues in the Post Acute Care Market. Would love to know more about what stage of the technology life cycle it’s in, what’s working and what’s not, what might be on the horizon, etc. But thanks so much for this effort!

  9. Excellent summary – but what about PALLIATIVE CARE? I’m in healthcare IT and equally engaged in managing care for very elderly parents and aunt. Only 1 of dozens of retirement/AL community contacts made this suggestion. Often provided by hospice, which connotates end of life, palliative care “is specialized medical care that focuses on relief of the symptoms and stress of serious illness. The goal is to prevent and ease suffering and to improve quality of life for patients and their families. Palliative care is appropriate at any age and any stage of an illness. And, it can be provided at the same time as cruative treatment.” Quoted from Center to Advance Palliative Care. Additional details at http://www.getpalliativecare.org and http://www.nphco.org. This is a critical post-acute option that needs more awareness and availability.
    Thanks to Cindy, HISTalk and readers for staying on the cutting edge of all the healthcare issues!

  10. Thanks Laura–I though about Palliative Care a lot when I was covering the Hospice option–many hospitals now are starting Palliative Care units, so that is why I did not cover. You bring up excellent points, thanks so much for the links.

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