In the 1990s, researchers at the Johns Hopkins University Schools of Medicine and Public Policy developed an innovative way to manage care for some acutely ill elderly patients (who often don’t want to or refuse to stay in a hospital) by treating them in their own homes rather than through an inpatient hospital admission. Since then, the Johns Hopkins team has aided several other hospital systems and Veteran’s Administration Medical Centers to implement Hospital at Home (H@H) programs of their own.

H@H models can be easily scalable for future pandemic preparedness, and patients were said to experience better clinical outcomes, with lower rates of mortality, use of sedatives and restraints, fewer lab and diagnostic tests, and cost savings ranging from 19% to 30% versus traditional inpatient care. They were also said to have better satisfaction among the patients and family. However, these models had not gained much traction in the US.

CMS launched the Hospital Without Walls initiative in March 2020 to free up inpatient beds (and the associated nursing and ancillary services) to care for critical COVID-19 patients and keep other patients safe. CMS expanded into the Acute Hospital Care at Home (AHCaH) model in November 2020. Hospitals and health systems need to be CMS-certified to participate in the model through an application for a waiver of the 24/7 nursing requirement and several other flexibilities to provide acute-level care in a home-based environment.

Patients must agree to receive acute services in their home and meet specific clinical criteria defined by the hospital or emergency department physician. Examples of acute illnesses that lend themselves as clinically appropriate for treatment in AHCaH are chronic obstructive pulmonary disease (COPD), pneumonia, heart failure, cellulitis, and gastroenteritis.

When conditions are met, the patient is admitted to AHCaH and all services (nursing, drugs, IV, lab, x-ray, etc.) that would be provided in the hospital are provided to the patient in their home, or for more complicated MRI-type tests, via transport for the test to the acute facility. Telemedicine and digital technologies are leveraged, as are physician, nursing, and EMT staffing.

As the patient’s home is considered part of the hospital during the admission, CMS is allowing reimbursement to hospitals and health care providers for care delivered under AHCaH at parity to the regular rates for care provided for inpatient facility services, including facility fees. Hospitals can potentially generate the same per-patient revenue at a lower cost to deliver care in the home, while opening inpatient capacity to generate new revenue.

In the 2023 Consolidated Appropriations Act, Congress extended CMS AHCaH waivers and flexibilities through December 2024. As of June 9th, 125 systems and 282 hospitals across 37 states are CMS-certified for AHCaH—more than double than just two years ago.

What’s driving participation growth? Is it the waiver extension period? Is it the possibility that funding extends permanently? Is it the CMS reimbursement methodology? Is it that hospitals see a new profit center in their business model? Or are the hospitals just trying to meet patients where they are?

These programs are not without challenges:

  • Hospitals need investment in technology, remote staffing resources, and care delivery infrastructure to extend into the home setting for these acute-level services which are at a much higher level than traditional home care. They also need patients to drive scale.
  • CMS reimbursement methodology based on hospital approach seems unsustainable, while home care is traditionally much lower and would need to be increased to account for acute nature of illness. Will CMS change methodology? What value is CMS getting? Will more oversight of quality and other metrics be mandated now that the emergency nature of H@H has passed?
  • As fee-for-service Medicare shifts toward value-based care, there is a need for data regarding the quality and total costs of care of inpatient care versus H@H care to determine the overall value of H@H programs.

For H@H models to be successful, it’s imperative to have alignment of purpose, as well as incentives, among the hospital, providers, and payers.

Impact for payers:

The program may end up costing Medicare money based on the current reimbursement model, and without oversight using solid comprehensive metrics it will be difficult to assess overall value. Commercial payers support programs directing care away from higher cost sites of care such as a hospital toward care in a lower cost site like a physician office or home. Cost comparison models that build in measures of not just outcomes, but quality of care, along with costs to patient and caregiver will be needed for long term viability of AHCaH. Commercial payers may also begin to engage in coverage for H@H models for their fully insured members, as well as align with CMS for Medicare Advantage beneficiaries under AHCaH.

Impact for manufacturers:

Manufacturers may have opportunities to leverage digital therapeutics or support initiatives addressing health disparities for H@H patients that are typically elderly or live in rural areas, in support of improved patient outcomes. Changes in reimbursement methodology may impact drug products at some point.