Home hospitals are on the line: here’s why they shouldn’t be

The cost of acute hospital care exceeds $1 trillion dollars annually in the United States. Although some efforts have been made to reduce this number, hospital care and prescription drugs account for approximately one third of national health care spending growth each year. Despite these grim statistics, there is reason for optimism. Alternatives to in-hospital care are developing that offer more affordable care without compromising quality. 

Home hospitals provide limited acute care services for medical conditions commonly treated in the hospital like asthma, COPD, or pneumonia. They have existed in some form since 1995 when the first home hospital program was started at Johns Hopkins University. However, until the COVID-19 pandemic, there was no reliable payment model that would reimburse their services and their use was correspondingly sparse. Although they are similar to the Medicare-at-home services recently proposed by Vice President Kamala Harris that would primarily cover long-term care at home, home hospital care focuses on the management of acute and time-limited diagnoses, such as pneumonia or a COPD exacerbation.

During the COVID-19 pandemic, however, the Center for Medicare and Medicaid Services issued the Acute Hospital Care at Home initiative, which allowed home hospital services to be reimbursed at equivalent value as the same care provided in a normal hospital. For example, if a hospital is reimbursed $5,000 for the treatment of pneumonia, any approved home hospital can also be reimbursed $5,000 for a patient with pneumonia, even though the cost of treating the same diagnosis in the hospital versus at home differ significantly. Importantly, reimbursement was not just available to individuals with private insurance, giving housed individuals across the socioeconomic spectrum access to these services.

Home hospitals offer several benefits over traditional hospitals. First, they provide care at a significantly cheaper rate than traditional facilities. In one randomized controlled trial, the mean cost of the episode of care at-home was 38 percent lower than the same episode provided in-hospital. Aside from not having the facilities cost built into hospital pricing, at-home care was also cheaper because they had fewer lab studies, consultations to other physicians, and imaging studies compared to in-hospital patients. Another randomized controlled trial found that comparable at-home hospital care costs over 50 percent less than care provided in the hospital.

Aside from the cost benefit, care provided in at-home settings provides comparable or better quality than in-hospital care. In the same trials cited above, at-home care showed similar or improved clinical outcomes, lower re-admission rates, no difference in functional status of patients, and less anxiety and depression compared to the in-hospital group. Importantly, they also spent less of their day being sedentary compared to patients in actual hospitals. 

Although home hospital services are not yet widely available, they offer a significant benefit to patients and the health care system in reducing costs and improving quality measures. However, the waiver implemented during the pandemic is set to expire at the end of 2024. Recently, a bipartisan bill was introduced into the House , the Hospital Inpatient Services Modernization Act. Extending the reimbursement practices for home hospital services for another five years would ensure that less expensive at-home care continues, allow hospitals to confirm the efficacy and safety of home hospital services, and would combat the rising prices of hospital care.