NCPA - National Center for Policy Analysis


October 16, 2008

Administering medications at home generally costs $150 to $200 a day, far below the $1,500 to $2,000 a day cost of a typical inpatient hospital stay.  Additionally, home-infusion therapy eliminates the risk that patients will be exposed to infections caused by hospital bacteria.  But a gap in Medicare coverage is making it harder for older and sicker patients to swap hospital stays for home care, says the Wall Street Journal.

Under its Part D program, Medicare covers only drugs administered intravenously, and claims that it doesn't have the authority to cover costs beyond the drugs themselves.  Although legislation requiring Medicare to cover home-infusion services would cost about $1.5 billion over 10 years, the cost would be offset by estimated savings of $7.4 billion, says the Journal.

In fact, home-infusion services have nearly doubled in size to an $11 billion industry over the past five years.  The market, dominated by local players, has begun to consolidate, says the Journal:

  • Last year, pharmacy giant Walgreen acquired Option Care Enterprises, one of the largest providers of home-infusion services, and in July 2008 purchased CuraScript Infusion Pharmacy, with operations in six states.
  • Private-equity firms Kohlberg & Co. and Blackstone Group LP have invested in national infusion-therapy companies, and Critical Homecare Solutions Inc. sometimes sends nurses to the hospital before a patient is discharged to start educating patients and caregivers on how to use equipment.
  • A number of hospital systems now provide their own home-infusion services, and nonprofit hospitals may help out patients by dipping into their charity-care funds.

Still, a patient's out-of-pocket costs can be quite high if they are insured by Medicare, and for drugs needed on an ongoing basis, the out-of-pocket costs are even higher.

Moreover, there is a risk of infection if proper hygiene rules aren't followed and if devices malfunction.  But most equipment has become more sophisticated, reducing risk, says the Journal.

Source: Laura Landro, "As Home IVs Grow, Medicare Patients Miss Out," Wall Street Journal, October 15, 2008.

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