Medicare beneficiaries who live in long-term care facilities account for a large and preventable portion of Medicare spending because of high rates of hospitalization, visits to the emergency department and use of skilled nursing care, according to three reports released on Tuesday by the Kaiser Family Foundation, Kaiser Health News reports.

The reports found that in 2006, residents of LTC facilities made up 5% of all Medicare beneficiaries, but spending on LTC beneficiaries accounted for 9% of Medicare spending, or $25 billion.

The research also found that beneficiaries living in LTC facilities in 2006 cost Medicare an average of $14,538, which is more than double the average spending for other beneficiaries.

Hospital expenses made up 40% of all spending on Medicare beneficiaries living in LTC facilities.

Reasons for Disparity

The reports cite a "culture of hospitalization" in LTC facilities as a major driver of the additional spending.

The reports indicate that LTC providers agree there is a strong emphasis on hospitalization and hospital testing for such beneficiaries, which puts a strain on program funding because Medicare covers all ED visits, treatments and hospitalizations.

The reports concluded that increased hospital visits also occurred because of a shortage of qualified staff in LTC facilities, along with certain protocols and license restrictions.

The reports found that a large portion of hospitalizations of LTC residents occurred within the first few months of their stay, when patients often are transitioning and medical records can get lost.

Lack of access to beneficiaries’ medical histories could lead to misdiagnoses and prescription errors, according to the reports.

Opportunity for Cost Containment

The studies estimated that if hospital stays for LTC beneficiaries were reduced by 25%, Medicare could cut its spending by more than $2.1 billion in 2010. Reducing such hospital stays also could result in Medicaid savings because that program pays for more than 60% of nursing home residents.

The findings suggest that legislators who want to cut Medicare costs in accordance with the federal health reform law could examine LTC spending and implement a more coordinated and efficient system.

One such effort already is under way, according to KHN. A provision in the overhaul will deny hospitals payment if they readmit certain patients within 30 days of the first visit in an effort to discourage unnecessary hospital visits. The measure takes effect in October 2012 (Miles, Kaiser Health News, 10/12).