Do Higher-Cost Settings Deliver Better Outcomes? Post-Acute Care Efficiency in Medicare Skilled Nursing Facilities and Home Health Agencies.

Determining the value of different post-acute care settings for clinically similar patients is important for providers and payers. This study examines the causal effect of post-acute care (PAC) setting on Medicare spending and short-term patient outcomes among beneficiaries discharged from hospitals following treatment for stroke or congestive heart failure (CHF). Using 2013-2017 Medicare claims data, we implement an instrumental variable strategy that exploits daily variation in skilled nursing facility (SNF) bed occupancy at the hospital service area level to estimate the local average treatment effect of SNF versus home health agency (HHA) care. Our findings reveal no significant differences, on average, in 30-day mortality or rehospitalization rates between SNF and HHA care among stroke and CHF patients. However, the 95% confidence intervals do not exclude clinically meaningful reductions in 30-day mortality. Meanwhile, SNF care is associated with approximately $4700 more in Medicare spending per PAC episode. The spending gap is larger in markets with more constrained SNF capacity, particularly in states with Certificate of Need regulations, rural areas, and low-income neighborhoods. However, we do not detect statistically significant differences in short-term health outcomes across these markets on average, suggesting that supply constraints may amplify the spending implications of SNF use while the relationship between PAC setting and short-term clinical outcomes remains uncertain. These findings highlight the importance of aligning PAC discharge decisions with both clinical needs and local capacity considerations, particularly under value-based payment models.