Changes in Informal Caregiving with Post-Acute Care Payment Reform

Alternative payment models have been proposed as a solution to the high costs of health care. While these models typically decrease consumption of formal post-acute care, they may result in a compensatory increase in the need for and use of informal or family caregiving. We estimate the effect of a large, randomized experiment with Medicare bundled payment on the need for and receipt of informal caregiving. Using data on over 2 million Medicare beneficiaries undergoing knee or hip replacement and a difference-in-differences approach, we find once bundled payment was mandated, there was a large substitution of home health care for SNF after knee and hip replacement and an accompanying decline in the intensity of home care. This resulted in an increase in the need for help with activities of daily living once home health was completed, help which was provided by informal caregivers