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News Roundup: April 1, 2016

Hospitals Brace for New Medicare Payment Rules

Published by The Wall Street Journal
April 1, 2016

Starting Friday, sweeping changes in Medicare payments could affect nearly 800 U.S. hospitals’ bottom lines, but not everyone is ready for the switch.

The new rules will hold hospitals accountable for all the costs of hip and knee replacements for 90 days. If patients recover and go home quickly, hospitals could reap savings. If patients have complications or need lengthy stays in a rehab facility, hospitals could owe Medicare instead.

The so-called bundled-payment initiative is the first mandatory program under the Obama administration’s plan to shift at least 50% of Medicare spending to alternative-payment models by 2018.

All hospitals in 67 randomly selected metropolitan areas, including New York and Los Angeles, are required to participate. Together, they perform about one-third of the 430,000 hip and knee replacements Medicare covers annually. The Centers for Medicare and Medicaid Services, or CMS, estimates the program will save $343 million on the $12.2 billion that Medicare will spend on the procedures over the next five years.

“We’re concerned that very few hospitals and physicians have developed the infrastructure necessary to meet this deadline,” said Thomas Barber, chief of the council on advocacy of the American Academy of Orthopedic Surgeons.

Last week, two U.S. representatives from Georgia introduced a last-ditch bill in Congress to delay the bundled-payment mandate, saying it “comes with tremendous risk and complexity for patients and health-care providers.”

Amy Bassano, incoming deputy director of the CMS Innovation Center, said, “We feel good that hospitals are ready to start on April 1.”

Unlike in some bundle programs with private insurers, hospitals won’t receive a lump sum from Medicare to divide among the participating providers. Medicare will continue to pay surgeons, physical therapists, rehabilitation hospitals and others involved in hip and knee replacements separately on a fee-for-service basis.

At the end of the year, if all those payments average less than a target price CMS sets for each hospital, CMS will pay the hospital the difference, provided certain quality standards are met. If the payments average more than the target price, the hospital will owe Medicare the difference, starting in the program’s second year.

Experts say hospitals’ best chance to stay below the target is to minimize the need for postoperative care and discharge patients directly home whenever possible.

Currently, about half of hip and knee-replacement patients spend time in skilled-nursing homes, rehab hospitals or other “post-acute care facilities,” which adds substantially to the cost. Another 33% of patients get care from home-health agencies. Post-acute care makes up more than a third of Medicare spending on joint replacements, studies show.

Officially, hospitals have little control over such facilities and patients can choose where to go. But hospital discharge teams can steer patients to facilities that give high-quality, cost-effective care and keep lengths of stays low.

“The financial incentive will be very strong to shift patients into lower-cost settings,” said James Michel, senior director of Medicare reimbursement at the American Health Care Association, which represents 13,000 post-acute care facilities. “We’re going to watch very closely to make sure the incentives aren’t so strong that it comes at the expense of patient care.”

“It’s very clear. If you can go home, you’re better off going home, and if you can’t go home, we can say, these skilled-nursing facilities do a good job and follow our discharge protocols,” said Lou Shapiro, chief executive of the Hospital for Special Surgery in New York City, which has been participating in a voluntary bundled-payment program with Medicare for two years.

Starting next year, hospitals can move patients to skilled-nursing facilities faster, without keeping them for three nights first as Medicare rules now require.

Only nursing homes with a three-star rating or higher from CMS will be eligible. That requirement could disqualify a substantial number in some areas, the AHCA says.

Some hospitals are concerned that the target prices—which range from about $16,000 to $35,000—don’t take into account the varying severity of patient conditions or socioeconomic factors that can affect patients’ ability to recover at home.

CMS has set a higher target—up to $60,000—for hip-fracture patients getting joint replacements. These patients tend to be older and frailer.

Otherwise, officials say the target prices should account for most other variables because they are based largely on each hospital’s historic costs. By the fifth year, however, the targets will be based on regional averages.

“That could be very tough for some hospitals,” said Joanna Hiatt Kim, vice president for payment policy at the American Hospital Association.

Hospitals that have experience with bundled payments say managing internal costs and patients’ expectations is critical. University of Pittsburgh Medical Center cut its costs by 2% over two years in its hip and knee-replacement bundles, in part, by reducing variations in surgical practices and getting patients into “pre-hab” programs to improve strength before surgery.

UPMC’s bundle under the Medicare program will include post-acute care for the first time. UPMC has three skilled-nursing facilities in its system and five more in a preferred network. “We believe they’ll be good partners for the future,” said UPMC chief quality officer Tami Minnier.

The new payment system could spur more hospitals to buy up post-acute care facilities or to avoid patients needing longer rehab stays, some observers say.

CMS officials say they will be watching for such issues, as well as signs that providers are pushing needed follow-up care past 90 days to fall outside of the time frame for the payment bundle.

Corrections & Amplifications:
The American Health Care Association is a trade organization representing about 13,000 long-term care and post-acute facilities. An earlier version of this article incorrectly called it the American Home Care Association and said it represents 12,000 facilities.

Bundled Payment Program Gets Underway, Presents Home Health Opportunity

Published by Home Health Care News
By Tim Mullaney
April 1, 2016

More than half of the hospitals that will be taking part in a mandatory new payment system for joint replacements are at risk of losing money—and forging better connections with home health agencies could be a crucial factor in avoiding this outcome in the program that starts April 1.

Specifically, 60% of hospitals in the 67 regions participating in the new initiative appear likely to face penalties, according to a new analysis from Washington, D.C.-based research and data analytics firm Avalere Health.

The Comprehensive Care for Joint Replacement (CJR) initiative, first announced last July, represents a new approach to payment reform from the Centers for Medicare & Medicaid Services (CMS). Under the plan, hospitals in affected regions will be responsible for Medicare spending on hip and knee replacement episodes of care, including hospital and post-hospital costs. If spending exceeds certain thresholds—based on the hospitals’ past spending and that of its regional peers—it could be dinged with Medicare penalties.

What’s new is the mandatory aspect of the program.

“Most past CMS initiatives have stimulated activity among early adopters, but the mandatory programs are CMS’ attempt to bring the remaining hospitals into a value-based payment world,” said Josh Seidman, senior vice president at Avalere Health, in a prepared statement. “For many of those providers sitting on the sidelines of alternate payment models, this new initiative will be a wake-up call.”

That wake-up call might be especially rude for the 60% of hospitals where spending for these care episodes exceeds regional norms, as determined by Avalere.

As for how these hospitals might rein in their costs, post-acute care appears to be a large part of the answer.

Nearly 40% of total spending on hip and knee replacements is related to hospital readmissions and post-discharge care, including at post-acute facilities and through home health agencies.

“The reality is that most hospitals don’t know where their patients go after they are discharged,” stated Fred Bentley, vice president at Avalere. “Their success under CJR will hinge on being able to track patients and partner with high-performing post-acute care providers.”

The average home health spending per CJR episode runs to $2,123, according to Avalere’s analysis of 2012-2014 Medicare claims data. That’s compared to $5,034 for skilled nursing facility care and $13,193 for inpatient hospital stays.

Some Congressional lawmakers attempted a last-minute delay of the program, arguing that providers need more time to prepare, but the legislation appears to have a tough path forward.

As we age, team-based approach to health care might work best

Published by Lexington Herald Leader
April 1, 2016

The U.S. Census Bureau estimates that by the year 2030 there will be 72 million Americans 65 and older. By 2050 the number is projected to increase to 89 million.

The U.S. Centers for Disease Control estimate 80 percent of all Americans older than 65 have been diagnosed with at least one chronic disease; 50 percent have been diagnosed with more.

The longer we live the more complex our health becomes, thus increasing the need for coordinated and comprehensive health care for our aging population. Complex health needs require the expertise of multiple specialists, all of whom prescribe medications, tests and treatments for their particular specialty.

This prompts one to ask, “Who is actually in charge of managing overall patient care?”

The Medical Home Model, a team-based approach to health care led by an individual’s primary care physician, was designed to:

▪ Improve delivery of care.

▪ Increase communication between providers and patients.

▪ Increase coordination of care.

▪ Provide timely access to necessary services.

▪ Provide accountability for prevention and wellness.

▪ Enhance overall quality.

The model promises to be a way to enhance health care in America by transforming how primary care is organized and delivered. The model’s attention to treating the whole person and linking all aspects of health care offers the potential to improve physical and behavioral health, and access to community-based services, and to refine the management of chronic conditions.

The idea is to move from a fragmented system to high-quality primary care that is more patient-focused and targeted to the complicated health concerns of older adults.

The Medical Home Model addresses complex health needs that require medical and social services support by offering patients longer appointments, involving patients and their families or caregivers communicating between themselves and specialists, and the integration of services. The coordination of care might include specialty care, hospitalization, home health care and community-based services.

Revising health care delivery using a Medical Home Model allows patients to continue their relationships with their personal primary care physicians, who will lead a team of individuals collectively responsible for ongoing whole-person care that is coordinated and integrated.

Most importantly, the model brings a commitment of quality care to patients and allows for aging with dignity.