Congress May Speed Overhaul of Payments for Post-Hospital Care

Health providers who care for discharged hospital patients are bracing for changes to government payment policies that could come sooner than expected as Congress looks for billions of dollars in estimated savings.

Medicare, the big government health program for the elderly and disabled, saw payments for what is known as post-acute care more than double, to $59 billion, between 2001 and 2013. The absence of clear guidelines on the appropriate care for patients was part of the reason. Treating a complicated case of pneumonia may cost $18,584 at an in-patient rehabilitation center but only $10,360 in a skilled nursing home, according to the Medicare Payment Advisory Commission, or MedPAC. Long-term care hospitals and home health aides also provide care, adding additional variables to the reimbursement calculation.

“The decision as to what part of the post-acute care system is used is highly predicated upon getting people out of the hospital,” William J. Hall, a professor at the University of Rochester School of Medicine who serves on MedPAC, said recently. “A lot of it has to do with who has the beds, who’s willing to accept the patient and get them out pronto. That doesn’t mean that there’s malfeasance or bad practices. It’s just kind of the way it is.”

“Post-acute care is a focal point of policymakers, and it’s obvious why,” said William Altman, executive vice president for strategy, policy and integrated care for Kindred Healthcare, a rehabilitation company, at a briefing this month for congressional staff. “We all agree that the system must be reformed.”

The current system often leaves the elderly and their families frustrated and confused about the right choice.

Researchers say there’s not much data readily available to compare options because hospitals until recently haven’t had much incentive to closely compare them. Instead, hospitals have looked to keep initial patient stays short, freeing up beds for new admissions.

Medicare paid for 9.6 million cases of post-acute care in 2013. Post-acute care generally refers to what the health industry provides after a patient is hospitalized for a major medical event such as a stroke or coronary bypass.

The White House’s fiscal 2016 budget request proposed packaging payments for clearly defined episodes of care to discourage unnecessary costs, estimating the change would save $9.3 billion over a decade.

Rep. Kevin Brady, R-Texas, helped shepherd a law through Congress in 2014 that was meant to create a framework for a unified approach to post-acute care under a single payment system.

The measure breezed through the House on a voice vote and was cleared by the Senate by unanimous consent. Brady has since become chairman of the House Ways and Means Committee and has expressed a commitment to a post-acute care overhaul. His role in the chamber’s fiscal decisions may put him on the hunt for savings to use as offsets in future budget deals.

The law mandated a robust collection of data to compare the different kinds of post-acute care services beginning in 2018. After two years’ worth of data have been collected, the Department of Health and Human Services has two years to report to Congress on how to create a post-acute care payment system. Congress could then act on any recommendations.

Altman of Kindred and others in the industry say they want to stick with that plan, but lawmakers have also signaled they want to act more quickly.

Industry Alert to Change

The post-acute care industry was on high alert last year as lawmakers overhauled Medicare payments to physicians.

The industry’s worry was that Congress would change payment rules on post-acute care and claim savings as an offset for the popular “doc fix” bill, Jay F. Grinney, chief executive of HealthSouth Corp., a major provider of rehabilitation services, said at J.P. Morgan’s annual health care conference this month.

Lawmakers chose not to change the payment rules, but leaders of companies that do post-acute care are sensing they got only a temporary reprieve. Two bills introduced in the House underscore the reasons for their concern.

Brady introduced a bill that would establish a shared incentive pool for the four kinds of providers of post-acute care. They would compete to earn bonus payments.

Rep. David B. McKinley, R-W.Va., has introduced a bill that could create the role of a coordinator for post-acute care. The coordinators would help control spending through preventing hospital readmissions, giving them a stake in identifying the best options for care.

Pilot Programs

The industry is therefore taking a closer look at how test programs from the Centers for Medicare and Medicaid Services already are changing the field, Grinney said.

The 2010 health law gave the CMS $10 billion to test alternative approaches to Medicare’s existing payment model, which pays providers for the volume of services delivered. The model has long been criticized for rewarding doctors and hospitals for providing more care without establishing how much they help patients. CMS has been moving aggressively in recent years to tie payment to the quality of care provided.

“People are now starting to focus on what all of these changes to the delivery system mean,” Grinney said.

Among the CMS test programs affecting the post-acute industry is the Comprehensive Joint Replacement model, which starts this year. It will make hospitals in 67 specified sections of the country accountable for the progress of patients enrolled in traditional Medicare after knee and hip replacements. HealthSouth described this as a good opportunity for the company as the program “should favor high-quality, low-cost providers.”

“In an integrated or a fully coordinated system, Medicare is no longer going to be focusing on payment-specific rules and regulations,” Grinney said at the J.P. Morgan conference. “They are going to be focused on outcomes, quality and patient satisfaction.”

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