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A Continuum of Care

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Medicare demonstration projects seldom live beyond their prescribed time limits. The fact that they are demonstration projects at all suggests that the political will for a permanent Medicare revision isn’t there. But a three-year Medicare Advantage demonstration that started in October 2005 boasts some intriguing possibilities for slowing cost growth and improving quality of care in the segment of the elderly population that consumes the lion’s share of Medicare dollars—those with chronic conditions.

The Erickson Advantage Health Plan I, which bundles a continuum of care for retirement community residents, encourages care partnerships between acute care hospitals and Erickson retirement communities to work together to cut the cost and improve the quality of care for the frail elderly.

Keeping a close watch

The three-year demonstration health plan sponsored by the Centers for Medicare & Medicaid Services currently has about 1,000 enrollees among the 15,500 residents at Erickson retirement communities in Maryland, Pennsylvania, New Jersey, Massachusetts and Virginia. Claims are paid by Medicare like any other coordinated care program with no CMS risk sharing. The plan is a partnership with United Healthcare Group’s Evercare division and continues Erickson’s philosophy of “marrying housing and healthcare,” says Bruce H. Sturm, senior vice president of Erickson Health Plan, the health plan division of Baltimore-based Erickson Retirement Communities. He expects that about 40 percent of Erickson’s residents will eventually enroll in the plan.

The health plan dovetails with Erickson’s philosophy of employing an army of clinicians to take care of its residents, with the idea that combining on-site healthcare with a retirement community can improve quality of life and cut healthcare costs for the elderly. More than 90 percent of Erickson residents choose the on-site healthcare program staffed by more than 40 board-certified geriatric physician specialists practicing only at Erickson. In fact, Erickson’s clinicians can handle everything but inpatient care. The demonstration project aims to coordinate acute care into the Erickson model by partnering with hospitals most likely to receive Erickson patients who need hospital care.

With an average age of 83 among the 1,000 enrollees in the health plan, such patients benefit from Erickson clinicians’ close watch, especially when they go to the hospital for an acute episode, says Sturm. Along with a “face sheet” generated from Erickson’s electronic medical record, employed registered nurses accompany Erickson patients to the emergency room, coordinate their care while in the hospital and work with the attending physicians.

Cutting stay times

Hospitals that participate stand to gain by treating elderly patients who generally have lower length-of-stay times. For example, while many Erickson patients have chronic conditions that require hospitalization, Erickson residents spend an average of only four days in the hospital per visit, versus an average Medicare beneficiary’s 5.9 days, says Sturm. Longer stay times for such patients cost hospitals money. With the Evercare health plan paying on a capitated basis, like traditional Medicare, participating hospitals can reduce overall length of stay, says Carl Schindelar, president of Baltimore’s 329-staffed-bed Franklin Square Hospital, which has been working with Erickson’s Oakcrest retirement community on the program since enrollment started Oct. 1.

Franklin Square has a vested interest in keeping length of stay down. It already averages a low 3.6 days for all patients, and keeping patients from developing complications that prevent them from leaving the hospital on time helps keep beds free. The hospital struggles with average occupancy rates of 92 percent amid 98,000 emergency department visits a year.

Schindelar says Franklin Square has received state approval for a new $175 million, seven-story patient tower to alleviate some of the strain, but until then, making sure patients don’t get sicker while in his hospital is important for both patients’ health and his facility’s financial well-being.

Maryland’s reimbursement scheme, in which payors reimburse hospitals under a case rate system, “is designed to provide reimbursement to you for doing the right thing,” he says. For example, assuming Franklin Square receives $1,000 per diagnosis-related group, even with a $100 adjustment for severity, the hospital is responsible to provide the appropriate care to the patient regardless of the length of hospital stay. “If I keep that patient for five days, I’m not going to be able manage their care for that $1,100,” he says.

By comparison, “in some other states, there’s no penalty to get a patient out in 3 1/2 days versus 4 1/2 days,” Schindelar says. And considering other inpatient facilities might be overbedded, “that might be a disincentive to get patients out quicker,” he says, pointing out potential political opposition the demonstration might face in any attempt to expand it after its three years are up. “Other hospitals that might participate in this program if it’s expanded might feel threatened because its whole purpose is to keep people out of hospitals,” he says.

Sturm hopes Erickson’s focus on individual patients and care quality will thwart some of those disincentives, but under Medicare Advantage, they can also be negotiated away in less restrictive states than Maryland, as Medicare Advantage programs must be negotiated with individual hospitals.

Changing working relationships

Some 35 percent of the population in the service area for Chilton Memorial Hospital is older than 65, says President and CEO Deborah K. Zastocki, and she expects that number to grow in coming years. That’s one reason Pompton Plains, N.J.-based Chilton jumped at the opportunity to work with Erickson in the demonstration project, she says.

But there were other reasons that had less to do with serving the 256-staffed-bed hospital’s growing elder population and more to do with practical concerns about the hospital’s investment priorities. “With Medicare under the old model, payments for people who were needing a lot of care were balanced by those who didn’t need much care,” she says. “Now most patients have multiple issues when they’re admitted, require a lot of staff focus and consume a lot more resources. By keeping them well, you’re preventing the need for additional beds.”

Erickson physicians from the nearby Cedarcrest retirement community have privileges at Chilton and help the hospital with the continuum of care for residents. Zastocki says even hospitals that aren’t participating in a formal demonstration project like Erickson’s can learn to work more closely with their local retirement communities to coordinate care because financial and quality improvements can accrue.

“Other hospitals can learn the need to begin to proactively participate as partners with their local extended care facilities and really learn how we can better transform medical information and decision-making through all levels of care in our health system.”

Philip Betbeze is finance editor with HealthLeaders. He can be reached at pbetbeze@healthleadersmedia.com.