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Lawmakers Seek 'PAC' Reform

 |  By cclark@healthleadersmedia.com  
   August 30, 2013

Two Congressional committees are exploring the notion of post-acute care reform which may require further development of quality measures and refinement of assessment tools.

The problem with the way Medicare tries to incentivize high quality is that, for the most part, it's mainly providers in acute care who are under a financial guillotine, many hospital organizations complain.

Hospitals are the ones that suffer readmission penalties and relinquish money into a value-based purchasing pool some never get back. And it's hospitals that must anticipate further cuts for higher rates of hospital-acquired conditions starting next year, even if the way for those conditions were paved by inadequate home healthcare or skilled nursing providers.

So to remedy what some see as unfairness, two powerful Congressional committees this summer are looking at "PAC reform," that is, the creation of incentive programs that span the most important post-acute care segments of the industry: skilled nursing facilities, home health agencies, long-term care facilities and inpatient rehabilitation centers.

In 2011, for example, these healthcare segments received $61.6 billion to treat 5.6 million beneficiaries. But there is a wide variation in how many beneficiaries use those services, as well as the margin they earn from Medicare payment, according to statistics from a Medicare Payment Advisory Commission's (MedPAC) March, 2013 report to Congress.

For example, while skilled nursing facilities saw a margin of between 22% to 24% and received $31,3 billion, they treated 1.7 million beneficiaries. Home health agencies, on the other hand, received a margin of 14.8% and $18.4 billion, but had 3.4 million beneficiaries.

In a letter to stakeholders June 19, Sen. Max Baucus, (D-MT), and Sen. Orrin Hatch, (R-UT) chairman and ranking member of the Senate Finance Committee, and Rep. Dave Camp, (R-MI), and Rep. Sander M. Levin, (D-MI), chairman and ranking member House Ways and Means Committee, asked for guidance with a series of 48 questions.

There is clearly a need for reform, they wrote, which may require further development of quality measures and refinement of assessment tools.

"What we need is alignment," says Blair Childs, senior vice president for public affairs for the Premier healthcare alliance, a group purchasing and quality improvement organization with 2,900 hospital members, which submitted a lengthy response to the Congressional request.

"The problem is that you have a system where only one set of providers is at risk, and it means the others aren't accountable. [Patient care] is a shared accountability, coordination of care issue. And you really need to have the other players involved in it.

"Let's face it," he adds. "We all know there [are] readmissions from post-acute care settings to the hospitals, some good and some that aren't good. But the hospitals are the only ones being penalized right now, and that's not the way you want to have it work.

"Our goal is to try to get everybody to perform at a higher level, and put accountability where it deserves to be."

If a home health agency has a higher number of readmissions back to the hospital than another home health agency with similar patients, or its patients seem more prone to fall or develop pressure ulcers, it could be argued that first HHA should pay a price. But what is fair?

Take a skilled nursing facility. While there is no penalty if that facility's patients are more likely to be readmitted, and that facility loses revenue from that patient for as long as they're in the hospital, today there are other incentives, such as the three-day rule, that may work in the opposite direction.

A patient who is determined to require hospital admission for three days is eligible for Medicare coverage of her post-acute skilled nursing facility stay, taking a heavy financial as well as a domestic load off of family members who aren't equipped to absorb that burden.

In its letter to the Congressional leaders, the American Hospital Association wrote "We believe that a mix of public quality reporting and pay-for-performance can align the healthcare delivery system—including post-acute providers—toward continuous quality improvement, and reward providers that improve," wrote AHA executive vice president Rick Pollack.

But how to measure? The AHA says that the Centers for Medicare & Medicaid Services "intends to achieve alignment of purpose by taking measures used in reporting programs for one setting and including them in another. However, this compromises the accuracy and credibility of measure results, making it difficult to determine whether improvements are being realized." Post-acute providers "urgently need measures of patient functional status, goal attainment, care coordination and cost that would allow them to engage with broader, cross-health care system improvement priorities."

What Premier and several other stakeholders in the acute care world want to see, he says, is a value-based purchasing system that spans the healthcare provider spectrum, similar to the value-based purchasing system for hospitals that's required by the Patient Protection and Affordable Care Act.

"We fundamentally think all of these ought to be in one value-based purchasing program, and that there shouldn't be a penalty program."

All providers, acute and post acute, would relinquish revenue for a revenue neutral pool of funds, out of which the best providers, those with the best total results from all quality measures, would share rewards.

"There may come a day when we don't have fee-for-service reimbursement, and it's all bundled payments or accountable care organizations," Childs says. "But as long as we do have fee for service, the only question is whether that fee for service has a quality component. And it's our firm belief that the system functions better if there is a level of quality measurement associated with it."

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