Beyond preventing readmissions and improving discharge planning, how can hospitals control which pre- and post-discharge services are delivered? If hospitals don't get it right, this could spell trouble for patients not covered by Medicare.
Hospital officials probably scratch their heads wondering how they control waste and reign in costs for Medicare beneficiaries after those patients have left the hospital, or even before they come in.
How do they keep private practice physicians from ordering useless tests, providing needless care and not reduce quality in the process?
See Also: Hospital Pay to Reflect Care Efficiency Soon
With the new federal "efficiency" or Medicare spending per beneficiary measure now in its first performance period—affecting 20% of a hospital's value-based purchasing incentive payments starting next October, 2014—that's indeed what the federal government is asking hospitals to do.
Starting this year, hospitals will be scored based on the average amount Medicare spends caring for that facility's patients over an "episode" that spans three days before beneficiaries' inpatient admissions to 30 days after discharge. All Medicare Part A and Part B costs are totaled, from home health, physician services, inpatient, outpatient, skilled nursing, durable medical equipment, and hospice.
But how, beyond preventing readmissions and improving discharge planning, can hospitals control which pre- and post-discharge services are delivered? And might there be some serious unintended consequences down the line, which instead of lowering costs actually accomplish the opposite?
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Ashish Jha, MD, a hospitalist and Harvard health policy expert, tells me I'm asking important questions that he's been wrestling with too.
"From a patient perspective," he says, "I get why Medicare is doing this; I like the concept because there's a lot to be said for it. But it also has substantial perils, and that part makes me worry. You have to do this thoughtfully, and I don't know [that] we have all the pieces in place now to do it as well as we could."
That's because down the line, Jha says, this could spell trouble for patients not covered by Medicare. Because in trying to incentivize coordination and integration of care outside acute care settings, the policy is in effect incentivizing provider consolidation.
"Now hospitals are buying up other hospitals and physician practices and building relationships with all types of post-acute care services from home health agencies to skilled nursing facilities," he says.
They then build market power towers that affect prices for the insured, perhaps even affecting premiums for participants in the new health insurance exchanges.
"You aren't just a big hospital anymore," Jha says. "Now you have nursing homes and home health agencies, and you own all of it, and your ability to negotiate with an insurance company has just gotten a lot stronger and a lot better. And you're going to extract higher prices from that insurance company. That's the part that insurance companies worry about, and I am very sympathetic to that," Jha says.
He sees pushback from other federal agencies who might say, "all of this is encouraging provider consolidation, and that's actually not helping lower costs."
Officials for the Centers for Medicare & Medicaid Services don't agree.
This efficiency measure "incentivizes hospitals to work on redesigning care systems and coordinating with other providers of care, which can have a significant impact on the quality and efficiency of services provided to the Medicare beneficiaries they serve," they said in a recent rule finalizing the measure.
They added, "we also continue to believe that hospitals have a significant influence on Medicare spending during the episode surrounding a hospitalization, through the provision of appropriate, high-quality care before and during inpatient hospitalization and through proper hospital discharge planning, care coordination, and care transitions."
It may be that some types of needless services would be avoided, like an expensive MRI that duplicates one recently performed. But the concern Jha points out is that in their efforts to be more judicious about what services patients receive, providers may go overboard and restrict other services for patients who might have benefited from them.
"Imagine there's a hospitalized patient who would really benefit from rehab. If a hospital said, 'Oh, that's going to make our efficiency measure look worse,' you can worry that patient won't get sent to rehab. They won't get a lot of post-acute care services that are helpful to them."
The problem is, there [is] no measure except mortality to gauge quality of care post discharge, Jha says. "If we're going to do a policy like this, where we're going to start measuring cost in the outpatient setting, beyond hospitalization, then we really need to measure quality beyond hospitalization too."
"We should have measures that assess functional status and outcomes from care. We shouldn't be doing one without the other."
All of this is new to hospital providers, some of whom are hearing about efficiency scores for the first time.
Orchestrating care Medicare beneficiaries receive outside hospital settings "falls outside the traditional boundaries of what hospitals have thought their job was supposed to be," Jha says. "And that's why I think the hospital industry has fought harder against this (efficiency measure) than it did against readmissions penalties. If I'm going to be held responsible for what services get received on day 15 or day 20 post discharge, from a cost point of view, I think you would also want to something around measuring the quality of that care."
Jha says that the issue hasn't boiled up much yet because hospitals and the physicians who work in them have not yet realized the impact high episode of care costs are going to have on their reimbursement checks. It's also a small impact at first, only 30 cents for every $100 of Medicare reimbursement. The financial incentives won't stay small for long.
"I would not be surprised if the efficiency measure plays a bigger and bigger role (in value-based purchasing) as time goes on," Jha says. "This is a place where there may be some real savings for the Medicare program."
Jha reflects back to a time just around the healthcare reform debates. "I used to hear this non-stop chorus from CMS officials, that if we only got more integration, and the world looked more like Kaiser, it'll be great for healthcare spending and reduce healthcare costs.
"Now I think there's an increasing recognition that's not necessarily true. Maybe these are some ways of reducing some amount of Medicare spending, but on the private insurance side, it's going to make some things a lot worse."