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2 Strategic Responses to Bundled Payment Models

By Christopher Cheney  
   August 06, 2018

Medicare's bundled payment programs are profoundly impacting the way acute-care providers are working with their post-acute care partners.

Hospitals and health systems participating in federal hip and knee replacement bundles are adopting two post-acute care strategies: limiting referrals to skilled nursing facilities and integrating with SNFs.

For hospitals, establishing strong relationships with SNFs can drive positive clinical outcomes and financial gains, researchers say.

"Linkages between hospitals and SNFs may be associated with reductions in readmission rates, hospital lengths-of-stay, and total expenditures for care," the researchers wrote in Health Affairs today.

The research features 22 hospitals and health systems that participated in Medicare's Comprehensive Care for Joint Replacement (CJR) model or its Bundled Payments for Care Improvement (BPCI) program from August 2017 to November 2017.

Under CJR and BPCI, hospitals face increased responsibility for post-acute care.

"These programs shift the financial responsibility for post-discharge care to hospitals and set incentives for stronger coordination between hospitals and post-acute care providers, including SNFs," the researchers wrote.

The hospitals and health systems in the Health Affairs research project took two approaches to the increased financial risk associated with bundled payments—reduced SNF referrals and closer SNF integration.

1. Limiting SNF referrals

Shifting patients away from SNFs was a primary response to bundled payments, the researchers wrote.

"A common response to bundled payment participation was to reduce SNF referrals for joint replacement patients and to shift discharges to home, with or without home health."

The researchers say there were four primary methods of limiting SNF referrals:

  • Risk stratification of patients before surgery, including targeting patients for pre-operative medical optimization such as weight loss
  • Education of patients who expected discharge to a SNF based on prior experience or the experience of friends and family. Hospitals adopted discharge planning that included presurgical education for patients.
  • Home care supports were provided to patients such as meal preparation and medication reminders.
  • Hospitals enhanced relationships or integrated with home health agencies to boost transitions of care. One chief medical officer told the researchers that his hospital acquired a home health company and they expected to merge their electronic medical records (EMRs).

2. SNF partners

Fifteen hospitals and health systems in the Health Affairs research project established networks of preferred SNFs to impact quality and cost, the researchers wrote.

All 22 organizations tried at some level to work closer with SNFs, they wrote. "While some hospitals reported efforts to reduce SNF use, all twenty-two hospitals employed new strategies to include SNFs in care management."

The researchers found several methods for hospitals and health systems to integrate with SNFs:

  • Sharing clinicians across hospital and SNF settings
  • Allowing SNFs to access hospital EMRs
  • Staffing of dedicated care coordination positions
  • Rounding in SNFs by hospital-based internists, geriatricians, and specialists
  • Placing hospital-based physicians in SNF medical directorships

More than two thirds of the hospitals and health systems in the Health Affairs research project reported that they formed preferred SNF networks in response to bundled payment incentives, the researchers wrote.

"Hospitals reported having formed preferred networks as one way to exert influence on the quality and cost of care, focusing on SNFs that historically received larger shares of their discharged patients."

Market geography was another key driver for preferred SNF networks, they found.

In selecting potential SNF partners, hospitals and health systems had limited access to SNFs that ranked well in Nursing Home Compare's star ratings, the researchers wrote.

"In any given market the number of available SNFs with high ratings was often limited. Many hospitals thus developed their own metrics, which included hours of therapy offered, SNF leadership churn, and quality of medical directorships."

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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