Happy New Year

Dear Blog,

Wishing you a new year of good health, happiness, and success!

Regards,

Joe


The Tomaino Group

127 Norwood Avenue
Northport, NY
11768
US

joe@tomainogroup.com
(914) 772-1552


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Arranging Care: A Resource Guide for Caregivers and Families

In the course of my years of experience as a director of nursing, CEO, and consultant, I have often been asked by caregivers for information on how to arrange care for a loved one. After repeatedly sending the same details, I decided to put together a monograph which addresses the challenge. In this booklet, I address the psychosocial challenge of arranging care, and a summary of the different resources--home care, nursing home, hospice, etc.-- which are available to assist caregivers with this task. For a copy of this guide, or to refer someone to get a copy, go to ContinuingCareInSite

Bundled Payment Program Becomes Required for Some in 2016

Dear Blog,

Lower extremity joint replacements are common surgical procedures across the United States, resulting in over $7 billion in expense to Medicare, according to the centers for Medicare and Medicaid services. This creates an opportunity for the CMS Center for Innovation to expand on the success they have demonstrated in their Bundled Payment Initiative to make this shared savings model required in 75 metropolitan statistical areas in 2016. This requirement has been put forward in proposed rule making by CMS and comments were due back to them on September 8, 2015. The final rule is pending and expected this Fall with implementation in January, 2016.

Under this rule, hospitals in these 75 areas who perform lower extremity joint replacements (DRG clusters 469 and 470) will be responsible for the costs associated with care of these patients both during the in-patient stay when one of these DRGS are triggered, and also for the 90 day post-discharge period. The hospital will be paid for the DRG as they usually have been at a special rate that includes some savings to Medicare up front. Each hospital will also have a DRG specific price set based on the in-patient and post discharge spend for its patients during a baseline period. At the end of the year, if a hospital has has expenses that are less than these costs, they receive the difference (savings). If the costs are higher, then they must pay CMS the difference.

For hospitals, this means that they need to be more focused on quality outcomes with standardized and efficient processes, and an avoidance of complications in the post discharge period that they would ultimately be responsible for. This means the hospital needs to careful partner with post Acute providers who help them achieve these outcomes. The next issue of this newsletter will include a discussion of strategies for success under bundled payments. Grassi will also be holding a webinar on this topic on Wednesday, January 27th...watch for details at http://www.on2url.com/lnk?MTY5Mjc1MHwxMjAyMDk2OTIyfHM9MQ%3D%3D

The Tomaino Group

127 Norwood Avenue
Northport, NY
11768
US

joe@tomainogroup.com
(914) 772-1552


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The Tomaino Group

127 Norwood Avenue
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11768
US

joe@tomainogroup.com
(914) 772-1552

Why Bundle?

WHY BUNDLE?

By April 18th, long term care providers applications to accept bundled payments are due. Why should you consider participating in the Bundled Payment Initiative?

When Congress passed the Affordable Care Act, they also authorized a variety of demonstration projects to test the concepts and to offer providers an opportunity to experiment with this new reimbursement strategy before it is fully implemented. In actuality, the bundled payment initiative is not truly a global payment for the entire care period. It is more accurately a shared savings program. In this scenario, Medicare gets its savings up front when the hospital with the initiating admission gives Medicare a 2% discount off of the usual DRG payment. The hospital receives its portion of the shared savings when the overall costs of providing care over the entire episode beats the index pricing period. The providers who contribute to the success receive a portion of that shared savings from the hospital. Of course, both the hospitals and providers are at risk if costs exceed the index period as well.

SHARED SAVINGS: THE FOUNDATION OF AN ACO

An ACO operates on the same premise of shared savings. The difference is that in the ACO scenario, all DRGs are included-- not just a few select clusters. An organization’s participation in the Bundled Payment Initiative gives you experience operating in an ACO environment before you fully need to adopt all of that risk. With participation in Bundled Payment Initiative, you are developing capacity to reduce variations of care, reduce complications, reduce re-admissions to the hospital, and operate with efficient utilization. Eventually, this model will be required for all Medicare cases.

Is there still a role for academic medical centers in Accountable Care era?

The Accountable Care Act (ACA) creates two different pressures for academic medical centers, which by their nature provide mostly tertiary and quartenary care. One is a supporting pressure, as few admissions to academic medical center could be performed less expensively in other settings, and the other is a downward pressure as the shared savings model seeks to drive down costs even for the most advanced care.

The ACA seeks to eliminate avoidable hospitalizations. Since academic medical centers provide the highest acuity of care, most of their admissions are complex and would not be able to be done in less resource intense environments. So as long as these centers remain true to their mission and do not try to supplement their high acuity patient mix with less intense care that could be done in a less expensive community hospital or in the community, then there platforms should remain unchallenged. Academic medical centers should create linkages with community hospitals and accountable care organizations who will be referring complex patients to them, and in turn should refer back to these community based organizations patients with less intensive care needs.

Core to the ACA is the shared savings model of reimbursement. Baseline cost data is established and creates a threshold for future performance after being trended forward for inflation and discounted slightly for the benefit of the payer. The premise is that the provider gains if they provide care at lower than the benchmark price, and loses if they provide care at higher than the benchmark price. The challenge for academic medical centers is that it is built into their DNA to always be looking for more technically advanced techniques, which tend to drive up the costs of care and create an imbalance to the loss side of the shared savings equation.

To survive in the accountable care era, academic medical centers need to remain true to their mission of only providing the most complex care and need to nourish strong relationships with accountable care organizations and payers. Under shared savings models, they must focus with laser intensity on making sure care is value based. Even if approaches become more technically advanced and grow in cost,there must be evidence based outcomes on reduction in overall cost of care through fewer complications, shorter recovery time, improved clinical outcomes. Only under this scenario will academic medical centers make it.

What Hospitals Need to Do to Survive Under the Affordable Care Act

There is no secret that one of the main components of the Accountable Care Act is to reduce the cost of healthcare by reducing avoidable hospital admissions. These avoidable admissions include preventable re-hospitalizations for complications that should be able to be foreseen and mitigated, as well as for admissions for ambulatory sensitive conditions that could be managed as an outpatient. There can be no argument that this objective is getting us where we need to be as a country -- reduced healthcare costs and fewer complications of hospitalization.

The challenge is that hospitals are expensive entities to manage, and they come with tremendously high operating costs and debt structures as they have been keeping up with technology advances and information management infrastructure. These costs require the cash flow from inpatient activity with a healthy revenue margin-- a much healthier margin than the ambulatory care that is sought after under the Affordable Care Act. With an estimated 25 to 30% of admissions being avoidable, you can see the significant impact this initiative will have on the bottom line of hospitals.

What is the outlook for hospitals under this scenario? Hospitals need to consolidate their acute care platforms to what the population health data show is truly needed for the communities they serve. Excess inpatient capacity needs to be re-purposed for primary and ambulatory care. Let’s take a fictitious 300 bed community hospital where the population health data show the need for bed capacity 30% less than current. This facility might take the 100 excess beds off-line and convert that space into physician condominium offices for specialists, with shared back office resources for reception, call center, clinical assistants, billing, medical records, etc. These specialists can lease these condos and maintain independent practices and purchase the shared support services at lower costs than if they had to provide them individually. Since they are specialists who need access to the technology and resources of the inpatient environment, since they are right in the hospital itself, they are efficiently positioned.

This sample hospital could also develop community based facilities for easy access to primary and ambulatory care-- geographically distributed among the community it serves. These facilities could be joint ventures or very close affiliations with physician partners. The need for outright purchase of medical practices can be avoided by offering the support of close alignment with a Physician-Hospital Organization providing support for health insurance contracting, and a Management Service Organization offering shared services support to reduce operating costs as described earlier for the specialists.

All of this requires capital-- and as the margin of revenue opportunity becomes thinner this will be a increasing challenge. Some of this capital can be achieved by improved margins from reducing costs with efficiencies and consolidation, but I don’t believe all of it can be met this way. In the 1950’s, the Hill-Burton Act provided financing for hospitals to develop in-patient infrastructure. I believe Congress will need to provide a similar program to help hospitals finance the restructuring of their debt and the repurposing of their platforms for this new scenario. In the meantime, things will remain very stressful and very interesting.