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Evaluating post-discharge cost and quality [PODCAST]

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Hospital_Finance_Podcast smallIn this episode, Maria Miranda, Director of Emerging Payment Models at BESLER discusses how to evaluate post-discharge cost and quality related to new bundled payment programs.
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Mike Passanante: Hi, this is Mike Passanante. Welcome back to the Hospital Finance Podcast.

Today, I’m joined by Maria Miranda who is the Director of Emerging Payment Models here at Besler. And she is going to talk with us about how you evaluate post-discharge cost and quality related to some of the new bundled payment model programs that are out there.

Welcome back, Maria.

Maria Miranda:  Thank you, Michael.

Mike: So Maria, let me just set up my first question for you here. On a prior podcast, we talked about the importance of measuring quality and how those quality measurements impact a CJR-participating hospital’s reconciliation. And so much of that quality measurement is now tied up not only in the hospital itself, but also with their post-discharge partners because 50% of the cost of a typical CJR episode is attributed to that post-discharge period.

So, for hospitals, how can they assess the quality and cost of their network of post-acute care providers?

Maria: So, just to clarify, Mike, the quality of the post-acute care providers won’t necessarily be counted in their reconciliation. However, if there’s poor quality, there’s probably unnecessary expense and the patients are held a little longer than they need to. And therefore, the reconciliation will, by default, be impacted.

We’ve talked about this before as well. Before bundled payments, hospitals had very little information concerning their patients post-discharge. Usually, after a surgery, there might be a phone call, there might be some follow-up. But if the hospital wasn’t accepting any downside risk, there really was very little incentive to do so.

They also didn’t have any information about the costs once the patient left. Bundled payments kind of changed all of that because it includes downside risk—and in the case of CJR, it’s mandatory downside risk. Hospitals have to do this because they have just too much exposure when the cost after discharge is unreasonable or if the patient is re-admitted to the hospital.

There’s some publicly available data on post-acute care providers that hospitals have access to. Depending on how many post-acute providers are in their capture area, it might be really difficult for them to go in and access this data on every single provider just due to sheer volume.

But CMS does provide claims data to the hospitals as part of the CJR program. And that claims data is posted shortly after the end of the episode. It’s helpful, but it can also be very difficult to decipher just because of all the different files that CMS sends the hospital.

But that makes three sources. The hospital could choose to just do internal follow-up and monitor those patients. After discharge, they can access data online about the quality and star ratings. Or they can manipulate the claims files that they get from CMS.

Mike: Maria, what can you tell us about the costs associated with post-acute care?

Maria: So, Mike, as you’ve mentioned before, the cost of post-acute care for CJR episodes can be up to 50%. That is a very large portion of the overall expense. Likewise, it’s very important for hospitals to try to reduce that.

According to MedPac in 2013, SNF’s furnished 2.4 million Medicare covered days to 1.7 million fee for service beneficiaries. And Medicare fee for service spending on SNF was $28.8 billion that year.

As I mentioned in the last response, until recently, hospitals had no incentive to monitor those costs beyond their four walls.

To add to the situation, SNF’s had no incentive to discharge early. Medicare pay SNF’s a per diem. And they authorize up to 100 days.

With so much of their revenue tied up with Medicare, it’s difficult for them to reduce length of stay without impacting their margins. So all in all, it’s just difficult to bring that cost down.

Mike: And you mentioned the star rating for some of these facilities that’s available online. Can you give us some examples of those and tell us what specific information is available other than a star rating itself?

Maria: So, if you go to, Nursing Home Compare, you can look up information on a specific facility or you can choose several facilities and actually compare them side by side. You’ll be able to get information on health inspections, staffing, quality measures. And then, all these areas are broken down into subcategories.

So, for example, under Health Inspection, you’ll be able to get information on the number of certified beds, their sprinkler systems, how close the facility is to a continuing care retirement community, and information regarding fire and health safety inspections.

Then if you look at staffing, there’s information regarding the number of licensed nurse staffing hours per resident per day. And then, that’s further broken down by different nursing titles.

Under quality, there’s information about patient falls, information whether residents have lost weight, pressure ulcers, physical restraints.

So, all this quality information is also broken out between short and long-term stays as well.

Mike: What kind of information can a participating hospital glean from a CMS claims data files?

Maria: There are a lot of data files. The information that’s being provided to the CJR hospitals is on all Part A and Part B services for the entire episode which starts, as you know, from the admission to 90-days post-discharge.

So, the hospital is going to get files that’s going to show their own internal information for the in-patient stay, but they’re going to get files for rehab, files for SNF, home health, as well as out-patient visits, TME—any services that the patient had. So, you’re going to get about 20 different files.

Through some manipulation of the files, the provider will be able to determine where their patients are going, how long they’re staying there, and what that total cost is per episode.

You can see, for example, how many ER visits or out-patient visits are recorded in the total episode. And you can see which of the patients were re-admitted to the hospital after discharge as well.

The claims data will also provide physician information. So you’re able to drill down into individual physician detail and possibly identify some discharge trends.

And it probably makes sense to look at these trends by the DRG and fracture combination as well. Because target rates differ by the level of acuity, it’ll be higher for patients that have major complications and co-morbidity as well as patients that present with fracture.

So, with patients that have no MCC’s or no fracture, post-acute expenses need to be monitored carefully because the hospital could exceed their target price.

Mike:   Have you come across any compelling arguments for why there’s such a variation in cost and quality?

Maria: Sure! I mean, there are a lot of studies out there. I read one specific study, a 2015 study by the Kaiser Family Foundation that found that there’s a correlation between the ownership type and the quality. For-profit ownership has a higher correlation to poor quality than a not-for-profit.

The study which used OSCAR and CASPER data between 2009 and 2014 also showed that there’s an increase in for-profit facilities for the years. And currently, about 70% of all nursing facilities in the US are for profit.

The study also highlights other factors that impact the outcomes and quality such as case mix indicators, staffing levels, process measures and facility deficiencies much like what we were talking about before with the Hospital Compare.

So, case mix will tell you the level of need of the patients—their mobility impairments, physical health and special care needs, as well as cognitive and behavioral health.

According to the study, higher nursing levels, especially the use of RN’s improved quality by showing a reduction in the use of antibiotics, fewer pressure ulcers, fewer catheterized patients, fewer urinary tract infections, and reduced hospitalizations as well.

Mike: What should a hospital look at when considering collaboration with post-acute care providers?

Maria: There are quite a few things that a hospital can look for, but there are probably three things that are very important.

They want to look at the percentage of patients that are being re-admitted from the SNF to the hospital. They probably want to look at the average length of stay for the SNF as well because as they’re being paid per diems, the longer that patient is in there, the more expensive it is, but also because, with quality, really, what you want to do is you want to make sure that the SNF is focusing on getting the patient home as soon as possible.

So, a very long average length of stay might be a clue that you’ve got some issues there.

And also, you want to be able to work with someone that’s willing to collaborate with the hospital on care redesign.

I came across another really good article in the New England Journal of Medicine titled Post-Acute Care: the Next Frontier for Controlling Medicare Spending by Robert Mechanic. And in that article, he discusses some of the qualities that a hospital should look for in a post-acute care facility when pursuing a preferred relationship.

The author makes the argument that hospitals and health systems will pursue relationships with nursing homes that offer 24/7 on-site skilled nursing staff and that are dedicated to post-acute care with distinct short stay units.

He further argues that hospitals would prefer to work with nursing homes that are equipped to treat certain acute exacerbations of common illnesses on-site instead of sending these patients to the emergency room.

And this is important because, again, this is what we’re seeing when we start digging into those CMS files. We see that patients will go into the SNF, and then they’ll keep bouncing back and forth. And one of the questions that you’ll need to ask is: “Is the SNF equipped to handle these patients with chronic diseases? Do they have the resources available or are they just shipping them back to the hospital?”

Mike: Maria, in a prior podcast, you discussed appropriateness of the anchor length of stay. What options does a participating hospital have?

Maria: This is interesting because as we know, hospitals have tried to reduce length of stay from the dawn of DRGs because you’re only getting one set price or payment for the DRG, so you try to reduce your hospital cost. And one of the ways that you do that is by reducing length of stay.

However, this is a little different because as I’ve explained in prior podcasts as well, if you send the patient home too early, they may get re-admitted. If you send them to the SNF, and they don’t have the right resources, the patient may get re-admitted.

So, one of the options that a hospital does have is to keep the patient an extra day or two if doing so is going to eliminate the need for a nursing home admission. So, if the patient can stay a little bit longer at the hospital, and subsequently be discharged to home with home care, but everything is in place to take care of that patient at home, then the hospital will decrease the price of the overall episode for Medicare over the course of the episode.

Of course, the hospital has to consider whether the incremental cost of keeping that patient an extra day or two is going to be low enough to justify that practice and whether or not they actually have the room to do that. If you don’t have the beds to do that, then that’s probably not going to be a very good option.

So, the situation is different for different hospitals, so you have to craft something that works for your facility because there’s no one-size-fits-all solution to this.

Mike: Maria, thanks for stopping by and helping us understand how to evaluate post-discharge cost and quality.

Maria: Great! Thank you, Mike.

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