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Unified Payment System for Post-Acute Care: What Hospitals Should Know

In June, the federal government moved a step closer to a radical overhaul of post-acute care (PAC) payment when the Medicare Payment Advisory Commission (MedPAC) confirmed the feasibility of a single payment system spanning all PAC settings. Just one in a slew of efforts aimed at breaking down current silos and transforming misaligned incentives in this complex part of the care continuum, the panel’s report recommends features and projects the impact of a unified, cross-setting system, as mandated by the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014.

Currently Medicare pays for post-acute care via 4 separate payment systems—1 for each site of care. The 4 systems result in vastly different payments for the same service, regardless of the outcome.

Under the new prototype system proposed by MedPAC, payments would instead be based on patient and stay characteristics. Calling a unified PAC prospective payment system (PPS) “within reach,” MedPAC indicated currently available data are sufficient to set fair and accurate payments for PAC services, with refinement possible as more data are collected in the future. In fact, while CMS is expected to use the prototype to develop a PAC PPS by 2023, the MedPAC report suggested a unified PAC payment system could be developed sooner.

The new payment system would likely decrease payments to inpatient rehabilitation facilities (IRFs) and long-term acute care hospitals (LTACHs) but actually bump up payment to skilled nursing facilities (SNFs).

Simply put, this could translate into the redistribution of payments from higher-cost settings and providers to lower-cost settings and providers. Ideally, beneficiaries with complex care needs (eg, patients with multiple chronic conditions) who might otherwise have had difficulty obtaining care could also benefit from the new unified payment system.

Despite its breadth (just the chapter on developing a unified PAC payment system ran to 52 pages), the MedPAC report left many questions unanswered. Read on for Sg2’s perspective on how to prepare for the coming changes in the post-acute care environment.

Solidify Strategic Relationships With Your Preferred Provider Network
The availability and willingness of local provider networks to serve as partners is critical to redesigning care. Key hospital stakeholders and post-acute care leaders must align goals and incentives to truly integrate care.

Support Development of Subacute Levels of Care at Skilled Nursing Facilities
With readmission penalties and bundled payment models, acute care hospitals are now essentially obligated to take responsibility for the skills and competencies of PAC staff. Getting involved in improving SNF capabilities (eg, offering more robust respiratory services or specialized therapy) is no longer an option but an imperative. Understanding this and preparing for increasing acuity of PAC patients, progressive organizations across the country are working with PAC partners on the development of subacute care (sometimes referred to as transitional care units). The focus of subacute care is on specific types of more acutely ill patients (eg, post–cardiac surgery patients) who in the past would likely have been hospitalized longer and/or discharged to a more acute level of care such as an IRF or an LTACH. And as SNF skill levels rise to provide this care, organizations will need to reevaluate staffing ratios, particularly for RNs. Enhanced RN staffing ratios, 24/7 coverage and on-site care coordinators are likely to raise subacute unit labor costs significantly.

Standardize Efficient Processes
Observation units, emergency department and ambulatory settings are just a few of the sites of care that will increasingly be involved in post-acute care placement. Setting standardized parameters around stabilization, placement and transfer orders allows health systems to ensure efficiency. For instance, in a highly efficient System of CARE, policies would establish turnaround times to accept patients within 1 hour and place them within 4 hours. Although patient referral policies and discharge orders can also be standardized, case managers in both acute and SNF levels of care will need to develop comprehensive education and discharge instructions based on individual patient goals and preferences and the complexity of each case.

Boost Quality With Expedited Medical Rounding and Care Conference Requirements
A visit by a physician and/or advanced practice nurse within 24 hours and a multidisciplinary care conference within 48 to 72 hours of SNF placement should be standard practice. These efforts will improve care coordination and, in turn, quality outcomes.

Sustain Quality Initiatives Through the Use of Technology
Avoid ED visits and unscheduled returns to the hospital through the use of teleconsults and remote monitoring. Health systems striving to excel in value-based payment models must find ways to connect with PAC providers in order to coordinate care across sites, control costs and utilization, and reduce readmissions. A plethora of commercially available technology tools have been developed to meet these needs.

Synthesize Metrics to Measure and Monitor in Real Time
The increasing importance of the post-acute care segment means that for the first time ever, hospitals need real-time monitoring of PAC service and quality metrics to ensure the delivery of appropriate care. As a first step in this process, adopt a list of specific metrics. Key metrics can help ensure the right care is delivered at the right time and in the right place.

Even without the payment changes MedPAC is proposing, other drivers such as bundled payment and readmission penalties for home health and SNF will require a continued focus by health systems on building out a system of preferred PAC providers. Sg2 is here to help.

Sg2 Senior Analyst Katie Elia contributed to this post.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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