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Orthopedic Bundles and Post-Acute Care Providers

Mar 10, 2016

The Comprehensive Care for Joint Replacement (CCJR) bundled payment model went into effect for hospitals in targeted geographic areas on April 1, but the stakes have just gotten higher for post-acute care providers everywhere.

More analysis than ever is now being performed on current post-acute spending, creating clear winners and losers. Post-acute providers that outperform will quickly rise to the top, and hospitals will want to align themselves with them. Hospitals are seeking post-acute providers that can deliver on quality and cost-effectiveness, prove their performance with metrics, and proactively work toward continuous improvement.

Hospitals under the model are accountable for medical costs across the 90 days after patient discharge; therefore, you can expect them to develop very narrow networks for post-acute care in the future and place even greater emphasis on home health partnerships in this new bundled environment.

For now, however, CCJR is focused on larger metropolitan areas, and there’s a five-year arc to the effort. Many hospitals in the country may not be doing much toward the effort, at least outwardly. And if they are, they certainly aren’t at the talking stage with post-acute care providers about the new bundled model.

That’s all the more reason post-acute care providers should initiate the conversation with hospitals and start resolutely preparing for the dramatic change that is surely looming.

For skilled nursing facilities, there’s work to be done. Here are some of the high-level activities you should strongly consider undertaking now.

Build Relationships
The first step for post-acute providers is relationship building. That includes building relationships with referral hospitals and other hospitals with which your organization might be interested in working, such as health care providers, managed care providers, and even other post-acute providers. Yes, other post-acute providers. It’s important to work with other post-acute providers in order to ensure shared clinical pathways across the continuum of care.

By all means, make the initial approach, if necessary. Doing so can give you the opportunity to educate hospital partners, for instance, about post-acute care issues at a time when they may not yet have begun to consider them. Work on building relationships.

Evaluate the Financial Effect
As previously stated, hospitals will be held accountable for the total cost of care within the bundled payment episode. So post-acute providers may feel like “it really doesn’t affect them.” However, as hospitals work to control their costs, post-acute providers will feel the effects of the following:

  • Admissions may fall as hospitals seek less expensive alternatives to skilled nursing facilities.
  • Hospitals and ACOs may seek to negotiate steep payment discounts from providers.
  • Lengths of stay may decline as hospitals and payors seek to shorten the length of stay and return residents to their home or another community-based setting as quickly as possible. 

To navigate the new payment systems, post-acute providers will need to understand the cost of care for each patient. Accurate cost information will be important to negotiating beneficial contracts with payors and understanding the impact volume changes will have on financial results.

To evaluate cost of care, post-acute providers should quantify:

  • Costs that don’t change as census fluctuates. Costs such as heating, maintenance wages, and administration would be fixed costs.
  • Costs that fluctuate based on the number of residents but that are not affected by the pay source of the resident. Costs such as dietary costs fall within this category.
  • Nursing wages based on the acuity level of a particular resident or type of resident. Tools such as the STRIVE study or other acuity-based staffing models will help with this analysis.
  • Costs that can be correlated directly to a particular resident or resource utilization category (i.e., therapy costs).
  • Costs that are unique to each patient, such as pharmacy costs.

Using this information, a provider can calculate cost per resident day or for a particular resident and utilize that information to negotiate reimbursement terms with payors. Providers will also need to utilize this information to model the financial effect of fluctuating census levels.

Post-acute providers who are not astute in these areas may jeopardize their future. Work on developing a comprehensive cost analysis and a financial modeling process to ensure ongoing financial health.

Understand Current Clinical Pathways
Care today is often very fragmented. Chances are every entity involved in the episode does things a little bit differently. So which clinical pathways should your organization use? The answer is quite simple: use the ones your acute care providers are utilizing. Doing so ensures a seamless continuum of care, even when patients change settings.

Whether it’s skilled nursing facilities or inpatient rehab, care should always follow the patient. When all entities are talking the same language, and the patient learns and recognizes that language and those protocols, care and outcomes seamlessly move right into the home environment.

The results of shared clinical pathways include continuity of care, better patient compliance, and a reduction in some of the key metrics important to the acute care provider, such as rehospitalization rates.

The most important attribute of protocols is to ensure that all partners in the care process are using the same protocol. Work to achieve that continuity.

Build and Sustain Your Rating
The current referral pattern will change. Acute providers will begin looking for cream-of-the-crop facilities. Many post-acute providers will begin to lose out, even from their most reliable referral sources.

In addition, the CCJR bundled model contains a key element that goes into effect in 2017. It’s the ability to use a waiver of the threeday qualifying hospital stay for a patient to be transferred to a skilled nursing facility. That facility, however, must rate at least three stars in the CMS Five-Star Quality Rating System. Therefore, your rating will become even more vital to your competitive position.
Consider your rating and strive to improve it so you can be one of those preferred providers that hospitals can choose when they initiate a waiver. Work to earn and maintain your stars.

Take Ownership of Discharge Planning
Just as hospitals take ownership of the discharge process from hospital to post-acute care, the future calls for your organization to take ownership of the discharge planning from post-acute to the home setting. Again, this is just one more example of the importance of continuum of care.

You may not be thinking that this is an important role, but it will be! It’s important not only for the bundled model, but also for the 30-day rehospitalization rule that takes effect for skilled nursing facilities next year. Why not create those home care relationships now and begin establishing some expectations for tracking and trending the best home health providers? Work on identifying the cream-of-the-crop home health providers and be accountable for discharge planning.

Develop Key Performance Metrics
If you want to know what to track, measure, and improve, have a dialogue with acute care providers, managed care organizations, local ACOs, and so forth. Find out what they consider to be most critical. You’ll be able to then track the metrics that are important to the providers that are important to your future success. Some of the key metrics that are common are multiple hospitalizations, star ratings, emergency room visits, quality of care (falls and pressure ulcers), and even nursing hours.

In addition, look at the geographic regions that are now working under the bundled payment model and align with the post-acute metrics therein. You can expect those metrics to be precedentsetting. Adopting them means you’ll be ahead of the curve and well positioned when it’s your region’s turn. 

Consider your quality measures. Be sure your organization is rating well compared to state and national benchmarks. Work with providers on creating a relevant scorecard.

Work…to Design Your Future
All of the learning and data coming out of the initial wave of bundled payments is suggesting that skilled nursing facilities are very expensive options for post-acute care. As a result, there’s a tremendous bias for keeping people home and using home health care.

Let that motivate you to start working on being more competitive now. Because home care is going to be an increased focus, it’s imperative to become more efficient, know the cost of care, deliver quality, and generate desirable outcomes.