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Repeal and Replace, Health Reform, and Post-Acute Care: What’s Next?

Authored by: Brian Ellsworth, MA, Director, Payment Transformation, Health Dimensions Group

The uncertainty about the viability, scope, and timing of the repeal and replacement of the Affordable Care Act (ACA) has left many providers wondering whether it is safe to stay in port, or to continue out to sea on their journey of transformation. Here is what we know now, including some late-breaking information.

Breaking Up Is Hard to Do. By necessity of the budget reconciliation rules that limit changes to tax policy and revenues, the ACA repeal and replacement discussion has been limited to changes to the individual insurance market and the Medicaid program. For a job that was already not very easy, these legislative realities are causing further challenges. Chief among them is that the Congressional Budget Office (CBO)—the official scorekeeper—has stated the American Health Care Act currently moving through Congress would remove 22 million folks from the ranks of the insured, and raise premiums on workers older than 50. Some of these issues are fixable, but will now require careful tweaking and political arm twisting. How fast, and whether, some of that can be worked out will be known in coming weeks.

Medicaid Challenges and Opportunities. The proposal to move Medicaid to a per capita cap funding model (sometimes referred to as block grants) has major implications for state Medicaid programs. Over time, states would potentially face funding shortfalls relative to current funding levels, but may also be given the flexibility and incentive to shift funding to new delivery and payment models. Long-term care providers that offer a continuum of services and are able to create integrated, value-based care with an emphasis on community-based services would be the most well positioned to thrive in an environment where states are incentivized to innovate. Freestanding facilities will need to find like-minded partners to pursue clinical and financial integration strategies in order to achieve scale and vertical integration.

Medicare Not in Play—Yet. Meanwhile, the legislative proposals for repeal and replacement of the ACA have not directly tackled changes to the Medicare program to date. Issues like the fate and funding levels of the Center for Medicare & Medicaid Innovation (CMMI) are likely to get addressed through the budget process and administrative rulemaking, causing some to wonder whether the pace and scope of Alternative Payment Models (APMs), such as ACOs and episodic bundling, will slow down. For a variety of reasons, including ongoing federal deficits and the need to have a plethora of Advanced APMs under the new physician payment rules, there will be ongoing pressures to achieve savings through new payment models.

A Case in Point: Mandated and/or Voluntary Bundling? In the waning days of the Obama administration, rules were finalized to expand mandatory episode payment models (EPMs) to include: hip fractures in the 67 markets; heart attacks and bypass surgery in 98 markets; and cardiac rehabilitation incentive payments in 90 markets—all with a tight implementation date of July 1, 2017. Citing the new administration’s directive to review all new regulations not yet implemented, the Centers for Medicare and Medicaid Services (CMS) just announced a three-month delay in the implementation date of these programs to October 1, 2017, along with a new 30-day opportunity for public comment. Although some pundits thought the rule would be repealed altogether, it is important to note that CMS extended the implementation date by the shortest plausible duration. Now, affected stakeholders will have an opportunity to weigh in on the record. One possibility is that these EPM models will remain, but be shifted to voluntary models. Several times over the last year, CMS has expressed its desire for another round of voluntary bundling in 2018, so stay tuned.

A Glimpse into Medicare’s Future. The Medicare Payment Advisory Commission (MedPAC) recently issued its annual March report with recommendations to Congress. This report typically provides an important signpost to where Congress and CMS might be going. MedPAC continues to see double-digit margins for post-acute providers, which resulted in recommendations for 2018 to freeze skilled nursing facility (SNF) and long term care hospital (LTCH) payment rates, as well as to reduce home health agency (HHA) and inpatient rehabilitation facility (IRF) payments by 5 percent. Some of the additional recommendations affecting post-acute care are to:

  • Revise the SNF payment system to better align payments and costs; and issue a report evaluating those changes by 2020.
  • Rebase HHA payments in 2019 and 2020, in addition to the rebasing authorized by the Affordable Care Act; concurrent with this rebasing, CMS should also eliminate number of therapy visits as a factor in setting HHA payments.

MedPAC noted that the research into payment refinement for SNF and HH prospective payment systems (PPS) is complete and should be implemented without delay. For instance, a SNF PPS workgroup has, for several years, been reviewing options to more accurately pay for therapy and non-therapy ancillaries. MedPAC sees payment refinements as an important next step to a unified payment system across post-acute care.

So How Do You Prepare for All of These Possible Changes? Keep one eye on the here and now, while also planning for a value-based future. Among the here-and-now items are: focus on your 30-day readmission rate (the performance period for readmission penalties for SNF VBP started January 1, 2017, and hospital readmission penalties have been happening for some time); make operations as efficient as possible; and understand shifting market patterns. Planning for the future should include identifying value-based partners and considering directly taking risk if not done so already. Call Health Dimensions Group today—763.537.5700—to learn how to prepare for the here and now, as well as the upcoming changes.

Wednesday, March 1: HDG National Summit Caps Off Another Success

What makes (it all) work? Good leadership, financial management, meaningful feedback.”

Wednesday was our final day of the Summit! Two panel discussions comprised much of the morning: Transforming Care: Stepping Back to Take a Closer Look and The Importance of Clinical Integration for Value-Based Transformation.

The presentations examined the unprecedented pressure to transform care. We also heard how clinical integration can succeed in a value-based payment world. Healthcare attorney Harry Nelson spoke about the key elements of clinical integration that creates efficiencies, providing a roadmap to the future of risk-based contracting. “There may be a fear-driven culture in regards to regulatory issues, but instead think of it as an opportunity,” he observed.

Dr. Beth Carlson of HDG then provided a big-picture look at healthcare reform and the opportunity for organizations to integrate care in a way that is transformational for providers and patients. As she said, ““Healthcare is a team sport. Consumers have a voice and are using it.”

Our event concluded with a capstone presentation by Chris Van Gorder. Van Gorder, who serves as the president and CEO of California-based Scripps Health, has been named one of the nation’s “100 Most Influential People in Healthcare” eight times by Modern Healthcare magazine.

Van Gorder reminded us that “the only constant in health care is change.” That couldn’t be more true in 2017! Van Gorder spoke about how front-line leaders can guide their organizations, whether it be through changes to the ACA or new reimbursement structures.

This closing discussion was an inspiring call to action for each and every one of us to lead the healthcare industry forward with strong and innovative leadership.

We all can agree that today’s healthcare leaders must find new ways to lead their organizations through whatever known – and unknown – challenges are on the horizon. Together, we have shared the lessons big and small that will guide us on the path to success.

Thank you to all the participants, presenters, sponsors and supporters of the 2017 National Summit. The big takeaway is that we are powerful together. The Summit gave us all the opportunity to learn from experts, discuss our industry challenges and drive solutions to the healthcare industry’s most pressing topics.

Stay in touch! Please follow us on Twitter at @HDGConsulting and join our email list to learn about our consulting services and regular webinars.

Tuesday, February 28: HDG National Summit Digs Deep on Detail

“. . . deliver results, create vision, build will, develop capability.”

Today began with a breakfast with Summit sponsors. Thanks to all our 2017 sponsors for their generous support which makes this event possible.

After breakfast, we split into two concurrent tracks of presentations and discussions. Track one featured presentations titled Leveraging the Value Proposition of Community Medicine and The Dynamics of Preferred Network Development.

To start things off, HDG’s Brent Feorene and Martha Twaddle of JourneyCare led an engaging discussion about how healthcare organizations and leaders can leverage the value of community medicine. Feorene and Twaddle explained how the change toward value-based healthcare has accelerated the rise of community medicine. Bringing medical care into the community (and beyond the doors of a single facility) has proven to deliver timely healthcare access and collaborative, team-based care.

As Twaddle pointed out, “Robust care in the home is a must’ in a patient-centered model that empowers and keeps readmissions low.”

The second session of track one, which included experts from around the country, tackled “The Dynamics of Preferred Network Development.” The discussion focused on the drive to value-based reimbursement for acute care facilities. Health organizations shared how they are responding to these challenges by going beyond the walls of their facilities to build partnerships, especially in skilled nursing facility networks.

The key takeaway? Acute care facilities need to identify alt-acute providers for collaboration, resource investment and partnership – and many organizations are already leading this charge.

Meanwhile, participants in track two learned about Developing Your Consumer Driven Service Line and The Growing Role of Medicare Special Needs Plans.

Preston Gee of Christus Health and Erin Shvetzoff Hennessey of HDG led things off by sharing their tips on how to develop a consumer-driven service line. It is widely known that as the U.S. changes the way healthcare is paid for and delivered, consumers have become more involved in their healthcare spending and outcomes.

Gee and Shvetzoff Hennsessey shared some examples of the many strategies organizations have adopted to put consumers front and center, while developing consumer-driven lines of service. Gee commented that the strategy for their success at Christus has been that  “we listened and we sought out information to learn what it is that matters.”

Next, Tom Coble of Elmbrook Management Company shared valuable insights into the growing role of Medicare Special Needs Plans (SNPs), which have grown along with Medicare Advantage Plans. Did you know that Medicare Advantage enrollment has grown by 30% over the last five years?

Coble shared how SNPs work and keys to successful contracting, as well as how these plans fit into our nation’s emerging value-based payment landscape.

Following lunch (and some much appreciated sun peeking through!), we re-convened and capped off the day with an intensive about Owning the Risk: A Journey into Value-Based Transformation, which was moderated by HDG’s Brian Ellsworth. Beth Carlson, HDG, discussed the elements of setting the stage for value-based payment: continued expansion, recognizing other payers are climbing on board and understanding know-how is critical.”

But, “the past does not equal the future,” said Donna Mueller of Avamere, “you must build competencies for rising acuity.” Across the country, healthcare organizations are engaging in value-based transformation that is improving quality and lowering costs.

The experts shared their distinct perspectives on why their organizations chose to undergo a value-based transformation, what challenges and successes they faced, and what they anticipate for the future of this transformative trend.

It was a full and productive day at the Summit! The energy here is palpable and the healthcare leaders in attendance are truly at the leading edge of innovative solutions for post-acute care’s most critical challenges.

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