So Obamacare is going well.

[WFU71]

Medicare is taking baby steps towards outcomes based reimbursement. CMS is now tracking the number of hospital patients discharged to nursing homes who are re-admitted to the hospital within 30 days with the intent of penalizing for excessive re-admissions.

For those who are unfamiliar with hospital reimbursement, Medicare pays them based on each diagnosis related group (DRG). Over simplified, a DRG involves the diagnosis, age, sex and other patient characteristics. A formula applies a payment to the DRG. Lets say a DRG payment is based on a five day hospital stay, with the range of inpatient days being three to eight. The hospital gets paid the same rate for the three day stay as the eight day. The incentive is to make money by shortening the stay. Taking the re-admits into account brings a much needed outcome measurement to the DRG system. The hospitals aren't keen on re-admits, so they wish to discharge patients to nursing homes that are better equipped to minimize the re-admissions. The result should be that better decisions and better care result in better reimbursement.

 

[ONW]

Medicare is taking baby steps towards outcomes based reimbursement. CMS is now tracking the number of hospital patients discharged to nursing homes who are re-admitted to the hospital within 30 days with the intent of penalizing for excessive re-admissions.

For those who are unfamiliar with hospital reimbursement, Medicare pays them based on each diagnosis related group (DRG). Over simplified, a DRG involves the diagnosis, age, sex and other patient characteristics. A formula applies a payment to the DRG. Lets say a DRG payment is based on a five day hospital stay, with the range of inpatient days being three to eight. The hospital gets paid the same rate for the three day stay as the eight day. The incentive is to make money by shortening the stay. Taking the re-admits into account brings a much needed outcome measurement to the DRG system. The hospitals aren't keen on re-admits, so they wish to discharge patients to nursing homes that are better equipped to minimize the re-admissions. The result should be that better decisions and better care result in better reimbursement.[/QUOTE]

Good knowledge. Who is the beneficiary of the better reimbursement, Dr., hospital, both?

 

[WFU71]

I honestly don't know if the MD payment is altered either way. The hospital's goal is to avoid a take-back from Medicare (better reimbursement means not getting docked) . There is similar stuff in the pipeline for nursing homes, although I haven't seen it spelled out. I know it will be outcome based. There are already a number of quality measures for them, so it's a matter of figuring out how to account for adverse outcomes that are caused the disease process as opposed to the quality of care rendered. It would be relatively simple to apply a similar hospital re-admission penalty, although you don't want either provider group to become too timid.

 

[WFU71]

I should add that there's an existing incentive to the nursing homes by getting a hospital's Medicare discharges. NH's make money on their Medicare A business and lose money on every Medicaid patient day. If a NH can adequately care for more medically challenging hospital discharges, the hospital turns a profit on the patient and will likely send the NH more Medicare business.

 

[ONW]

The hospitals front the costs and then the reimbursement is negotiable and dictated i.e. "we've performed x service at y cost, and Medicare says not so fast here's what we're willing to pay"?

That's a horrible business model.

You sound like your work in this field. Do you know where hospitals make-up the difference between the claim and the payment?

 

[ONW]

I should add that there's an existing incentive to the nursing homes by getting a hospital's Medicare discharges. NH's make money on their Medicare A business and lose money on every Medicaid patient day. If a NH can adequately care for more medically challenging hospital discharges, the hospital turns a profit on the patient and will likely send the NH more Medicare business.

Essentially, if you can keep a discharge from re-admission, we're throwing business your way NH? Do Assisted Living facilities work the same way?

 

[WFU71]

Essentially, if you can keep a discharge from re-admission, we're throwing business your way NH? Do Assisted Living facilities work the same way?

Correct. ALF's don't work that way because they aren't licensed for Medicare A (inpatients). Hospital discharges to ALF's are less likely to return quickly because they don't require any where near the amount of care a discharge to a NH needs. ALF's are built on a social model; NH's on a medical model. the line between them is becoming blurred as ALF's seek higher reimbursements and the feds/states force the lighter care NH patients out of NH's.

40 years ago many of today's ALF residents were private pay NH patients. ALF residents who can't pay privately generally get auxiliary grants from state welfare funds. That amount of $ is low, so most ALF's won't accept those people unless they're already there and "spent down" their funds. The ALF's that do accept auxiliary grants for admission have a really tough time making ends meet, just as those NH's that don't have sufficient Medicare A to offset their Medicaid losses.

 

[WFU71]

A couple of other players in the hospital discharge competition are rehab centers (often owned by hospitals) and home health agencies (another gold mine for hospitals). Rehab centers don't have any long term care (LTC) patients and generally specialize on high end care like significant stroke recovery. Home health usually gets the discharges that need care that doesn't qualify for NH Medicare A. An ALF resident returning from a hospital stay will often receive home health at the ALF. Similarly, a NH Medicare A patient who doesn't need LTC gets home health at home after NH discharge.

 

[deacdiggler]

I applaud doctors for providing that service and think they should be allowed to recoup those costs by raising their rates on the rest of us.

The issue is that there is no governor on health care costs. Ask people to decide whats catastrophic and what isn't through the market. Provide safeguards for those who can't help themselves.

 

[WFU71]

The hospitals front the costs and then the reimbursement is negotiable and dictated i.e. "we've performed x service at y cost, and Medicare says not so fast here's what we're willing to pay"?

That's a horrible business model.

You sound like your work in this field. Do you know where hospitals make-up the difference between the claim and the payment?

I didn't see your response when I posted the last two. Under the DRG system payment is (over simplified) based on the average cost for performing the DRG. In the example I used payment was for 5 days. If the hospital can discharge the patient in three days, they make lots of $$. If the patient needs eight days, the hospital loses a bunch. Obviously, hospital administration wants to draw the line at the beak even point (5 days). If the hospital is too aggressive in discharging and the patient bonces back from the NH in 30 days, it costs the overall system more and is terrible for the patient. That's why the penalty for re-admissions is coming their way. NH's have similar payment risks on the therapies they provide as Medicare and managed care companies come back after the fact and say the patient didn't benefit enough from the therapy, so we're not going to pay you for the work you did.

I'm a retired NH admin/corporate critter. I do some consulting (currently in northern Virginia for a few weeks). I have several hospital administrator friends and did some work in ALF's when that business was being developed.

 

[DreamOnDemOn]

I didn't see your response when I posted the last two. Under the DRG system payment is (over simplified) based on the average cost for performing the DRG. In the example I used payment was for 5 days. If the hospital can discharge the patient in three days, they make lots of $$. If the patient needs eight days, the hospital loses a bunch. Obviously, hospital administration wants to draw the line at the beak even point (5 days). If the hospital is too aggressive in discharging and the patient bonces back from the NH in 30 days, it costs the overall system more and is terrible for the patient. That's why the penalty for re-admissions is coming their way. NH's have similar payment risks on the therapies they provide as Medicare and managed care companies come back after the fact and say the patient didn't benefit enough from the therapy, so we're not going to pay you for the work you did.

I'm a retired NH admin/corporate critter. I do some consulting (currently in northern Virginia for a few weeks). I have several hospital administrator friends and did some work in ALF's when that business was being developed.

Hospitals were not paid this way when room rates were ten dollars a day. Of course, not as many consultants were needed to help massage the numbers for reimbursement. (I do not mean to insult you, '71: I am sure you are doing what you can to help the orgs out of their messes and are earning every cent of whatever they are giving you!) It really is too bad, though, for that person that actually does need the 8 days. Imagine if we bought cell phones this way.

 

[ONW]

Thanks 71.