Archive for Alternative payment models


Mixed Verdict: Home Health Leads to More Readmissions But Lower Costs

Readmission rates are greater for patients discharged from hospitals to home health care than they are for those discharged to skilled nursing facilities but home health services cost so much less than nursing homes that home health saves money even with the higher numbers of hospital readmissions.

This is one of the major findings of a new study comparing differences in outcomes for patients who are admitted to skilled nursing facilities upon discharge from the hospital to those for patients who go direct home and receive home health services.

The study also found no meaningful differences in patient mortality or functional outcomes.

Readmissions from home health are 5.6 percent greater than those from skilled nursing facilities but with the much lower cost of home health services, Medicare saves, on average, more than $5400 over the first 60 days after discharge when patients are discharged to home health services rather than nursing homes.

Hospitals, it appears, prefer to discharge patients to nursing homes – perhaps, the study’s authors suggest, because of concern for their own readmission rates, which are subject to review and penalty under Medicare’s hospital readmissions reduction program.  Also, relatively few hospitals participate in alternative payment models that encompass …

State to Experiment with Global Budgets for Rural Areas

The Commonwealth of Pennsylvania plans to launch an experiment in which participating health insurers will fund global budgets to care for residents served by selected rural hospitals.

The program seeks to preserve access to care in rural parts of the state by stabilizing the financial health of struggling rural hospitals.

According to a Pennsylvania Department of Health news release,

The Rural Health Model is an alternative payment model, transitioning hospitals from a fee-for-service model to a global budget payment. Instead of hospitals getting paid when someone visits the hospital, they will receive a predictable amount of money. Payment for the global budget will include multiple-payers, including private and public insurers.

The global budgeting project is a joint venture of the state’s Department of Human Services, Department of Health, Insurance Department, the Pennsylvania Office for Rural Health, five participating hospitals, and five health insurers.  The federal Center for Medicare and Medicaid Innovation, another partner, is investing $25 million over five years to fund a rural health redesign center to support the project’s launch.

The state hopes to add more hospitals and insurers in the future.

The project is needed, according to the state, because “Nearly half of all rural hospitals in …

Hospitals Flee Downside Risk in Medicare Bundled Programs

More than half of the hospitals that voluntary participate in Medicare bundled payment model programs leave those programs when faced with the possibility of financial penalties based on their performance.

So concludes a new report by the U.S. Government Accountability Office.

Some of these models feature both “upside” and “downside” risk.  Upside risk offers financial incentives to participants that keep their costs below targeted amounts; they share those savings with Medicare.  Downside risk occurs when hospitals are penalized when their costs exceed agreed-upon targets.  Some of the model programs begin with only upside risk and later move into both upside and downside risks, but when the downside risk begins, the GAO found, more than half choose to leave the voluntary programs rather than incur downside risk.

Some observers believe this behavior speaks to the need to require participation in the models rather than make participation voluntary.

Learn more about the GAO’s look at the behavior of hospitals that participate in Medicare bundled payment programs in its report “Medicare: Voluntary and Mandatory Episode-Based Payment Models and Their Participants.”


MedPAC Meets

Last week the Medicare Payment Advisory Commission met in Washington, D.C. to discuss a number of Medicare payment issues.

The issues on MedPAC’s December agenda were:

  • The Medicare prescription drug program (Part D)
  • Opioids and alternatives in hospital settings: payments, incentives, and Medicare data
  • Hospital inpatient and outpatient services payments
  • Redesigning Medicare’s hospital quality incentive programs
  • Physicians and other health professional services payments
  • Medicare payment policies for advanced practice registered nurses and physician assistants
  • Ambulatory surgical centers and hospice payments
  • Skilled nursing facilities, home health agency, and inpatient rehabilitation facilities payments
  • Long-term care hospital services payments
  • Outpatient dialysis payments
  • Future policy directions to address Medicare prescription drug spending
  • Analysis of Medicare Shared Savings Program (MSSP) performance

MedPAC is an independent congressional agency that advises Congress on issues involving the Medicare program.  While its recommendations are not binding on either Congress or the administration, MedPAC is highly influential in governing circles and its recommendations often find their way into legislation, regulations, and new public policy.

Go here for links to the policy briefs and presentations that supported MedPAC’s discussion of these issues.…

New ACO Incentive: Exemption From 3-Day Stay SNF Requirement

In an effort to encourage more Medicare accountable care organizations to assume financial risk for the care of their patients, the Centers for Medicare & Medicaid Services is extending its exemption from the three-day inpatient stay requirement before Medicare ACOs can discharge their patients to skilled nursing facilities to ACOs participating in selected ACO model programs that involve two-sided risk under preliminary prospective assignment with retrospective reconciliation.

This move expands the waiver from the three-day SNF requirement that ACOs that assume greater financial risk already receive.

Details about the new policy, including the ACO models that qualify for this exemption and the conditions under which those ACOs can gain exemption from the three-day inpatient stay requirement, can be found in the new CMS guidance document Medicare Shared Savings Program:  SKILLED NURSING FACILITY, 3-DAY RULE WAIVER.…