Prin/Meth Health Plane

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Strategic Planning and Post-acute Care Services

Jeffrey P. Harrison

Chapter 10

“A population that does not take care of the elderly and of children and the young has no future, because it abuses both its memory and its promise.”

—Pope Francis

“In a culture where there is trust, respect, and a moral foundation, the young can grow and the elderly thrive.”

—Dr. Debra Harrison

Learning Objectives

Evaluate the availability of post-acute care services in local communities.

Identify the appropriate post-acute care interventions to meet the healthcare needs of older adults.

Identify quality issues impacting the provision of post-acute care.

Discuss the challenges faced by healthcare executives as they develop a strategy to meet post-acute care needs.

Understand the sources of financing for post-acute care services as well as opportunities for increased efficiency across the continuum of care.

Key Terms and Concepts

Adult health day care center

Comorbidity

End-of-life care (EoLC)

Hospice

Inpatient rehabilitation facility (IRF)

Palliative care

Post-acute care (PAC)

Prospective payment system (PPS)

Skilled nursing facility (SNF)

Introduction

Post-Acute Care (PAC)

Definition: Services provided after discharge from an acute care hospital.

PAC providers include:

Skilled nursing facilities (SNFs)

Home health agencies (HHAs)

Inpatient rehabilitation facilities (IRFs)

Long-term care hospitals (LTCHs)

In 2013, Medicare’s payments to more than 29,000 PAC providers totaled $59 billion, more than doubling since 2001.

As part of its cost-cutting strategy, Medicare is attempting to shift PAC into less expensive outpatient treatment and hospice settings (MedPAC 2015).

Introduction

As the longevity of Americans increases and the number of baby boomers reaching retirement grows, the demand for PAC and similar services will increase.

These developments offer strategic planning opportunities and business growth potential for a wide range of healthcare providers.

Chronic conditions are the leading cause of illness, disability, and death in the United States; account for the majority of US healthcare expenditures; and have a high incidence in the elderly.

Life expectancy in the United States was 78 years in 2009 and increased to 79 years in 2013 (Moses et al. 2013).

Definitions

In most cases, PAC planning is a joint decision-making process involving the patient, the patient’s family, the patient’s physician, and a hospital case manager.

End-of-Life Care (EoLC)

Provided when a patient is not expected to recover from his condition and further treatment is futile.

EoLC does not focus on life-sustaining treatments but is designed to maximize patient comfort.

Treatment includes hospice care and components of palliative care.

Hospice care focuses on pain relief and helping the patient and family cope.

Palliative care improves the quality of life of patients and their families.

Healthcare and US Population Demographics

An aging population and increasing proportion of international immigrants will lead to changes.

Between 2014 and 2060, the US population is projected to increase from 319 million to 417 million.

By 2030, it is projected that 1 in 5 Americans will be 65 or older.

Minorities (any group other than non-Hispanic whites) will make up half of all Americans by 2044

By 2060, 1 in 5 Americans will be foreign born (Colby and Ortman 2015).

The Affordable Care Act has expanded insurance coverage and access to healthcare for many Americans; however, most women and men in the United States are covered by insurance obtained through the workplace.

Definitions

Inpatient rehabilitation facility (IRF)

Facility that provides restorative services for traumatic injury, acute illness, and chronic conditions

Skilled nursing facility (SNF)

Facility that treats elderly patients with chronic diseases who need nursing care, rehabilitation, and other healthcare services

Healthcare and US Population Demographics

Women

Women are more susceptible to losing coverage because they are almost twice as likely as men to be covered as dependents. If they become widowed or divorced or their husbands become unemployed, they may lose insurance coverage.

Affordability of care is also a key issue for women, who are disproportionately low income.

Their lower incomes and eligibility for the Women, Infants, and Children program have historically meant more women than men qualify for Medicaid.

For frail and elderly women and their families, long-term care is a crucial concern. Women make up 73 percent of nursing home residents and home health care clients.

Inpatient Rehabilitation Facilities (IRF)

IRFs are growing in importance as the need for restorative services for traumatic injuries, acute illnesses, and chronic conditions increases.

To qualify as a Medicare IRF, 75 percent of admitted patients must require intensive rehabilitation for one of ten specified physical conditions, such as stroke, spinal cord injury, head trauma, burns, hip fracture, and amputation.

In 2013, about 79 percent of IRFs were hospital-based units, and the remaining 21 percent were freestanding facilities.

Hospital-based IRFs usually have fewer inpatient rehabilitation beds than freestanding IRFs, so they only account for 53 percent of patients going to IRFs after acute hospital discharge (MedPAC 2015).

Inpatient Rehabilitation Facilities

Large payment differences exist for the patients treated in IRFs versus skilled nursing facilities (SNFs) for the same conditions because they use different Medicare payment models.

As part of Medicare’s Conditions of Participation, at least 60 percent of an IRF’s patient population must fall in the “complex rehabilitation need” category.

The intensity of such rehabilitation requires a higher cost structure, and as a result, reimbursement is higher.

In communities where IRFs are located, more PAC patients are admitted to an IRF than to an SNF.

Physicians prefer to transition patients to IRFs because they provide a minimum of three hours of intensive rehabilitation therapy per day.

Inpatient Rehabilitation Facilities

IRFs are under increasing financial pressure to meet operations costs and invest in the latest healthcare technologies.

Medicare is exploring a site-neutral reimbursement policy that could lower program spending relative to current policy by between $1 billion and $5 billion (MedPAC 2015).

IRFs are evaluating expanding their service lines to include home health care, outpatient rehabilitation, and telemedicine to provide cost-effective care to the growing elderly population.

HealthSouth is one of the nation’s largest providers of PAC services, offering both facility-based and home-based post-acute services in 33 states and Puerto Rico through its network of IRFs, HHAs, and hospice agencies.

Exhibit 10.1: Network of Post-acute Care Services

Medicare Reimbursement of Inpatient Rehabilitation Facilities

Medicare reimburses IRFs through its prospective payment system (PPS).

The PPS motivates IRFs to control costs by offering a predetermined fixed payment per patient case, regardless of the costs the IRF incurs in rehabilitating the patient.

CMS has implemented new payment methodologies that allow IRFs to assume financial risk through ACOs and to participate in CMS’s bundled payment initiatives.

Allows beneficiaries the freedom to select the provider of their choice.

Some ACOs have established partnerships with selected PAC providers. Under this arrangement, ACOs select PAC partners by reviewing the cost and quality metrics for each provider and its geographic coverage.

Rehabilitation Services in Acute Care Hospitals

Inpatient rehabilitation is the most frequently opened new clinical service in acute care hospitals.

In 2015, 900 hospitals had an IRF, and 185 also had an SNF (MedPAC 2015).

In 2013, approximately 35 IRFs closed; 80 percent were hospital-based units. However, at the same time, almost two-thirds of new IRFs that year were hospital-based units.

This statistic suggests that there are challenges facing hospital-based units, most likely related to reimbursement and cost, whereas some acute care hospitals with high census may find that IRF units help reduce inpatient lengths of stay and free up hospital beds for additional admissions (MedPAC 2015).

Skilled Nursing Facilities (SNFs)

Acute care hospitals and SNFs are working collaboratively.

In 2012, the average SNF occupancy rate was high, at 82 percent. The average annual compensation for a nursing home administrator in 2015 was $99,566, with the top 10 percent earning $120,667 (Salary.com 2015).

To meet increased demand, the number of SNFs has been growing at a rate of 12 percent annually.

Medicare expenditures for SNF services increased from $10.9 billion in 1999 to $15.7 billion in 2004 and to $28.8 billion in 2013.

The data show that 67 percent of Medicare beneficiaries discharged from acute care hospitals go home, with the remainder discharged to PAC facilities.

Palliative Care

To palliate means to make comfortable by treating a person’s symptoms from an illness.

Hospice and palliative care both focus on helping a person be comfortable by addressing issues causing physical or emotional pain or suffering.

When healthcare organizations provide palliative care services, patients have the opportunity to request information related to end-of-life care.

Palliative care plans can reduce costs by decreasing patients’ length of stay; reducing unnecessary tests, treatments, and medications; and incorporating PAC services.

The majority of US hospitals have palliative care programs supported by outpatient services, nursing homes, and home health care agencies.

Highlight 10.1: Advanced Care Planning

Advance care planning involves making decisions about the healthcare a person wants to receive if she becomes unable to speak for herself. It includes the following:

Getting information on the types of life-sustaining treatments available

Deciding what types of treatment a person would or would not want should she be diagnosed with a life-limiting illness

Sharing personal values with loved ones

Completing advance directives to put into writing what types of treatment a patient would or would not want and who she choses to speak for her should she be unable to speak for herself (CaringInfo 2015a)

For more information, consult the National Hospice and Palliative Care Organization’s website: www.caringinfo.org/i4a/pages/index.cfm?pageid=3277

Hospice

Patients’ Use of End-of-Life Care

Recognizing that a high percentage of total healthcare dollars is spent on EoLC, CMS created a unique hospice benefit designed to improve the quality of EoLC while also reducing its cost.

This benefit, combined with a growing elderly population, creates a significant strategic opportunity to expand hospice services across the United States.

The Role of Hospice

Hospice care contrasts with curative care in that it is not designed to cure an illness or lengthen life but rather emphasizes the management of pain.

However, palliative care may be given at any time during a person’s illness, from diagnosis through curative or noncurative treatment.

Most hospice programs are run by not-for-profit organizations.

Most hospice care is provided in the home by a family caregiver; however, inpatient hospice care is available for pain and symptom management for periods of up to five days.

Hospice and the Continuum of Care

An effective hospice program can improve acute care hospital performance by

decreasing length of stay,

reducing ancillary charges,

preventing unnecessary inpatient utilization,

reducing hospital readmission rates, and

reducing emergency department visits.

Inpatient hospice standard of care usually requires a minimum of one interdisciplinary hospice team member contact per day in the hospital (primarily visits), supplemented with volunteer visits and 24-hour nursing care.

Cultural Diversity and Hospice Services

A 2011 study found that, of patients who received hospice care in the United States, 82.8 percent were white, 8.5 percent were African American, and 6.2 percent were Hispanic.

It is important to recognize potential cultural beliefs related to hospice.

Between 2010 and 2050, the share of the non-Hispanic white US population will decline substantially.

The African American, American Indian, Alaska Native, and Native Hawaiian and other Pacific Islander populations will maintain their shares of the population.

The Asian population will increase.

The Hispanic population will increase substantially (Ortman and Guarneri 2015).

Adult Health Day Care Centers

Adult health day care centers provide a combination of social and medical services, and they are designed to keep senior citizens in the community as long as possible, thereby reducing admissions to nursing homes.

These centers also provide services to patients who require PAC and assist their family caregivers.

For example, an adult health day care center can provide meals, transportation, socialization, therapeutic activities, healthcare treatment, and health referrals.

The cost of adult health day care centers varies widely. It ranges from $40 a day to more than $100 per day depending on the services offered, reimbursement, and region.

Adult health day care is not usually covered by Medicare. Some coverage may be available through state or federal programs (e.g., Medicaid, Older Americans Act, Veterans Administration).

Adult Health Day Care Centers

Look to other countries!

Norway has a unique and comprehensive system for elder care that includes adult health day care. In Norway, adult day care centers are located adjacent to child care centers and are within walking distance in most local communities. Norway spends more per capita on caring for its elderly than any other developed nation.

Despite the fact that adult day care centers were developed with the intention of reducing admissions to nursing homes, they currently pose no threat to nursing homes.

The number of nursing home facilities declined slightly between 2013 and 2014.

The decline in facilities most likely reflects the expansion in some states of home- and community-based services, which allow people to remain in their homes rather than in an institution—a positive move for our country (MedPAC 2015).

Summary

Faced with a rapidly growing elderly population, healthcare providers have a strategic opportunity to position themselves as integrated providers of PAC. As the population ages and the prevalence of chronic disease increases, the need for PAC in IRFs, SNFs, adult health day care centers, and patients’ homes will grow significantly.

Acute care hospitals have an opportunity to develop an integrated model of PAC services and implement EoLC or hospice programs.

When exploring any new business venture, strategic planners need to ensure that the reimbursement they will receive for providing services is sufficient to make the venture profitable. Given the reality of ACOs, the bundled payment system, and Medicare/Medicaid reimbursement; PAC services are often less than the amount the provider will need to spend to deliver the services. This is important to consider when exploring PAC ventures.

Questions

References

CaringInfo. 2015a. “Advance Care Planning.” National Hospice and Palliative Care Organization. Accessed September 11. www.caringinfo.org/i4a/pages/index.cfm?pageid=3277.

CaringInfo. 2015b. “Palliative Care.” National Hospice and Palliative Care Organization. Accessed April 29. www.caringinfo.org/i4a/pages/index.cfm?pageid=3354.

Colby, S. L., and J. M. Ortman. 2015. Projections of the Size and Composition of the U.S. Population: 2014 to 2060. US Census Bureau. Published March. www.census.gov/content/dam/Census/library/publications/2015/demo/p25-1143.pdf.

Gupta, N. 2013. “Models of Social and Health Care for Elderly in Norway.” Indian Journal of Gerontology 27 (4): 574–87.

Harrison, J. P., D. Ford, and K. Wilson. 2005. “The Impact of Hospice Programs on US Hospitals.” Nursing Economics 23 (2): 78–84.

References

Health Research & Educational Trust (HRET). 2012. Palliative Care Services: Solutions for Better Patient Care and Today’s Health Care Delivery Challenges. Published November. www.hpoe.org/palliative-care-services

HealthSouth. 2014. HealthSouth 2014 Annual Report. Accessed April 30, 2015. http://investor.healthsouth.com/files/doc_financials/annual/2014-Annual-Report_v001_ t9qefo.pdf.

Kaiser Family Foundation. 2013. “Health Reform: Implications for Women’s Access to Coverage and Care.” Issue brief. Published August. https://kaiserfamilyfoundation. files.wordpress.com/2012/03/7987-03-health-reform-implications-for-women_s-access-to-coverage-and-care.pdf.

Klein, L. C., K. Kim, D. M. Almeida, E. E. Femia, M. J. Rovine, and S. H. Zarit. 2014. “Anticipating an Easier Day: Effects of Adult Day Services on Daily Cortisol and Stress.” The Gerontologist. Published July 4. http://gerontologist.oxfordjournals.org/content/ early/2014/07/01/geront.gnu060.full.

References

Medicare Payment Advisory Commission (MedPAC). 2015. Report to the Congress: Medicare Payment Policy. Accessed April 29. www.medpac.gov/documents/reports/march- 2015-report-to-the-congress-medicare-payment-policy.pdf.

Morley, M., S. Bogasky, B. Gage, S. Flood, and M. J. Ingber. 2014. “Medicare Post-acute Care Episodes and Payment Bundling.” Medicare & Medicaid Research Review 4 (1): E1–E12.

Moses, H., D. Matheson, R. Dorsey, B. George, D. Sadoff, and S. Yoshimura. 2013. “The Anatomy of Health Care in the United States.” Journal of the American Medical Association 310 (18): 1947–64.

National Hospice and Palliative Care Organization (NHPCO). 2012. NHPCO Facts and Figures: Hospice Care in America. Accessed September 13, 2015. www.nhpco.org/sites/ default/files/public/Statistics_Research/2012_Facts_Figures.pdf

References

Obermeyer, Z., M. Makar, S. Abujaber, F. Dominici, S. Block, and D. M. Cutler. 2014. “Association Between the Medicare Hospice Benefit and Health Care Utilization and Costs for Patients with Poor-Prognosis Cancer.” Journal of the American Medical Association 312 (18): 1888–96.

Ortman, J. M., and C. E. Guarneri. 2015. “United States Population Projections: 2000 to 2050.” US Census Bureau. Accessed May 1. www.census.gov/population/projections/ files/analytical-document09.pdf.

Salary.com. 2015. “Nursing Home Administrator Salaries.” Accessed March 24. www1.salary.com/Nursing-Home-Administrator-Salary.html.

Seniorresource.com. 2015. “Adult Day Care and Adult Day Health Care.” Accessed May 1. www.seniorresource.com/hsdc.htm.

Shimooka, A. C. 2014. “The Win-Win of Palliative Care.” The Advisory Board Company video. Published May 5. www.advisory.com/research/physician-executive-council/multimedia/ video/2014/misconceptions-about-palliative-care.

World Health Organization (WHO). 2015. “WHO Definition of Palliative Care.” Accessed March 29. www.who.int/cancer/palliative/definition/en/.