ACOs Try to Solve the Post-Acute Care Crisis

Five competing accountable care organizations in Massachusetts are working together to reduce problems that crop up for patients who requirecare after leaving the hospital.

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In 2012, Medicare's post-acute care bill in the traditional fee-for-service program totaled $62 billion, more than double the $26 billion the program paid in 2000. About 43 percent of all Medicare beneficiaries discharged from hospitals in 2011 required some form of post-acute care, according to the Medicare Payment Advisory Commission (MedPAC).

In July, the esteemed Institute of Medicine issued a report that showed variation in Medicare spending across the nation is driven largely by differences in post-acute care. "If regional variation in post-acute care did not exist, Medicare spending variation would fall by 73 percent," the IOM said. Even among beneficiaries with similar care needs, spending varies more than three-fold, according to MedPAC, and at the extremes can ping pong by as much as 800 percent.

After-hospital care decisions often are driven by proximity of services, patient preference or financial or contractual relationships between providers, according to Mark Miller, executive director of MedPAC, which provides Congress with technical advice about running Medicare. Miller blames fee-for-service payment, which rewards any post-acute care providers for services provided, without discerning which setting or provider is deemed most efficient or effective in delivering the right amount of needed care.

"The use of outpatient therapy is similarly vexed by the lack of guidelines about when and how much therapy is appropriate for a given condition," Miller told a congressional panel in June. Miller and the IOM cited payment reforms, such as ACOs, as a key fix.

"It will be incredibly helpful" to have standardized protocols in place, says Bane. It's a two-way street, he says, as hospitals under fee-for-service drop patients like hot potatoes once they leave the hospital, which can lead to mix-ups. "Membership is welcoming the standards so we don't have to play under five different sets of rules."

Now, the players are broaching trickier territory, attaching metrics to the guidelines. "We do need to identify facilities that are high quality," says Ackerly, adding the initiative is "laying the groundwork for advancements in quality measurement and care improvement." Bane says re-hospitalization rates and "critically important" patient satisfaction rates will be included. When it comes to length-of-stay measures, Bane says, they must be adjusted on a case-by-case basis. A healthy person recuperating from a hip replacement is very different from a hip-replacement patient suffering a chronic illness.

With guidelines and measures in place, payment changes will likely follow for post-acute providers that so far have been paid exclusively on a fee-for-service basis. "We're discussing piloting some value-based [payment] system," says Bane. This could ultimately lead to some facilities specializing in certain types of care or patient conditions, rather than being jacks of all trades.

"The response was really positive" to the guidelines, says Elissa Sherman, president of LeadingAge Massachusetts, which represents not-for-profit providers of post-acute care. The road ahead, she acknowledges, will change. "The ACOs will be reducing the number of SNFs to which they refer," she says. "They will want to be working with SNFs that are able to meet the quality standards and that are able to reduce length of stay. This may mean a reduction in Medicare post-acute business for SNFs who are not able to meet the standards and reduction in length of stay. Some facilities that see a major decrease in Medicare revenue may ultimately have a hard time staying in business."

From Medicare's perspective, that may not be a bad thing.

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    Medicare