Instability in Healthcare Payment System Can Wreck Innovative Coordination Efforts

As healthcare reform begins to take effect, many care providers—including those in the senior care industry—are looking for innovative ways to improve care quality and reduce costs by coordinating care, but if Medicare payments remain unstable, it could prevent those efforts, according to post-acute care provider Kindred Healthcare at a recent Senate Finance Committee hearing held on Wednesday.

Both sides of the political aisle can agree that the nation’s healthcare system is in need of some serious reform, even if not everyone agrees with President Obama’s particular version. At the hearing, four executives working at the field level for implementing innovative ways of delivering healthcare weighed in on their progress before Sens. Orrin Hatch (R-Utah) and Max Baucus (D-Mont.).

Innovation necessary to transform patient care


In his remarks, Sen. Baucus quoted Albert Einstein, who once said, “If you always do what you always did, you will always get what you always got.”

Considering that healthcare premiums doubled between 2000 and 2010, Baucus said it was “clear” the nation couldn’t keep traveling along the same path it has been.

“We all have common goals: to reduce health care costs and improve health care quality,” he said, adding that innovation plays a key role. And, he continued, “the innovation we’re talking about transforms the way providers deliver care to patients.”


There’s currently a “silo” system, said Sen. Hatch in his remarks, where patients are often seen at multiple settings—doctors’ offices, hospitals, or nursing homes—and the various healthcare providers aren’t doing a good job of communicating with each other, many times resulting in an unclear picture of a patient’s needs. 

“Our fee-for-service system provides little financial incentive to manage care properly,” said Hatch. “Instead, the incentive is to increase the volume of services. Reducing costs will require that patients receive the right care, in the right place, at the right time.”

Collaborate, coordinate, and cooperate 

In order to transform the healthcare system, there will need to be a lot of collaboration, cooperation, and aligned incentives between providers, payers, patients, and policymakers, Kindred Healthcare’s CEO Paul Diaz emphasized during his testimony before the committee.

Post-acute care has a “critical role” in coordinating care and lowering healthcare costs, as 35% of all Medicare beneficiaries admitted into an acute care hospital require post-acute care upon discharge.

“The problem from a care perspective is that as patients move from the acute care hospital to multiple post-acute settings there isn’t anyone, particularly physicians, who are responsible for coordinating care and driving the outcomes throughout the patient’s entire episode,” said Diaz. 

The resulting “silo-based” delivery system, featuring a lack of coordination among providers regarding when,where, and how to transition patients, doesn’t efficiently utilize healthcare services based on individual patient need, he argued. 

Building a post-acute care continuum

Kindred’s goal is to become a post-acute continuum of care provider that can integrate other providers’ service offerings as it delivers care to patients. Being able to coordinate care can reduce hospital admissions, which in turn reduces spending and is conducive to a person-centered care model.

Coordination can look like establishing committees with partners to formally identify shared goals and strategies for improving care quality and management, Diaz said. His company has established “dozens” of such committees across the nation with hospitals, health systems, physicians, managed care payers, and private and public ACOs. 

“This type of clinical integration can yield significant and immediate results even under the current fee-for-service payment system: As a result of our efforts in collaboration with our acute hospital partners, Kindred has reduced re-hospitalization rates by over 8% in our LTACs and Skilled Nursing and Rehabilitation Centers since 2008,” he said in his testimony.

The post-acute care provider has found that the number of patients returning home from all of Kindred’s post-acute service offerings is increasing, attaching more importance on coordinating care between settings to achieve quality and control costs.


Instability in the system can wreck innovation

There are barriers to coordinating patient care, and one of those is payment instability under the current system, said Diaz, who asked the Committee to consider the impact of additional payment cuts, including the impending 2% sequestration cuts to Medicare payments set to take effect in January 2013 for 10 years.

The cuts would negatively affect post-acute care providers’ ability to carry out pilot programs for care coordination, he said. “Innovation requires stability, and more payment cuts will cause a level of instability that I fear will prevent the kind of innovation needed to transform our healthcare system.”

Click here to access the remarks and testimonies given during “Progress in Health Care Delivery: Innovations from the Field.”

Written by Alyssa Gerace

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