Monday, July 21, 2014

Medicare Plans to Penalize Hospital Use

Guest Contributor Paul Burke

Medicare plans to penalize hospital use for 4.9 million seniors who get health care from Accountable Care Organizations (ACOs). ACOs are groups of doctors and hospitals which sign up to receive rewards from Medicare if they cut Medicare spending on their patients. They also receive protection from antitrust and kickback rules.
The rewards which ACOs receive are changing. Out are rewards for cholesterol management and anti-clotting treatment. In are rewards for keeping patients out of hospitals.
Three quarters of ACOs do not cut costs enough to get rewards, so the changes are not aimed at them. Most ACOs include hospitals, so the new incentives to avoid hospital stays are not aimed at them either; they will just bring other patients into the hospitals, with little or no net saving.
The new rewards do show Medicare's thinking about how to care for seniors.
Medicare plans to penalize ACOs when patients in three categories have unplanned hospital stays. The three categories are: diabetes, heart failure and multiple chronic conditions. Even when these patients need hospital stays, such as for appendicitis or heart attacks, Medicare proposes a penalty on each stay.
ACOs are already penalized when their patients go to hospitals for treatment of heart failure, emphysema, chronic bronchitis or asthma, on the reasoning these can be treated without hospital stays. ACOs are supposed to minimize hospital stays for those treatments, and now are also supposed to minimize hospital stays for patients with diabetes, heart failure or multiple chronic conditions.
ACOs have also faced penalties each time a patient leaves a hospital and is readmitted within 30 days to the same or another hospital, for related or unrelated treatment. An extra penalty will apply in the future if the patient goes to a nursing home in between. Penalties are additive, so six penalties will apply for example to a patient with multiple chronic conditions who goes into a hospital for emphysema, then to a nursing home and back to a hospital for heart failure within 30 days.
Doctors and Medicare patients can avoid these penalties on hospital stays. They can try to identify ACOs which have cut costs enough to care about the penalties and avoid them, or avoid all ACOs, or choose hospice, which ends all curative care. Avoiding ACOs is wise, according to Regina Herzlinger, PhD, of Harvard Business School, when patients have serious issues such as "diabetes, cancer, or congestive heart failure. You need specialists for that. They are the opposite of organizations, such as ACOs, that do everything for everyone."
ACOs may not want seriously sick patients anyway. Simon Prince, MD, President of Beacon ACO in New York, which does earn rewards, presciently said before Beacon became an ACO, "If they're going to put the risk back onto the ACO and onto the physician, it's going to be more difficult and we could start self-selecting which patients we want to include in our ACO."
In each measure ACOs need to be above the 90th percentile to get full rewards, so for example they get full rewards if they hospitalize fewer diabetes patients than 90% of their competitors. This high target shows Medicare's high priority for reducing hospital use. Medicare has already extended hospital readmission penalties to patients outside ACOs. It also cuts general hospital payments based on total patient cost from 3 days before the stay to 30 days after.
As Medicare extends penalties outside ACOs, it will be harder for patients with chronic illnesses to avoid the penalties and keep getting complete care.
Many goals of quality medicine are not covered in this reward system. There are no rewards for keeping patients alive or for prevention or treatment of most conditions, such as cancer, HIV, disabilities, osteoporosis, kidney disease, or pain. Tonya Saffer of the National Kidney Foundation says, "Quality measurement is not exactly where it needs to be yet. We need true outcomes measures that are associated with morbidity, mortality, and patient quality of life."
Medicare struggles even to follow medical guidelines. They are dropping rewards for cholesterol management and anti-clotting therapy because guidelines changed. lists all the rewards, and it lists the 369 ACOs, which serve 4.9 million patients. Most doctors, 61%, do not plan to join ACOs, so patients have choices. Medicare accepts comments until Sept. 2 on the new reward structure. ACOs which cut costs will start earning the new rewards in October 2015.

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