The Trouble with Avoidable Readmissions
Sep 6, 2012

The Trouble with Avoidable Readmissions

By · Leave a Comment

183911-vlcsnap_2010_05_16_21h56m32s5As a Scot (my name is spelled with one, “t” because my father wanted to be sure I never forgot), I remember with both amusement and annoyance a line from the movie, Braveheart: “The trouble with Scotland is that it’s full of Scot’s.” As I see it, the trouble with trying to address healthcare costs through reducing avoidable readmissions is that there are too many readmissions. Bear with me . . .

Avoidable hospital readmissions are the lowest of low hanging political fruit in the Healthcare Reform debate, representing an immediacy of opportunity to impact aggregate healthcare spending for very little political capital in exchange. The means of cost reduction is directly controlled by the Federal government – in the form of Medicare payment reductions. And the organizations identified as the culprit deserving of such reductions are those behemoth institutions of waste and inefficiency: the hospitals (yes, that’s sarcasm).

To be sure, there is substantial evidence where individuals discharged from a hospital stay wind up back in the hospital because of factors and events that could have been avoided. But avoided by whom – how – and at what cost? Healthcare providers of all types that will be impacted by the readmission penalty had better begin to understand the economic ramifications of how these questions are going to be answered.

As has been rather widely publicized – yet from my personal observation, up until just recently still largely ignored – the Affordable Care Act (ACA) included Section 3025: Hospital Readmissions Reduction Program. Section 3025 amended the Social Security Act such that it now requires CMS to reduce payments to IPPS hospitals with excess readmissions, effective for discharges beginning on October 1, 2012 (i.e., in a few weeks). Initially, the Program has established readmission measures for Acute Myocardial Infarction (AMI), Heart Failure (HF), and Pneumonia (PN).

Excess readmission ratios are calculated by comparing national average rates of readmission for patients discharged to a hospital’s individual experience while relying on a methodology endorsed by the National Quality Forum (NQF). I recognize this is a gross oversimplification, but all of the detail you could hope to find is now widely available – whether on the CMS site referenced above or many other organizations that have made such information available on their web sites.

For FY 2013, determination of the excess readmission ratio is based on actual discharges having occurred during the 3-year period of July 1, 2008 to June 30, 2011. According to a Kaiser Health News report, more than 2,000 hospitals will begin to see payment penalties under the program due to patients being readmitted within the 30-day threshold.  The overall anticipated impact of these penalties is approximated to be $280 million over the next year.

Not surprisingly, as with many aspects of the ACA, the Readmissions Program carries with it a great deal of controversy.  Many clinicians, including physicians, who are directly responsible for the care of those individuals represented by the statistics entering into the determination of a readmission penalty feel that readmissions are ultimately driven by acute medical needs – and patients that need to be in a hospital, well, they need to be in a hospital. Simple as that. Better to pay a relatively small penalty than have a patient die trying to avoid it goes the thinking.

Yet those involved in healthcare delivery on all sides (the clinical, the social, the community and the administrative) understand first-hand the reasonable and plausible goal that the Readmissions Program is seeking to address: a reduction in readmissions that are caused by insufficient and/or improper assistance and care available to the individual after being discharged from a hospital; i.e., the avoidable readmission.

Readmissions resulting from the natural progression of a disease state, comorbidities, unexpected and/or negative reactions to post-discharge treatment – there is legitimate concern that the Readmissions Program will interfere with clinicians’ ability to effectively manage their patients’ health in lieu of what are being considered unwarranted and unwelcomed outside influences and distractions. On the other hand, readmissions that result from a decline in condition owing to non-clinical factors, such as personal trauma associated with transferring and transitioning, the failure to follow a prescribed post-discharge treatment regimen (e.g., diet, exercise, medication), the inability to keep medical appointments – these are significant contributors to readmissions that PA/LTC organizations can have a significant impact upon.

But being able to determine cause in individual cases is going to be a monumental challenge that neither the ACA, nor the regulations promulgated for the Readmissions Program, adequately address. It is going to result in a lot of finger pointing on ward floors – and underneath the tables in board rooms. So we are left with two choices: do some more complaining and hope that the ACA is repealed (and replaced by an ultimately very similar Republican approach two or three years from now), or roll up our sleeves and be innovative in spite of the regulatory challenges.

For those PA/LTC organizations wishing to pursue the latter, I suggest they begin to invest immediately in the development of an operational infrastructure that will facilitate their ability to record, monitor and report the requisite data elements that can be used to evidence all of the contributing factors leading to hospital readmissions of the individuals under their care – clearly and unequivocally. Though, in theory, a large part of the impetus for the Readmissions Program is to engage hospitals in having accountability and responsibility for patients’ welfare post-discharge, as a PA/LTC provider I would interpret that reality as being given responsibility without authority.

Remember this: knowledge is power.  Before engaging in any type of contractual agreement with a hospital that ascribes financial responsibility for hospital readmissions, the PA/LTC organization must be in a position of negotiating strength.  That strength will come from the ability to know and understand – before the hospital does – the nature and root cause of a readmission.  Power will also come from the ability to support that understanding with evidentiary support.

The other integrated concept here, of course, is risk management.  The same knowledgebase that can be used to build negotiating strength can be used to mitigate the risks  – market, operational and financial – associated with hospital readmissions.

PA/LTC provider organizations stand to benefit in several ways from the Hospital Readmissions program.  The inherent demand generated by hospitals seeking to have greater control of post-discharge outcomes should be welcomed in light of trends away from institutionalized care.  The stronger voice many PA/LTC clinical staff have sought in dealing with hospital staff is getting a well-deserved boost.  And done wisely, there are new revenue opportunities available at a time when reimbursement is being ratcheted down at every turn.

As discussed above, however, there are also substantial performance risks that will ultimately bring down some organizations before all is said and done.  Don’t be one of those organizations.

  ~ Sparky

Filed Under: Editorials & Opinions, Hospital Readmissions · Tagged: , , ,
Aug 10, 2012

CCRCs: Healthcare Providers–Or Not?

By · Leave a Comment

To be, or not to be – in the business of healthcare.  That’s the question continuing care retirement communities (CCRCs) are facing today – even though my anecdotal experience would suggest the board and c-suite leadership at many of those organizations have yet to be fully reconciled of such reality.

As reported by Alyssa Gerace in Senior Housing News, a recent panel discussion held at SHN’s inaugural Senior Housing Summit in Chicago on July 26th painted a concerning economic forecast for the future of the CCRC model.  Having been involved in near 50 CCRC project developments since the early 90s, I have some familiarity with that model – the good, the bad and what is apparently largely misunderstood.

For a segment of the senior population, typically over the age of 75, CCRCs are a very attractive retirement housing option. They offer the comfort and security of a community tailored to meet the physical and emotional needs of seniors, the social energy of a community setting and the critically important peace of mind that personal services, assistance and care are available, when and if needed, removing that potential caregiving burden from their adult children raising families of their own.

The fatal financial challenges faced by several CCRCs have been largely driven by economic realities beyond the control of those communities’ management teams.  Yes, there have been a few bankruptcies – isolated cases of weak and exposed capital structures, poor planning, mismanagement and a phenomenon the industry has always been challenged with: service creep.  But the economic malaise of the past several years has not been selective in its impact on any business enterprise involving real estate – and so it has not spared CCRCs.

Though understandably self-serving and a tad superfluous in its explanation of the development process, LeadingAge nonetheless prepared a very useful piece that effectively addresses this phenomenon of spotlighting the unfortunate exceptions in,  CCRCs Today: The Real Deal About Retirement Communities.  I refer Pub Patrons there rather than take up space here for a good rebuttal of media attempts to extrapolate isolated misfortunate into industry condemnation.

What concerns me about the future operational and financial viability of the CCRC model a lot more than market influences and capitalization, however, is the impact of Healthcare Reform.   In explaining why this concerns me, it might be helpful first to provide a short summary of how CCRCs contact with residents for post-acute/long-term care.

CCRCs generally contract with individual residents under three agreement types:
Type A: Life care ~ residents typically pay an initial entry fee (often a significant portion of which may be refundable) and a monthly fee that is adjusted for cost-of-living, but if in need of assisted living or nursing care pay no additional fees of any significance.
Type B: Modified ~ the difference from Type A is that some additional payment is required for assisted living or nursing and the amount depends on the nature of the agreement (e.g., there may be a number of free days provided before payment is required or a percent discount from full rate per diems).
Type C: Fee for Service ~ residents requiring additional care pay the full amount for that care, the same as if they had moved in directly to assisted living or nursing without having first been a resident of the CCRC, though priority access to that care may be provided them.

In my experience over the past decade, new project developments have consistently migrated away from Type A contracts to Type C in an effort to avoid the actuarial risk of providing healthcare to an aging population without the contractual means to significantly realign the revenue base generated by that population as a reflection of caregiving costs above what had been projected.  This has been a trend bolstered by the relative lack of success of long-term care insurance policies and annual healthcare inflation.

But even CCRCs that contract with residents under a Type C arrangement – and this is especially true for nonprofits (of which LeadingAge estimates comprise over 80% of all properties) – assume a consequential market and brand risk of being expected to provide healthcare to residents that may not be able to afford that care.  As noted above, the security of having access to personal assistance and nursing care as and if needed has been a fundamental part of the CCRC’s value proposition.

Healthcare Reform is going to significantly increase and accelerate these risks.  So, my counsel with respect to how CCRCs seek to strategically position themselves as healthcare providers is therefore clear: go all in or get out.  I believe the prospective economic benefits of going decidedly in either direction is a plausible strategy for long-term financial sustainability.  I believe trying to hang out in the middle until the dust settles, short of having a substantial endowment, is a recipe for financial disaster.  I have identified below several of the more compelling ramifications of Healthcare Reform to be cognizant of as those leadership teams contemplate this reality.

Intense cost pressures: although the contractual arrangements to provide nursing care at CCRCs most typically include some form of direct payment from the individual receiving care (i.e., whether through an entry fee, monthly fee or per diem fees – or some combination thereof), most communities still have significant exposure to Medicare and Medicaid.  As I have written here before, these payment sources will continue to see tremendous pressure to control aggregate spending on national healthcare, regardless of what happens politically this fall and into 2013. 

And, as of now anyway, accepting these payment sources exposes organizations to the ACA’s future reporting and transparency mandates, which need to be seriously understood and considered.  On the other hand, it is highly unlikely that future quality of care outcomes (which will directly impact revenue) can be met without incurring annual increases in direct caregiving labor costs well above general inflation.  All healthcare providers are going to have to struggle with how to reconcile that which cannot be reconciled.

New care delivery models: ACOs, medical home models, insurance exchanges, payment bundling, the potential redesign of Medicare Advantage Plans – as these models are implemented they will have an unquantifiable impact on the healthcare buying behaviors of CCRCs’ targeted market populations. They will also impact historical patient referral patterns. One can only hypothesize at this juncture the ramifications of these impacts – but to remain economically sustainable means aggressively and proactively monitoring and understanding how these care delivery models will affect an organization’s operations and financial viability.  It also means actively developing clinically-based relationships with other healthcare providers in those organizations’ markets.

Home and community-based services: Primarily driven by market demands, this appears to be an area where CCRCs have been most proactive (e.g., the CCRC Without Walls concept). But from what I have seen so far, most of the interest and activity has been in socialization, hospitality and personal/home care services. If wanting to stay in the business of healthcare, CCRCs should learn quickly what it means to be part of a community-based integrated care delivery network where revenue is tied to clinical quality performance standards that depend, in part, upon other healthcare providers through contractual relationships.  As an aside, I cannot envision a future viable business model for a CCRC that stays in healthcare and does not include home healthcare as a core element of its care continuum.

Infrastructure investments: to be a competitive provider of post-acute/long-term care in lieu of healthcare reform is going to mean having the operational, clinical and technological infrastructure necessary to assess payment risk, monitor and report on outcomes in real time, be effectively positioned to negotiate capitation contracts and be ever vigilant in assessing the emerging local market dynamics of healthcare delivery.  This is an expensive proposition that in all likelihood cannot be funded out of operations: meaning the necessary investment will require either use of equity, incurring debt or leveraging the infrastructure of other healthcare providers in the market through contractual relationships.

Tax exempt status: Though Section 9007 of the Affordable Care Act requires that only hospitals having tax-exempt status complete a Community Health Needs Assessment, how long will it be before a similar requirement is mandated for nonprofit CCRCs – especially when consideration is given to the average wealth and incomes of the populations served by many of these communities across the country.  Being licensed as a nursing care provider with tax-exempt status will ultimately require addressing the justification of that status in terms of how the CCRC benefits its surrounding community.

These are a few of the important considerations that come to mind when contemplating whether TO BE or NOT TO BE in the healthcare business.  I know there are quite a few CCRC organizations that have already recognized this reality and are proactively planning to stay in healthcare.  I have had the very good fortune to have worked with a number of them.  One thing I found they have in common: they each have assumed a decidedly outward looking vantage with respect to their future strategic positioning.

For better or worse, they have embraced the reality that being (staying) in healthcare very much means being proactively integrated into the surrounding community and healthcare provider network.  The resultant consequences of that reality may not create an attractive positioning for some CCRC organizations – and the resident populations they serve.  This is completely understandable and in many cases ought to be thoughtfully anticipated.  Those organizations may be much better served by moving toward an active adult model.  But they should get out of the healthcare business now, before it’s too late.

  ~ Sparky

Filed Under: CCRCs, Editorials & Opinions · Tagged: , ,
Jul 23, 2012

Healthcare Reform Depends on Home Healthcare

By · Leave a Comment

As shared in this space last week, the Council of State Home Care Associations recently completed a five-month project that was designed to gain a better understanding of how well home healthcare and hospice agencies are prepared for Healthcare Reform.  Artower Advisory Services published the summary findings and observations of that report here.  Note that throughout this post I refer to, “home healthcare” without intending to be ignorant regarding the variation in terminology and services and care provided by agencies of different types (e.g., home care, skilled home health, private duty, hospice, etc.).

Now that the survey is over and results published, I wanted to take a moment and share some background behind my passion for working with and supporting the Council’s efforts and, more generally, the home healthcare industry.  In a nutshell, I believe that if the goals of Healthcare Reform are to be achieved, there are two areas where success will be most important: Wellness and Prevention – and Home & Community-Based Services.

The former because finite resources simply cannot afford to save people from themselves forever, and the latter because the age wave will require a more efficient and effective consolidation of services and care in non-institutional settings.  And, promisingly, I believe there are great opportunities where home and community-based services can be effective in promoting and facilitating wellness and prevention – across all age cohorts.

Shortly after the March 2010 passage of the Affordable Care Act I created a reference document that summarized and organized the various programmatic funding opportunities available to organizations both directly and indirectly involved with healthcare delivery.  What struck me at the time – and does to this day – was the number of instances where home healthcare was specifically identified as a potential recipient of funding pursuant to its role in helping to facilitate the intended benefit of such initiatives.

And what also struck me at the time was the hugely important role that home healthcare must play in the evolution of care delivery models under Healthcare Reform.  There are several compelling reasons in support of this belief.  There are also significant obstacles in the way of realizing the potential of these opportunities.  I will discuss each, in turn, below.

Compelling Reasons Underscoring the Importance of Home Healthcare

Policy Advancements
First, and perhaps most important, is the continued public policy advancement that is moving US healthcare delivery away from institutional settings to individuals’ homes.  Driven by a confluence of consumer preferences (i.e., especially of the Baby Boomer Generation), desire to reduce unsustainable capital costs and recognition of the health benefits home-based care can offer, policy initiatives at both the state and federal levels have steadily been moving toward a redistribution of public funding toward home-based care, and this is certainly reinforced in the Affordable Care Act.

Valuable Positioning
Second is the existing knowledgebase that home healthcare providers possess.  They already have established business models, market intelligence, operational capabilities and the clinical acumen necessary to identify, plan and implement integrated care delivery models that bring services and care into the home.  This “ahead-of-the-curve” positioning can offer substantial advantages to home healthcare agencies as they seek to become  a valuable conduit between acute care providers and patients as part of integrated care delivery models.

Alignment with Community-Based Solutions
Third, they are quite naturally already community-based.  One of the most highly attractive programs thus far in the implementation of the Affordable Care Act has been the Community-Based Care Transitions Program.  While other healthcare provider types are in the community, home healthcare agencies very much are the community.  They are ideally situated to leverage the knowledge and awareness gained from caring for individuals in the very homes that are the foundational elements of those communities.

Ability to Transcend Care Delivery
Finally, taken together, private duty, home care, skilled home healthcare and hospice agencies represent a wider transcendence of individual service and care than any other provider type.  From providing the occasional, and as-needed, personal care services (i.e., assistance with various activities of daily living) to intensive, ‘round-the-clock medical care, home healthcare agencies are excellently positioned to facilitate holistic and integrated care delivery.

Industry Challenges

But as the ORASI© survey identified, there are substantial challenges that must be overcome if home healthcare agencies are to successfully take advantage of the opportunities presented.  Some of these challenges are within the purview of organizations to develop strategies for overcoming, while others represent exogenous considerations beyond their direct control.  Thus, to a significant degree, the latter represent important future public policy considerations that must be addressed if the desired benefits from home healthcare are to be realized.

Challenge: Fraud & Abuse
The home healthcare industry has been its own worst enemy for nearly a generation now.  The inability to self police perceptually damaging fraud and abuse has resulted in a giant target on the industry’s back that has been manifested in burdensome regulations, which have often appeared to be throwing the baby out with the bathwater.  Although widely accepted that the isolated actions of a few have resulted in broad brush castigation, perception is reality: and the reality is this is a daunting challenge the industry must address square on before it can hope to be strong participants in integrated care delivery models.

Challenge: Producing the Necessary Labor force
Home healthcare is quite obviously a very labor-intensive business.  Unfortunately, the dichotomy of projected future demand for caregivers and cost constraints holding down the ability to gain a competitive advantage through wage differential is likely to get worse before it gets better.  This phenomenon will likely be the greatest driver of industry consolidation in the near future.  Organizations that are better able to recruit, train and educate and then retain the highest quality caregiving staff will ultimately have success over competitors.

Challenge: Over Reliance on Technology
Not unique to home healthcare is the belief (hope) that technology – both care-oriented (e.g. supportive, remote monitoring,  tele-health) and information (e.g., electronic medical records, communication, operational functionality) will provide great opportunities to increase productivity and efficiency.  This is a belief that I fear will end up costing a lot of agencies their businesses.  While technology certainly offers great promise, successful agencies will recognize it for what it is: an enabler of people and processes.  If the requisite investments are not made in the latter two, expenditures on technology will only hasten the burden of financial unsustainability under Healthcare Reform.

Challenge: Non Home Healthcare Provider Acceptance
In order for home healthcare agencies to be effective participants in a world of integrated care delivery they must be able to partner with other healthcare providers in ways that add value to both those organizations – and, more importantly, their patients.  Healthcare in the US for far too long has been dominated by silos of care segmentation.  Getting different provider types to work together and across disciplines is going to require a tremendous amount of personal discomfort on the part of healthcare providers – and it is going to require a major leap of trust, particularly in the sharing of patient information.  For better or worse, the burden of building that trust rests largely on the home healthcare industry.

Policy Considerations

The home healthcare stands at the precipice of a tremendous opportunity to be the primary facilitator of innovation and the catalyst of sustainable change in how healthcare is delivered in the United States.  It is strategically better positioned than any other care provider type to embrace the underlying concepts of Healthcare Reform embodied in the Affordable Care Act.  It is also functionally and pragmatically better positioned than any other provider type to implement the several programmatic integrated care delivery initiatives of the Act.

But as identified above, the industry faces substantial challenges.  Without being able to make the requisite investments in infrastructure, knowledgebase, technology and – most importantly – caregivers, the industry will not be equipped to fulfill these expectations.  Thus, it is vital that future public policy recognize the importance of providing adequate funding necessary to develop the industry into the national care delivery network required for success.  Not only does the home healthcare industry’s success depend upon it – but the successful implementation of Healthcare Reform under the Affordable Care Act depends upon it.

  ~ Sparky

 

Filed Under: Editorials & Opinions, Home Healthcare & Hospice · Tagged: , , , ,
Jul 6, 2012

Coming to a State House Near You: Medicaid Wars

By · Leave a Comment

Did the June 28th Supreme Court decision disallowing the federal government to coerce state participation in the Affordable Care Act’s Medicaid expansion kick a hornet’s nest or just lay it bare for more to see? Currently at issue is whether individual states will now “opt out” of participation in providing Medicaid coverage to an estimated 15 million individuals across the country by 2019 under Section 2001 of the ACA.

This past week one of the most vocal opponents of the ACA, Florida Governor Rick Scott, was out and visible at numerous media outlets willing to give him a bully pulpit to reinforce his position – that not only will Florida opt out of Medicaid expansion, but will also refuse to implement Health Insurance Exchanges as well.  Whether he follows through (he is not up for reelection until 2014) will be another matter.

In fact, the political challenge for him and the 28 other Republican governors who have to mull over that decision is a choice between increasing already tapped out Medicaid budgets or foregoing billions of dollars of federal funding available to the states that do not choose to opt out.  Since the cost sharing is initially 100% federal funding, stepping down to 93% by 2019, opting out might be economically prudent but very difficult to sell politically.  There are only three Republican governors running for reelection this fall: Jack Dalrymple (North Dakota), Gary Herbert (Utah)  and Luis Fortuño (Puerto Rico).  So expect more chest thumping bravado before some very difficult choices have to be made going into the fall of next year.

Complicating matters, the SCOTUS decision has caused an unforeseen wrinkle, or  donut hole as it were – a new potential coverage gap in the decades’ long protraction to bring this country politically kicking and screaming into the 20th Century by providing universal healthcare coverage to its citizens.  The math (actually the overlapping regulations) gets very tricky, so I won’t begin to try and explain what I haven’t been able to completely understand myself.

The up shoot is that individuals living in states that opt out of the expansion with incomes above those states’ Medicaid income eligibility but below 100% FPL will neither receive coverage under the ACA Medicaid expansion, nor be eligible for subsidies to help purchase health insurance in the new exchanges.  It should be noted this does represent a reduction in current benefits to this population – but the assistance that had planned to be available under the ACA now would not in states that opt out.  In any event, it would seem to have the makings of a political sword that could be used quite effectively in the future against any of the Republican governors choosing the opt out.

Underlying this whole discussion, of course, are even more challenging issues – issues that Pub patrons should be very interested in monitoring.  In states that really do end up opting out of the expansion, will that leave additional state budget dollars for long-term care coverage? <insert your favorite political sarcasm here>  In states that don’t opt out (which I expect will eventually be just about all) how will future efforts to negotiate FMAP rates for cost sharing of long-term care be impacted by the new coverage benefit (i.e., will federal lawmakers be pressured to reduce their share in lieu of Medicaid expansion)?

What we have shaping up – and has been in the making for the past twenty years – is a fierce generational conflict: as the aging demographics demand a greater share of public assistance for needs of the elderly it will become more and more difficult to maintain assistance for the non-elderly indigent and disabled.  Lack of a cohesive and widely accepted policy on immigration will serve as a catalyst to intensify that conflict, and the battleground will be state capitals.

At a practical level what this means for providers of senior housing, aging services and post-acute/long-term care is being caught between the lines: a labor force sympathetic to the economic struggles of their generation providing care to a powerful demographic that will, in the aggregate, carry dominating influence in how public funds are allocated.  My immediate reaction to this is to recognize now how incredibly valuable brand positioning and brand awareness will be in the future – and how critically important brand management must become for those providers wishing to survive this coming policy maelstrom.

   ~ Sparky

Filed Under: Editorials & Opinions, Medicaid · Tagged: , ,
Jun 28, 2012

Implications of SCOTUS Decision on Medicaid Funding of PA/LTC

By · Leave a Comment

Before I get to the heart of this post (the Medicaid story), please allow me to share some additional thoughts up front.

Dewey Wins Moment
First, as was announced this morning, the Supreme Court has found the Affordable Care Act is constitutional in its entirety (noted exception regarding Medicaid expansion).  I was following the announcement on the SCOTUS blog this morning (where it was shared that the Individual Mandate was upheld), and so I had a very hearty laugh listening to John King of CNN go on for nearly five minutes about the implications of the Individual Mandate being struck down.  Apparently, a reporter in the Court read the opinion passage that, “the individual mandate thus cannot be sustained under Congress’s power to ‘regulate Commerce’ ” and failed to keep reading.  Ah, the risks of wanting to be first.

Maintaining Political Perspective
Second, a modest word of caution.  As I have written here and shared with industry peers and constituencies in various other formats, this is another step along the path of Healthcare Reform.  The next challenge the Affordable Care Act faces is the fall elections.  And I would not be the least bit surprised – or really, at all disappointed – to know that Republican strategists are in a back door way pleased with this decision because they can now use it to energize their voting base.  It will be a rallying cry to get the vote (and donations) out.  Democrats will have to redouble their efforts (if not their campaign fund raising) if they want the ACA to survive in tact beyond the 113th Congress.

But, it will be very difficult now to rescind the entire Act regardless of what Messrs. Romney, Boehner, McConnell, et al would like us to believe.  First, there is the political reality of having to not only win the Presidency but to maintain a majority in the House and take back control of the Senate.  I think retaking the Senate will actually be a longer shot than Romney defeating Obama.  Second, by the time any new legislation could be drafted, vetted and passed, the ACA will be well into implementation.  Trying to go backwards at that point would have devastating social and economic consequences that elected officials of any stripe are unlikely to want to be associated with.

There very well could – and I would expect, regardless of election outcomes, will – be some modest tinkering in the future.  We still have the economic realities of a very fragile world economy that keeps us teetering on the brink of another deep recession.  So I think it is likely the essential benefits definitions and actuarial soundness of insurance plans under standardization of coverage will be tightened up in ways that improve budget projections. 

Medicaid Expansion
To some, like me, this part of the decision was more of a surprise than the IM being found as constitutional – and there could, potentially, be rather significant implications for post-acute/long-term care providers.  I am not by a long stretch a legal scholar, but I will try to give you my best understanding.

Title II, Section 2001 of the Act – Medicaid Coverage for the Lowest Income Populations – expands coverage for individuals with incomes at or below 133 percent of the federal poverty level ($14,856 in 2012).  As a practical matter, this means expanding coverage for adults without children or disabilities.  According to a May 2010 Kaiser Family Foundation Report, it is estimated that an additional 15 million individuals will receive beneficial healthcare coverage under this provision by 2019 at an estimated cost of $465 billion.

According to 42 USC § 1396c – Operation of State plans, the Secretary of HHS has the ability to withhold federal funding of a state’s Medicaid program for failure to comply with federal requirements (this was existing code not altered by the ACA).  Thus, states not complying with provisions of Section 2001 of the ACA would be at risk of having all federal Medicaid funding cut off – not just funding of the Medicaid expansion.  In lieu of the ACA’s Medicaid expansion, the Court found that application of 1396c in such instance would be unconstitutional because states could not have anticipated such an onerous exercise of coercion when electing to participate in the original Medicaid program.

The remedy of this finding is that the Act must be amended such that 1396c would not apply to a state’s decision whether or not to participate in the Medicaid expansion under Section 2001.  So, in theory, states now have the option of whether they want to participate in the Medicaid expansion or not.

Now, given that the program’s design will initially provide 100% federal funding for newly eligible enrollees under the expansion program – declining to 93% by 2019 – I cannot imagine how any state would choose not to participate.  It would seem to be political suicide for an elected official to forgo federal funding to expand healthcare coverage to the poor when the relative impact on that state’s budget is, by comparison to federal spending, rather small.  And by not participating, that state would essentially be choosing to lose a portion of the taxes paid by its citizens that will benefit the poor in other states.

On the other hand, as we witnessed when several Republican governors chose not to accept economic stimulus funding, there is a very real possibility that some states may choose to opt out of the Medicaid expansion as objection or disagreement with the expansion (or the Affordable Care Act in general).  Add to that concern over the potential Medicaid Crowding Out effect, and you can see where some states may choose to opt out of Medicaid expansion.

In as much as many post-acute and long-term care providers are very dependent upon state Medicaid funding, the ripple effect of how this plays out in the months ahead will be something such organizations will want to watch closely.  And, of course, we will be actively monitoring such developments here in the Pub.  There could be significant state policy ramifications impacting the budgeting of Medicaid funding for post-acute and long-term care.

That’s what I think, anyway.  I would be very interested to know what you think.

  ~ Sparky

Filed Under: Affordable Care Act, Editorials & Opinions · Tagged: , , ,
Jun 15, 2012

SCOTUS Decision Day Approaches

By · Leave a Comment

Okay, it’s prediction time.  We are about to head into the back half of June next week, and that means we have a two week period now during which the Supreme Court will hand down its decision in what is one of the most notorious cases that institution has ever deliberated.  No, it doesn’t rank up there with Marbury v. Madison, the Dred Scott Decision, Plessy v. Ferguson or Brown v. Board of Education – but it is likely to be remembered as the most impactful decision on future public policy since Roe v. Wade in 1973 for our generation.

So here is my prediction.  SCOTUS upholds the Affordable Care Act in its entirety.  Now, I have read more than I wanted to of the assessments, opinions, analysis – and the all-to-irritating opinions cloaked in very weak and self-serving analysis.   I have browsed through the transcripts of oral arguments presented before the Court.  I watched and listened to legal scholars, former judges and elected officials from every level of government.  And the one key takeaway I have from assimilating those hours of my life wasted is this: nobody at this point in history has any more inkling of how SCOTUS is going to decide than you or I. 

The legal arguments, particularly those that are based upon Constitutional Law and History, I found fascinating.  I wish I could believe that those arguments – on all sides of the issues before the Court – would carry the greatest weight to effecting a decision.  But Supreme Court Justices are human, after all, and subject to social influences – to what degree is the subject of some very interesting (if not quite useless) analysis.

And the Supreme Court’s standing in public opinion has taken a real beating. A recent opinion poll shows an approval rating of only 41%.  This has to carry some influence – regardless of the external rhetoric.    But while the logical consequence would be to assume such disfavor would weigh on the side of deciding against the ACA, I think the opposite will happen.  I think, in particular, Justices Roberts and Kennedy will not want to appear unduly influenced by public opinion and out of step with their historical vantage on previous decisions.  I also think they quite rightly understand that their decision – in either direction – will ultimately serve as the catalyst to energize the political party disappointed in that decision.  And so regardless of what they decide, the Affordable Care Act will de facto be sent back to Congress in one manner or another.

But please remember the SCOTUS decision is really a side show at this point to Healthcare Reform – particularly as reform will impact care provider organizations.  This holds true for the fall elections, as well, which will be the next round of political exchange impacting the reform effort however the Court decides.  At issue is when and how reform will be implemented – not the impact it will have on healthcare providers.

The underlying trends and drivers that brought us to this place in history will not abate because of a court decision or election.  The population will continue to age; people will continue to live longer and be sicker longer; the available caregiving labor force will continue to face challenges keeping up with demand; State budgets will continue to be under tremendous pressure; and the world economy will continue to influence the US economy in ways that are still very unpredictable.

But it’s fun to make predictions in any event, especially since this one has had such drama leading up to it.  So I’ve given you mine.  What’s yours?

  ~ Sparky

Filed Under: Affordable Care Act, Editorials & Opinions · Tagged: ,
Jun 12, 2012

Managed Care for Dually Eligible

By · Leave a Comment

On another discussion venue in which I participate, a very learned and esteemed physician colleague in the San Francisco area shared with our group a recent brief from the California Medical Association (CMA Alert) regarding that state’s pilot project to move dually eligible individuals in Los Angeles, Orange, San Diego and San Mateo counties into a managed care plan.

Under the Medi-Cal 1115 Waiver, California is pursuing four pilot projects to redesign care for dually eligible seniors.  Similar pilot projects are being pursued in a number of other states as part of a national effort under the direction of the Center for Medicare & Medicaid Services’ (CMS) Center for Medicare and Medicaid Innovation (CMMI).  Of significance for this post, it was noted in the CMA Alert that, “if dual eligibles (sic) wish to remain in fee-for-service Medicare, they will have to actively choose to do so.”

In other words, they will be assigned to the new managed care pilot project by default.  Given what is the reasonably perceived inability of this aging population to necessarily advocate for themselves, at issue is whether such default can be interpreted as a back door mandate.  Are these individuals being deprived of their right to choose their healthcare provider? And who, by right, assumes the responsibility of advocating on their behalf?

This is certainly a moral dilemma, and I can appreciate CMA physician members’ concerns.  We are a nation and society with deep roots and political sensibilities to individual rights.  We are also a society, however, that is facing a potential national calamity in being unable to provide basic housing, services and care for an aging population that cannot afford to pay for such necessities.  From that vantage, I think an effective argument can be made that the potential to infringe upon such rights is outweighed by the urgent need to proactively develop innovative public policy solutions to address the aging tsunami that is building every day.

But setting aside for the moment the issue of the means by which the dual eligible population is enrolled, according to a Kaiser Family Foundation research paper, when compared to the non-dual eligible population dually eligible individuals are more likely to have chronic care needs, have a higher incidence of ADL needs, and be more than twice as likely to be both in fair or poor health – and suffer from a cognitive or mental impairment. This is a population for which the right to choose their own doctor is often not high on their list of priorities. This is also the very population where coordination of services and care across community-based programs, acute care, post-acute/long-term care and behavioral health services has the most promise of being beneficial to the individual because of the huge communication gaps that now exist between those areas.

So we are looking at a frail elderly population that isn’t able to pay for their own care – and likely in need of a host of complimentary/supplementary assistance (housing, ADL assistance, private duty, medication management, behavioral health – addiction in this population is scarily on the rise).  I do not wish to be ignorant of those individuals’ rights – but we are standing on the beach looking into the abyss of the looming demographic tsunami and understanding before a lot of others that such tradeoffs will have to be made.  They will be made.  The only thing at issue is when and how.  Wouldn’t it be better to plan for the flooding after the age wave hits?

These are the types of critically important public policy issues that senior housing, aging services and PA/LTC organizations should be aware of – and have active participation in their advocacy – whatever your views.

So, what do you think?

  ~ Sparky

Filed Under: Editorials & Opinions, Medicaid · Tagged: , , ,
Jun 2, 2012

Can We Afford Home & Community-Based Services?

By · Leave a Comment

So who wants to spend their final days in a nursing home? Please raise your hands.

I think we all hope that when our time comes we will be in natural repose – whether that’s flying down the road with a gang of over 75 year-old Harley riders or in our own bed, surrounded by those who have made our life worth the living.  What many of us also hope is that we never be a burden on others; and if that means we require care in a nursing home, we are very grateful that care exists.

The “consumer preference” side of the inertia that has been driving the social and political push toward home & community-based services (HCBS) is plain enough.  The portended cost savings side, however, has yet to be supported with hard evidence.  In fact, as reported by Jenni Bergal in her May 24, 2012 article, States Encounter Obstacles Moving Elderly and Disabled Into Community, published in Kaiser Health News, the 2007 CMS initiative, Money Follows the Person, has been a disappointment to many.

As reported there, the demonstration was initially anticipated to place apx. 35 thousand Medicaid recipients in HCBS settings within the first five years – while the actual amount has been 22.5 thousand (36% below what was targeted).  Although $4 billion has been authorized by Congress to underwrite costs of the program it is estimated there currently exist 900,000 individuals living in institutions that qualify for transfer to HCBS settings under the program.  In addition to falling short of volume and outreach expectations, it is still not clear from available research whether the program is capable of providing an overall aggregate cost savings.

There are two general areas representing obstacles to success: affordable housing and operational support.  Effective HCBS models very often require that individuals transition to a new setting because their current home does not adequately accommodate accessibility and permit in-home supportive assistance.  Affordable housing for the elderly is, of course, one of the greatest social challenges that we are now facing, irrespective of HCBS.

Within the area of operational support there are two distinct categories: lack of what I will call technical support (e.g., timely access to direct caregivers, such as physicians, nurses and therapists; inability to most effectively leverage available remote monitoring and assistance technology; and inadequate management of medication);  and individual support (e.g., both access to community-based service supports and/or availability of informal caregiver support, such as families). 

The Affordable Care Act has a number of specific programmatic initiatives in support of HCBS, including: Community First Choice (Sec. 2401), State Option to Provide Health Homes (Sec. 2703), Money Follows the Person Continuation (Sec. 2403); Independence at Home Program (Sec. 3024); Community Based Care Transitions Program (Sec. 3026); Community Health Teams (Sec. 3502); and Community Based Collaborative Care Networks (Sec. 10333).  Additional support of HCBS initiatives is coming from the Center for Medicare and Medicaid Innovation, as well as numerous state Medicaid programs.

Many senior housing and care providers that have historically provided post-acute and long-term care within the confines of institutional settings have been committing substantial resources to advance strategic HCBS initiatives.   Again, their efforts are reflective of both the perceived preferences of their targeted market, as well as recognition of the trending shift in available public funding.  And I do believe there is merit in having a sense of urgency behind such efforts because of the potential rewards that first mover advantage may bring as integrated delivery models drive markets toward greater consolidation.

Based on the available results of the Money Follows the Person demonstration, however, there is at least anecdotal evidence in support of incorporating additional risk mitigation into those efforts.  It would be prudent to ensure development plans are assessed and modified periodically as additional information becomes available about future HCBS initiatives.  To the extent those initiatives can provide organizational Option Value that can reduce the potential cost of market repositioning in reaction to what is learned over time, the additional up front investment is probably a good idea in this environment.

I know there are some very forward thinking and experienced senior housing and care providers out there who are already well down the road to building the social, community and provider infrastructure that it takes to develop successful HCBS – regardless of what future research shows.  Hopefully, one of those folks will stop by the Pub and share with us what they have already learned!

  ~ Sparky

 

Filed Under: Editorials & Opinions, Home & Community-Based Services · Tagged: ,
May 23, 2012

Branding in An Era of Healthcare Reform

By · Leave a Comment

Larry Minnix, President & CEO of LeadingAge, recently began a video series entitled, a few minutes with Larry Minnix (I am guessing they didn’t hire Porter Novelli to help with the naming – or, maybe they did).  If you haven’t already, I encourage you to take the time to watch these.  Larry does a wonderful job sharing timely and highly relevant messages in his famously comfortable speakeasy style.

In the current episode that I’ve embedded below Larry discusses LeadingAge’s 2011 Annual Report. 

In referring to LeadingAge member organizations, Larry noted that, “we’ve had reinforced the fact that the most valuable, priceless thing that you own is your not-for-profit brand and heritage.”

I agree with Larry – today. Tomorrow – as in the next five to ten years – is a different story. The looming reality facing nonprofit senior housing and care organizations is that to remain economically viable in the future I believe their brand will have to become more synonymous with value than being nonprofit.

For those nonprofit organizations desiring to survive (and thrive) under Healthcare Reform, future brand identity and perception may need to change significantly. Consumer preferences of the Baby Boomer generation, the need to participate in integrated care delivery systems, learning to financially manage through new payment models (e.g., ACOs, managed care, payment bundling) – these are factors, which will have a greater impact on successful brand strategy than a nonprofit identity.

This is why I found that part of Larry’s message so timely and well placed. Tomorrow is not too soon to begin proactively managing your brand in lieu of Healthcare Reform. To be sure, managing a brand is a bit like herding cats: there are things you can control, things you cannot control and things you foolishly believe you can control.

I am reminded of a passage I like to quote from the book, Brand: It Ain’t the Logo: It’s what people think of you™  by Ted Matthews.

“A Brand is the sum total impression and memory of every remarkable, every so-so and every negative experience with any and all pieces of an organization. A Brand is the personality of a company, product or service and is judged and assessed a value by everyone it touches, whether inside the company (your employees) or outside (your customers, suppliers, shareholders and other stakeholders). These perceptions of value may, or may not, be what you want them to be. Which suggests a fact that may surprise you: your Brand isn’t really yours. You don’t own it – all the people thinking about you do.”

Perception is reality, isn’t it. Being able to monetize the perceptual advantage of being a nonprofit will continue to be critically important to brand awareness and positioning. I am not suggesting otherwise. But – it will not be sufficient for survival in the face of the tremendous challenges ahead, and it will be secondary to perceptually positioning your brand based upon the ability to deliver value under Healthcare Reform.

What do you think?

  ~ Sparky

Filed Under: Editorials & Opinions, Industry Trends & Drivers · Tagged: , , ,
«Previous Page