©2010 Health Dimensions Group

©2010 Health Dimensions Group

April 20, 2010
Health Care Reform: PL 111–148 and
Aging Services Providers
Aging Services of Michigan
Annual Conference & Trade Show
Presented by Kathleen M. Griffin, Ph.D.
©2010 Health Dimensions Group

Topics
•PL 111–148: Short-term, Mid-term, Long-term
Changes
•Biggest Challenges for Aging Services Providers
– Medicare Cuts and Changes
– Accountable Care Organizations and Bundling
– Home- and Community-Based Services (HCBS)
– Transparency Requirements
•Strategic Imperatives for Aging Services
Providers
– More on strategies in next session
©2010 Health Dimensions Group
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PL 111–148: Health Care Delivery
and Payment Changes
•Short-term: Next three years, production model
payment system remains largely in place—with
Medicare payment reductions but most delivery
system changes not yet effected
•Mid-term: Three to seven years out, health
delivery reforms phase in, and new payment
incentives begin to tip the balance
•Long-term: Disease/chronic care-centered
systems of care become the predominant clinical
and competitive model
Adapted from Sg2 Chairman’s Letter January 2010: Imperatives for Growth and Performance
©2010 Health Dimensions Group
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Medicare Cuts and Changes
• Market basket reductions
– MedPAC recommendation = 0% MB increase FY 2011 for SNFs and
HHAs
– Market basket adjustments
• HHAs, -1% 2011, 2012 and 2013; then productivity adjustments of
-1% beginning 2015
• SNFs, productivity adjustments beginning FY2012 = ($14B) over 10 years
• Payment revisions
– SNFs, RUG IV delayed to FY2011, but concurrent therapy
adjustment, look- back period change, and MDS 3.0 effective
10/01/2010
– HHAs, rebasing (no more than -3.5%/year) 2014–2017
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Medicare Cuts and Changes (continued)
• Value-based purchasing
– Payment based on achieving certain
thresholds for quality measures: Plan to
Congress by FY 2011
– MedPAC
• SNFs report on avoidable rehospitalizations
and percentage of
Medicare discharged home; assessment at
admission and discharge; actual direct
nursing costs
• CMS should identify patients most likely to
benefit from HHAs, and develop outcome
measures
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Why Post-Acute Targeted for
Medicare Cuts: Spending
MedPAC (2009): Medicare Post-Acute
Spending Increases Fueled by SNFs and HHAs
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Avoidable Hospital Readmission
Penalties
• Medicare payments reduced for avoidable admissions for three
conditions as of October 1, 2012:
– Likely the conditions for which hospitals now report readmissions:
• Congestive heart failure (CHF)
• Heart attack (AMI)
• Pneumonia
– In FY 2015, the number of conditions may be increased
• Payment formula: payments for avoidable readmissions,
aggregate Medicare payments to a hospital:
– Subject to a “floor”—payment reductions will be no greater than
percentage of aggregate Medicare payments to hospitals:
• FY2013 1%
• FY2014 2%
©2010 Health Dimensions Group
• FY2015 and beyond 3%
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Why Post-Acute Targeted for Medicare
Cuts: Use and Re-hospitalizations
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Accountable Care Organizations
(ACOs)
• A new shared savings program, 1/1/2012
• Integration of physicians, hospitals, post-acute providers,
outpatient, and ancillaries
• Responsible for all Part A and Part B care; more than 5,000
Medicare beneficiaries; three-year contracts with CMS
• Objective: reduce overall Medicare costs
• Incentive: ACOs share in cost savings versus “normal” marketbased
payment for Medicare beneficiaries
• Many large health care systems preparing; employing
physicians as first step
SNFs and HHAs will be in or out—
not everyone will play in Medicare space
©2010 Health Dimensions Group
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Bundled Episodic Payment
• Bundling = payment to a single provider entity of one
amount for the full range of care during a hospitalization
episode
– Episodic payment related to acute hospitalization:
-3 through +30 days
– Hospitalization, re-hospitalization, post-acute care, outpatient
hospital services including ED, physicians
• Pilot begins 1/1/2013; if spending reductions, expand at
least by 1/1/2016
• Initial focus on one or more of eight conditions
• Payment: either single bundle or via bids
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Chronic Care Management and Homeand
Community-Based Services (HCBS)
• CLASS Program—1/1/2011, voluntary insurance program for
purchasing community living assistance services and supports
• Medical Homes—24/7 one-stop shopping for primary care; possible
capitated payment for all health care management of Medicaid (law)
and Medicare (demonstration) beneficiaries
• Independence at Home—NP and physician house calls with 24/7
availability (demonstration)
• Money Follows Person—Rebalancing Demonstration extension
through FY 2016
•Senate bill stated that Congress should
financially encourage LTC services and supports
at home, not just institutional
©2010 Health Dimensions Group
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Impact of HCBS Trends on MI
(2007 Data)
SNF Beds Per 1,000 65+ SNF Occupancy %
• Increases in LTC at home decreases SNF bed need
• Some mitigation due to demographics, but may be offset by
technology advances
• Home care companies are growing and are attractive to investors
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SNF Transparency and Consumer
Information
• 21 pages in law
• Some highlights:
– 2010: disclose ownership
– 2011:
• NH Compare—direct care staff, census
and case mix, employee tenure and turnover,
hppd direct care
• Standard complaint form
• Demonstration–Monitor quality and compliance of chains
– 2012: Cost Report—details on direct care, indirect, capital, and
administrative costs
– 2013: Compliance program to prevent/detect criminal, civil, and
administrative violations
©2010 Health Dimensions Group
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Three Strategic Imperatives for
Aging Services Providers
Address hospitals’
biggest concerns:
• Length of stay
(LOS)
• Pending readmission
penalties
Enhance your
post-acute and
home care
continuum
Create a
cluster care
continuum
In the new health care delivery system, skilled nursing providers who are
lone rangers in the institutional long-term care business will be—in the
Medicaid business
©2010 Health Dimensions Group
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A Final Thought for Aging
Services Providers
If everything seems under control,
you're just not going fast enough.
©2010 Health Dimensions Group
Mario Andretti 15

Thank You
Kathleen M. Griffin, Ph.D.
National Director, Post-Acute and
Senior Services
Phone: 480-922-9366
kathleeng@hdgi1.com
Health Dimensions Group
4400 Baker Road, Suite 100, Minneapolis, MN 55343
763.537.5700 fax: 763.537.9200
www.healthdimensionsgroup.com
©2010 Health Dimensions Group
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©2010 Health Dimensions Group 17