Congress Looks to Improve Medicare Post-Acute Care

capital-building (6)By – Peter A. Finocchio

The Health Subcommittee of the House Energy and Commerce Committee held a hearing on April 16th to examine the challenges of Medicare post-acute care and examine ways to improve it. Congressman Joe Pitts (R-PA), Chairman of the Subcommittee, noted the weaknesses of the current approach. “The current model has significant reimbursement disparities for treating the same condition,” he explained. For the 30 days after hospital discharge of patients recovering from congestive heart failure in 2008, he noted, Medicare paid an average of $15,000 per patient for those cared for in a rehabilitation hospital and $10,700 for those admitted to a skilled nursing facility (SNF). For those who received home health care, however, the cost was only $2,500. The wide cost disparities between different types of treatment for the same diagnosis means that while some may be getting a good deal on their health care payments, others are being significantly overcharged. Because this is a Medicare service, this means that not only are patients receiving inefficient care, but also taxpayers are paying more for these services than best practices would recommend. This is a consequence of the fee-for-service model. By awarding payments to providers based on the number of doctor visits and treatments prescribed, the current Medicare system for post-acute care unintentionally incentivizes providers to emphasize the quantity rather than the quality of care. Thus, doctors may recommend more services than are needed, resulting in higher costs for Medicare, even though the patient may not be utilizing the best option.

Fortunately, for the second year in a row, Congressmen David McKinley (R-WV) and Tom Price (R-GA) have introduced AMAC-supported legislation to address this growing problem by transitioning the model of post-acute care Medicare service to bundled payments that focus on quality rather than quantity of care. This time they are joined by Congressman Jerry McNerney (D-CA) as a fellow sponsor. The bipartisan bill which they have proposed is called the “Bundling and Coordinating Post-Acute Care Act,” or, in its abbreviated form, the “BACPAC Act.”

Witnesses at the April 16th hearing addressed the problems in Medicare post-acute care services, and examined potential solutions, including the proposed BACPAC Act. In his testimony, Mark Miller, Executive Director of the Medicare Payment Advisory Board, blamed the current fee-for-service model for contributing to lower quality care and inefficiencies in funding allocations. Dr. Miller said that the bundling of payments would provide “an incentive to provide high quality care in the most efficient setting and to tailor the services provided to the patient’s needs.” “Too often, beneficiaries discharged hospitals experience uncoordinated and costly PAC care services,” added Dr. Steven Landers, President and CEO of VNA Health Group. “Instead of teamwork and clear care paths, there is often fragmentation and confusion.” Dr. Landers contended in his written testimony that the BACPAC Act “keeps patients at the center of their care and, unlike other concepts, ensures that patients are not limited to one set of providers based on their site of hospitalization or other factors.”

Not all of the witnesses were convinced on the BACPAC Act’s potential, however. Leonard Russ, Principal Partner at Bayberry Health Care and Chairman of the American Health Care Association, said that the legislation lacked clarity and believed “there are other paths which policy makers could be explored which would advance PAC reform without creating an unnecessary level of turmoil among providers who must be successful in implementing these reforms and beneficiaries.” There was consensus among the witnesses, however, on the need to reform the current system.

Quality, not quantity, should drive care. By shifting Medicare disbursements for post-acute care away from fee-for-service to a bundled payment method, the BACPAC Act would improve treatment services, expand choices for seniors, and ensure better stewardship of Medicare dollars. The dialogue at the hearing about post-acute care and reforming it through this legislation was productive and promising. AMAC will continue to monitor progress on this issue and will continue to advocate for stronger and more secure Medicare services for our nation’s seniors, as well as for future generations.

For more information about the hearing, including video recording and witness statements from the Committee’s website, click here.

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5 years ago

By shifting Medicare disbursements for post-acute care away from fee-for-service to a bundled payment method will harm the patient. Bundled services sound good on paper but in reality the quality suffers since the patient will be forced to substandard facilities that provide the lowest bid cost to the hospital whom is the employer of the doctor. Lowest bid provides more cost saving to the hospital. Hospitals will be the deciding source for where the patient goes after discharge. Currently bundled services are used for other care and it has proven to be inefficient and not cost effective in the long… Read more »

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