April 6, 2009
The current congressional fervor to overhaul the U.S. health care system has some policy makers discussing how to change the way post-acute providers, including LTACHs, home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and outpatient-based hospital rehabilitation facilities are compensated for treating Medicare beneficiaries. One solution proposed by President Barack Obama, the Congressional Budget Office, and certain congressional leaders is to bundle payments for acute care and post-acute care services provided within the first thirty days after being discharged from an acute care hospital. This listserve briefly discusses this proposed solution and explores some of its pros and cons.
In 2008 the Congressional Budget Office (CBO) released a report to the House and Senate Committees on the Budget providing an expansive list of options for reducing Federal health care spending. In its report, the CBO proposed bundling acute care and post-acute care services into one payment as a way to “reduce federal outlays by an estimated $0.7 billion over the 2010-2014 period and by almost $19 billion over the 2010-2019 period.” Under the proposed bundled payment system, acute-care hospitals would receive a bundled payment and would contract with post-acute care providers for their services. Bundling would require acute care hospitals to be responsible for all levels of care provided outside the hospital setting, thus requiring them to act like third-party insurers in some respects. Hospitals would be required to determine how much post-acute care a patient needs and the best ways to provide that care. They would also be required to make decisions about a patient’s continuing care needs, as well as the appropriateness and quality of care.
President Obama’s 2010 proposed budget lends further support in favor of the CBO’s proposal, and the Administration appears poised to compel delivery system modifications through aggressive bundled payment policy changes. The proposed budget suggests that using bundled payments, together with a “combination of incentives and penalties,” should decrease hospital readmission rates for Medicare beneficiaries.
Opponents, however, argue that it would be difficult to craft an acute care and post-acute care bundled payment system for the following reasons:
The bundling model has been proposed many times since the early 1980s as a measure to control escalating post-acute care costs, decrease preventable acute care readmission rates, and increase Medicare cost savings, but has never received broad support -- until now. In a year in which legislators appear to have the political appetite to enact substantial healthcare reform, this bundling proposal deserves the attention of post-acute care providers. Carefully crafted legislation that takes into consideration the reimbursement needs of post-acute care providers could produce an entirely new, workable model. It will be important, however, for all parties to be represented at the negotiation table since the potential pitfalls associated with the bundled delivery system may have unintended, adverse financial consequences for some post-acute care providers.
Please contact one of the authors or a member of the Senior Care Team if you have questions about post-acute care bundling.